Decentralized Exchanges: The Future for Trading Cryptos
Most likely your very first experience purchasing bitcoin involved using a centralized exchange.
If you can recall, I went into depth about a few of these exchanges in a recent video.
Despite their ease of use and high volumes, exchanges like Coinbase, Kraken, and Poloniex are indeed centralized. Considering that perhaps the most valued phrase regarding cryptocurrencies and their networks is “decentralization” it’s pretty ironic that the most popular exchanges don’t quite fit that philosophy.
Centralized exchanges are great for making quick trades.
They are also a great place for hackers to target.
In addition to providing a place to trade cryptos, centralized exchanges also provide a place for their users to store their cryptocurrencies. Even though it’s been said time and again that using exchanges to store any cryptocurrency that you are fond of is not a good idea, still lots of people do it. This results in the popular exchanges becoming a honey pot for hackers to target. This has resulted in many people losing lots of money.
Not because of the currency itself, but because the exchange had weak points that were taken advantage of.
Go ahead and google Mt. Gox and also more recently the Bitfinex hack.
Centralized exchanges are also subjected to governmental regulations and also the decisions made by those who run it. We are seeing this play out in China right now as the centralized exchanges there are now shutting down due to government regulations.
Enter decentralized exchanges.
These are the exchanges that do not require a third party to store your funds, instead, you are always directly in control of your coins and you conduct transactions directly with whoever wants to buy or sell your coins.
Decentralized exchanges also do not require you to give out your personal information. You can create an account and right away be able to start trading.
However, one drawback for decentralized exchanges is the lack of liquidity compared to the more popular centralized exchanges. I think this will change over time as these centralized exchanges are forced into more strict regulations and as they pass these restraints on to their users, soon more people will seek out better options.
Another great benefit of decentralized exchanges is their distributed nature, meaning their servers are spread out so that there is no risk of server downtime.
Here are some of the more popular decentralized exchanges
Bitshares Asset Exchange:
Bitshares has a way of always slipping under the radar, but this platform has the best daily volume that has been around $6 million as of late. This asset exchange is a place to trade with both asset-pegged and fiat-pegged tokens.
Openledger:
Openledger is also on the Bitshares blockchain and this is where you can trade a decent number of different cryptos. The daily volume on Openledger is around $3million.](https://coinmarketcap.com/exchanges/openledger/)
Etherdelta:
Etherdelta has a relatively healthy daily volume that bounces around the $4 million mark. This exchange is based on the ethereum blockchain and is where you can find many of the ERC20 tokens that have not yet been added to more popular exchanges. It certainly lives up to the hype of not being user friendly. In fact I made a video that specifically goes over how to use this one for those who could use some guidance I suggest checking that one out.
Counterparty:
Counterparty is a decentralized exchange that uses the Bitcoin blockchain and the Counterparty protocol acts as a decentralized escrow service. The volume on Counterparty leaves something to be desired I’m sure by it’s users with its daily volume hitting around $2,000.
Additional Reading/ Sources:
CryptoCompare Defines Decentralized Exchanges
Wikipedia on Mt. Gox
Bitfinex Troubles
China's Regulations Affecting Chinese BTC Exchanges
Bitshares Wallet
Bitshares "The Dex" Daily Volume on CoinMarketCap
OpenLedger Create Account
OpenLedger Daily Volume on CoinMarketCap
EtherDelta Dex
EtherDelta Daily Volume on CoinMarketCap
CounterParty Website
CounterParty Daily Volume on CoinMarketCap
All of the exchanges need to hire UX designers and help make the entire process easier for everybody, centralized or not.
There is a barrier to entry with trying to figure out what is what and how to work what. It seems the entire concept of User Experience was mostly ignored in favor of engineering on 90% of theses sites.
I'm available should any of you guys read this... IT IS A DIRE NEED!
I hope the decentralized exchanges continue to grow and surpass the centralized ones. Safer, more secure, and hopefully easier to work UX improvements into...
Head over to bitsharestalk.org and get hired by the Bitshares blockchain reserve fund. They are paying out over $180k USD for UI and other upgrades over the next six months. If you have UX talent they would be very happy to pay you very well to contribute, currently they are working on a bounty program at about $125/hr. If you get support from the community for your work/talent you can propose your own worker that can get voted in and pay you damn good money to work on the Bitshares DEX UI. People don't realize Bitshares makes money off each transaction, and instead of paying wasteful/corrupt/centralized mining cartels like BTC/ETH, puts the fees into a reserve fund, which is currently worth just under $100 million USD. No joke! Bitshares is the first decentralized autonomous company in the world and has been running for three years.
very great😍😍
Okay, I'm sold.
I've been doing research on Bitshares over the past few weeks. Undecided on whether to risk some money on it or just let it pass as with dozens others. Your comment here is the decider. It's obvious you know much more than I do.
I have Counterparty but as Heidi had noted, the daily volume is VERY low. It might change in the near future though (the speculator's perennial hope). I'm going to hedge with the "DEX" theme by also buying Bitshares.
EXACTLY @sasha.shade!
sweet thank you for sharing
Excellent sources. I only knew OpenLedger and Bitshares. Cheers!
Follow me @Yehey
Thank you
thankyou brother... i have upvoted you every where... in comments and started following you .... do vote on my every post @heisali
you are right, really good! this can be the future.
very,good
Great work Heidi!
I will be sure to embed this video and link to your post in next weeks Bitshares State of the Network report; there is some great education in the video and sadly people generally only learn the hard way.
P.S - You should consider using your referral for your Bitshares/Openledger links; this way if people take your advise and sign up you will get a share of their transaction fees and visibility on your penetration.
Keep up the great work!
Great work by Heidi and good idea steempower. tweeted
Disclaimer: I am just a bot trying to be helpful.
good
Good times kicking it with you, Juan, and crew last year at Steemfest in Amsterdam Heidi!
Will you be in Lisbon so we can all get together for a repeat, one year reunion waffle mission? 😊
Of course I'll be there! So looking forward to it :)
Awesome! 😀
good
If someone wants to try out one of the first decentralised exchanges for ethereum based tokens, go to www.oasisdex.com.
Great explanation, we need more decentralized exchanges
Yes we do! We also need a way to buy safely besides meeting up... I know chargebacks are an issue, but i rather buy with a card... wish there was a way to meet all criteria.
I do have an OpenLedger account... I just hope they can pick up more volume, as trading outside a small group of active coins is so negligible as to render the exchange useless. But it's early days yet... in a few years, things may be different.
Thanks for another informative post!
excellent post.mind blowing content you made. I'v followed and upvote you. at least 1 upvote me https://steemit.com/topnews/@currentnews/mexico-earthquake-survivor-floors-dropped-like-dominoes
BTS is about to explode. Mark my words.....
I can definitely see that it could... though I hope it stays low for a month or two more so I can get more invested. The volume of trading jumped high during the China ICO news. Now it has quieted down a bit. I'd love to see the volume of trading on BitShares and OpenLedger increase. So I'm glad that Heidi is making posts like these promoted Distributed Exchanges. She's doing a great service to all of us who like BitShares and are invested in it.
Good one there. I have personally used openledger and I think it is a great exchange. It may not be easy at first but if you look very well you will understand it. The interface is great and certainly easier than etherdelta
I believe there is going to be increased demand for decentralized exchanges after September 30 when China bans chinese exchanges.
I also believe that bitshare exchange will be a beneficiary of huge portion of this inflo into decentralized exchanges followed by openledger and then etherdalta for Erc20 tokens.
This may impact on the price of bitshare positively. Ethereum is already on the run.
I also really like OpenLedger. I've been using for the last two weeks and I'm hooked!