Cryptocurrencies are a success because they are decentralized, immutable and trustless. No intermediaries, no censorship or regulation, no danger of losing money other than a leak of the digital private key. But the very moment a user tries to trade outside the blockchain, there is no longer a fool-proof algorithm protecting him from the dangers of traditional markets.
In order to securely and easily execute crypto-to-crypto and crypto-to-fiat currency trading, users are ironically forced to rely on third-party guarantors. Large online exchanges are completely centralized entities which by design compels users to relinquish control over their money into their hands.
Obviously having private centralized bottlenecks, connecting decentralized financial ecosystems to each other and to traditional markets in many ways defeats the entire concept of cryptocurrencies.
Centralised online crypto-exchanges may be falling out of grace with the industry’s massive burst of growth
Centralised exchanges completely undermine most security benefits cryptocurrencies possess. They are vulnerable to hacks, inside jobs and operational errors.
Most notorious heists and fiascos from the world of crypto were in some fashion linked to centralized exchanges. Together with ICO scams, online exchanges are the major black hole where literally millions of Bitcoins disappear.
Even the largest, most respected exchanges were not left unmolested, overall losses amounting to millions of Bitcoins. Today it is a common knowledge among traders to never hold a large number of coins on a single exchange for too long.
Why weren’t exchanges decentralized since long ago?
Decentralised exchanges have actually existed for a while but they all ended up as niche projects. While completely decentralized exchanges are more secure, accessible and transparent, they have found no real appreciation within the community.
Being non-profit projects these exchanges have to get by with slow trading engines and a limited list of features. Lacking even such basic instruments as lending and marginal trading, they are not favored by traders and thus can not boast decent liquidity. The fact that traders tend to accept serious risks associated with trading on centralized platforms speaks volumes about current decentralized solutions.
What’s the plan going forward?
Many crypto-evangelists that the future lies in hybrid solutions. A good example of such approach is EXPREAD project, which is not just a trading platform but an overarching ecosystem offering a fundamentally new business model for online exchanges. Basically, it combines the advantages of both centralized and decentralized solutions, the former being sophisticated functionality and high-performance trade engine and the latter being higher security, full transparency, and joint governance
The concept behind the new model is easy to grasp. EXPREAD will provide the community with a seamless global trading framework incorporating multiple exchanges built on top of it. Such individual exchanges can still be centralized ventures but they will all be interconnected in a seamless decentralized network sharing one order book, trading engine, and liquidity pool.
“EXPREAD liquidity model enables a seamless aggregation of the market depth to harvest the synergy value from unified liquidity pool.” says Carlos Gao, co-founder of EXPREAD.
This synergy value the project promotes relies heavily on whether the community of traders finds this model more appealing than flawed and problematic but familiar approach of largely centralized exchanges. The team is engaged with the community showing that this is among their top priorities at this stage.
“2018 promises to be an important year for our platform as the team puts forth a global agenda in order to ensure its fast and sustainable development through acquiring strong partnerships and further funding”, says the Expread CEO. “We are inviting the active crypto enthusiasts to join our telegram global community in order to gain more insight directly from the founders and technical team of the platform”.
We are yet to see if EXPREAD proves to be a success or a failure. One thing is clear – EXPREAD’s suggested model has a potential to disrupt the obsolete crypto-exchange market and those who own any type of cryptocurrencies would be wise to keep an eye on this project.