Decentralized exchanges will never work

[darkota]

So, every now and then I see a post about the beauty of a decentralized exchange. Well here's the thing. You can't get USD on a Decentralized Exchange, adding new coins to trade will always be a headache, and since there won't be any censorship, scamming with new, random, 2 day old altcoins will be abundant, among other things

Decentralized Exchanges sound good in theory, but in practice it just isn't plausible.

[mprep]

So, every now and then I see a post about the beauty of a decentralized exchange. Well here's the thing. You can't get USD on a Decentralized Exchange, adding new coins to trade will always be a headache, and since there won't be any censorship, scamming with new, random, 2 day old altcoins with be abundant, among other things

Decentralized Exchanges sound good in theory, but in practice it just isn't plausible.

I have no experience in directly dealing with decentralized exchanges but I see several things that I would like to address (that in fact ties in with any place where you trade):

since there won't be any censorship, scamming with new, random, 2 day old altcoins with be abundant, among other things

That's why you use common sense and avoid shady coins.

Aside from that, the idea of decentralized exchange is like the idea of cryptocurrencies: you have to keep trying to come up with that one mechanism that works and has the least issues possible.

[kelsey]

So, every now and then I see a post about the beauty of a decentralized exchange. Well here's the thing. You can't get USD on a Decentralized Exchange, adding new coins to trade will always be a headache, and since there won't be any censorship, scamming with new, random, 2 day old altcoins will be abundant, among other things

Decentralized Exchanges sound good in theory, but in practice it just isn't plausible.

Why do you need to get USD in for a decentralised exchange to work?

I've used and traded cryptos for years yet not once have I ever used USD (I've never even seen any US currency) nor have I traded cryptos for fiat.

The whole point of cryptos is to be an alternative to fiat (but thats lost on most the in cryptos for the fiat crowd).

[runpaint]

New altcoins will be like a miracle for decentralized exchanges and all the people around the world. 

Your question is "How will people get any money in the first place that can be used on the exchanges?"

Solo mine any new altcoin, trade it for another relatively cheap coin, trade that for doge, trade that for ltc, trade that for btc.

Or just accept bitcoin for your own goods and services in the real world, and use that to enter the exchange.  Maybe you'll buy a cheap new altcoin from a homeless street child in India who has an hour a day at an internet cafe.

[theskillzdatklls]

it could work if governments create cryptos like i think ecuador has done.

also it could still work with alts which is ok but not great. but yeah, it cant be tied to usd.

it could perhaps be tied to gold storage but that would be a logistically tough thing to do.

[12345mm]

a decentralized exchange could by definition have no central bank account where one would be able to send fiat $ to and thus could not hold any balance of fiat currency as i understand it ... i would imagine it would somehow have to involve users attaching their individual bank accounts to the decentralized exchange ledger and sending money directly from one person's bank account to the other person's bank account in exchange for btc on the ledger of the exchange , while the btc sent to the decentralized exchange could be run off of a side chain connected to the btc blockchain ? ... at least as far as i understand the idea in any case it seems like it would be awfully clumsy and slower vs a centralized exchange ... more like a p2p marketplace capable of running a balance sheet with built in escrow-style delay assuring buyers can't buy 1000btc from a $0 bank account and sellers wouldn't be able to sell false btc because it could be based off of the btc blockchain ? ... in theory ...

[shawshankinmate37927]

It's probably easier to think of it as a "decentralized order book" rather than a "decentralized exchange".  The currencies would either be exchanged directly between the two parties without a third party being involved or the two parties would have to agree on a trusted third party (escrow) to be an intermediary.

[fundomatic]

You can't get USD on a Decentralized Exchange

There's BitUSD (market pegged asset) available in BitShares (first decentralized exchange).
Either you get BitUSD on a centralized exchange and move it into the BitShares blockchain, or you can trade BTS, BitBTC (the market pegged BTC), BitCNY, BitEUR, BitGOLD, BitSILVER for BitUSD.

Some markets are low liquidity though.

The gateways are being setup where you can get an IOU for your USD and trade with it in BitShares exchange (just like IOUs issued by a centralized exchange). However, if the gateway is busted, so are your IOUs.

adding new coins to trade will always be a headache,

In BitShares you can easily issue a UIA (user issued asset) and if you provide a gateway/bridge to another coin blockchain, I think, you can easily 'add' any coin.

... and since there won't be any censorship, scamming with new, random, 2 day old altcoins will be abundant, among other things ...

It is the free market: do your own research.

Decentralized Exchanges sound good in theory, but in practice it just isn't plausible.

I'm sure there are lots of other issues with decentralized approach (scalability etc).
it would be interesting to see how they develop.

[cakir]

If you want USD I'll send it to you via air mail dude.
When the usd arrives to you; you'll send my coins

Here it is, we didn't need the bank to send money

[dwma]

So, every now and then I see a post about the beauty of a decentralized exchange. Well here's the thing. You can't get USD on a Decentralized Exchange, adding new coins to trade will always be a headache, and since there won't be any censorship, scamming with new, random, 2 day old altcoins will be abundant, among other things

Decentralized Exchanges sound good in theory, but in practice it just isn't plausible.

Why would 2 day altcoins be added to a DEX if they are "always a headache" ?

[M28MmickT]

It's probably easier to think of it as a "decentralized order book" rather than a "decentralized exchange".  The currencies would either be exchanged directly between the two parties without a third party being involved or the two parties would have to agree on a trusted third party (escrow) to be an intermediary.

This is where you go to find your answer ^^ Trusted 3rd party though is 'smartcontracts' we would not have need to get usd on there if we have a coin that is hedged to the usd which can be spent of a decentralized market place. Bitbay is on its way to some good future business with decentralized ways leading the way the dev David has already created NightTrader which is a decentralized exchange already a few tweeks can be what we need.   

[mymenace]

they say the same thing about a decentralised finance system, yet we see the beginning in bitcoin

[deluxeCITY]

they say the same thing about a decentralised finance system, yet we see the beginning in bitcoin

The saying that goes back far in the past something along the lines of never say never  I am not sure how close it is but take a look at Forex!?

Pretty sure that you can deposit btc onto there, i will take a look and get back to during the week

[brekyrself]

A decentralized exchange with a proper gateway can help with legal compliance around the world.

See: http://bytemaster.bitshares.org/update/2014/12/18/Benefits-of-Being-a-BitShares-Gateway/

[Abbey_j]

Regarding the OP:

So, every now and then I see a post about the beauty of a decentralized exchange. Well here's the thing. You can't get USD on a Decentralized Exchange

No but you can trade into it (BitUSD) from bitcoins instead of trading into bitcoins from USD.  From there you are just going to trade back and forth anyway, so who cares if the egg really did come before the chicken.

, adding new coins to trade will always be a headache, and since there won't be any censorship, scamming with new, random, 2 day old altcoins will be abundant

In BitShares it costs 500,000 BTS (which is a big chunk o' change) to register a new tradable asset (in order to keep the spam down)

Decentralized Exchanges sound good in theory, but in practice it just isn't plausible.

The BitShares webwallet was once a theory, but now it is a reality
https://wallet.bitshares.org/

Really? Do you guys really believe Bitshares? It acts likes a pyramid schemes in China, some people yalling that BTS will go to 500$ everyday.

[Lethn]

I'm glad the OP gets it, central banks are a monopoly on currency, they will never allow a decentralised system to properly take place, if they do, I'd think something is up and chances are they'll use it as a way to keep track of lots of people trying to use any exchange they're allowing into their economy.

[xHire]

There are two main approaches: with fiat and without fiat. The first one is represented, e.g., by Bitsquare (they use escrows to secure coins while fiat is being transferred). The second approach is represented, e.g., by Coincer (my project). When you omit the fiat part, you can use pure crypto to trade coins between blockchains. Then you only need an underlying P2P layer to make it really decentralised. Obviously this is much easier and also safer than trading coins with fiat in a decentralised way.

[GermanGiant]

A decentralized exchange with a proper gateway can help with legal compliance around the world.

See: http://bytemaster.bitshares.org/update/2014/12/18/Benefits-of-Being-a-BitShares-Gateway/

That Gateway thing is a honeytrap. It kills the decentralization and requires trust.

[DooMAD]

I have bitcoins and I've never sent fiat to an exchange.  Bitcoin is peer-to-peer money.  I handed my fiat cash to a person and they gave me bitcoins.  Why do people always work under the backwards premise that exchanges are the be-all-and-end-all of crypto?  You don't need intermediaries to trade bitcoin.  Peer-to-peer and decentralised exchange is all we need to flourish.

[newIndia]

So, every now and then I see a post about the beauty of a decentralized exchange. Well here's the thing. You can't get USD on a Decentralized Exchange, adding new coins to trade will always be a headache, and since there won't be any censorship, scamming with new, random, 2 day old altcoins will be abundant, among other things

Decentralized Exchanges sound good in theory, but in practice it just isn't plausible.

U r correct indeed. None of BitSquare, OpenBazaar or BitShares have been able to overcome the problem of trust. Some tried escrow, some tried multiple centralized gateways. But at the end of the day, to get FIAT on board u need some centralization.