Decentralized exchanges, or DEXs, came to revolutionize fintech and how we look at money or cryptocurrency. They offer significant benefits and innovations for trading cryptocurrencies compared to centralized exchanges.
Back in 2012, buying a bitcoin was a difficult process that could take three weeks. Then Centralized exchanges came to the scene to make the process easy and seamless. These centralized crypto exchanges seemed to work perfectly – until they didn’t.
Mt. Gox was attacked in 2014, and over 850,000 bitcoins were stolen. Bitstamp was hacked in 2015, BTC-e was shut down in 2017, and the infamous QuadrigaCX was hacked – by its owner and CEO – in 2018 and eventually shut down, having lost all its clients’ coins, in 2019.
Not all centralized exchanges have had issues. Many currently operating have had years of successful business operations and many happy customers. Centralized exchanges have their own negatives, however. They’re forced to obey know-your-consumer (KYC) regulations of the country in which they reside. They have limits in terms of order book size and require the user to trust the business’s solvency, something often seen as a negative by native crypto users.
A combination of these issues and the development of smart contracts eventually led to an elegant solution: an exchange platform built entirely on crypto in a completely trustless and decentralized manner – a decentralized exchange.
DEXs are very complex smart contracts, but they have simple goals: to provide liquidity to anyone who wishes to trade cryptocurrencies. The most popular DEX is Uniswap, built entirely on the Ethereum blockchain. Uniswap provides a decentralized trading platform for any crypto user who wishes to trade Ethereum-based tokens.
DEXs have a few significant benefits over centralized exchanges. They do not require KYC, and they operate 24/7. They also provide investors with yield farming opportunities, which are opportunities to help facilitate decentralized swapping – or trading – of digital assets in exchange for a small fee. And the smart contract code (Uniswap is written in Solidity) is open and transparent, allowing crypto natives to verify the code instead of trusting a centralized business to be solvent.
In BitSchon, you can use DEXs freely and make your transactions 24/7.
