Why do investors need to know more about a Decentralized exchange in 2020?
With an emphasis on freedom of operations and providing the power of decision making to the participants in a network, Decentralized exchanges have started emerging in the cryptocurrency space. It uses a peer-to-peer mechanism for enabling direct transactions between two different parties. There is an absence of third-party involvement in a decentralized exchange. The assets are kept safe through a distributed ledger technology.
Difference between a Centralized and Decentralized exchange
A centralized exchange is managed by the authority, and they verify all their users. They will be held liable in case the user’s data or trading information is leaked. They manage and control the platform’s operations by making independent decisions.
Decentralized exchanges function exactly in the opposite way. They have low risks of getting hacked, and users have more freedom to control their funds. The exchange just performs the role of finding relevant matches for the buying and selling of cryptocurrencies.
How does a Decentralized exchange operate
Benefits of using a Decentralized Exchange
Limitations of Decentralized exchanges
Future of decentralized exchanges
For those stakeholders advocating complete decentralization, many decentralized exchanges use servers for storing trading data but attach responsibility to the user for storing their respective private keys. Since decentralized exchanges are not subject to much regulation, it leads to problems in determining who is liable for any violation. Hence, an appropriate regulatory framework is required to be created by competent authorities. It needs a common position to be adopted by all countries. Currently, it requires more liquidity and scalability for mass adoption. The advantages of decentralized exchanges overcome its cons, and it would make waves in the years to come. It can make a significant mark on the financial world as of digital assets holders prefer more security and control in their engagement with exchanges.
Get in touch with the accomplished developer team of Blockchain App Factory for creating a decentralized exchange at an affordable cost in 2020. Remain in control of your funds from start to finish.
