The movement behind blockchain technology and cryptocurrencies is in many ways a rejection of central authorities. In a world where people are less trusting of banks and financial institutions, many are attracted to the idea of platforms that allow people to trade with one another in a peer-to-peer environment.
This general public distrust towards centralized institutions can be seen in findings from the PEW Research Center, which explored public trust in the U.S. government among Americans. Similarly, findings in Canada show that Canadians have a decreasing level of public trust as well.
While cryptocurrencies such as Bitcoin and Ethereum are praised for being decentralized, some find issue with the way in which they are commonly purchased. While the currencies themselves may be decentralized, often they are traded on cryptocurrency exchanges which are controlled by companies and therefore not decentralized.
Enter the decentralized exchange (DEX)
One emerging solution to make cryptocurrency trading more decentralized is a framework known as a decentralized exchange (DEX). The term refers to a variety of trading platforms for digital assets that are not run by central parties.
Instead, these platforms are often entirely based on programs that can facilitate buy and sell orders. On a DEX, users have the option to purchase and sell their digital assets without having to rely on a central authority (such as a traditional cryptocurrency exchange) in order to carry out the transaction.
What is the appeal of decentralized exchanges?
Cryptocurrencies are, by their nature, a solution that allows people to conduct financial transactions in an increasingly trustless world. This same mantra is echoed in the appeal of decentralized exchanges.
By leveraging a decentralized exchange, users do not have to worry about placing their trust in a third party. Instead, they can simply use the exchange to conduct transactions in a transparent manner where trust does not need to be a factor.
Furthermore, users of decentralized exchanges often feel safer as they are at less risk of having their funds stolen in a breach. Similarly, they can rest easy knowing there is a lowered chance of being scammed by an exchange operator.
How companies are evolving to combat DEX issues
There are several issues in the landscape today that continue to make centralized exchanges more prevalent than their DEX counterparts.
One of these major issues has to do with the user experience. While there is a certain level of trust required for a user to conduct trades on a central exchange, they are trading this trust for the associated benefits of these platforms. Centralized exchanges are able to provide assistance for users and are often much less complicated to use.
This contrasts decentralized exchanges, where users are on their own if they make a mistake or lose access to their funds. Coupled with the fact that DEXs are often difficult to use, many feel that decentralized exchanges are not yet fully ready to meet the needs of the majority of cryptocurrency traders.
To combat these issues, leading innovators and DEX projects are continually working to make these platforms less complicated and easier for the average user to navigate. Just as cryptocurrency trading in general has become more user-friendly over time, it is likely that DEXs will do the same.
DEXs are also evolving as consumer knowledge evolves alongside them. As the public continues to further its understanding around blockchain technology and cryptocurrencies, users are being granted the assurance they need to rely on themselves in a technological movement driven by decentralization.
Decentralized exchanges continue to grow in the world today
There are several examples of decentralized exchanges and decentralized protocols operating in the world today.
One example is DEx.top, a cryptocurrency exchange which reportedly launched with 10,000 users. Like its peers, this launch serves as further proof of the demand for decentralized platforms that allow users to be in control of their own funds.
Similarly, a protocol known as Loopring is another notable entry in the DEX genre. While not operating as an exchange of its own, Loopring does supply a protocol which is allowing projects across the world to offer their digital assets on decentralized platforms.
Another prevalent DEX in the space today is Bisq. Formerly known as Bitsquare, this grassroots team’s decentralized exchange is praised for being run directly on the computers of users. It is considered another leading example of the progress that decentralized exchanges are making.
Moving forward, it is likely that new DEX platforms will emerge and that the market’s current offerings will continue to improve thanks to the work of innovators.
Cryptanite stands at the forefront of decentralization
As a blockchain technology company at the forefront of the decentralization movement, Cryptanite continues to lead users forward to a world of safe and seamless financial exchange.
Among its product offerings, Cryptanite boasts a mega-app ecosystem that features services which allow users to easily buy and trade cryptocurrencies.
One of Cryptanite’s services, in particular the Cryptanite Wallet, is a quintessential example of how decentralized blockchain platforms are making trading easier and safer for users. The wallet allows for quick one-click transactions using decentralized wallet technology.