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Trading with Cryptocurencies can be profitable, and non-profitable if you are new, you don’t know how to trade, but somebody told you that it is very easy and you can make a lot of money just by buying and selling cryptocurrencies. Or that someone else can do it for you. Within the last year there has been a big fuzz about cryptocurrencies, trading platforms, and how people are making millions out of nothing. Yes, they are making millions, but not everyone. Millions are making the ones who are already in this business for a while and know what are they doing. On the other handthe ordinary people, most of the time are just losing their money. They believe in fast cash. Unfortunately, a lot of the marketers out there promote it as a fast cash. Something that will bring them significantly large amount of money for a short period of time.
The everyday person, who is not educated about the cryptocurrencies, about the trading platforms, the exchanges, and how all of this things work, can lose a lot of money. I am a member of a several crypto groups, where I read how people are losing money, how they got scammed. There are people that even put their life savings in some of the currencies, some of the exchanges, the platforms and have lost a lot of money. There is no such thing as fast cash. There is no such things as big profits in a short period of time. It might be, if you win the lottery by some miracle, or if you bet on some type of sports games, and you get all the results correct. You need to work hard, to be educated on how the things are going, and then yes, you can make money. If you are following the crypto news, you will read how many speculations, scams, worthless coins, losses but on the other hand as well a lot of gains, new technology, new promising coins are coming out, almost every day. The internet is just filled with these things. And that is why I am also writing these blogs, to educate you more on the cryptoworld. To know where to start and what to look for. I am not a leading expert, or some hitechguyt, I am same like you, just an everyday guy, who got caught in the crypto madness. But everyday I learn little by little, because I want to know, I want to learn and as well to make certain profits along the way. I do not want to be scammed, to lose my money, just because someone is trying to HYPE me on that certain coin, exchange, platform etc.
And this is what I see is happening every day. People promoting new coins, new platforms etc. Many people approach me as well on Facebook, to tell me about how great their platform is, or how great the new exchange is. I am not saying that all of them are scams, there are many real coins that solve real problems, exchanges out there that are working very good, but there are a lot that don’t. That is why you must be always careful, you must always look for another opinion, to do some research and then to make your final decision. At the same time, when you are trying to invest, do not invest a lot of money. Always invest the amount that you are ready to lose.
The topic about the cryptocurency exchanges is a little bit bigger and that is why I must brake it down in a few posts. So let’s dive in:
Cryptocurrency exchanges are nothing but digital marketplaces (webpages) where you can buy and sell Bitcoins or any other currencies that are listed on that certain exchange. The Exchanges are the back bones of the cryptocurrency market. In the world of the cryptocurrencies there are 2 types of exchanges:
In today’s article I am going to focus on the Decentralized Cryptocurrency Exchanges.
In order to understand the decentralized exchange, first you need to know a cryptocurrency exchange does. The cryptocurrency exchange is a platform where you can buy and sellcryptocurrencies and receive fiat money or cryptocurrencies. In a decentralized exchange there is no central controlling server or a third party to hold the funds of the participants in the exchange transaction.
There are several differences between the decentralized and centralized crypto exchange:
- Control of funds
In a decentralized exchange there is no centralized platform service that is in possession of order books and custody. Funds are controlled by the users and participants of the platform. The users transact directly with their peers without the need of any central server.
The users of centralized exchange platform make deposit to the exchange in order to facilitate an exchange/trading transaction. These funds are controlled by the centralized exchange service. This means that order books and custody it is in the hands of the centralized platform service.
The decentralized exchanges are all about anonymity.
Some of the centralized platforms allow anonymous trading accounts on their platforms. Due to many government regulations, it is difficult to trade anonymously on a centralized crypto exchange.
In decentralized exchanges there is no need to rely on a third party intermediary. By implementing smart contracts and blockchain protocol, the system is built to provide trust-less authentication and authorization of crypto exchange transacions
The users in the centralized crypto exchange rely on the platform to authenticate and authorize their transactions. The platform is the third-party intermediary, providing trusted crypto exchange services.
Now that we have highlighted the differences between the decentralized and centralized exchange, let’s look at some of the qualities that decentralized exchanges have:
- Faster and cheaper transactions
By removing the third party in the transactions process, the decentralized platform provides faster, cheaper and more cost effective crypto exchange transaction
- More difficult to hack
On the centralized crypto exchanges there have been a number of high-profile hacks during the history of crypto exchanges. Because in the decentralized exchange, there is no single point of entry, just like in the blockchain, the hacker will need to compromise more than half of the network to be able to commander the system
- Seamless Integration with Secure Hardware Wallets
This is a major advantage in the decentralized exchange. A number of decentralized exchanges offer integration with the popular hardware wallets like Trezor and Ledger Nano S, which ensures a much safer transaction space. The user can send their coins directly from the hardware wallet to the smart contract of many decentralized exchanges. In centralized exchanges this is not possible, because the user has to manually enter the private key, if he wants to move the funds from the wallet to the exchange. This puts users at risk of malicious phishing and key logging attacks.
- The funds are controlled by users, rather than a central corporation
In the decentralized exchange the control of the money is always in the hands of the users, since the network uses P2P network architecture. The transactions occur between peers in the network. The users control their private keys as well as their funds at all times.
This are some of the qualities that the decentralized exchange has, now let’s have a look of the bad qualities the decentralized exchange has:
- Difficult to use
The dashboard in the decentralized exchange it’s very confusing and there is too much that needs to be done to navigate through the smart contracts. You must be knowledgeable in order to do it. The centralized exchanges are very easy to use, and to navigate.
- Lack of Robust Features and Functionalities
Most of the decentralized exchanges only support the basic cryptocurrency exchange function. A lot of the advanced trading tools and features are missing like: margin trading, stop loss as well as host of other trading features. These are the main reasons why the decentralized exchange haven’t achieved much popularity in the cryptocurrency world.
This are the main good and bad qualities that the decentralized exchange platform have. Here are a few of the most famous decentralized exchange platforms:
0xProtocol is a decentralized exchange platform of Ethereum-based tokens. It is pronounced as ‘’zero-ex’’. The 0xProtocol enables transactions of the ERC20 (ethereum) tokens between users in a secure, trustless, feeless and quick manner through the use of Ethereum smart contracts. 0x’s goal is to allow any Ethereum tokens to be traded efficiently. 0x was co-founded by Will Warren and Amir Bandeali in October 2016. It is a very promising project
- Kyber Network
Kyber Network is a decentralized exchange platform that enables instant onchain exchange of cryptocurrencies. It shares a lot of similarities with the 0xProtocol. The project also attempts to minimize the high costs associated with maintaining the order book of decentralized exchange on the blockchain.
Bitsquare is a peer-to-peer marketplace for cryptocurrencies like Bitcoins. It is a fully decentralized exchange which requires no name, email ID or verification. It supports 126 cryptocurrencies including Bitcoin.
Here are a few more decentralized exchanges that you can trade on:
- Waves Dex
- Oasis Dex
- Radar Relay
Conclusion – Working Decentralized exchanges
There are some more decentralized exchanges out of which few are still being build and few are still have very low liquidity or are facing security difficulties.
Namely, such exchanges are:
- Bancor liquidity exchange
- EtherDelta (didn’t covered it due to its recent breach)
- Counterparty Exchange
- Altcoin.io (Atomic Swap Powered- under development)
- Airswaps (Under development)
Whatever their current state may be the future is promising for decentralized exchanges because they are destined to improve and innovate if they want to save the cryptosphere.
Thank you for reading.
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