Transformingtrading

TRANSFORMING TRADING : TRADITIONAL EXCHANGES TO CEX AND NOW DEX

The concept of financial trading has evolved over the years. While stock trading still dominates the exchange scene, it has started to give way to cryptocurrency trade. The transformation is not without reason. Cryptocurrency holds a market cap of over $300 billion, with the potential to reach the $10 trillion mark in the near future. There are currently about 1500 cryptocurrencies in the market today along with a significantly large number of cryptocurrency tokens. This rapid growth of cryptocurrency has attracted traders from across the world. Although built on the same concept of buying and selling assets (coins or assets) with the intention of earning a profit, cryptocurrency trading differs vastly from the traditional trading processes.

THE TRANSITION FROM TRADITIONAL CRYPTOCURRENCY EXCHANGES

The growth of cryptocurrency exchanges can be attributed to the challenges presented by the traditional exchanges. Some of these include the long hurdles of paperwork and high costs associated with the commencement of trade. Fiat exchanges are highly regulated investment centers and hence companies offering the exchange services require a great deal of information from the trader. This adds to the cost and delay in setting up a fiat trading exchange. Investments to be profitable in these exchanges, require a considerable amount of market analysis through news, evaluation of economics, political trends, and indicators. Trading fees are another factor that figures among its various disadvantages. Cryptocurrency trading exchanges, on the other hand, simplify trading by offering the facility at a negligible fee. Volatility is one of the major factors that contribute to the popularity of cryptocurrency exchange. The cryptocurrency market is much more volatile than the traditional one offering opportunities for greater profit. However, if not done carefully it acts as a double-edged sword, providing chances for profit and loss in equal measure. Although some countries have imposed certain restrictions on cryptocurrency trade, it remains largely unregulated. This makes trading faster and simpler with fewer rules to carry out a trade. However, cryptocurrency exchanges are notorious for security attacks.

CENTRALIZED CRYPTO EXCHANGES VS DECENTRALIZED CRYPTO EXCHANGES

Decentralisation refers to the distribution of the network from a single Central Point to across the entire network nodes and this further involves devolving the power of decision making from a central authority to the different entities on a network. This is one of the main features of cryptocurrency. In a peer to peer network, the transfer value of a cryptocurrency such as Bitcoin is not decided by a central authority but by a distributed group of network nodes.

Nevertheless, this very property of cryptocurrency is not followed in all cryptocurrency exchanges. Cryptocurrency exchanges can be either centralised or decentralised. Some of the most famous cryptocurrency exchanges such as Binance are in fact centralised. In a centralised exchange, all the data are stored with the central authority and often involves a Third Party to facilitate parts of the Trade. The idea of centralisation is mainly associated with the Exchange having a degree of control over the funds or personal details or other things pertaining to trade. Most of these exchanges allow the transaction of fiat and cryptocurrency.

Storage of all data at a central location creates a greater risk of security. Hackers can easily access all data at once by breaking the security barriers of the central location. This has been evident from the previous instances of hacks that led to the downfall of many main Centralised cryptocurrency exchanges.

Decentralised exchanges, on the other hand, do not require any intermediaries for operation. The elimination of a third party to carry out the trade considerably brings down the cost and delay in carrying out the transaction. Decentralised exchanges are similar to blockchain in that there is no single point of failure. The hacker would have to compromise more than half of the system to take advantage of the data. Hence the risk of malicious attack is very less in these exchanges. They also allow seamless integration of hardware wallets which allow users to transfer funds directly from the wallet to the smart contract or the blockchain. This helps prevent the threat of keylogging and phishing attacks.

THE FUTURE OF TRADING

Cryptocurrency is one of the most thriving and dynamic ecosystems within the Blockchain Technology space. It has grown significantly over the last few years along with a parallel system of supporting services. With this large expansion of the cryptocurrencies, crypto trading is expected to witness steep growth in the coming years. The development of Blockchain technology has opened up new possibilities for innovation. The future of cryptocurrency trade is expected to be decentralised sans its slight disadvantages. The new exchanges will overcome the issues of complex UIs and escalating transaction costs. They will also be able to include a wider range of coins in trade. We currently face a shortage of a comprehensive exchange that caters to the different needs of a trader. Some exchanges lack in the number of currencies that can be exchanged, while others fall short of an interactive user interface. BankDex decentralised cryptocurrency exchange addresses the issues of present-day exchanges with a decentralised exchange that allows users to trade crypto and fiat currency with the help of a single versatile interface. The exchange enables peer-to-peer trade with the help of a well-constructed smart contract. The decentralised nature of BankDex eliminates the need for a third party or central controlling server. The platform facilitates fast, secure and cheap transactions between traders. It overcomes some of the shortcomings of decentralisation with a user-friendly interface that enables smooth trade for even a common trader. BankDex allows the trade of multiple crypto and fiat currencies through a multi-currency wallet that enables wallet-to-wallet trade between the users. It simplifies cryptocurrency trading by offering free cancellation of transactions and unlimited withdrawal of funds. BankDex trading services will be available free for the first three months of transaction and thereafter at the payment of a very nominal fee. BankDex aims to redesign the future of decentralised trading by eliminating the complexities associated with the current systems.

CONCLUSION

The financial trading system is set to undergo a major transformation with the advent of cryptocurrency and blockchain technology. Cryptocurrency trading has opened up new dimensions of trade with the potential of generating greater profits. Crypto exchanges are increasing in maturity with the development in technology. As the public interest in cryptocurrency trading increases with time, decentralised exchanges will become the most preferred way of trading. By overcoming the inadequacies of present-day exchanges BankDex decentralised exchange is aiming to be a key player in the future of trading.