In May 22, there was a fatal bug in famous crypto exchange OKEX when the exchange upgrades its system. Trading is suspended due to technical issues in OKEX. This causes panic in crypto world: from May 22th to May 24th, BTC falls from $8463 to $7475, ETH falls from $700 to $583.
It was not the first time the whole crypto market facing low level errors from exchange that beat the market’s confidence. In April 22th, there is a contract bug of BEC token in OKEX that hackers can use this bug to get unlimited free tokens and this causes the BEC token’s value to go nearly zero. OKEX rolled back the data after that.
Other than the collapse of Mt Gox, those scandals above are not worth mentioning. The exchange filed for bankruptcy in April 2014 after admitting it had lost more than 700,000 of its users’ bitcoins, and it’s safe to say the impacts of Mt Gox’s collapse can still be felt in the industry today.
It is obvious, the biggest risk of cypto is the centralized exchange in a decentralized world.
In exchange, your cryptographic assets are stored in the exchange. Actually you don’t have a wallet in the exchange that can be controlled by you. Quite the opposite, the wallet in the exchange is controlled by the exchange itself. When you withdraw the crypto assets from the exchange, the exchange guy will review your request and handle the withdrawal from their wallet. This is very unsafe if the exchange been hacked, crypto assets are stolen by its staffs, bugs or technical issues occur and more.
Crypto investors are very sensitive to the safety issue of crypto exchange. In such a world that emphasizes decentralization, the centralization of crypto exchanges are truly freaks. However, they are so profitable. According to the report of CCTV, the fee income of one of the biggest crypto exchange in just a single day is $ 8,000,000. They are making money like printing machine and they cannot lower the risk at all.
I think the biggest pain point in crypto world today, is decentralized crypto exchange. Centralized exchanges are so risky and they are Sword of Damocles to its investors.
The essential problem of centralized crypto exchange is the crypto assets in exchange are not controlled by investors but the exchanges. Hacker attacks, bugs, technical issues, moral hazards will cause losses to investors and they can’t do anything to it.
In a decentralized exchange, the crypto assets are controlled fully by investors. They have their own wallets and can transfer and exchange their crytos all by themselves. However, performance issue is the biggest problem. If you need to exchange BTC and ETH with another one. The transaction time is so long that you may lost a lot of trading opportunities. How to leverage decentralization and performance is the biggest challenge.
Many famous crypto exchanges is researching on decentralized crypto exchanges, however, they still have not found a feasible solution.
Without any exaggeration, the biggest opportunity in crypto world today is the first, stable, feasible and safe decentralized exchange. Such exchanges will surely be popular and earn a lot of money.
With the release of EOS.io v1.0, the first blockchain platform that supports more than 500–1000 TPS will be available. With that performance, to make such kind of decentralized exchange become truth.
How to utilize the EOS.io platform to realize such decentralized exchanges? That depends on you, my dear developers. I believe the chances are there when EOS.io released.
Our team, Digital Credit, is working to build such decentralized exchange based on EOS.io. We are also the team to build the first credit system(http://digitalcredit.io) that evaluate your credit only by your talents.
Bye bye centralized crypto exchanges, I can’t wait to the real decentralized, high performance, safe exchange. I can’t wait anymore.