What are Decentralized Crypto Exchanges? Overview, types, and advantages.
Decentralized Finance (DeFi) is the latest buzz in the crypto world. The DeFi impacts the Crypto Exchanges. The Decentralized Crypto Exchanges have seen a spike recently and gained popularity.
The Decentralized Crypto Exchanges are non-custodial peer-to-peer exchange platforms that directly connect the seller to the buyer. The user remains in control of the private keys compared to the centralized exchanges. Let’s have a detailed description of these.
What is DEX?
A DEX is a type of crypto exchange in which the user is in control of their digital asset’s private keys. It eliminates the need for any third-party involvement in the crypto exchange. Whereas in Centralized Exchanges, a third party is involved that has the custody on your behalf. The trade or the exchange performed is not on the blockchain but on the database of the exchange. Even for some, it may seem that centralized exchanges are simple, but they limit the access to your access to the crypto world, pauses your capability to trade, and even makes you vulnerable to cyber-attacks. On the other hand, DEX uses Smart Contracts for crypto exchange between individuals. Orders are executed directly on the blockchain network, and the user is always in charge of it.
Advantages of DEX
Security: Since the DEX are non-custodial wallets, you can always maintain your assets with a private key. Unlike the centralized where you have no assurance because the exchange has the authority over your assets. There is a chance of getting hacked in the centralized system.
Anonymity: The decentralized system does not require you to fill in any personal details such as the KYC (Know Your Customer). The Decentralized exchanges are anonymous and offer complete privacy to the user.
Lower Fees: The decentralized exchanges charge lower transaction fees as compared to the centralized exchanges. This feature is highly attractive to the users as it can save a lot of fees and the process is trusted.
Privacy: This exchange offers privacy to the user. The user does not have to disclose any information to a third party. There is no process such as registration which helps maintain user privacy. These days people value their privacy more than anything.
No Hacking Risk: Since there is no involvement of any third party, the decentralized exchanges are safe as well as private. There is no risk of hacking.
Still, now the cryptocurrency remains an unexplored territory even the people who are actively working on it do not have the fundamental knowledge about the same.
We at BlockCoders can help solve the challenges related to the DEX system with our unique approach to designing and developing the platform.
If you are looking for a team to help you build an effective DEX platform for your cryptocurrency, Get in touch with us! Our team is always ready to help you find some answers for you.