Why are people moving to decentralized cryptocurrency exchanges?

Why are people moving to decentralized cryptocurrency exchanges? – In 2017, over 250 centralized cryptocurrency exchanges were operating around the world. In this article they are talking about crypto application to offer bitcoin trading features like accurate and précised strategies for becoming an independent trader. Moreover, you will get live customer support. But, as the popularity of cryptocurrencies has surged in recent years, so too have concerns regarding exchange security online. In fact, despite their growing popularity, it is believed that hundreds of millions (if not billions) of dollars in cryptocurrencies have been stolen since the start of 2017 alone.

With cryptocurrency thieves finding newer and more innovative ways to steal funds from trading platforms every day and leaving users unable to get any help from law enforcement agencies around the world, it’s no surprise that trust in centralized cryptocurrency exchanges is plummeting too. Numerous exchanges have been hacked in recent years, including Bitfinex and MtGox.

The latter not only lost over half a billion dollars’ worth of Bitcoin (around 850,000 BTC at the time) when it was breached in early 2014 but also suffered the indignity of seeing its former CTO transported to Tokyo’s Metropolitan Detention Center to serve a 33-month prison sentence for the crime.

 Former CEO Mark Karpeles was found guilty on three charges relating to data manipulation and currency contamination. But, first, let’s discuss why people prefer decentralized exchange in contrast to a centralized one.

Security of Decentralized Exchange:

Mt. Gox suffered a security breach that led to the theft of an estimated $473 million worth of Bitcoins. In the aftermath of this incident, those who participated in the Bitcoin markets on the exchange were left with no recourse because Mt. Gox was bankrupt and did not offer any support following this incident.

The lack of security surrounding centralized exchanges has not only left customers vulnerable but also caused significant harm to Bitcoins’ reputation as a stable investment vehicle, as many people who invested their life savings in Bitcoin through exchanges have seen their investments wiped out by hacks or fraud attacks perpetrated by scammers working for centralized exchanges. However, decentralized exchange eliminates the possibility of a hacker targeting a single centralized company to attack and undermine the entire market.

Organized scams in centralized exchange have also been a problem in the past. The essential appeal of decentralized cryptocurrency exchange is that it eliminates mutual trust between trading parties. Centralized exchanges require traders to place their trust in central institutions, which face security threats from cybercriminals and accidents, such as theft or loss of bitcoins in transit.

Tolerance to cryptocurrency market crash:

Removing the monopolistic control of centralized exchanges over markets gives investors the freedom to choose their exchanges. Coinbase and Gemini are two popular platforms that are top-notch in terms of trustworthiness and security, but they still operate as centralized platforms. As a result, users’ funds remain vulnerable to hacks or other threats even though they have complete control over what they trade. In cryptocurrency crashes, centralized exchanges hiked their transaction fees; on the contrary, decentralized exchanges can continue operating normally.

Free market:

Decentralized exchanges are decentralized, which makes it more difficult for regulators to seize user funds or shut down services. Instead of one centralized entity controlling the flow of funds, participants decentralize each other’s funds through a network of independent nodes, eliminating the possibility of restriction by government agencies and bullies who seek to disrupt transactions.

No KYC and brimming privacy:

KYC and AML requirements have become the new battleground between governments and the crypto community. And it doesn’t help when exchanges are required to introduce KYC policies that take a very narrow view of the market, creating unnecessary friction.

 Decentralized exchanges have not been subject to any government regulations and can operate without KYC programs, putting traders in control of their funds. In addition, there are no regulatory requirements for cryptocurrency investment, making decentralized exchanges an excellent option for those that wish to keep their funds private from third parties.

Long-term economics:

Decentralized exchanges can support cryptocurrencies’ long-term potential by making them less susceptible to manipulation by central authorities. With centralized exchanges running now, they accept deposits in fiat currencies and can issue new tokens and coins as long as they have enough liquidity. By contrast, decentralized exchanges are based on cryptographic protocols that are much harder for governments to control or determine the value of tokens trading upon these platforms.

While decentralization does make use of cryptocurrencies vulnerable to attacks from cybercriminals and other malicious entities, there is still greater security in a decentralized exchange than in a centralized one.