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Author Topic: [2018-09-26] Truly decentralized exchange – who will be the first in this race?  (Read 48 times)
S3cco
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September 26, 2018, 09:32:46 AM
 #1

Bitcoin Garden: Truly decentralized exchange – who will be the first in this race?
https://bitcoingarden.org/truly-decentralized-exchange-who-will-be-the-first-in-this-race/

The cryptocurrency market had its bright moments of glory, and while the recent news may sometime be upsetting, the decentralized exchanges are charged for further competition and cutting-edge developments. The path of platforms evolutions is hard, complicated and has many issues. To understand the market, one needs to consider vital questions: what is the difference between the centralized and decentralized exchange? Each of them has their pros and cons, but the progress is merciless and we soon about to witness significant changes which are inevitable. What is HFT, what benefits and hardships of implementation in modern DEX does it have? We provided you with a brief story to make all these points clear.

The blockchain technology helps to perform a global transition to the economy that does not require the trust of third parties for the exchange of goods. However, today’s crypto exchanges are mostly centralized, and that causes numerous severe threats: they are vulnerable to hacking, do not react well to the specific processes associated with blockchain technology – such as hard forks – and are often associated with the risk of getting under the plume new regulations by implemented by different world governments. Centralized crypto-exchange exchanges may soon become obsolete, as they miss the opportunity to use blockchain technology and thereby improve their capabilities and effectiveness.

The existing problems of centralized exchanges are numerous: lack of liquidity, vulnerability, risks of losses and thefts as a result of a centralized operating principle. The exchanges present a tasty morsel for hackers, given that billions of transactions are made through them every day and servers store user money.

Decentralized exchanges or DEXs, on the other hand, are aimed at solving problems that are inherent in centralized structures as they create P2P-markets powered by the mighty blockchain tech – usually Ethereum – which allows traders to store funds and operate them further independently....


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September 26, 2018, 10:17:30 AM
 #2

Not all of these DEXs are "powered by mighty blockchain tech". If we're truly looking at P2P and non-network based, then it should really include all kinds of blockchains. Of course, article's accurate in that most DEXs out there - or at least with significant volumes - are Ethereum-based, but the "winner" of the latest batch of DEXs will be the one that implements brain-free atomic swapping.

We know it's already possible and achieved almost daily now in testnets, but getting something that almost any major blockchain user could use, place a trade and close it, with simple GUIs anyone could use with 2 or 3 clicks... that's the target now.

CEXs are popular because they're easy to use.

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September 26, 2018, 12:02:31 PM
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Technically speaking, we don't even need decentralized exchanges, but just an environment where we all can be our own exchange, and LN offers that environment.

By the time we're a year or two further, there is a much wider level of interoperability between all sorts of networks, and that's when the real party begins. Spot traders will always use centralized exchanges no matter what, which is perfectly fine, and the other part of the industry will feast on peer to peer trades as they should be. That's what I call a perfect balance between supply and demand.

It will take some time, but we're still at stage one of everything so that's perfectly fine. Last year was the first ever time that both Bitcoin and Ethereum were pushed to their limits, which caused fees on both platforms to sky rocket, and that's actually a good thing. You don't know when you reach your limit until you actually reach it. See it as a stress test. Smiley

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September 26, 2018, 06:32:36 PM
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Technically speaking, we don't even need decentralized exchanges, but just an environment where we all can be our own exchange, and LN offers that environment.

By the time we're a year or two further, there is a much wider level of interoperability between all sorts of networks, and that's when the real party begins. Spot traders will always use centralized exchanges no matter what, which is perfectly fine, and the other part of the industry will feast on peer to peer trades as they should be. That's what I call a perfect balance between supply and demand.

It will take some time, but we're still at stage one of everything so that's perfectly fine. Last year was the first ever time that both Bitcoin and Ethereum were pushed to their limits, which caused fees on both platforms to sky rocket, and that's actually a good thing. You don't know when you reach your limit until you actually reach it. See it as a stress test. Smiley

I'm not sure if there's a way to make LN and other decentralized technologies to work with fiat (stablecoins don't count). The ability to exchange coins for fiat are very important for cryptocurrencies, without liquidity their value can't grow freely, which undermines their game-theoretic foundations. Low price means lower cost of attack, and that's a problem for any cryptocurrency.

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September 26, 2018, 08:05:29 PM
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I believe one of the greatest contributions of the ethereum blockchain is easy negociation of erc20 tokens in Dex exchanges, safe and secure, controlled by smartcontracts.
 
It's easy because all transactions are tokens/eth pairs, on the same blockchain.

Maybe one day we can reach that level of security with Dex atomic swaps


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September 27, 2018, 09:54:18 AM
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I'm not sure if there's a way to make LN and other decentralized technologies to work with fiat (stablecoins don't count). The ability to exchange coins for fiat are very important for cryptocurrencies, without liquidity their value can't grow freely, which undermines their game-theoretic foundations. Low price means lower cost of attack, and that's a problem for any cryptocurrency.

At this point in time it's indeed impossible to work around fiat's centralization (especially if you also discard stable coins), which is why centralized exchanges will always be the dominant factor in that field, but that's all fine. In the end, we already have a base currency, which is Bitcoin, and with how you can swap from coin to coin without having to worry about confirmation times, there isn't really an obstacle to prevent it from being a base currency.

The majority of the coin to coin traders trade to profit in Bitcoin, and when there are bad times coming up, they park their funds in Bitcoin to counter the leveraged effect of altcoins during corrections. The only thing we need is patience and help build up LN where possible. Play with it. Test it. Try to swap from BTC>LTC and vice versa. The latter is what I am going to dedicate my weekend to.

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September 27, 2018, 10:17:21 AM
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I'm not sure if there's a way to make LN and other decentralized technologies to work with fiat (stablecoins don't count). The ability to exchange coins for fiat are very important for cryptocurrencies, without liquidity their value can't grow freely, which undermines their game-theoretic foundations. Low price means lower cost of attack, and that's a problem for any cryptocurrency.

At this point in time it's indeed impossible to work around fiat's centralization (especially if you also discard stable coins), which is why centralized exchanges will always be the dominant factor in that field, but that's all fine. In the end, we already have a base currency, which is Bitcoin, and with how you can swap from coin to coin without having to worry about confirmation times, there isn't really an obstacle to prevent it from being a base currency.

The majority of the coin to coin traders trade to profit in Bitcoin, and when there are bad times coming up, they park their funds in Bitcoin to counter the leveraged effect of altcoins during corrections. The only thing we need is patience and help build up LN where possible. Play with it. Test it. Try to swap from BTC>LTC and vice versa. The latter is what I am going to dedicate my weekend to.

This post made me envious. Am partly following LN developments but have to admit am the last to try out something that needs a little more than click and execute, plus didn't have the proper device and OS to try. Am seeing now there seems to be an Android wallet with good feedback. Which client will you be using? Do share your test results. Might as well put my ltc to use some time.

And yes, fiat centralisation can't be helped and that's their whole purpose. Bitcoin is already the base currency of the crypto economy and that starting point establishes decentralised money. Bitcoin as a base currency outside of crypto is coming, we'll know one day when Google lists everything against BTC!

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September 27, 2018, 10:54:57 AM
 #8

Am seeing now there seems to be an Android wallet with good feedback. Which client will you be using? Do share your test results. Might as well put my ltc to use some time.

More and more mobile clients start to pop up supporting LN, but they are all operating using a third party node, and as far as I have seen, they don't allow you to swap from LTC>BTC. It's purely BTC channel payments they focus on. I am operating my own node, and have to put all the time I have this weekend into finding out how to execute my first ever swap, which obviously requires me to set up a Litecoin LN node as well.

I haven't reported any of my progress since it only consisted of simple channel payments that went through without problems, but will definitely do when I come across bugs.

If you want a hassle free mobile client being capable of regular (on-chain) transactions and LN transactions, then Bitcoin Lightning Wallet is the best one to use right now. Minimum channel funding through that wallet is 0.003BTC, maximum 0.1677BTC, but the best is to just keep it as close to 0.003BTC as possible since it is for testing purposes only.

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September 27, 2018, 11:22:29 AM
 #9

In the end it boils down to trust and ease of use and nothing else. The average consumer wants to trust the platform where they will be making large trades. <The government backing and some centralized organization with consumer protection, is what they are used to>

They also want a easy to use platform. Most of these decentralized exchanges are way too complicated for the average consumer to understand.  Roll Eyes

Solve the trust issue and make it easier to use and people will flock to those services.  Cheesy

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