This content originally appeared on DEV Community and was authored by anyatito
Decentralized exchanges are a new version of digital currency exchanges that have been created to solve the problems of centralized exchanges. However, these exchanges also have their own problems. Since it has not been long since these new exchanges started operating, you may be faced with many questions such as what is a decentralized exchange and what is the difference between them and a centralized exchange. For this reason, in this article, we intend to introduce this type of digital currency exchanges.
What is a decentralized exchange? Send and receive digital currency directly
Exchange offices are places to buy and sell currency online. Conventional exchanges operate centrally to provide good service to their users and speed up the transaction process. That is, they have a powerful central server where user information is stored. Some traders and activists in the world of digital currency consider the centralization of exchange offices as a weakness. That is why a decentralized exchange has been created.
Decentralized exchange (DEX) is a peer-to-peer online service (P2P) that allows direct transactions between two users. These types of exchanges are built on the blockchain network and allow traders to freely store or trade their digital currencies. Ethereum is the most widely used blockchain for decentralized exchange, however many exchanges have been set up on other blockchains such as graphene.
What is the difference between a centralized exchange and a decentralized exchange?
In most centralized and reputable exchanges, users must authenticate and store their digital assets in wallets designated by the exchanges. The purpose of centralized exchanges is to facilitate transactions between users, prevent fraud and abuse. For this reason, they have complete control over the transactions. For example, you can easily view the price of digital currencies in a centralized and reputable exchange and trade in the shortest time. Such a feature is possible only with full control of transactions.
To answer the question of what is a decentralized exchange office, it must be said that such exchange offices act exactly against centralized exchange offices. The management of these exchanges is fully automated or semi-automated and is an independent platform. The administrators of these exchanges can change the decentralized exchange only in important decisions that are made in the presence of all members of the platform. The most important difference between a centralized and a decentralized exchange is that a decentralized exchange does not store users' assets or information on a central server, and users can trade with each other anonymously.
Decentralized exchange benefits; Distributed architecture and more security
In fact, the main advantage of a decentralized exchange is the distributed and decentralized architecture that prevents a person or organization from controlling transactions. In addition, the following benefits can be mentioned.
High security and resistance to hacking: Users' assets are not stored in DEX exchanges. On the other hand, hacking a distributed system is very difficult. Therefore, the security of assets and information in DEX will be more.
Preventing manipulation in transactions: In the past, some exchange offices have manipulated transactions to cause prices to rise or fall. In a decentralized exchange, the possibility of such a thing is minimized.
Unlimited: One of the problems that we Iranians especially face is the issue of sanctions and domestic laws. International exchange offices do not provide services to Iranians and even freeze their assets. Decentralized exchanges have also solved this problem. Because no one has the right to restrict anyone from using the facilities of these exchanges.
What are the disadvantages of decentralized exchange? Problems that make using DEX difficult
Decentralized exchange has many unsolved problems. These problems have led traders to restrict the use of these platforms in most cases. In fact, distributed exchanges are not widely used, and currently only people with specific purposes use DEXs.
Unrecoverable access: Unlike centralized exchanges, they have no way to recover forgotten passwords or wrong transactions.
Limited features and tools: DEXs do not have the popular tools of traders and the many features of online exchanges.
Liquidity problem: Even the best decentralized exchanges have a very small share of the trading market
Low Speed: Checking and verifying transactions in a decentralized exchange is time consuming. Because this has to be done by the miners. The low volume of transactions has also led to a small number of miners. For this reason, buying bitcoin from a reputable exchange will be much easier and faster than a decentralized exchange.
Introducing the best decentralized exchanges based on the highest daily transaction rate
A large number of decentralized exchanges have started operating in recent years, but only a handful of them have been able to achieve an acceptable daily trading volume. Here we get acquainted with the most important and best decentralized exchanges in the world (according to cointelegraph statistics).
Binance DEX decentralized exchange; The best decentralized exchange in the world
Binance is the largest digital currency exchange in the world and its decentralized version is also known as the largest and most important decentralized digital currency exchange in the world. Binance DEX uses the core technology of Binance China to conduct its trading, so its trading capacity is almost binance. Thus, the problem of speed and power that existed in many other decentralized exchanges does not exist in Binance DEX. In addition, Binance DEX also supports hardware and software wallets, and the fees are very low. Thus, this exchange is the best decentralized exchange in the world. Unfortunately, it is not possible for Iranians to use this exchange.
IDEX decentralized exchange; The best decentralized exchange for Ethereum
IDEX Exchange ranks second in terms of daily trading volume after binance. This decentralized exchange has very good facilities and is very similar to centralized exchanges in terms of user environment. IDEX is the first Ethereum-based decentralized smart contract exchange to offer full trading facilities fast and high volume to its users.
EscoDex Exchange
EscoDex decentralized exchange with the support of 100 different currency codes, the ability to confirm transactions, high speed and ease of working with the Scodex platform environment, the ability to convert any asset to another asset and high security have been able to attract many positive comments. Unlike the previous two exchanges, Skodex does not offer many additional features to its users and is just a simple and fast environment for trading.
Decentralized switcheo exchange
Switcheo Exchange is the first decentralized NEO blockchain exchange to offer EOS, Ethereum and Neo tokens in addition to NEO. This exchange is in the fourth rank of the highest daily trading volume after Escodex. The goal of the switcheo network project is to provide more facilities for a world-class trading experience. This exchange provides safe and free trading for its users.
Decentralized exchange still has a long way to go
In this article, we tried to answer the question "What is a decentralized exchange?" Nearly three years after the launch of powerful decentralized exchanges such as Binance DEX, offering more features and increasing network speed, decentralized exchanges still have a small share of the global market. These exchanges will have a long way to go to attract the attention of professional traders.
This content originally appeared on DEV Community and was authored by anyatito
anyatito | Sciencx (2021-10-04T06:14:05+00:00) What is a decentralized exchange? Introducing the best decentralized exchanges. Retrieved from https://www.scien.cx/2021/10/04/what-is-a-decentralized-exchange-introducing-the-best-decentralized-exchanges/
Please log in to upload a file.
There are no updates yet.
Click the Upload button above to add an update.