The Decentalized Exchanges requires zero Kyc , your coins are only yours and you can trade directly from your own wallet. The 100% of the tradung fees generated from exchanges are distributed to network service providers . Always remember whether its a bull or bear market , exchanges always make money .
There are many problems with the centralized exchanges that's why the need of Decentralized Exchanges is increasing day by day . Let us all see :
Why we need Decentralized Exchanges
Safe Funds - The first problem with centralized exchanges is that there is always a risk that funds on these exchanges are not safe , they can be hacked . As we all see , hacking cases are increasing day by day . Millions of funds are stolen from Centralized Exchanges . As many people entering in crypocurrency world , so there is also a need of safer environment to trade . Decentralized exchanges are more safer than centralized exchanges because the best thing about Decentralized Exchanges is you can trade directly from your hardware wallet. Less chances of being hacked until u provide your private key to someone .
No KYC - The problems with Centralized exchange is they always need KYC ( know your customer ) these are mandatory . But if something happens to that exchanges than not only your funds but your data is also at a risk . The best examples for this is Mt. Gox and BTCE .
Sometimes they also ceased the new user registration . As we all saw in past bittrex , binance and many others exchanges have done that . That create alot of problems for the people in this world.
Scalbility and speed - In most times , the profits of centralized exchanges earn from trading fees goes back to the exchange to cover their running cost and to make their own profits . Some of the exchange taking millions on daily bases but still they are not scale quivkly to prevent downtime occuring when they are overloaded with users . So , exchange must grow faster than their user base expands . Decentralized exchange solve this issue by shared capacity in the broadcasting system, and with order broadcasts and order matching also being decentralized, than these type of failures will not exist .
Manipulation - There is a term known as Front running which means the unethical practise of manipulating the bids on the orderbook . These types of problems will occur when an entity has control over orderbook or have priority access , where a user can complete pending transactions at a higher or loeer price effectively manipulating the market. This practise is illegal but still occurs on centralized on exchanges . This can happen without knowing u people. The solution to this problem is OFF-CHAIN ORDERS , which enables matching to take place off-chain with the swap still take place on-chain.
Profits and Fees - On most of the centralized exchanges profits goes back to the exchange . The single biggest point of weakness in the crypto ecosystem are centralized exchanges. But think of a scenario where you own your own funds and not by a third party entity as in case of centralized exchanges . This will happen only in case of a decentralised exchange where u can directly trade from your hardware wallet . So only u have access to your funds .
So there is no one who can stop decentralized exchange , no govt. Can interfare in this exchange . Your funds and data are fully safe .
Also the fees on decentralised exchanges are provided to the service providers .
Centralized Trading vs Decentralized Trading
Sometimes trading in centralized exchnges ia a very problematic situation as for the previously mentioned issues of closing new signups, implementing withdrawal limits and the delisting of coins without warning, but there is not such a problem like this on decentralized exchange . There is alot more to cover in this topic and I will cover this on coming days.
There is some questions try to answer these questions and think which is better Centralized Exchange or Decentralized Exchange ?
Q-1 Who owns your funds ?
Q-2 Is there any withdrawl limits ?
Q-3 Is there a company or entity running a exchange ?
Q-4 Are the orders books and order matching centralized ?
Q-5 Is KYC required ?
Q-6 Are there any cost to be listed on exchanges ?
Q- 7 Can only certiain pairs of coin be traded ?
Q- 8 Are your coins are sent to third party entity ?
Q- 9 Who owns the exchange profits ?
Q - 10 Does the exchange require Email, google or facebook sign up ?
FIND answers to these questions for Centralised and Decentralized Exchanges and Decide which is better.
Also let me know your views in the comments .
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