- 1. Disadvantages of centralized crypto exchanges
- 1.1. Crypto exchanges and decentralization
- 1.2. Decentralized exchanges based on Ethereum blockchain
- 1.3. Decentralized exchanges based on Waves blockchain
- 1.4. Decentralized exchanges based on Bitshares blockchain
- 1.5. The interface is a decentralized DEEX cryptocurrency exchange
- 1.6. DEEX Exchange is differ from other not only by quick blockchain
- 1.7. 2FA authorization using the blockchain
- 1.8. Stealth transactions
- 1.9. Decentralization is the user’ choise
Disadvantages of centralized crypto exchanges
With the growing popularity and amount of cryptocurrencies, the need to exchange one crypto asset for another as well as for fiat assets and the so-called stable coins is growing too. At the beginning of crypto market formation, the first exchanges appeared where users made the exchange of one cryptocurrency or token for other implementing cryptocurrency trading.
The first to appear were centralized exchanges that used the approach of classical stock and currency exchanges with a financial center providing functionality for trading with crypto assets to user. At the same time, centralized exchanges have the same drawbacks as a traditional financial institution. Such exchanges can’t resist to hackers’ attacks, the company that operates the stock exchange can lose all the funds. And sometimes they carry out scam exits controlled by founders telling to the community of crypto-investors a story about an alleged hacker attack or about the regulator’ actions which led to the loss of cryptocurrency or fiat funds. The most famous and largest scam exits of the centralized cryptocurrency exchanges are MtGOX, BTC-E (WEX), QUADRIGA.
Decentralized crypto exchanges have appeared to solve the conflict between the decentralized nature of cryptocurrency assets and the centralized essence of traditional exchanges. They use blockchain technologies to authorize users and confirm that users have funds for exchange without the need to send them directly to the exchange.
The organizers of the decentralized platform do not have access to user’ funds, can’t change passwords. Working with the decentralized DEEX crypto exchange you can be sure that you are the only owner of funds! This is both an advantage and a disadvantage for a number of insufficiently advanced crypto users. If you have forgotten or lost your password you have lost access to your cryptocurrency as well. The exchange’ administration will not help you in any way, it simply does not have access to your authorization data.
Crypto exchanges and decentralization
So, what are the decentralized crypto exchange? What blockchain technologies are involved in their creation?
A good solution is to use decentralization technologies to perform some of the functions of crypto exchange, for example the authorization using the user’s private key, which allows you to store funds on a personal wallet without transferring money to third-party before the exchange application is executed. It is possible to increase the safe use of these decentralized exchanges and resistance to possible breaks.
At the beginning of 2019 there are more than two hundred decentralized cryptocurrency exchanges, differing in interface, the ability to trade with various cryptocurrencies and tokens, with fiat money, etc.
Decentralized exchanges usually use a common blockchain such as Ethereum, Bitshares, Graphene, DEEP, Waves. Rarely it can be EOS, NEO or 0x. They differ in the technological platform and supported tokens, as well as the need to log in through a specific cryptocurrency wallet (to use the entry point to one or another cryptocurrency – DEEX, Ethereum, Bitshares, Waves, etc.).
Decentralized exchanges based on Ethereum blockchain
Distribution of shares in the trading volume of decentralized exchanges in March 2019 bt the Delphi Digital report.
IDEX is the most popular among the Ethereum exchanges. It also provides more than half of the trading of decentralized exchanges in this blockchain, having very good liquidity.
Other examples of exchanges working with Ethereum tokens are Cyber Network, Uniswap, Bancor Network (also works with the EOS blockchain), EtherDelta and others.
However, they do not provide the best functionality and interface offer to trade only with Ethereum tokens (except for multi-currency exchanges like Bancor) and do not work with fiat assets.
Also, these exchanges are only partially decentralized. According to a study by Delphi Digital, IDEX has many signs of centralized exchanges. And its recent actions go beyond the basics of decentralization and digital freedom. This crypto exchange introduced AML and KYC. The same is done and the oldest cryptocurrency ShapeShift exchange. But fully decentralized systems are the subject of need and we predict that the decentralized exchanges will grow, as well as decentralized OTC crypto exchanges. And all the functionality can be found within the decentralized blockchain DEEX ecosystem.
Decentralized exchanges based on Waves blockchain
The fact is that there is only one decentralized Waves exchange. It’s a Waves Dx, built-in directly into the client of the platform with the same name. It developed and supported by it’s the Waves company and in spite of the decentralization of storage facilities, the rest of its features, including the “matcher” that maps requests for the purchase and sale (the formation of “market depth”) is centralized. The popularity of Waves cryptocurrency and the Waves blockchain tokens is significantly inferior to Ethereum, although it is actively developing.
Users are interested in crypto exchanges based on Bitshares blockchain. This blockchain provides highest bandwidth than Ethereum and allows to make more transactions per second, approaching a greater decentralization of all elements of the exchanges. It can solve some more problems, for example, the miner abuse when they place their orders before others for more profit.
It happens because of the fact that Bitshares blockchain uses the DPoS (delegated proof-of-stake) consensus algorithm which is gaining popularity due to its lower labor costs — there is no need for productive equipment for mining and transactions. You only need the appropriate software and “freezing” of the relevant cryptocurrency on a special wallet.
Among the Bitshares-based exchanges the DEEX cryptocurrency exchange can be distinguished. It provides users with good functionality along with high decentralization, reliability and independence from third parties.
The interface is a decentralized DEEX cryptocurrency exchange
Using the atomic swap technology DEEX exchange provides an opportunity to trade not only with Ethereum or Bitshares tokens, but also with many cryptocurrencies and tokens based on different blockchains. Currently, about 50 digital currencies and tokens are connected to DEEX.
In addition to the direct exchange of cryptocurrencies, DEEX allows the user to connect its own node and earn on commissions similar to mining, while contributing to the strengthening of the reliability and decentralization of the service. You can read the terms and conditions for DEEX nodes here.
DEEX uses exchange’s services not only for exchange and trade but also for IEO — Initial Exchange Offering projects, that is needed to offer coins for crowdfunding on the exchange with automatically subsequent listing. This should attract additional users and investors to cryptocurrency projects.
DEEX Exchange is differ from other not only by quick blockchain
Among the functionality available to Deex’ users it offers deposit and withdrawal of fiat funds, a three-level referral program, two-factor authentication using the blockchain and the ability to use stealth transactions. We’ll focus on two urgent functions, as they are fully corresponded to the concept of anonymity and decentralization.
Registering an account on the DEEX Exchange, you can choose the option of authorization using a specially generated QR-code to access your exchange account.
QR-code contains a private key that must be scanned at the entrance (login) to the exchange. The correspondence of the code to a particular user is checked by the public key stored in the blockchain, so it is impossible to replace the key.
It is quite similar to authentication with the private wallet’s key but there are less risks to compromise the wallet by transferring your private key via the Internet when entering the exchange.
This option is quite interesting and can significantly improve the security of user’ funds.
Sometimes it is necessary to send transaction to another user so that it cannot be tracked. Contrary to the general opinion, Bitcoin and Ethereum blockchains are not completely anonymous, all transactions are not only stored in the blockchain, but also are visible to anyone who can learn a lot of information with the help of conventional blockchain explorers.
DEEX uses the Graphene blockchain platform which allows you to save only the fact of transfer without the ability to know the sender and recipient by generating a special stealth address which keys are available only to two users within the DEEX platform. Sending funds with this option the anonymity of the transaction will be guaranteed and it will be impossible to track it.
Thus, the Deex Exchange stands out among all other trading platforms due to additional functionality that fully uses the principles of decentralization.
Decentralization is the user’ choise
Summing up, we can point to the key difference between the centralized and decentralized exchange. It’s the reliability and safety of user funds.
Decentralized exchanges do not yet have the same functionality and convenience as centralized ones, but sending funds to a centralized exchange it is necessary to understand that after sending you can’t return them.
After all, “your money in the Bank – is the money of the Bank already”. The exchange, like the bank, can be hacked at any time, go bankrupt, freeze your account and require documents confirming the origin of funds or payment of taxes — and you can’t resist it. Not to mention the lack of anonymity due to the need for full verification.
Decentralized exchanges build a new economy, which beginning marked the appearance of Bitcoin, when no third party can arrest or freeze your funds and only you are responsible for them.
The example with Binance with its decentralized Binance Dex exchange shows that even the largest crypto market gamers believe in the prospects of decentralization and independence from any governmemnts. On the other hand, we should be skeptical about the Chinese crypto-forex with drawned volumes of crypto trading and IEO. It is possible that the supposedly decentralized Binance exchange with its blockchain is an advertising action that allows you to earn and raise the price of BNB token. After all, the Binance blockchain is private one, controlled by the trusted administration nodes. It’s a private adjustable blockchain.
So, make your choise!
DEEX. For Everyone. Everything. Everywhere.