Crypto course · Section 1: Crypto Foundations
Crypto Exchanges Explained: Spot vs Futures, Order Books and Fees
How crypto exchanges work: centralised vs decentralised, spot vs futures, reading an order book, slippage and maker vs taker fees.
Beginner6 min read·6:22 video·Lesson 3 of 26·quiz: 4 questions
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A crypto exchange is a marketplace that matches buyers with sellers. On the spot market you buy and own the actual coin; on the futures market you trade a contract that follows the coin's price, usually with leverage. Every trade goes through an order book and pays a fee, which is usually lower if your order adds liquidity (maker) than if it takes it (taker).
Centralised vs decentralised exchanges
A centralised exchange (CEX) is a company. You create an account, verify your identity (known as KYC, "know your customer"), deposit money and trade on its website or app. The exchange holds your coins in its own wallets. Well-known examples include Binance, OKX, Bybit, KuCoin, Coinbase and Kraken, but which ones may legally serve you depends on your country, and that list changes.
A decentralised exchange (DEX), such as Uniswap or PancakeSwap, is a set of smart contracts. You connect your own wallet and swap tokens directly; nobody holds your funds for you.
| Centralised exchange | Decentralised exchange | |
|---|---|---|
| Who holds your coins | The exchange | You, in your own wallet |
| Identity check | Usually required | Usually none |
| Paying in local currency | Often possible | Not directly |
| Main risk | Exchange failure, frozen withdrawals | Smart contract bugs, fake tokens, user mistakes |
| Best for beginners | Yes, with care | Later, once you understand wallets |
Spot vs futures
| Spot | Futures (perpetual) | |
|---|---|---|
| What you get | The real coin | A contract on the price |
| Can you withdraw it | Yes | No |
| Leverage | No (unless margin trading) | Yes, often up to very high levels |
| Can you profit from a fall | Only by selling what you own | Yes, by going short |
| Can you lose more than the coin's fall | No | Yes, relative to your margin; positions can be liquidated |
Spot is where beginners should start. Futures come later in the course, in Crypto Futures Trading, after you understand position sizing.
Reading an order book
The order book is the live list of everyone's waiting orders for one trading pair, such as BTC/USDT (Bitcoin priced in USDT).
- Bids are buy orders, sorted from the highest price down.
- Asks (offers) are sell orders, sorted from the lowest price up.
- The spread is the gap between the best ask and the best bid.
- Depth is how much is waiting at each level.
Here is a simplified BTC/USDT book:
| Side | Price (USDT) | Size (BTC) |
|---|---|---|
| Ask | 60,010 | 0.5 |
| Ask | 60,005 | 1.2 |
| Bid | 60,000 | 0.8 |
| Bid | 59,995 | 2.0 |
The spread is 60,005 - 60,000 = 5 USDT, which is about 0.008% of the price. That is tight, as it usually is on Bitcoin.
Example
You place a market order to buy 1.5 BTC. The book has only 1.2 BTC at 60,005, so you get 1.2 BTC there and the remaining 0.3 BTC at 60,010. Your cost is 1.2 x 60,005 = 72,006 plus 0.3 x 60,010 = 18,003, a total of 90,009 USDT. Your average price is 90,009 / 1.5 = 60,006. The difference from the 60,005 you saw on screen is slippage.
On Bitcoin, slippage on a small order is tiny. On a small altcoin the book may hold only a few hundred dollars at each level, and a market order of a few thousand dollars can push the price several percent. Before trading any coin, look at its book depth. The liquidity heatmap shows how resting orders for BTC, ETH and SOL build up and disappear over time.
Maker and taker fees
- A maker order sits in the book and waits, adding liquidity. A limit buy below the current price is a maker order.
- A taker order fills immediately against an order already in the book, removing liquidity. Every market order is a taker order.
Exchanges usually charge takers more than makers. A schedule might look like this, though real fees differ between exchanges, change over time and often fall with higher volume or when you pay in the exchange's own token:
| Market | Maker | Taker |
|---|---|---|
| Spot (example) | 0.10% | 0.10% |
| Futures (example) | 0.02% | 0.05% |
Fees are charged on the full value of the trade, not on your profit.
Example
You buy $1,000 of BTC on spot at 0.1%: the fee is $1. You later sell it for $1,000: another $1. The round trip costs about $2, or 0.2%. If you do that 50 times a year with the same $1,000, you pay about $100 in fees, 10% of your money, before any profit or loss. On futures with $10,000 of position value and a 0.05% taker fee, each side costs $5, so $10 per round trip.
Other costs include the spread, slippage, withdrawal fees and, on futures, funding payments. Always read the exchange's fee page before you trade.
How to choose an exchange
Use this checklist:
- Legal availability. Is it allowed to serve users in your country? Rules are changing in Pakistan and many other places, so check the current position.
- Liquidity. High volume and tight spreads on the pairs you want.
- Security record. Past hacks, how they were handled, and whether it publishes proof of reserves (a regular check that it holds customers' coins).
- Deposits and withdrawals. Practical ways to move money in and out in your currency, and the fees for doing so.
- Support and transparency. Clear fee pages, real support channels, a working app.
Risk
In November 2022 the exchange FTX collapsed and customers could not withdraw their money for a long time. A big name is not a guarantee. Keep only your active trading balance on any exchange, spread larger amounts across self-custody and more than one platform, and learn to withdraw before you need to.
Tip
Turn on every security option the exchange offers on day one: an authenticator app for two-factor login, a withdrawal address whitelist and an anti-phishing code. The next lesson explains each one.
Continue with Crypto Wallets and Seed Phrases to learn how to hold coins yourself.
Key takeaways
- On the spot market you buy the real coin; on the futures market you trade a contract on its price, usually with leverage.
- The order book lists buy orders (bids) and sell orders (asks); the gap between the best of each is the spread.
- Large market orders eat through several price levels, so the average price you pay (slippage) is worse than the price on screen.
- Maker orders add liquidity and usually pay lower fees than taker orders; fees are charged on the full trade value.
- Never keep all your money on one exchange: exchanges can fail, freeze withdrawals or leave your country.
Quiz: check what you learned
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⚠ Not financial advice — educational signals only. Read the disclaimer.