The need for decentralized exchanges
If you have been reading some of my posts lately you may have noticed me warning people not to leave too much of their funds on exchanges. One of the biggest points of cryptographic security of your funds was to not trust your value on other people and services and I believe this can't be stressed enough as we are getting to a point where many of the currencies are seeing sky high profits which is usually when things start going "down".
Mt. Gox in 2014 was one of the biggest exchanges and it went down with over 780k Bitcoin from customers. Now almost 4 years later it seems like there are so many new people involved in the crypto-space now who never learned a very expensive lesson like the ones almost 4 years ago.
Now I don't want to spread FUD about exchanges without there being any clear evidence, but lately there have been a lot of reports on certain subreddits and people filing a lot of tickets about not being able to withdraw their tokens or other issues with certain exchanges. Then again even Mt. Gox was just being silent for many months until it was found insolvent in early 2014 and everyone, including me, lost some Bitcoins to it.
Recently in the subreddit of Bitfinex it seems like hell is breaking loose:
Now these could also just be FUD'ers wanting to drive traffic onto other exchanges, or just not want people to use them as a mean of buying coins so they can get them cheaper. Or it could just be customers who need assistance. Either way, with Poloniex being slow to assist their customers during the summer, Bittrex lately also getting addressed a lot about certain issues, now even Bitfinex seems to be having problems. Goes to say that customers are getting tired of using centralized exchanges and rightfully so.
The time has come for decentralized exchanges to shine. A decentralized exchange is where the exchange does not rely on any third party services to hold and secure customers funds but uses peer to peer networks to allow users to trade between other users. A decentralized exchange that is popular right now is Bitshares Open Ledger, even though it often lacks a lot of volume and the spread on some coins is ridiculous. Another is the Market we have here on Steem where we can exchange Steem for SBD and soon hopefully more SMT's!
With decentralized exchanges we won't have to worry about other people making sure our coins are safe - the trust lays in the code much like blockchain itself. With more users using them they will only get better in the long run. Although Open-ledger has fees since the currency is built in a way that rewards the stakeholders with transaction fees - here on Steem we have no fees at all. Imagine being able to trade your favorite SMT's for no fees whatsoever, the bots trading short-term will have a field day and volumes will be insane! Similar to the big Chinese exchanges some time ago that had no fees in the beginning to attract customers.
Make sure to not keep too much value on exchanges, we can never know when something happens to them. Hardware wallets or the Steem wallet is so much safer from theft or hacks than having your coins in the hands of other people's services.
Stay safe out there Steemians!
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You are absolutley right.
Decentralized exchange are a really vital developement for crypto-world.
First, decentralized exchange are really necessary to ensure the absence of a third-trust-part (as requested by crypto's original concept, particullary in Satoshi Nakamoto's original paper).
Second, decentralized exchanges are the only thing that can survive to government ban (you can't find a central failure point to hit). Particullary in case government regolarizes exchange and force them to adopt fiscal-individuation measures (know-your-customer, or KYC).
Third, if there isn't a central cold wallet storage crypto fluxes are very difficultier to control, increasing system's privacy level.
At the moment, decentralized exchange are difficult to use and unrelevant in terms of volume. Also, they have problems for liquidity management. But I believe that as governments turn theyr eyes on Crypto exchanges, developement will go faster.
I agree. The governments of the world are gearing up their attacks on cryptocurrencies and the exchanges are an easy way to target them. DEX could well explode out of government action. We know the bankers are threatened by these tokens which means they are sending the government hacks out to do the dirty work.
Regulation means putting it in the hands of the bankers.
Agree. Bitcoin tried to decentralyze payment system, and the moment has come to decentralize crypto market with DEX for exactly the same reasons: exchanges are untrustable just like banks. We have had mt.gox scam, Bitfinex-tether questions (only hypothesis at the moment.. But anyway very important for market stability), bittrex confirmation issues, kraken slowdown.. A lot of elements that underline the needy of a second decentralization wave, directed to replace "traditional" exchanges.
Anyway, personally I don't think that bank are feeling so threatened by cryptos. For a lot of reasons:
If governments were so scaried by crypto, they could act exactly as China and kill the crypto economy banning all exchange-market in any moment. But they aren't doing. I am Italian and I was expecting European Central bank to strongly and fast react to all this, but at a public level nothing of this has still happened. For the moment, crypto sector is young and they are probably sill evaluating situation.
But, we need to continue one step at a time. Let's see what happens with futures..
All valid points.
However, I feel bankers do not fear if they feel they can gain control of it, hence much of the government speculation of crackdown.
You are right, we will see what happens. There is a lot going on with this market and the next 6-12 months will see great changes.
Yes. 12 months ago market cap of all crypto was under 15$ billion and fork-mania didn't exist. Things are changing really fast in this market, we can only observe and continue to study, study and study again
Flexibility and agility are key.
We dont know what will happen, just things will be different.
This is huge
I study economy at university and I have held a workshop about fiscal aspects of bitcoin, and preparing the exposition i have clearly understand this: Exchanges are the perfect gateway for governments. They are the only thing that can really centralize all cryptos and crypto users.
I am using Bisq decentralized crypto exchange for the past 2 month and I like it. I also got me a Ledger Nano S hardware wallet 3 moth ago which I like very much I just leave a bit of my BTC on Bittrex and Kraken to trade in other coins. So excited for SMT's on steem :-)
I use the Nano also...it is a good one.
Yes the SMTs will really launch steem into the atmosphere.
We saw what the ERC20s did for ETH...we will see a similar take off, in my view, here from SMTs.
Yup good example the ERC20 hope SMT will even work better out for steem :)
I believe it will since it provides a lot more than ERC20 does.
Liquidity since all SMT created tokens are paired with steem
Security of tokens on the steem blockchain just like STEEM
Curation/reward system built in natively.
Smartcontract for ICO already in the blockchain.
None of that exists with ICO.
I totally agree the steem future looks bright :)
I really wish decentralized exchanges would take off a little more... there seems to be some good options "on the surface," but they also seem to lack the liquidity and range of the likes of Poloniex, Bittrex, etc.
I am not sure WHAT can be done to make the decentralized option more "visible," and I also have to wonder if there-- ultimately-- is a trust issue there. Much as we are all busy trading decentralized currencies, when it comes to trading, do wee require (psychologically) a "someone" to be in charge? I don't know so really just throwing another question out there.
I'm sure they will get more popular being used on a platform with a big community already using them, especially without having any fees. ;)
Government will help....their need to control will start with the centralized exchanges, hence driving people to de-centralize.
One of the first things I did after signing up for Steemit was to get an openledger wallet and check out the exchange... and it was a bit disappointing. On the other hand, I didn't have a whole lot to compare to, being a relative neophyte... my previous entire exposure to cryptos was having a BTC wallet through blockchain.info.
Maybe if Steemit grows to having 100K+ active members, the exchanges listing Steem would get moving a little faster.
haha, read a little farther and I get a clue. I'm still at the blockchain.info phase.
Seems like the in house Steem exchange for SBD and Steem might be a place that some people already know and trust, is there any reason it couldn't expand to other coins?
I think the problem might be that those who seek decentralized exchanges are also the most sceptical ones, and it's always scary to start using a new low volume service. I guess there is also the problem that you have to trust that the exchange is indeed decentralized.
Give it time @denmarkguy.
We are still early in this game. 2018 will be a year of a great deal of change in the entire cryptocurrency sector. Wall Street will be entering, government will crack down, bankers will get more fearful, and blockchains more powerful.
All aspects of this market will get stronger over the next 12 months.
You have a valid point on the trust issue. Seems like maybe something can be done on the software end to help?
One thing on the visibility, I'm in the process of scouring these comments looking for any mentions of exchanges to check. Not seeing much, people seem to be talking with assumed information. Naming names could be helpful in increasing visibility.
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I think we should work on user retention levels first. As new accounts are being made everyday but most of the new users leave the platform within a month. This is really alarming.
If we are able to retain new users then they will tell 10's of their friends about the platform and the community will automatically grow. And everybody knows that word of mouth is the most powerful. But if new users are leaving the platform, there is a huge possibility that they may spread negativity about the platform.
Why new user leave after a few days is a completely different question. There are a huge lot of different reasons for that, but the biggest is that posts by minnows are not getting any audience, even if they write some good posts.
I wrote a complete post about this topic, and if anyone is interested, they may go to my profile and read my most recent post. I didn't include the link here as then people would think that i am spamming. Thank you for
Please don't SPAM... take a look in this before hurting your reputation.
Hey @acidyo your fears about centralized exchanges actually resonate with me. I have been on a warning spree telling people to stay away from bittrex and poloniew and their likes as much as possible. With new platforms like Changelly, and Bitshares in particular.
Exactly.
Mt. GOX of 2014 should be a lesson to us all....
Thanks for sharing!
Thank you for your warnings @nairadaddy.
I am a holder of BTS for the exact reason you mention. I think there is going to be a time when the centralized exchanges are simply to dangerous to do business with. Either government closure/seizure, theft, or fraud....none bode well for those who put money in there and keep their tokens there.
I feel that we are in a patch where everybody with a passing knowledge is going through a baptism of fire. I’m one of these people.
I did get pointed towards eToro as a starting point, and then it transpires that you can’t even push stuff to a wallet there! So much fumbling in the dark. At least on here crypto is a favourite topic (unsurprisingly) so you can get a bit of a passing knowledge. If you follow the right people.
yes it's true we should be more careful with all the centralized exchanges
You got a 0.05% upvote from @postpromoter courtesy of @jout!
The issue is, that even though most people assume they are aware of the risks, they too often assume they are the ones being able to recognize all the dangers.
"I'm not in danger, I'm using only this one service which I used for four months already and had zero issues, so I'm sure it is perfectly safe..."
Some then assume they are so poor crypto-wise they do not need to worry yet, but I could imagine a scenario in which a currency suddenly increases in price, going to the moon.. and then a random trading site goes rogue and steals everything from accounts of the users.
It's always too late to react when the worst has happened.
i would trust better decentralized exchange!
I absolutely agree with you. We need more decentralized exchanges to ensure more trust is present in the course of making transactions
0x, EtherDelta, Kyber Network, BitShares, Openledger, so many projects are competing in this field. Many new decentralised exchanges are emerging but I think it’s not easy to achieve mass adoption because it’s much harder for people to use(though much safer), and many people even still have problems in buying Bitcoin from centralised exchanges.