“Fully” Decentralized Cryptocurrency Exchanges (DEXs)
In light of recent events, both involving the implication of new KYC and AML laws when it comes to cryptocurrency exchanges, as well as the delisting of certain currencies due to legalities (XRP), you may be wondering just where you can trade cryptocurrencies without government interreference. Luckily, there are a number of fully or partially decentralized cryptocurrency marketplaces out there, however there certainly aren’t near as many as there are those which are centralized. It’s important to note that most decentralized exchanges involve the swapping of cryptocurrencies between two parties with no intermediaries. And just because an exchange is decentralized, doesn’t mean it still won’t require some level of verification which is similar to KYC.
Block DX is a decentralized exchange which doesn’t require any sort of KYC, AML, or registration process, making it fully private. There is no middle man, nor middle token, and your coins are traded very quickly using something know as atomic swaps. Atomic swaps are trustless, and happen on a P2P basis. Since there is no entity or company overseeing Block DX, the market is always open and there is never a time when it is down. Because of the decentralized nature of the exchange, the fees are lower on Block DX than most centralized exchanges and all of these fees are distributed to the nodes only, there is no central entity making a cut. Block DX currently offers trading capabilities for over 100 different cryptocurrencies. It seems to be very user friendly, and there is a user interface available for all operating systems. There is also a set up video you can watch if you’ve never traded on a decentralized exchange before. As far as decentralized exchanges go, this seems to be the best one out there as of the writing of this article.
Similar to Block DX, Atomic DEX is a decentralized cryptocurrency exchange which is built on the basis of atomic swaps. Atomic Dex is built by the same people who built Komodo coin, however its software is completely separate so users don’t have to worry about company coin software interference. Atomic Dex relies on the same types of swaps as Block DX and thus requires that you have a bit of trust in the person you are trading with. Of course, this does bring up some security issues if the person you are trading with is dishonest, but this is sadly a risk you have to take when using a decentralized exchange of any sort. All of the technology used on the platform is open source and is there for anyone to look into.
Using Atomic DEX appears to be just as a simple as Block DX, as they also offer videos and other resources to help with installation. The only main difference between Atomic DEX and Block DX, is that Atomic DEX is funded and sponsored by the Komodo company, Block DX is self-funded by the community which uses it — making it just a hair more decentralized for those who are especially concerned with the idea of company interference. It is also unclear if Komodo makes money off the P2P swaps, which their website doesn’t say that they don’t, so it’s possible, and likely, they take a cut of the fees.
IDEX is another decentralized exchange which is quickly rising to popularity. Unlike to aforementioned two exchanges, IDEX offers other solutions besides just an atomic swap. IDEX offers swaps on a more secure basis using a multi signature and node-based escrow exchange program. This means that when you want to make a trade with another person (as decentralized exchanges are person to person only) both your funds are placed in a form of escrow where multiple nodes must come to a consensus to release the funds. These nodes which form the consensus will check to see that each individual involved in the trade has the proper funds, then they will effectively sign off on the transaction and release the funds to the respective parties. Of course, this leads to the trades not being instant like they are in the atomic swap, but it adds an additional level of security for those concerned about the possibility of scams. IDEX is also Ethereum based, limiting the coin pairs of what can be traded on their platform.
It needs to be noted however, that IDEX does take fees from their users and they do require some form of KYC. Although this may not be reported back to centralized entities, it is nowhere near as private as Block DX. IDEX also was the victim of a recent scam in which a fake app with their name was released on the google store. If you do want some of the safety which comes with using a platform like IDEX, be aware and do your research as these trades can still carry risks.
Qortal, unlike Block DX and Atomic DEX is an entire decentralized platform, which offers a number of functions besides just an exchange. However, when it comes to their exchange there is no KYC or AML required. These trades function similar to Atomic DEX in that there is no escrow or middle man, and the trades are direct person to person using smart contracts. Although this all sounds great, Qortal is a new platform, and still has a lot of development before they become a viable marketplace. Currently they only offer BTC trades with LTC to be added at a later date. So, if you need to trade altcoins of any sort, this platform is likely not for you. Of the three truly decentralized platforms, Qortal also seems the least user friendly and most difficult to use, this could change as the company further develops the platform though. Especially as they announce a pending phase three to hopefully be launched soon.
Other Decentralized Marketplaces
Of course, these four markets aren’t the only ones out there boasting decentralized trading, but many of them who call themselves decentralized aren’t actually decentralized, which is a bummer because besides Block DX, these options don’t really seem all that great. Another issue with forming a decentralized marketplace is that people are often nervous to do trades without some sort of backing, and without centralization this simply can’t happen, and thus the audience (and demand) for decentralized markets is pretty small, leading to the development of very few products in the space.
When you are looking for a decentralized market, or doing transactions on one, be very cautious of the market you use and investigate the technology behind these P2P swaps. This will help you avoid possible scams, and be more secure in “trustless” transactions. If you have further questions about blockchain or cryptocurrency, consider signing up at MintDice.com to receive some free guides on the topic.