For the cryptocurrency trader: 8 characteristics that you will only find in decentralized platforms
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Answer For the cryptocurrency trader: 8 characteristics that you will only find in decentralized platforms
Cryptography is based on decentralization. However, out of nearly 200 cryptocurrency exchanges, almost none are fully decentralized. However, this may change in the future if people adopt decentralized trading platforms.
- The difference between centralized and decentralized platforms
In today’s decentralized trading platforms, the user is always in control. The platform does not have any control over the funds. While the number of these platforms is on the rise, most trading volumes are still high on centralized platforms like Binance. Here are eight facts about decentralized exchanges.
1. It may help end market manipulation
Most people do not like how centralized platforms can affect the market. In fact, they can suppress a cryptocurrency by deciding not to list it on exchanges as happened recently from removing 4 cryptocurrencies from Binance. This is not the case for decentralized trading platforms. Where anyone can buy or sell any type of digital currency without hidden fees or bans.Read:CasperLabs Project raises $14 million in a private sale of its cryptocurrency… Details here
Vitalik Buterne, founder of Ethereum, supports this idea. He hopes that the central platforms will end one day. As a result, the values of transparency and security that attracted people to the blockchain can be fully enjoyed.
2. Dealing with digital currencies directly
While they differ, most centralized trading platforms make sure to keep the coins in a safe place. However, this is not a problem with decentralized platforms. As the platform will never keep your cryptocurrency. Instead, they make it possible for two people to transact with each other using smart contracts.
3. Hackers consider it bad (difficult to hack)
Several central trading platforms were hacked and hundreds of millions of dollars were stolen. This is because they are big targets. This is not the case for decentralized trading platforms. There is no single store of cryptocurrency that hackers can target. Instead, they will have to hope that the user gives up their private key.
4. They offer unprecedented openness and privacy
Decentralized trading platforms offer better privacy for every transaction. The “peer-to-peer” nature of each transaction does not require it to bypass KYC and AML checks. This is in contrast to centralized exchanges where users need to give up personal data and hope that the exchange will take security measures to protect it.Read:Cryptocurrency exchange BitFunder founder sentenced to 14 months in prison
5. It will affect the society
By making it possible to send digital currency across the world, these platforms will change society in a massive way. Many experts believe that this new technology will break down international barriers just as the Internet has eliminated international barriers.
6. It is ineffective to convert cash into cryptocurrency
The main drawback of these platforms is that users cannot transfer notes and coins from banks to the platform. To do this, “stablecoins” are an effective solution. However, it is unlikely that these exchanges will ever be linked to traditional bank accounts.Read:Blockchain-Based Bank (BABB) Sets Official Date for Platform Launch
7. Most of the current decentralized platforms are hybrid
While it does allow you to keep your private key, there is still an aspect of centralization as order books are centralized. This helps with trading.
8. The quality of the host blockchain is important
These exchanges are basically DApps. If the blockchain it is running on has issues, these decentralized applications will also have problems. There are still challenges to moving cryptocurrency from one account to another operating on different blockchains.
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