Every asset requires a platform to trade. Exchanges serve as a channel to liquidate and trade assets for profitable deals. For kick-starting your crypto investment, you need to purchase the desired crypto coins from the cryptocurrency exchange platform. Every novice trader dives into the crypto market through exchanges.
Crypto exchanges are of two types: Centralized & Decentralized. The centralized crypto exchanges are prevalent in the market space, and popular channels include Bittrex, Bitfinex, Binance. In this post, let’s discuss the decentralized crypto exchanges!
What is a decentralized crypto exchange?
A decentralized crypto exchange platform is the channel that allows you to purchase or trade crypto coins without any central governance. The exchange platform enables you to transfer fiat currencies to cryptocurrencies, vice-versa, and exchange between different crypto coin pairs.
Let’s peep through the merits and demerits of decentralized crypto exchange platforms!
Merits of decentralized crypto exchanges
Swift & Cheap transactions
Decentralized crypto exchange platforms are devoid of third-party or intermediary interventions. Hence the buy/sell orders of the crypto trading are processed rapidly with reduced or negotiable transaction charges.
Users control transactions
The decentralized crypto exchanges have no central authority; the entire community of users governs the transactions of the platform. The user community controls the transactions as the exchange is built in P2P architecture. The automated smart contract protocols control the crypto transactions in the decentralized exchanges. The trade deals are authorized by the private keys of the user account.
Enhanced security
Centralized crypto exchanges are prone to security hacks. There are evident high-profile hacks in the popular centralized exchanges for the value of assets in the centralized servers. With decentralized servers, the DEX platform is much more secure than centralized exchanges. Hacker requires to break the security walls of more than 50% of the users account to steal the assets in decentralized exchanges which is nearly impossible.
Seamless hardware wallet integration
Decentralized crypto exchanges afford their users with seamless hardware wallet integration. The hardware wallets like Ledger Nano S and Trezor are utilized to store the crypto assets from decentralized crypto exchanges. Users can send or receive crypto coins of their choice in their cold storage wallets, which becomes the most secure way of storing cryptocurrencies. Centralized exchanges fail at the point of integrated crypto user wallets, that becomes an advantage for the hackers!
However, decentralized exchanges also come with some demerits, which the crypto space is working on!
Demerits of decentralized crypto exchanges
Difficult User-Interface
Centralized crypto exchanges like Binance, Coinbase have intuitive user-interface that helps users glide with the flow of trading without any hindrance. Decentralized crypto exchange platforms are composed of chaotic smart contracts that are even taking breaths of tech-savvy. Hence, the decentralized crypto exchange platform dashboards must be enhanced with an elegant user-interface to promote decentralization.
Lack of advanced features
Decentralized crypto exchanges are built with basic functionalities, and they lack advanced features that are available in a centralized one. Advanced trading tools like stop-loss, margin trading, candle-stick patterns lag in decentralized platforms.
Take away!
Decentralized crypto exchanges are on their way to take up the hit without any flaws. Soon, the decentralized crypto exchanges enhanced privacy, transparency; the reduced transaction fee will be hitting crypto traders hard for their business needs! Here’s the list of popular decentralized crypto exchanges!
- Binance DEX,
- IDEX,
- Bisq,
- CoinChangeX,
- 0x Protocol,
- Kyber Network