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

Trustless

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

Tax &

Regulation

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.
Server &

System Issues

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.

author
Written By:  by Vakeesan Mahalingam
Read Vakeesan's full DEX write-up at: https://cryptovest.com/news/decentralized-exchanges-dex--what-are-they-my-top-picks-for-2018/ 
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