Changelly is a non-custodial exchange based in Prague, Czech Republic.
It was one of the first exchanges of its kind, founded in 2016, over a year before the 2017 cryptocurrency boom.
Today, Changelly supports over 150 cryptocurrencies which are easily converted from one to the other via a simple exchange operation (see details of non custodial exchanges below).
The user chooses 2 cryptos, then provides an output address where to receive funds. The customer then receives a deposit address for the first currency.
The Changelly system then awaits for a deposit at that address. When confirmed, the deposit will be marked as valid and the system will release a certain amount of the target cryptocurrency to the target address.
A non-custodial exchange does not hold customer funds in accounts. Although Changelly customers must perform KYC and AML procedures to exchange cryptocurrencies, the funds never go to an individual user’s permanent deposit account.
Instead, specially coded wallets handle deposits and identify when a certain customer’s exchange operation is ready to be performed (usually after a fixed number of block confirmations). (In a sense, it’s like a very short lived account that only lasts for the duration of the exchange operation.)
Once there are enough confirmations, the funds are marked as confirmed and the requested exchange cryptocurrency is sent to the address specified by the customer when the transaction began.
After the operation, no funds remain at the exchange and the virtual account is closed.
ShapeShift is another example of a non-custodial cryptocurrency exchange.