Large cryptocurrency platforms are breaking the basic principles of digital money – users must be identified and their coins held in company accounts. Now platforms that operate under different rules are starting to develop.
Independence from governments or third parties and a decentralised financial system are central features of most digital money. However, they are mostly exchanged on large centralised trading platforms, which are subject to the rules of local financial regulators, require users’ personal data, and may share transaction information with the government, completely undermining cryptocurrency principles.
Decentralised exchanges were created specifically to circumvent such platforms. These exchanges are based on a peer-to-peer p2p network – all participants have equal opportunities. Its system operates on open source code, the exchange is not controlled by anyone. The user can make transactions without intermediaries.
The exchange system uses clients’ computers to create a unified network and there is no specific centre. Traders and investors will not have to worry about hacker attacks or technical failures as funds are held by the customer of the platform rather than a third party.
The main advantages of such exchanges are complete anonymity – traders do not need to identify themselves in order to work, the security of funds storage and open source code. However, decentralised platforms are more difficult to operate because there are fewer trading instruments. These exchanges are not in high demand compared to traditional exchanges, so they have low trading volumes and liquidity.
Decentralised exchanges are still in their developmental stage. The creation of such exchangers is more complex and expensive. These exchanges are built on a specific blockchain, most often Ethereum.
Cryptocurrency exchange EtherDelta specialises in ERC-20 tokens. The commission on trading orders is 0.3%, other transactions on the site are free of charge. Deposits and withdrawals are subject to a fee, which goes to the miners who confirm transactions on the Ethereum network.
In order to work on EtherDelta, it is necessary to create a MetaMask wallet in a special application, which can be downloaded from the official website. Extensions are available for Chrome, Firefox and Opera browsers.
IDEX, an ethereum blockchain platform, is designed to handle ERC-20 tokens. Like other decentralised exchanges, there is no need to register – an account is linked to a wallet.
The Waves DEX exchange operates on the Matcher principle for initial trade confirmation, this allows you to trade 24 hours a day and not have to wait for block confirmation by miners. A large number of altcoins are available on the platform in pairs with WAVES and bitcoin, you can issue your own token and trade it on the exchange.