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Author Topic: Decentralized vs. Centralized Exchange what is better?  (Read 128 times)
Utoy101
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July 17, 2018, 06:24:28 AM
 #1

Decentralized Exchange?
  • A decentralized exchange is an exchange market that does not rely on a third party service to hold the customer's funds. Instead, trades occur directly between users (peer to peer) through an automated process. This system can be achieved by creating proxy tokens (crypto assets that represent a certain fiat or crypto currency) or assets (that can represent shares in a company for example) or through a decentralized multi-signature escrow system, among other solutions that are currently being developed.
  • This system contrasts with the current centralized model in which users deposit their funds and the exchange issues an IOU that can be freely traded on the platform. When a user asks to withdraw his funds, these are converted back into the cryptocurrency they represent and sent to their owner.
  • Decentralized Exchange or DEX is a new technology in the cryptocurrency sphere that has no central controlling server. It basically facilitates the cryptocurrency trading on a distributing ledger. Hence, you don’t need a third party intermediary to hold your funds when making an exchange transaction.

Benefits
  • Coin Responsibility: Centralized exchanges store all of the crypto funds placed on their exchanges which can potentially make them vulnerable to hackers. Decentralized exchanges on the other hand often leave ownership of cryptocurrency in the hands of their users and simply act as a place for peer-to-peer trading.
  • More Privacy: Most decentralized exchanges do require the creation of an account before you can begin trading. However, unlike more centralized exchanges such as Coinbase which needs to confirm users' identities via various forms of official government ID, most decentralized exchanges allow anyone to create an account under any name they choose with very little or no approval process. This can be admittedly bad for governments and the finance sector but it is a feature that is becoming more attractive to those citizens who are weary of Big Brother tracking their every move.
  • Not Restricted by Law: Not being restricted to one physical location, decentralized cryptocurrency exchanges are much harder to regulate or even shut down. This can be good news for users of Bitcoin and other cryptocoins who live in countries where cryptocurrency is illegal.
  • Decentralized Servers: Many decentralized cryptocurrency exchanges are hosted on decentralized servers. This means that all of their servers aren't located within a single location and are often spread out around the world. Some servers can even be truly decentralized by existing solely in the cloud. This method of hosting can make decentralized exchanges much harder to hack than traditionally hosted exchanges, thus making user data and funds more secure.

Dangers
  • Still an Option B: Traditional centralized cryptocurrency exchanges are generally much more popular than decentralized ones and as a result often have many more users and active trades. Centralized exchanges also tend to have more money behind them and can afford a better user experience, customer support, and sense of professionalism.
  • Mysterious Ownership: Because decentralized exchanges can be used to avoid regulation, many choose to keep their founders' identities anonymous. Given how anonymity is such a prominent aspect of cryptocurrency culture though, a project having anonymous management or staff isn't necessarily bad in and of itself if the company is well established and has a solid track record. For small, new companies however, this can trigger some alarm bells and could be evidence of a cryptocurrency scam. Users should still be sceptical at all times when it comes to their finances.
  • Not Regulated: The lack of regulation, as mentioned above, can be a positive but it also means that there will be very little support from outside parties if a decentralized exchange goes down or is suspected of stealing funds from users.
  • Intimidating to New Investors: Decentralized cryptocurrency exchanges don't have the mainstream appeal of centralized ones and this can scare away many potential users who only want to work with companies that are officially approved by their country's government and can be held responsible for a poor customer experience. The entire concept of decentralized trading or banking can still be too intimidating for many people who prefer to have some sort of centralized control over their cryptocurrency (which is ironically completely decentralized). Less users means less active trades on a decentralized platform.

Examples of Decentralized Exchanges
  • IDEX
  • WAVES DEX
  • OPENLEDGER DEX
  • CRYPTOBRIDGE DEX
  • OASIS DEX
  • RADAR RELAY
  • BARTER DEX
  • BISQ
  • STELLAR DEX
  • BANCOR
  • AIRSWAP
  • ETHERDELTA

Centralized Exchange?
  • A centralized exchange is a website that handles the trading of bitcoin to fiat or other cryptocurrencies. An exchange's purpose is to allow you to trade BTC for fiat currency and to other cryptocurrencies ( like litecoin, eth, etc, ripple, xmr ).
  • With centralized exchanges, intermediaries such as companies act as middle men in order to facilitate trading on their platform. In exchange for providing this service, intermediaries collect trading fees. In essence, centralized exchanges often act as the first point of contact for newcomers that are interested in trading cryptocurrency. Many individuals seek to have an interface that can connect them to both cryptocurrency trading and the real economy, and centralized exchanges provide that.
  • Centralized exchanges (often called a “CEX”) are run by an organization that oversees its day-to-day operations like maintenance, security, and growth. The business model of a centralized exchange is similar to that of a traditional securities exchange that charges a trading fee in exchange for access to the marketplace. This type of exchange acts as a mediating third party that connects buyers and sellers with one another.
  • This includes buying/selling cryptocurrencies with fiat (fiat/crypto paring) as well as buying/selling cryptocurrencies with other cryptocurrencies (crypto/crypto pairing). They can be viewed as an online marketplace for the entire cryptocurrency network.
  • A centralized market is a financial market structure that consists of having all orders routed to one central exchange with no other competing market. The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking to buy or sell the specific asset.
  • Centralized exchanges are good, they are easy to access and use, and provide advanced tools and trading functionalities such as margin trading, stop loss and lending.

Benefits
  • Centralized Bitcoin exchanges hold the cryptocurrencies in custody to make it easier to trade them. This is a benefit that many users relish, and they also like that they don’t have the responsibility to worry about the safety of their cryptocurrency.
  • Wallet balances are automatically adjusted to reflect changes in the crypto market, and when Bitcoin went through SegWit, these exchanges retained custody and executed the split on their own. This is a clear gain for the users who would not have the time or expertise to figure out how to handle this split on their own.
  • Another big advantage of centralized exchanges is the prices they enable for customers. Since they are able to aggregate so many orders at once and don’t have to deal with some of the more complicated custody issues, they can provide the same service at a cheaper cost.
Dangers
  • The largest risk, and one that many have highlighted in recent times, is the chance your cryptocurrency will be confiscated or compromised. Even if the centralized exchange doesn’t act in explicit bad faith, their entire network is set up like a honeypot that just serves to motivate hackers.
  • Another issue that may present itself is the problem of leadership making decisions that affect the fate of your Bitcoin. For example, when Coinbase made the decision to trade Bitcoin Cash, that caused a huge stir in the market, and wasn’t a democratically arrived-at decision. This seems to be very similar to the setbacks of regular fiat currencies, which is where the criticism comes in.

Examples of Decentralized Exchanges
  • COINBASE
  • GEMINI
  • KRAKEN
  • ROBINHOOD



https://coingape.com/what-is-decentralized-exchange/
https://www.mycryptopedia.com/decentralized-exchanges-v-centralized-exchanges/
https://coinsutra.com/decentralized-vs-centralized-crypto-exchange/
https://steemit.com/exchange/@nyinyinaing/decentralized-exchange-vs-centralized-exchange
https://www.lifewire.com/cryptocurrency-centralized-exchanges-pros-cons-4158224
https://cryptoslate.com/decentralized-exchanges-vs-centralized-exchanges/
https://www.investopedia.com/terms/c/centralizedmarket.asp
https://cryptoways.com/blog/2017/09/06/exchanges/
https://steemit.com/exchange/@nyinyinaing/decentralized-exchange-vs-centralized-exchange
https://cointelegraph.com/explained/centralized-cryptocurrency-exchanges-explained
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Alluro
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July 17, 2018, 12:12:16 PM
 #2

I think people will move to decentralized exchanges in the future. Because the decentralized exchanges private key owned by the user, users can trade any amount without any KYC verifications etc.

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July 17, 2018, 02:06:11 PM
 #3

I think people will move to decentralized exchanges in the future. Because the decentralized exchanges private key owned by the user, users can trade any amount without any KYC verifications etc.

I think that many States will not want their citizens to trade on decentralized exchanges because there is no KYC verifications. I trade on centralized and decentralized exchanges.

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boulderchain
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July 17, 2018, 05:58:02 PM
 #4

I think people will move to decentralized exchanges in the future. Because the decentralized exchanges private key owned by the user, users can trade any amount without any KYC verifications etc.

I also prefer decentralized exchange, but I don't think the majority of people will switch. The centralized exchanges just have the convenient factor and not everyone want to be responsible for his own keys (to create backups, secure them, ...)

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July 17, 2018, 08:25:51 PM
 #5

I think that many States will not want their citizens to trade on decentralized exchanges because there is no KYC verifications. I trade on centralized and decentralized exchanges.
And this is what the people wants, to remain anonymous with their trades so they won't be exposed. Both has good and bad side but I prefer to use them both.

It's good to stay to one exchange if you are convenient but it's also okay to try them out.

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July 17, 2018, 08:50:24 PM
 #6

Decentralized Exchange?
  • Coin Responsibility: Centralized exchanges store all of the crypto funds placed on their exchanges which can potentially make them vulnerable to hackers. Decentralized exchanges on the other hand often leave ownership of cryptocurrency in the hands of their users and simply act as a place for peer-to-peer trading.

I never traded in any De centralized exchange so I have question how exactly this work for coin transfers? If exchange do not contain coins how the buyer and seller get their coins?
Is it some thing similar like peer to peer transactions with escrowed  deals?

Examples of DeCentralized Exchanges
  • COINBASE
  • GEMINI
  • KRAKEN
  • ROBINHOOD


Can you correct your article for the typo.

micutadudu
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July 17, 2018, 09:50:21 PM
 #7

Both are fine, depends what you want. I like dexes, never had any problem with idex, delta, switcheo. When NEX tho?
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July 17, 2018, 11:58:45 PM
 #8

It's hard at this point to stick or to prefer one over the other because of limitations. So for my convenience I use both and decide which one to use depending on my current strategy
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July 18, 2018, 12:14:56 PM
 #9

Both are fine, depends what you want. I like dexes, never had any problem with idex, delta, switcheo. When NEX tho?

Centralized exchanges are not fine at all, but we still use them because there is no enough liquidity in the dex and most are slow.

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July 18, 2018, 10:56:27 PM
 #10

Centralized exchanges are not fine at all, but we still use them because there is no enough liquidity in the dex and most are slow.
liquidity is the most important factor for traders to choose their trading platforms
not only most DEX has low trade volumes, but also on some parts are more complicated than regular exchanges

boulderchain
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July 19, 2018, 02:42:57 PM
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not only most DEX has low trade volumes, but also on some parts are more complicated than regular exchanges

This is the main issue. Necomers will never trade on bisq for example, because they simply can't send their security deposit without any btc.

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mySmile28
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July 19, 2018, 03:09:25 PM
 #12

decentralized  lagging so much!
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July 20, 2018, 08:45:28 AM
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The article that is very helpful to the novice, the analysis is very good, I have saved the article!
boulderchain
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July 20, 2018, 09:41:34 AM
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decentralized  lagging so much!

Depends which one do you use. Did you already try crypto-bridge? This works quite good without any lagging.

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July 20, 2018, 12:01:17 PM
 #15

I think people will move to decentralized exchanges in the future. Because the decentralized exchanges private key owned by the user, users can trade any amount without any KYC verifications etc.

Personally, I think the two can coexist successfully an people visiting the both platforms have their distinct reasons for doing to. Op has definitely done a good job identifying both the advantages and disadvantages of the two which shows that they are both not perfect. Aside the abuse of KYCs and forceful implementation of this by the centralised exchange sites, I think I would be more tilted towards the centralised ones because they are easy to use without any need for understanding technical parts that surrounds private keys export, import, compromise etc.

People will only move exchange sites eventually that they are sure that their investment is secure and not about KYC which is the subject of dispute and the major difference between the two.

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July 20, 2018, 01:05:42 PM
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crypto-bridge and all bitshares forks - are not decentralized exchanges

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boulderchain
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July 20, 2018, 02:29:51 PM
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crypto-bridge and all bitshares forks - are not decentralized exchanges

Why do you think that? They adveretise themself as DEX.

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July 20, 2018, 02:49:53 PM
 #18

Today, neither of them is good and we have to use them both of them and they are for trading not holding your coins so don't hold your coins in exchanges.

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July 20, 2018, 09:36:10 PM
 #19

Helpful article. thank you
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