The great appeal of cryptocurrency is its ability to democratise money. Enabling money to be freed from the shackles of a central manipulative power - this is, arguably, the ultimate end goal of cryptocurrency.
The trouble is, we are currently in a transitional phase. When you exchange fiat for cryptocurrency, you are making this trade through an exchange, and chances are, it's centralised.
As of now, it's pretty much necessary to go through an exchange that is centralised to buy crypto with fiat. Why is this a problem?
Firstly, it's a problem because anything that has a central point of failure... can fail. Seems obvious, but the point is, centralised exchanges store data somewhere in a single place. It might be pretty secure, it might be really secure, or it might have major security flaws, but if it gets hacked, your funds could be accessed by a malicious actor, along with a whole bunch of other users' funds. If the exchange gets shut down for any reason, your funds can also disappear.
If you could be in full control of your funds at all times and would only exchange directly with another user directly from your wallet and then back to your wallet, your funds would not have to be left in the trust of another entity. This is what decentralised exchanges of the future could offer.
Until exchanges are completely decentralised, there is still a point of central control, and therefore, a point of failure and vulnerability. Once these exchanges are fully implemented, the genie will truly be out of the bottle. It will no longer be possible to "shut down" cryptocurrency trading without shutting down the entire internet.
At the moment, there are numerous decentralised exchanges that are cropping up. Most only trade in BTC or ETH pairs, but USD pairs may happen at some point in the near future. One currently centralised exchange that plans to evolve to decentralisation, for example, is CobinHood. A move to full decentralisation with USD pairs would be revolutionary.
You will have to forgive my ignorance when it comes to this - but if you know of a decentralised exchange that is actively trading on USD pairs, or how this would even be technically possible, please mention it in the comments below!
It should be noted that atomic swaps will also play an important role in the decentralisation of trading. Atomic swapping is already technically possible, but should be more user-friendly and possible with some wallets in the coming months.
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