The way crypto exchanges work depends on their type of platform. Most crypto trading platforms are known as centralized exchanges, which function as a brokerage, acting as intermediaries between buyers and sellers.
Users can deposit money into exchanges to buy cryptocurrency or deposit their own crypto to trade for other currencies, known as crypto-to-crypto spot trading. Traders can expect to pay a fee for converting one crypto to another, like when exchanging regular currencies at a bank (for example, converting USD to EUR).
In exchange for digital currencies, exchanges may accept a wide variety of payments, including credit card payments, direct bank transfers, credit or debit cards, money orders and even gift cards.
Dedicated crypto and bitcoin exchanges will allow you to withdraw your crypto funds and transfer them to another wallet of your choice. Others, especially those that focus on other assets, like stocks — including Robinhood and eToro — only let you purchase the crypto but not transfer it out of their web wallets.