There are many different types of cryptocurrency exchanges, all offering different services in different ways. It can sometimes be overwhelming to know which one to choose that best meets your needs.
Centralised exchanges currently dominate the industry, whether this is a good thing or bad, is another matter. It has brought enormous funds from wall street type traders who use algorithms, automated trading bots, and arbitrage to make a profit, though it has also inarguably hurt the industry as well, think back to the infamous Mt. Gox hack or the more recent CoinCheck, and Cryptopia hacks in January 2018, and 2019 respectively.
Why are there so many centralised exchanges constantly being hacked? As the name suggests, user’s cryptocurrency is centrally held by the exchange in what is called a centralised exchange wallet.
Decentralised Exchange (DEX)
Blockchains such as Ethereum allow Decentralised Apps (DAPPS) to be built, current DEX’s are DAPPs that allows buyers and sellers to exchange tokens. A DEX only allows crypto-crypto transactions, but more importantly currently only tokens within that blockchain, E.g Ethereum / Powerledger or Ethereum / OmiseGo. Work is progressing positively on multi blockchain decentralised cryptocurrency exchanges, but it is slow going.
DEXs do have advantages, they are completely decentralised meaning it does not operate within a single country, and can be accessed globally. The drawbacks to this is that transaction speeds are limited by the blockchain. For high volume, or daily traders this can be too slow, as transactional speeds can determine whether your buy or sell order has gone through in the window of opportunity.
DEXs are an area that will pick up adoption in the future, however with its complexity to new users, low volumes, this will take time.
Peer-to-Peer (P2P) Exchange
P2P exchanges have been around for a long time and work much like any other marketplace similar to eBay or Gumtree. Sellers post what they would like to sell and an interested buyer connects with the seller. Simple, right?
P2P exchanges are the easiest to use and more importantly can often be the only way to reliably trade cryptocurrency with fiat currency. This kind of exchange usually do not have support for a wide range of currencies. Elbaite is a P2P exchange but without any of the drawbacks supports many different cryptocurrencies including Bitcoin, Ethereum, Powerledger, OmiseGo, Basic Attention Token, and fixes most of the issues when it comes to P2P crypto trading.
An exchange like Elbaite allows sellers and buyers to connect with each other, and securely transact without ever putting their cryptocurrency at risk. Elbaite does not hold any cryptocurrency at any time, sellers simply transfer the cryptocurrency directly to the buyers wallet. It is the quick, easy, and secure method.
Cryptocurrency trading has come a long way, and there a many great services out there for everyones needs. Get started on your journey at www.elbaite.io