In this video, Jackson Palmer explores and breaks down the world of trustless decentralized exchanges (DEX), including EtherDelta, the 0x protocol, Kyber Network, Airswap/SWAP and Omega One.
Are you tired of paying high fees to centralized exchanges like Bitfinex, OKEx, and Coinbase/GDAX?
Are you looking for a safer way to trade cryptocurrencies without the risk of potential exchange hacks?
Do you want to control your own private keys instead of giving access to centralized exchanges which can be hacked, going down with all your funds?
The solution: Decentralized Exchanges (DEX).
Remember the word ‘DEX’. This will become a buzzword all throughout 2018, especially in the second half of the year.
A Decentralized exchange (DEX) enables peer-to-peer (p2p) trading of cryptocurrencies without the need for any middle man or intermediary. It is completely open source with no one party in control. Decentralized exchanges promote trustless transactions, meaning you don’t need to entrust your cryptocurrencies to a third party service, custodian or intermediary. You maintain full control of your account and your digital assets. With DEXs, you can say goodbye to all the stringent KYC (Know-your-client) documents necessary with the current influx of centralized exchanges.
DEX vs Centralized Exchanges: Comparison
|Functions||Centralized Exchange||Decentralized Exchange|
|Fees||0.15% -3%||no fees, few have small fees|
|Verification||ID, KYC/AML, lengthy (sometimes takes weeks)||none|
|Security||Single point of failure
Vulnerable to hacks, losses and theft
Lack of trust
Unsafe to execute large orders
Do not allow trading from hardware wallets
|No single point of failure
Cannot be hacked
Safe to execute large orders
Some will allow trading directly from hardware wallets for safety
|Transactions||Not recorded on the Blockchain||Recorded on the Blockchain|
|Control||You do not control your private keys
Requires user to be online
|You control your private keys
Require users to be online, but some DEXs will have the ability to transact p2p offline
|Easier to trace, tax and regulate users, especially those trading on exchanges that accept fiat currencies.
Government may be able to obtain KYC info from exchange
|Harder to trace, tax, and regulate users, as p2p doesn’t involve the current banking system or KYC protocols.|
|High volume and price volatility cause instability or server crashes
Downtime due to system issues or upgrades
|Increased traffic actually increases performance
No server issues to mention
Decentralized Exchanges are the future
Decentralized exchanges represent the next evolution of cryptocurrency trading, but are still in their nascent stages. Launching one is difficult on a technical level, expensive, and still requires a lot of development before we see mass adoption by the community. As with any exchange, each specific DEX will have its own pros and cons, but as far as centralized vs decentralized goes, it should be obvious that the latter is the one best suited for the shift to a decentralized economy.
Written By: by Read Vakeesan's full DEX write-up at: https://cryptovest.com/news/decentralized-exchanges-dex--what-are-they-my-top-picks-for-2018/