Bitcoin Forum

The problems with MtGox are nothing new and despite of exchanges disappearing overnight or declaring their bankruptcy, some people still choose these exchanges...again and again. May be it is not the optimal choice to trade a decentralized coin within a centralized exchange systems.

There are decentralized systems eg next, ripple, mastercoin (not sure about this one)...

So why not using the decentralized systems?

Any thoughts?
  

ripple sucks. it's a private company, centralized and premined in that regard. Nxt and mst aren't ready yet. Can't wait for decent decentralized traiding. That'll be a jump in the evolution of crypto. Would be so cool.

Decentralized systems are by design not suitable for High Frequency Trading for example (as a global consensus needs to be reached on the order book if someone in Australia and Europe wants to buy the same order). e.g. Ripple has a granularity of ~10 seconds, which is an eternity for a lot of traders.

Also there is still the "problem" of trust - decentralized order book or not, someone needs to hold the assets traded. This is no different in NXT, Ripple, Mastercoin... (ProtoShares seems to want to do some kind of derivative that magically will materialize somehow in your bank account, I haven't looked too much into them) decentralized TRADING does not mean that there is no need for trusted entities that HOLD the underlying assets. No matter how you call these entities (gateway, exchange, escrower...), in the end there is no way to digitally send a USD note over the internet.

This can be circumvented if you only trade digital assets (such as Bitcoin, Litecoin, ...coin), then again this gets a bit circle-jerky and while there might be some use in that, still a lot of people see big value in being able to somehow get USD for BTC and vice versa.

All in all decentralized exchanges take it one step further (there is only the need for a trusted escrower, not a trusted escrower + exchange engine/order book), a lot of people here seem to expect something different though which is hard, if not impossible to do with current (reversible) money systems. After all, this is one big reason why Bitcoin exists in the first place!