A lot of the platform try to deliver the decentralized exchange site. but you are forgetting to mention the eidoo project as part of the project that has focused to develop the decentralized exchange site. We know the centralized exchange site will be able to crackdown by the government through the regulator. eidoo will try to build the decentralized platform through their current product. The multi crypto wallet.
But this time there are some decentralized exchange sites that already existed but it was feeling complicated for use them.
Topic: Decentralised exchanges: possible improvements and future outlook (Read 216 times)
November 09, 2017, 06:33:38 AM
I wanted here to discuss the interesting and inspiring topic of decentralised exchanges. As a newcomer and newbie, some other aspects probably need to be also addressed and developed, but it can be a good base to start a discussion and get further opinions on the subject :-)
Even if decentralised exchanges are offering advantages based on the inconveniences of the centralised exchanges, there are still some features that need to be improved in order to gain a broader customer base and extend the number of transactions.
Challenges to be adresses by decentralised exchanges
In order for decentralised exchanges to rivalize and be competitive with centralised ones and being able to keep on growing and attracting more customers, many issues, mostly technological and legal ones, remain to be addressed. Developpers are actually being working on them thanks to funds raised through ICOs.
The main challenge being liquidity and trade volumes, players have been working on improving several features that would enable the decentralised exchanges to become technically more user friendly. Some solutions like multisignature addresses, account management system, transactions notifications, possibility of exchanging to each currencies with another, different assets' management (open plugins system) and asset-to-asset exchange, cross exchange, multiple languages support are being developed (ex. nvo.io).
Another aspect being KYC issues, some solutions are also beeing identified, even though not being ideal and sometimes expensive (exchange for fiat outside of any exchange, at meetups or using crypto debit cards). However, improvements are ongoing with the development of exchanges built right into the wallet.
Regarding AML requirements, some decentralised exchanges found some ways to bypass them by supporting transactions between different cryptocurrencies while not offering the possibility to that they cannot currently exchange cryptocurrencies with fiat currencies. However, solutions such as trade limitations to prevent fraud and extortion, dedicated arbiters as well as security deposits (lock-ups with multisignature addresses) are also being implemented (Bitquare).
Future outlook
Even though both exchanges offer pros and cons, future development would probably lie into a closer cooperation or integration of their market players so that both would gain in knowledge and expertise and propose more reliable and accessible solutions.
Despite being critical towards cryptocurrencies, centralized exchanges started to develop their offerings, including wallet and brokerage services, as their customer bases swell due to skyrocketing cryptocurrency prices. Some of Wall Street's big players are also eyeing on cryptocurrencies and seeing development opportunities and possibilities of making large profits while keeping costs low. Goldman Sachs expressed their interest in developing a cryptocurrency exchange and trading platform in the nextcoming months (market penetration maybe through acquisitions), while JP Morgan, sending mixed messages, started also trading cryptocurrencies (newsbtc.com , coindesk.com). Another possible development would be the possibility, for centralized exchanges in various jurisdictions, to tokenize real-world assets, which would then be traded in a decentralized manner.
On the other hand, some newcomers also understood the benefits of both exchanges' integration and are launching hybrid models based on that idea as the example of the openANX platform, whose goal is creating a truly open source and decentralized platform that uses a hybrid model to integrate the key strengths of the existing centralised exchanges and proposes significant enhancements such as credit risk assessment, structured dispute resolution and a collateralized deposit system.
Sources:
https://news.bitcoin.com/decentralized-exchange-airswap-gets-attention-aftermath-chinese-crackdown/
https://cryptortrust.com/2017/01/06/decentralized-exchanges/
https://nvo.io/assets/whitepaper.pdf
https://kyber.network/assets/KyberNetworkWhitepaper.pdf
https://www.openanx.org/en/assets/whitepaper/openANX_White_Paper_ENU.pdf
Even if decentralised exchanges are offering advantages based on the inconveniences of the centralised exchanges, there are still some features that need to be improved in order to gain a broader customer base and extend the number of transactions.
Challenges to be adresses by decentralised exchanges
In order for decentralised exchanges to rivalize and be competitive with centralised ones and being able to keep on growing and attracting more customers, many issues, mostly technological and legal ones, remain to be addressed. Developpers are actually being working on them thanks to funds raised through ICOs.
The main challenge being liquidity and trade volumes, players have been working on improving several features that would enable the decentralised exchanges to become technically more user friendly. Some solutions like multisignature addresses, account management system, transactions notifications, possibility of exchanging to each currencies with another, different assets' management (open plugins system) and asset-to-asset exchange, cross exchange, multiple languages support are being developed (ex. nvo.io).
Another aspect being KYC issues, some solutions are also beeing identified, even though not being ideal and sometimes expensive (exchange for fiat outside of any exchange, at meetups or using crypto debit cards). However, improvements are ongoing with the development of exchanges built right into the wallet.
Regarding AML requirements, some decentralised exchanges found some ways to bypass them by supporting transactions between different cryptocurrencies while not offering the possibility to that they cannot currently exchange cryptocurrencies with fiat currencies. However, solutions such as trade limitations to prevent fraud and extortion, dedicated arbiters as well as security deposits (lock-ups with multisignature addresses) are also being implemented (Bitquare).
Future outlook
Even though both exchanges offer pros and cons, future development would probably lie into a closer cooperation or integration of their market players so that both would gain in knowledge and expertise and propose more reliable and accessible solutions.
Despite being critical towards cryptocurrencies, centralized exchanges started to develop their offerings, including wallet and brokerage services, as their customer bases swell due to skyrocketing cryptocurrency prices. Some of Wall Street's big players are also eyeing on cryptocurrencies and seeing development opportunities and possibilities of making large profits while keeping costs low. Goldman Sachs expressed their interest in developing a cryptocurrency exchange and trading platform in the nextcoming months (market penetration maybe through acquisitions), while JP Morgan, sending mixed messages, started also trading cryptocurrencies (newsbtc.com , coindesk.com). Another possible development would be the possibility, for centralized exchanges in various jurisdictions, to tokenize real-world assets, which would then be traded in a decentralized manner.
On the other hand, some newcomers also understood the benefits of both exchanges' integration and are launching hybrid models based on that idea as the example of the openANX platform, whose goal is creating a truly open source and decentralized platform that uses a hybrid model to integrate the key strengths of the existing centralised exchanges and proposes significant enhancements such as credit risk assessment, structured dispute resolution and a collateralized deposit system.
Sources:
https://news.bitcoin.com/decentralized-exchange-airswap-gets-attention-aftermath-chinese-crackdown/
https://cryptortrust.com/2017/01/06/decentralized-exchanges/
https://nvo.io/assets/whitepaper.pdf
https://kyber.network/assets/KyberNetworkWhitepaper.pdf
https://www.openanx.org/en/assets/whitepaper/openANX_White_Paper_ENU.pdf
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