Cryptocurrency exchanges are platforms that allow for the trading of cryptocurrencies. Unfortunately, many of them violate the very nature of cryptos –privacy and decentralization.
As a result, trader data on the platform aren’t as private or as secure as they ought to be. The good news is that some exchanges are deviating from the centralized norm by offering decentralized exchanges (DEX) that are trustless and offer excellent privacy.
If this is what you’re looking for, this 2018 guide to decentralized exchanges will provide you with all the information you need.
- 1 Why Should You Use Decentralized Exchanges?
- 1.1 Pros And Cons Of Decentralized Exchanges (DEX)
- 1.2 Top 5 Decentralized Exchanges For 2018
- 2 Top 5 Decentralized Exchanges Conclusion
Why Should You Use Decentralized Exchanges?
As great as centralized exchanges can be, their drawbacks are quite alarming. For instance, centralized exchanges are often the target of hack attacks.
This is owing to the central data storage facilities that they use, as well as the ease of access. There’s no doubt that these exchanges make things easier for its users.
But that same ease of access has been responsible for the loss of millions of dollars in cryptos. Hackers were able to identify passwords, log into people’s exchange accounts and withdraw all their funds from their wallets. A decentralized exchange protects you from all these.
The second biggest issue is that centralized exchanges are often subject to government regulations, policies and actions. This alone, violates the decentralized and anonymous nature of cryptocurrencies.
People keep their cryptos stored away because they don’t want government interference of censorship. But, when the exchanges they trade on, are willing to comply with government regulations, this can be a bit of an issue.
But, with decentralized exchanges, this is a non-issue. Government policies and regulations can’t touch these exchanges because their assets can’t be easily accessed.
These exchanges work using p2p technology that eliminates the need for central servers or third party escrow services.
Transactions are carried out directly between individuals and automatically verified and approved by the algorithm, thus putting power back in the hands of the people, and providing them with 100 percent control over their monies.
Naturally, these measures often come with the significant perk of anonymity, thus eliminating the need for their personal data and ensuring that the user’s identity is protected and secure.
This makes it very difficult for the government to intervene owing to the encrypted nature of the exchanges and anonymous transactions.
Pros And Cons Of Decentralized Exchanges (DEX)
Apart from the aforementioned reasons, what are the pros and cons of decentralized exchanges? Let’s quickly explore them.
Low Cost And Speedier Transactions
Centralized exchanges often mean the use of third party services. These typically charge some fees for the use of their facilities. The third party present also implies a slower transaction speed. With the third party eliminated, transactions are faster and cost far less than they normally would.
While most centralized exchanges have adopted high security measures, they are still vulnerable to hack attacks. DEXs on the other hand, aren’t vulnerable at all. There’s no central server or a database of personal information that can be exploited. This makes it ridiculously difficult for any decentralized exchange to the focus of a hack attack. And even if anyone’s account is compromised –often owing to the user’s carelessness- only that user would be affected, and not the entire network.
Direct Transfers To And From Hardware Wallets
Transferring your tokens from your exchange wallets to hardware wallets can be risky, particularly if hackers have installed keyloggers on your computer. To move them, you would have to enter passwords, and private keys. DEXs provide a means through which direct transfers to and from your hardware wallets are seamless, and require no data input. So, moving your cryptos are simple, easy and fast.
Not Very User Friendly
This is the single biggest issue that decentralized exchanges have. It’s often barebones with only the most basic of functions available for use. You’ll have to forgo features like stop loss, margin trading, sell and buy walls among many other features. These can be a bit of an issue with crypto traders who are already used to depending on these features.
Top 5 Decentralized Exchanges For 2018
This guide would be incomplete without a list of the top decentralized exchanges in 2018. The following are some of the best decentralized exchanges that we have found to be great.
This platform is primarily dedicated to trading ethereum and its ERC20 tokens. Its unique selling point is its speed and decentralized feature. This is impressive, considering that many DEXs either have one or the other.
IDEX essentially offers what is considered the best of both cryptocurrency worlds. It currently has one of the world’s top transaction volumes on DEXs. The only downside is that the transfer of ethers to and from wallets can be slow.
Apart from that, trading on the platform is relatively easy, thanks to a user friendly interface. Oh, make sure to keep your backup phrase secure and safe, otherwise. You’ll need those to access the account at all times.
Another ethereum based trading platform, this is also popular for its ERC20 token enabled exchange. Transactions on EtherDelta are facilitated by smart contracts –same with IDEX.
In fact, it appears that this is a clone of IDEX seeing as they share a striking similarity in function, user interface and processes.
While it’s not as popular as IDEX, the transaction volume here is pretty significant. More importantly, funds/token transfer to and from wallets are comparatively faster on this platform.
Unlike the first two who interfaces are web based, this is a software that traders install on their PCs to trade on the exchange.
This exchange’s biggest edge is that it also incorporates and allows the use of over 120 fiat currencies, which makes it great for directly buying your cryptos of choice. Speaking of cryptos, the platform also offers the trade of altcoins, which makes it a more holistic DEX.
Users can start trading within minutes by simply downloading the software, installing it and setting it up for trades. Its p2p algorithm makes for increased anonymity and security.
While it’s not as popular as the first two, it’s doing well enough and may soon become even more popular than those if traders start abandoning centralized exchanges for decentralized exchanges.
Most DEXs tend to have liquidity problems. Not Bancor. This decentralized exchange has excess liquidity, prices tokens fairly, offers price and platform stability.
It’s very user friendly too, making it easy for newbies to trade cryptos of their choice. Its inclusion of a wide range of altcoins makes it a great decentralized exchange.
Another decentralized exchange, this is a reliable and reputable ethereum based platform that facilitates the trade of cryptocurrencies. Its p2p algorithm ensures that all traders stay anonymous, while transactions are faster, cheaper and more effective.
Users don’t need to sign up with Kyber. All they need is to login to through their wallets to trade. It also has great liquidity, making it a safe place for near instant trades.
Top 5 Decentralized Exchanges Conclusion
As you can see, decentralized exchanges are fast becoming easier to use. Combined with their other pros, it is very easy to see that they will be the future of crypto trading. So, don’t waste any time joining anyone that suits your needs.