Centralized vs Decentralized exchanges — which one does HighBank support?
Without any doubt, we support decentralized exchanges and in this article, we will shed light on its advantages.
It is quite unfortunate that despite using the word ‘decentralized’, most of the popular exchanges like Binance, Bittrex, and Coinbase have a purely centralized infrastructure. It cannot be ignored that in the beginning (I mean when the crypto hype surged), it was crucial to rolling out centralized exchanges in order to offer liquidity and promote the usage, but now, there have been many incidents which prove that we need to go for decentralized exchanges. For instance, there have been several significant hacking incidents on some of the major exchanges and in some cases, governments also imposed bans, hence thwarting the entire business models. Since DEXs do not fall under any jurisdiction (as they are decentralized), the government cannot impose any sort of ban. Therefore, it is pretty obvious that something needs to change in order for the niche to be more trustable.
Decentralized exchanges at a glance
Last year and even a couple of months ago, there was hype for popular centralized exchanges. But in the light of the incidents mentioned above, there is a new trend in the crypto niche where users have started preferring decentralized exchanges. It is also very understandable as to why the user interfaces and efficiency of these DEX sites is far slower than their significant others. The primary reason is that they have recently gone mainstream, whereas centralized models were operational when BTC and ETH hit their all-time highest.
So, in the future, we can expect DEX to be a lucrative business model — but let’s just have a look at the perks of a decentralized exchange.
It is important to explore the technical aspect of centralized exchanges in this regard first. Basically, all of your decentralized currencies are held or secured in a centralized environment, which puts your funds at risk. When you create an account on these exchanges, you are given wallet instances for all the available tokens listed on the exchange. But what’s worse is that they keep hold of all the private keys. Just imagine the wrath it could bring if all private keys are stored centrally — basically, they are easing the job for hackers. What’s worse is that most of the centralized exchanges do not have robust security to guard the private keys.
HighBank’s decentralized exchange is way different in that regard. The basic exchanging principles remain the same, but the protocols and processes are different in order to ensure none of the private keys is stored in a central environment and every wallet carries desktop-level security.
I know we are discussing exchanges right now, but the wallet is an integral part of it and we cannot ignore the importance in this case. It is also worth mentioning that it is not mandatory to use our exchange in order to enjoy the features of our secure wallet. You could use it even for accepting 3rd party payments by integrating our gateway on your website.
Moreover, if you look at it, even centralized exchanges can team up with us in order to enhance the security of their private keys and ultimately, the wallets.
That’s a wiser option instead of closing an entire business just because it’s centralized — we need to move forward, not otherwise.
Centralized exchanges do face downtimes — could you believe that? This is because (even though they allow you to trade a decentralized commodity) the backend infrastructure is not ‘that decentralized’ and depends highly on the reliability of a few servers and nodes. However, in the case of a DEX, the hosting network is much larger than its significant other and hence, there is no downtime.
Efficiency is everything in this business. Even though centralized exchanges enjoy the upper hand if talk about transaction speed in general when you try to transfer your funds from a desktop wallet to a centralized exchange, the efficiency is not commendable at all.
Here is the procedure:
- If you have the compatible/exchangeable currency in your HighBank wallet, put up a trade order on the exchange
- If the system finds the currency you want to perform an exchange with, the transaction is carried out within a second and the accounts are credited in real time
- For instance, if you plan to trade/send your tokens outside of the HighBank network, you need to initiate a transaction that is executed on an underlying blockchain. As a result, the main network is not overcrowded with transactions going out or coming in from different networks and the same efficiency is maintained for all type of trades, whatsoever
Purely crypto oriented
Most of the centralized exchanges allow bank wire transfers and credit cards for an equivalent amount of crypto tokens being transferred. Well, that is a way to ease the customers but one way or the other, it refutes decentralization and anonymity.
However, the level of anonymity and privacy practiced in a decentralized exchange is beyond the capability of any centralized exchange and they are strictly crypto-based. You can buy tokens through credit card on a centralized exchange and then transfer to your DEX wallet, but while you are using the HighBank exchange, forget credit cards — this is a robust measure to ensure user anonymity and guarantee privacy.
It is often said the since decentralized exchanges are difficult to use, have less functionality and a not so friendly interface, customers do not prefer using them.
HighBank took that into account and we have offered a great deal of functionality, ensuring that we remain as close to centralized exchanges as possible, in terms of the number of features, while guaranteeing decentralization, security, anonymity, and privacy.
DEXs do not fall under any jurisdiction (as they are decentralized), the government cannot impose any sort of ban. Therefore, it is pretty obvious that something needs to change in order for the niche to be more trustable.
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