Issues With Bittrex and What I've Learned About Exchanges

After a rather discouraging week in crypto due to problems with Bittrex, I've decided to finally make my first post on here to express my thoughts, as well as what we can learn from the situation and possible alternatives to centralized exchanges like Bittrex.

Bittrex-Richie, who claims to be "the one you yell at whenever your deposit or withdrawals aren't working" seems to be deflecting shots from everyone this week, and I'll be honest, with most of my investment money locked up in the exchange, I'm feeling a lot like Bill in this GIF.. defeated.
( GIF courtesy of @roelandp )

So here I am, playing a little "SteemFighter" of my own, hoping to express my concerns with Bittrex and open up a discussion about the other options available when it comes to exchanges.

As you may know, there has been a lot of uncertainty this week for the users of Bittrex, as thousands of accounts were disabled without warning and no comment was made from Bittrex until yesterday. The statement was brief, and attempted to ease the minds of those of us whose accounts were disabled, but nothing was mentioned about when they would be back up. For many, including myself, this might have been too little too late. In an article on Cointelegraph, David Dinkins said, "A simple email from Bittrex, either before or immediately after accounts were “temporarily suspended,” would have probably gone a long way toward reassuring users that they would eventually receive access to their funds." But Bittrex didn't send an email, and they didn't address the thousands of users who are also experiencing verification problems. This was another theme in the discussion this week as many people either lost their verification status or attempted to upgrade it in order to withdrawal from the exchange, only to find that there was an "error" with verification.

This is the error message displayed by Bittrex, but the error doesn't actually go away when you attempt to reload the page or log back in on another device.

I brought this issue up on twitter, and heard back from nearly 5% of those who viewed the tweet that they were experiencing this same issue. Thousands of support requests have been opened up, but not one of my followers had heard back from Bittrex explaining why their verification failed or why the site wasn't actually allowing them to try to re-submit. This issue, while talked about on social media nearly as much as the disabled accounts, was left out entirely from the statement posted by the exchange. I have even seen some users speculating that Bittrex is intentionally blocking verification in order to withhold funds. I hope, however, that this isn't true and that we just need to be patient. Many argue that Bittrex, while poorly handling their communication with users, is working to overcome growing pains as cryptocurrencies become more and more mainstream, and will eventually sort through their support tickets and fix the affected accounts. I have read about the same "growing pains" argument when it comes issues with Poloniex, though, and some of their users claim to still have unresolved support requests months later with funds still stuck in the exchange.

Issues like these led me to further research the different options that are out there when it comes to cryptocurrency exchanges, and I have found two other models that may be a better answer than centralized exchanges like Bittrex and Poloniex.

Unlike these exchanges, platforms like EtherDelta function as decentralized exchanges. On decentralized exchanges, users' private keys and coins are not stored on a central server, but are stored in a peer-to-peer network, like the blockchain. This minimizes the risk of a hacker compromising the servers of the exchange and stealing funds, like with what happened to Mt. Gox in 2014. While governments may dislike the idea of these platforms that make funds harder to trace and, in turn, harder to tax, I see great value in the security of the decentralized model. Isn't the idea of decentralization what brought most of us to crypto anyway?

Finally, a model that I see having much larger application than just for investors, would be the instant exchanges like Changelly and Shapeshift. With these you are able to shift between different coins in a matter of minutes without ever having to input your personal information or deposit on the exchange. This would be an easy way for people using cryptocurrencies in real-life scenarios to quickly switch between coins depending on where or for what they are using them. From the investor side, I also don't mind the idea of using these services to ensure that all of my coins are in separate wallets and, most of the time, locked away in a safe place instead of at the mercy of the owners of an exchange.

The Wild West of Cryptocurrency can be tough to navigate at times, but I hope that my first post here on Steemit will spur a discussion about what exchanges can be trusted, as well as the different models we have available. I would love to hear thoughts in the comments, and for anyone else whose funds are stuck in Bittrex, let's hope we'll be back to trading soon.

Cheers!