Crypto World #6 Bitcoin Regulation: That's Why 2018 Will Be The Year of Decentralized Exchanges:

mann (61)in #crypto • 7 years ago

There are many indications that 2018 will be the year for decentralized exchanges for Cryptocurrencies. Crypto-traders can now rely on various decentralized exchanges such as Radar Relay, Waves Dex, OpenLedger Dex, or Bitsquare, if they want to act without central authority, without verification and anonymously directly with other users. The importance of these marketplaces will increase this year, and there are good reasons for that.

The problem with centralized exchanges:

We have learned from earliest childhood to trust our money to others - our parents, a bank and even our Cryptocurrencies on a stock exchange. Currently, centralized exchanges such as Binance, Kraken, and many others dominate Bitcoin and another cryptocurrency trading.

These exchanges provide a platform on which sellers and buyers are brought together. For most of these platforms, the user must register and verify. The advantage of centralized exchanges is on the one hand in the relatively simple use and on the other side in the ability to use advanced trading options.

Decentralized exchanges are the logical next step:

In contrast to central trading venues, decentralized exchanges follow the inherent logic of the Blockchain. These marketplaces are distributed globally and are secured and verified by the network. They are "trustless." This means that there is no central location that the user must trust concerning their data and money.

Trading on decentralized stock exchanges is based on the peer-to-peer principle, i.e., directly between the users. So if you want to buy a few Litecoin (LTC) with Ether (ETH), place a buy order and wait until a seller meets the order at the set price.
Once buyers and sellers have agreed, ETH and LTC will be transferred to the own wallet of buyer and seller. In the meantime, some decentralized stock exchanges even support hardware wallets.

Advantages of decentralized exchanges:

The benefits of decentralized exchanges are apparent. The user has full control over his coins and tokens. This provides a higher level of security, both regarding hackers and government regulation. If a decentralized exchange closes, the user does not need to worry about his coins in most cases.

Also, there is no need to register or verify for trading. The user thus remains anonymous and can theoretically use the marketplace even if the state in which he lives entirely prohibits the selling of Cryptocurrencies. Also, the likelihood of the stock market being offline is far less than that of centralized counterparts because the marketplace is decentralized and thus distributed.

However, currently, the most significant disadvantage of decentralized marketplaces is that most such exchanges are far less liquid than their centralized counterparts. The trading volume in the various exchanges is still quite low. And what brings you the most beautiful decentralized stock market, if no customer for their own sales order finds?

It is to be hoped that different marketplaces will merge and allow cross-trading between different decentralized exchanges.

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Regulation and decentralized exchanges will be important topics in 2018:

For these reasons, it can be assumed that decentralized stock exchanges will become more critical in 2018. This is all the truer because it is also expected that regulators in 2018 will focus even more on Cryptocurrencies. After China, South Korea, and the USA, Germany, France, other countries are also starting to regulate the market more clearly.

Initial moves in this direction are expected from the G20 summit in March 2018. But even without strict regulation, there are enough reasons to use decentralized marketplaces. If you trade with Cryptocurrencies, you should take a closer look at the concept.