Introduction to CeFi

Centralized finance — CeFi — is the familiar world of companies that hold your assets, run order books, and connect crypto to bank accounts. For most people, a centralized exchange is the first touchpoint with digital assets: you verify your identity, deposit fiat or crypto, and trade inside an account balance that lives on the exchange's internal ledger, not in your personal wallet.

CeFi sits between traditional banking and on-chain DeFi. Exchanges like Coinbase, Kraken, and Binance offer speed, customer support, and deep liquidity that many decentralized protocols still struggle to match for large fiat pairs. Custodians and prime brokers serve institutions with insured vaults, compliance tooling, and negotiated settlement.

The tradeoff is counterparty risk. When you hold assets on an exchange, you trust the company's solvency, security practices, and regulatory standing. CeFi failures — from Mt. Gox to FTX — showed that convenience can become catastrophic when reserves are missing or customer funds are commingled with proprietary trading. This course maps how CeFi works so you can use it deliberately rather than blindly.