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Can We Trust The Crypto’s Exchanges

by Crypto Soho
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In Trustless Cryptocurrency Exchanges We Need To Trust

trust post pictureBasic Condition For Any Money Transaction

Can we trust the cryptocurrencies exchanges?

The fundamental condition of any money transaction is trust.

You wouldn’t give money to your friend to buy you something if you hadn’t trust him; you wouldn’t deposit money in the bank if you knew you will not be able to withdraw it when needed and so on.

Trust is the basic condition of a sustainable business system.

The emergence of cryptocurrencies exchanges

The popularity of cryptocurrency hasn’t been developed overnight with few ups and downs of the market.

It has taken a lot of grinding and squealing down the line to build a reputation that is driving the community into mainstream adoptions.

The emergence of the cryptocurrency exchange services has a lot to do with that reputation. In fact, it was these so-called exchange services that allowed the expansion of the ICO campaigns. In return, people from all corners getting their chance to make an investment in cryptocurrency market and blockchain technologies. The stats comply with the statement; almost 500% increase in crowdfunding from 2014 to 2017.

Cryptocurrency Exchange Services

There are two types of cryptocurrency exchange services available for the users, centralized and decentralized. The inflation of the cryptocurrency market might prove risky for the development of the centralized exchange services. With more and more investment opportunities and investors to go with it, exchange services are put under immense challenge to provide the optimal service to the customers. Unfortunately, the market liquidity is limiting the services of the exchange services. These companies do not support all the major cryptocurrency at the same time with only a handful of coins being supported by the major exchanges. As a result, trading times are increasing and hampering the fluidity of the cryptocurrency market.

Issues We Need To Consider (Not only Security)

Even if we consider the fact that exchange services support most of the necessary coins, we can’t ignore the fact that some of these are not as old as BTC or ETH. So with market expansion, the market for these newly arrived coins is expanding too. More trades are taking place every day and people are turning to these centralized exchange services to utilize their decentralized coins- doesn’t really comply with the fundamentals of cryptocurrency. Scams and hackings incidents over the last few years have resulted in the loss of almost $1.76bn cryptocurrency. Security is a must paid concern for the exchange services and for an unregulated currency that is not the correct word you want to hear.

Decentralized cryptocurrency exchange services offer the perfect alternative for centralized exchange in terms of security. The perks of bitcoin technology make the decentralized cryptocurrency exchange so much superior to others. Blockchain technology is transparent. Transactions are controlled by the sender and receiver directly. There are no third parties involved. So there’s no “trust” factor to consider. That is why the protocol is regarded as “trustless”. One can’t make fake transactions because everything is programmed and recorded with encrypted security. Users can maintain the anonymity and process transactions smoothly.

Will There Be A “Perfect Exchange System’?

Experts believe that blockchain technology can lead to the development of the perfect exchange system. A peer-to-peer transaction service that will hold customer funds and include automated functions. Clients will be able to process their transactions while their funds are held in secure accounts instead of a central site. It will not hold any of the customer funds to prevent the incidents of scams and hacks. Transactions would be processed in real-time as the exchange service will only allow a transaction at optimum liquidity.

But the concept of decentralized exchange service is still relatively new to the community. The technical terms of the blockchain based exchange service might prove a bit difficult for clients who don’t have proper knowledge about the technology. With all the problems of the centralized exchange services, I think it’s about time people start to pay attention to these decentralized exchange services and push for mainstream adoption.

Further interesting reading can be found in MIT Technology Review, posted in technologyreviews.com, by Mike Orcutt.

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1 comment

Anonymous September 17, 2019 - 12:22 pm

Great article thanks for providing this info

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