Hello, this is Bonifa (@bonifasan).
Do you know that there are two types of exchanges in the cryptocurrency, centralized exchanges and decentralized exchanges (DEX) ?
In recent years, distributed exchanges (DEX) attract much attention as next-generation exchanges in place of traditional centralized exchanges .
On this page, we explain the features of the distributed exchange (DEX) and the differences from the centralized exchanges in an easy-to-understand manner. Please see to the end by all means.
What is DEX (Distributed Exchange)?
DEX (Distributed Exchange) is an exchange that allows users to trade virtual currencies directly without going through central administrators.
On the other hand, the centralized exchanges such as Coincheck and bitFlyer which are currently in common use, the operator (exchange) mediates transactions between users.
In short, it is an image called “direct deal” DEX to the centralized exchanges of “brokerage transactions” .
Introducing the four merits of DEX (Distributed Exchange)!
From here, we will introduce the four merits of DEX (Distributed Exchange).
The biggest advantage of DEX (Distributed Exchange) is that it has high security.
On centralized exchanges such as Coincheck and bitFlyer, the user entrusts the management of the private key to the operator, so if malicious operators are concerned, it is also possible to steal our assets.
In addition, since the operator who manages the secret key of a large number of customers is a prey of hacking attacks, there is a possibility that our assets deposited with the operator are stolen by hackers.
However, because DEX (Distributed Exchange) manages the private key yourself, the risk of misconduct by the operator of such exchanges and hacking of exchanges is very low.
- Hacking incidents of exchanges such as Coincheck and Zaif that occurred so far occurred because the secret key was deposited with the central manager, which is very difficult for DEX (Distributed Exchange).
Identification is unnecessary
As a result of the revision of the law on funds settlement in the year of the year, management of the cryptocurrency exchange required national approval.
Therefore, in order to start trading on exchanges such as Coincheck and bitFlyer, you must first submit your identity confirmation documents and register for several days to several weeks .
However, DEX (Distributed Exchange) does not require identity verification, and users can start trading on the same day if there is a mail address, wallet address, etc.
- However, in the future it is not possible to deny the possibility that identity confirmation becomes essential also in DEX (distributed exchange).
Kyber Network already requires identity verification and IDEX also announced the introduction of previous Japanese confirmation.
I can not take a wasteful commission on the exchange
It is also one of the big advantages of DEX (Distributed Exchange) that it is not possible to take wasteful fees for exchanges.
- The fee is high in the centralized type
- At the centralized exchanges, it is costly for talented people and advanced security systems to protect exchanges from attacks by hackers. Therefore, the exchange operates with profit by taking a lot of commission from the user.
DEX (Distributed Exchange) has no central administrator and cryptocurrency management is done by each user himself, so the cost of maintaining the system is greatly reduced.
This makes it impossible for the centralized exchanges to take a lot of fees that they have to pay.
It is not necessary to pay an unnecessary fee and it is a great merit of DEX (Distributed Exchange) that it is possible to deal cheaply.
24 hours 365 days available for trading
In centralized exchanges, it is often the case that cryptocurrency and legal currency can not be exchanged due to circumstances of exchanges such as maintenance.
In addition, I think that there are many people who have experienced experiences of not being able to conduct transactions as well as deposits and payments due to server down of operation.
However, in DEX (Distributed Exchange), a large number of distributed nodes support the system, so some computers go down, and the exchange itself does not go down.
Also check disadvantages of DEX (Distributed Exchange)
DEX (Distributed Exchange) has many merits, but the following issues also exist.
Volume is low
The biggest disadvantage of DEX (Distributed Exchange) is that the volume is low.
Because it is a newly constructed mechanism, there are still few users and there is no liquidity of transaction.
Therefore, it is difficult for the price you want to sell and the price you want to buy to match, so it will take time to trade or not to be established.
- Although it is a problem that can be solved gradually due to the spread of DEX (Distributed Exchange), the current situation is that it will take time to stabilize transactions.
Transactions are processed on the block chain
On centralized exchanges, transactions are processed using data in the exchange, and transactions are not written in block chains one by one, so it is possible to instantaneously trade and buy.
Meanwhile, in DEX (Distributed Exchange), all transactions are processed on the block chain, so remittances may be delayed due to scalability problems and others.
In addition, transactions are handled on the block chain, so there is no fee to pay exchanges, but fees etc. are required to maintain the platform.
- Put simply…
- Because DEX records transactions on the block chain …
- It takes a network maintenance fee
- Transaction (remittance) will be delayed
There are not many centralized exchanges currently free of transaction fees, and from the people who buy and sell frequently, it can be said that a fee is a major disadvantage.
However, as transactions are processed on the block chain, it can be said that the merits are that the trading record remains in a form that can not be tampered with .
At present, it is said that utilization of off-chain technology such as lightning network is said in the problem of time required for trading, and future way of new DEX (distributed exchange) is being sought.
There is no support for operation
One of the disadvantages is that there is no operator in DEX (Distributed Exchange), so we can not receive support.
There is no support such as lost secret key or incorrect remittance destination, all become self-responsibility.
- If you are new to cryptocurrency beginners or who do not have knowledge of block chains, it may be difficult to use.
There is nothing to do with loss of secret key or misdelivery, even in the case of centralized exchanges, due to the mechanism of the block chain.
However, in order to increase the number of users of DEX (Distributed Exchange) in future, the maintenance of the support system is one of the important tasks.
Tradable pairs are limited
On DEX (Distributed Exchange) on Eliaryam it is almost impossible to only deal with “pair on the same chain” currency pair such as a pair of Ether to versus tokens .
This is because different block chains need to be connected to exchange virtual currencies on different block chains.
On the other hand, the centralized exchanges handle transactions with data within exchanges, so you can trade virtual currencies on different block chains.
- About WBTC
- Today, KyberNetwork Inc. plans WBTC to issue bridge coin and bridge bridge currencies.
Also check the difference between DEX (Distributed Exchange) and Centralized (Domestic Exchange / Overseas Exchange)!
|DEX (Distributed Exchange)||Centralized Exchange|
|Private key||Manage by yourself||Exchange controlled|
|Identification||None||Mandatory (overseas has unnecessary places available)|
|Transaction fee||Variable due to scalability problem||Uniformity|
|Key currency||Currency on DEX||Legal currency, BTC etc.|
It is thought that the instability of transaction fees and the low volume of transactions will be improved through the use of off-chain technology and the spread of DEX (Distributed Exchange).
What is the future of DEX (Distributed Exchange)?
Centralized exchanges, which are now mainstream, have hacked attacks on exchanges such as Mount Gox, Coincheck, and Zaif in Japan alone, and the cryptocurrency illegally leaked out in Japan.
It is impossible to overlook the fact that the cryptocurrency exchange, which must manage customer assets and maintain high security, is suffering from such damage.
DEX (Distributed Exchange) has overcome some of the weaknesses of traditional centralized exchanges , and now exchanges are opened and users are gradually growing.
- Benefits of DEX Conclusion
- High security (self-management of secret key)
- Identification is unnecessary
- There is no need to pay a fee to the exchange
- You can trade 24 hours a day, 365 days at any time
Although, even today, centralized exchanges are mainstream today, DEX (Distributed Exchange) has a number of challenges, including volume issues and support issues.
However, further attention is given to DEX (Distributed Exchange) in future , and if these challenges can be overcome, there is a high possibility that it will be mainstream of the cryptocurrency exchange in the future.
Introduction of five recommended election exchanges!
Here are five recommended DEX (Distributed Exchange).
In order to use DEX (Distributed Exchange) built on the block chain of Enterprise Collaboration , it is necessary to create a wallet named Metamask .
Metamask is, you can make it easier by installing an extension of GoogleChrome.
How to use MetaMask (Summary)! Easy addition of deposits / withdrawals / tokens
IDEX (IDEX) is a DEX (Distributed Exchange) built on the Ethernet block chain.
IDEX has also issued its own token AURA, etc. There are also stakeings according to dealings.
The number of currencies handled is also large, and it is very popular DEX (distributed exchange) now.
Click here for IDEX
Kyber Network (Kyber Network)
Kyber Network (Kyber Network) is a platform that functions as a DEX (Distributed Exchange) for exchanging cryptocurrency built on the Ethernet block chain.
Kyber Network (Kaiba Network) has a function called ” settlement API function “, which automatically converts money into Ethernet even if you pay in a currency other than Ethiariam.
As a result, users who do not have Ethernet will be able to participate in ICOs limited to Etherami, and participation in ICO becomes very convenient.
A thorough explanation of the features of Kyber Network / KNC! Exchange · chart information summary
Click here for Kyber Network
0x (zero X)
0x is a protocol that can build DEX on the block chain of Ethernet.
At 0x, as the exchange of orders is handled off-chain, it is characterized by a number of fees not required like EtherDelta (Ether Delta).
It is also equipped with settlement API functions like Kyber Network (Kyber Network), and it is one of the popular DEX (Distributed Exchange).
Waves (Waves) is a wallet equipped with the DEX (Distributed Exchange) function.
The Waves platform ‘s DEX (Distributed Exchange) is a major feature that it can exchange not only between virtual currencies but also legal currencies such as dollars and euros .
Also, it is rare in DEX (Distributed Exchange), and it also supports deposits and withdrawals of major virtual currencies such as Bitcoins, earmaria, light coins, and gee cash.
Waves is here
Openledger (open leisure)
Openledger (Open Leisure) is the world’s first DEX (Distributed Exchange) built on the BitShares block chain.
Besides the currency on the BTS block chain, it is also possible to trade BitUSD, BitJPY, OpenBTC, etc. which are peg currencies of dollars and Japanese yen.
Because it corresponds to Japanese , Japanese can use with confidence.
Click here for Openledger
This time, I explained about the characteristics and merits of DEX (Distributed Exchange) and the differences with centralized exchanges.
Unlike centralized exchanges, DEX (Distributed Exchange) has less risk of hacking, but there are still many disadvantages such as support and volume problems.
However, as virtual currencies become wider in the future, attention will also be gaining attention on DEX (Distributed Exchange), these problems will improve. It is a place I would like to expect in the future spreading.
Author: ぼ に フ ァ 【Coin Desk News】 – Source Post: https://crypto-times.jp/what-is-dex-2/
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