The future of Bitcoin and other crypto currencies on a decentralized exchange because different people like Vitalik Buterin and John McAfee are unanimous. What is it with decentralized exchanges, and why they are safer than their centralized Alternatives: centralized exchanges vs. decentralized exchanges.
The current environment of Bitcoin and other crypto-currencies, is extremely vulnerable to three of the worst advice for private investors: Fear, Uncertainty and Doubt. Of FUD when trading, Bitcoin guide, you should avoid. However, the recurrent suspicion against centralized exchanges, it should hardly surprise that the hard-minded crypto enthusiasts have a doubt. That’s why we need decentralized exchanges.
One of the basic principles and main advantages of decentralized exchanges is that you – just like Bitcoin – no Central point of attack. The Lack of a Single Point of Failure , it is ultimately, the the Alternatives to BitMex, octopus and Binance so attractive. The users enter directly in contact with each other, there is no “middle men” that switch currencies between Trading and Crypto (can).
So there’s no Central Server, and the crypto-currencies. The more difficult the access by authorities to the same extent as it prevents unwanted attackers. And the decentralized exchanges are the same, the basic structure of the Bitcoin Blockchain. This is also aligned to the fact that there is no single point of attack – Satoshi Nakamoto referred to Bitcoin as a Peer-to-Peer network. A network so that individual users directly to each other. Decentralized systems also offer other advantages compared to centralized systems. The Following are some examples.
Exchanges-Hacks: security vulnerabilities in centralised systems
Mt.Gox – moments of mistrust
One of the most relevant and first cases, in which mistrust that emerged towards centralized exchanges, Mt is the history of the Japanese stock market.Gox. It was in the year of 2013, the Bitcoin stock exchange par excellence, 60 percent of the global trade volume of Bitcoin were run over Mt.Gox. What happened next, is Bitcoin history: A non-enlightened Hack, in the suddenly of 850,000 Bitcoin were gone. To this day, Bitcoin has not turned up, the users are still waiting for their deposits – in vain. On top of it All, then dipped Recently, a mysterious Wallet in the substantial suspicion that all the old Mt.Gox whale. In addition, the movements with a substantial drop in the Bitcoin exchange rate went hand-in-hand. But that is a different story.
Binance, Youbit, Bitstamp & co.: Single Points of Failure
What with Mt.Gox took its beginnings, planted in the world of crypto expansive fort currencies. In January 2015, Bitstamp fell a Hack to the victim, in which a total of 19,000 Bitcoin were lost. Former value: five million dollars. The reason is that The Wallets of the stock exchange were corrupted. A short time later, local bitcoins reported an attack – it was the chat system that the attacker has access to stored cryptographic got currencies. 2016 was BitFinex. Here it was the princely sum of 120,000 BTC, stolen by hackers through a security vulnerability in the System. Whether Nice Hash, Coincheck, or Binance – the list could be endlessly continued. What all these attacks have had: The crypto-thieves found a single back door that you leave could – the Single Point of Failure. One more reason for decentralized exchanges.
To lead is suspected, the crypto-war: Kim Jong-un
Political sensitivity: Kim Jong-UN’s alleged Cyber-war
Man turns his gaze to East Asia, get the (Un-)security of centralized stock exchanges on top of that, political weight. Because one of the news Agency Bloomberg gives Reports to Believe, the North Korean Regime is behind some of the attacks on South Korean stock exchanges. And it is not unlikely that Donald trump’s beloved enemy Kim Jong-un is behind these attacks. Because in the possession of crypto-currencies, North Korea would not only be able to weaken the economy of the southern neighbours. Rather, the detour through crypto-allowed currencies, quite similar to how it is in Venezuela, the circumnavigation of the American sanctions. However, Even with these attacks, it is the Single Point of Failure, the Bitcoin exchanges at an attractive attack target for hackers.
Decentralized stock exchanges – The way out of the Dilemma
Alone the discussed examples of potential points of attack on centralized crypto stock exchanges, speak a clear language. Ethereum founder Vitalik Buterin took place in this context even clearer words:
“I hope that centralized exchanges burn in hell!”
On the TechCrunch Sessions: Blockchain 2018 Buterin primarily criticised the centralisation of Power that comes with centralized exchanges:
“We can decide to get rid of Makes this stupid king-maker, which empowers the Central stock exchanges, for example, a Token can be large. The further we remove ourselves from this world, the more we approach values as us, such as openness and transparency that the Blockchain is actually. If it goes from Fiat to crypto, it will demoralize hard-to-discreetly, because you have to dock eventually, with the Fiat world, which has only one centralized access.“
In order Vitalik Buterin speaks to another sore point, the centralized exchanges and decentralized exchanges to get rid of.
Control through Central instances, Contrary to the basic idea behind Bitcoin
At the risk of repeating, The basic idea behind Satoshi Nakamoto Bitcoin Protocol of the decentralization and trust on the (Blockchain)technology, instead of on instances, such as Central banks or governments is based.
But it is precisely this role of centralised exchanges. Whether Binance, BitMex, or octopus – they are all businesses run by individual instances. These finally have the control over the rights of its users and, above all, (mostly) via their Private Keys.
Decentralized exchanges solve this Problem, the control is delivered to the individual users and, above all, on the technology. Thus, the liquidity of the stock markets decreases, however, there are no major stocks of Bitcoin and other crypto-currencies, on which users can rely. (Read more here).
A blessing and a curse at the same time
The absence of a Central control instance, brings a disadvantage: the absence of a control instance. To get users more control over their embedded crypto-currencies, but you need this control also carry out the responsibility is not easy.
Nevertheless, The chances are good that the future of Bitcoin and other crypto-currencies, distributed in the hands of the decentralized exchanges. You are ultimately safe from Hacks and give the users the control over their Assets – just as it is in the sense of the Blockchain technology.
Examples of decentralized exchanges about Bisq, Cobinhood, Robinhood, Bancor, IDEX or Bitshares. A statement in Detail can be found here.