The Bitcoin bubble popped in January of 2018. Since then the hype around Bitcoin has evaporated like spilled water in a desert. Mainstream news outlets have stopped carrying daily news about Bitcoin, cryptocurrencies, and blockchain.
That is a good thing.
When it's most difficult in any industry, is when innovation rears its head and brings all the older players forcefully into a new paradigm to create a bigger boom cycle. This is exactly what has been happening in the cryptocurrency and distributed ledger technology world.
New blockchains are rising out of the smoking ruins of a hopelessly positive bubble that reached its apex nearly 15 months ago. Tron's MainNet was launched amid the doom and gloom of mid-2018 cryptocurrency. It's now the most popular blockchain platform for gambling dapps and has easily taken over Ethereum's previous leadership position in that segment.
In light of new regulations coming out of various countries, exchanges have had to adapt. Many of the most popular exchanges are not less private and less anonymous than they were a year ago. Pakistan is the latest major country to adopt a regulatory framework for digital currencies and will not be the last. The G20 nations will, as early as June, meet to table a joint regulatory framework for cryptocurrencies. This has been viewed with suspicion by many companies in the crypto world. There is a segment of investors who are not happy at this turn of events either.
There is also a key problem of hacking and key loss to consider. The news has been full of the South Korea Bithumb hack. The company lost an estimated $13 million worth of crypto. They assured investors and clients that it was only the hot wallet that was compromised but it doesn't make for good reading. Then there was the tragic death of QuadrigaCX CEO recently. He was the only person who had the key to the company wallet accounts. All of that centralized, all that money now locked in a wallet that will never be opened.
Enter DEX, the New Way to Trade Online
If older cryptocurrency exchanges, centralized ones, were heralded as a new way to transact and trade online, then DEXes… is the new way. Decentralized exchanges have been around for a while, but they have never taken off. Now, with impending regulatory pressure on centralized exchanges mounting, the market is finding them more appealing. There has been a definite increase in the number of projects and innovations around decentralized exchanges.
One of the largest, to date, is Binance's plan to launch its own DEX in Singapore. DEXes have found it almost impossible to turn crypto into fiat currency. Binance's new Singapore based DEX will allow trading of Binance Coin to Singaporean Dollars, among other cryptocurrencies. It is part of a push towards keeping decentralization while remaining trustworthy. Binance CEO Zhao is enthusiastic about the release of the Binance MainNet on a DEX. Others are skeptical.
Problems Rife, Can They be Solved?
The problems with DEXes up until now were simple. They couldn't exchange crypto for fiat. This much Zhao has solved with his Singapore based DEX. They are generally very difficult to use, have basic features and low liquidity. It remains to be seen how many of these problems Binance can address with the launch of their new DEX. However, there are others in the community that has been working on these problems independently.
Industry insiders say that the next generation of DEXes will still face a problem of liquidity and interoperability. The work most innovators will focus on will be those two. Once these are figured out, scalability issues will start to wear down on DEXes.
Polkadot and Cosmos both think they have the interoperability problem done and dusted. Many are watching these blockchain protocols very closely as they could prove to be the future of secure, private cryptocurrency exchanges.
What is Out There?
So apart from April's launch of Binance's DEX, what else is there? Well for starters, there is Ethereum 2.0 which aims to address a number of these issues. There is also ContractLand which is another company that aims to give people the benefits of future DEXes today. ContractLand bases its approach on the novel use of two different technologies. Terra-Chain and Terra-Bridge. The company is confident that it can push through a world-class service, but it is yet to make its way to the public.
DEXes may be the future, but they face multiple problems. How those problems are handled will determine the future of cryptocurrency for a good long while.