Centralized Cryptocurrency Exchange has come under attack based on the fact that it contradicts the decentralized nature of the entire ecosystem. Moreover, its security is sort of fragile and in some instances have left a sour taste in the mouth of users.
Wendy McElroy, a Free Market Scholar and a Blockchain analyst asserted that Satoshi never envisioned centralized exchanges and the circumstances would have horrified him. “Bitcoin was forged to avoid centralized third parties, such as banks and centralized exchanges, that require users to trust them with wealth and privacy. Peer-to-peer transfers based on cryptographic proof were supposed to replace the need for a middleman who demanded trust,” McElroy remarked.
However, the good news is that Decentralized Exchange (DEX) is becoming a popular aspect in the space. More and more DEX are springing up whilst major players in the Centralized Exchanges are metamorphosing into Decentralized.
Year of DEX
Are we going to see 2019 as a year of DEX where the marketplace will be strictly P2P without storage of digital currencies in a vault by Crypto exchanges? Coin news Live sought the views of some experts.
Markus Msg768 of Swiftcash thinks the Crypto space will see more of DEX in 2019 since it’s easy to set up. “The reason for that is because setting one up is much easier than setting up a traditional exchange since the Bitshares blockchain handles almost everything and it’s not that hard to fork the front-end of Bitshares, and create your own gateways and issue your own tokens,” Msg768 opined.
However, Scott Wehman, who is in charge of marketing at CryptoBridge differed a bit. Wehman reasons that It is too early to say, but if the trend continues as it did in 2018, DEXs will continue to increase in market share.
Defeating The Purpose
Sudhir Khatwani, a Blockchain analyst wrote in an article in late 2018 that, it is a shame that the whole purpose of monetary sovereignty for which Satoshi Nakamoto created Bitcoin is still at the helms of centralized parties. He articulates the greatest threat to cryptocurrencies is not volatility, as most assume but it is the fact that 99% of cryptocurrency trade still happens on centralized exchanges.
On the part of Msg768, the dominance of Centralized Exchanges necessarily doesn’t defeat the purpose of decentralization. He argued only a handful of coins are usually in exchanges and the vast majority of coins are often in private addresses where the owners alone have access to the private keys. Msg768 explained further:
I believe that there is a common misconception about decentralized exchanges. None of these exchanges is as decentralized as cryptocurrencies themselves are built to be. The founders or the owners of these exchanges still have full control over the cryptocurrencies that are deposited into their exchange via their gateways.
Notwithstanding, Welham believes wholeheartedly the control Centralized Exchange has is not the best. “Cryptocurrencies are not being used for anything other than speculation currently, so the average user is less concerned with the underlying need, value of and purpose of decentralization,” he maintained. “It is only with the failure of centralized operations that it will be found unacceptable and the alternative considered.”
Benefits of Decentralization
It is imperative to examine what is in Decentralized Exchange for the industry. Stimulatingly, Msg768 and Welham recognised the supremacy and the gains DEX offers Cryptosphere.
Msg768 estimates once we rectify the common misconception about decentralized exchanges, we can clearly see that the major gain in having these exchanges becoming dominant over the traditional ones, will be less fake volume and less wash trading in the space, which can help the markets become much more predictable and therefore much less volatile. For him, the issue of having to trust a middleman in order to buy or sell cryptocurrencies will still remain unsolved in this case.
The man in charge of marketing at CryptoBridge also stated DEX will come with sweeping autonomy for users of crypto. Moreover, he pointed out the degree of safety in the system will go up tremendously copulated with higher competition among innovators.
Privacy And Freedom
Additionally, both experts were in concert DEX will usher in an era of deepening financial freedom and privacy. Welham stipulated:
We believe in an open marketplace and feel that unnecessary restrictions (which are touted under the guise of protecting consumers) are actually in place to keep the incumbent legacy financial system in power. Cryptocurrency was initially designed to challenge this power and set a course to return it to the average person.
In conclusion, Msg768 said he is for decentralization of any type of power in the world because humans are all created equal. He quoted Frederic Bastiat and urged the Crypto community to organise ourselves with the quote: “If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind?”
Future of DEX
Even if Decentralization of Exchange doesn’t become dominant in 2019, it is apparent the industry needs that in order to fulfil its purposes. Besides, it seems there are so much to be done for the Blockchain arena this year.
Notwithstanding so much has been achieved in a decade. That tells we are on course and there are more frontiers that will be covered sooner than later.
Coin News Live wishes everyone in this space a prosperous and a blissful 2019. Stay with us for the best news and analysis of Blockchain Technology.