Exchange-based transactions, ;
Exchanges bring together brokers and dealers who buy and sell these objects. These various financial instruments can typically be sold either through the exchange, typically with the benefit of a clearinghouse to cover defaults, or over-the-counter (OTC), where there is typically less protection against counter-party risk from clearinghouses,
This is the case if you for example buy altcoins on Bittrex.com, Or poloniex.com All these transactions Are ""Exchange-based".
This means in the case of cryptocurrencies, that it is done through a third party, and you don't know the seller of the currency.
OTC transactions :
Over-the-counter (OTC) or off-exchange trading is done directly between two parties, without the supervision of an exchange. It is contrasted with exchange trading, which occurs via exchanges.