Cryptocurrencies like Bitcoin utilize an unhackable and decentralized transaction ledger called blockchain. There is no bank or company or organization running everything behind the scenes, which is why trading Bitcoins and other cryptocurrencies is considered safe from hackers.
Rather than having specific servers for cloud transactions, decentralized exchanges (DEXs) utilize blockchain. This way, any data they wright goes directly to the blockchain, making it impossible to hack, ensuring that DEXs are more secure than any kind of centralized banking system. A majority of cryptocurrencies also utilize peer-to-peer trading, which involves users making transactions directly from their personal wallet, so no funds are ever deposited.
For most users, their blockchain wallet address is their only ID, making it harder to hack someone’s personal information. Also, with no central authority, government intervention or regulation is far less likely to affect blockchain.
On the other hand, decentralized exchanges can be slow moving and difficult to use. For some, there is a small group of people offering support and services. However, most of the time, transactions are dependent upon miners to confirm those transactions, which often comes at a cost.
Of course, it’s hard to put a price on privacy and security when it comes to any type of currency. Thus, the positives of DEXs tend to outweigh the negatives. Moreover, the DEX model is still growing and developing, so it stands to reason that things will improve with time.
With all that in mind, let’s take a look at some of the top DEXs in operation today.
Bancor allows you to exchange various ERC-20 tokens, utilizing message apps as part of the process. There’s no need to deposit funds, and there is a user-friendly interface that makes everything relatively easy. However, Bancor sets all the prices, and all you can really do on this DEX is swap tokens.
This is a rather odd DEX in that it has no dedicated interface. You simply log into your “Counterwallet.” The problem with Counterparty is that there’s no token filter, so it’s tough to tell if anything you see is a scam or not. While you can create tokens via the Bitcoin blockchain, the process is overly complicated, so you need to be a savvy crypto expert to get much done.
EtherDelta is a popular DEX. However, as its name implies, it only deals with Ethereum assets, as well as Ethereum derivatives. Through the use of smart contracts, EtherDelta comes as close as you can get to working directly with the blockchain. However, the interface can be confusing for those who are new to cryptocurrencies and the exchange process. In short, this is for experienced crypto investors.
ForkDelta has many similarities to EtherDelta, as it’s literally a fork of the latter. The newer version is more user-friendly than EtherDelta, making it easy and free for ICO assets to be added. However, the two are quite similar in many ways, although ultimately the two should become more distinct from one another.
Just like ForkDelta, IDEX revolves around Ethereum and ERC-20 tokens. But the big difference is that IDEX combines both centralized and decentralized trading. IDEX uses smart contracts but also has an “arbiter” that helps to speed up the trading process. Of course, this means third-party control, which is a deal-break for some users. The site also rewards users with its own proof-of-stake coin, the AURA.
Kyber has aspirations to be the next big thing, but right now it’s mainly used to exchange tokens. It’s good for allowing users to exchange tokens using their liquid assets and without having to make a deposit. Unfortunately, Kyber provides no information about making informed trades. Instead, it’s merely a giant token swap.
This is a site that tries to do it all, from Bitcoin to altcoins, and even fiat money. You can either choose a wallet that connects straight to your computer or a traditional account that’s a little less secure but can be accessed from anywhere. However, this latter option requires traditional deposits. OpenLedger also has some interface and usability issues that can turn off users.
Radar Relay distinguishes itself by being build using the 0x (ZRX) protocol. Doing so helps with speed and accessibility because only confirmed transactions are written on the ETH blockchain. There are no accounts to maintain or deposits to make, you’ll just need an ERC-20 compatible wallet. Of course, with 0x, there will be a secondary blockchain, meaning you must have faith in the third-party running the show.
Created by Stellar Lumens, this DEX only lists six coins: CNY, MOBI, REPO, RMT, SLT, and XLM. You also need to make a wallet deposit in order to trade. However, unlike most DEXs, StellarTerm offers a desktop client and is quite easy to use.
Waves DEX is a combination of centralized and decentralized trading. You can trade a variety of cryptocurrencies as well as fiat money, and the process is quite quick. However, because it’s build on the WAVES platform, using this DEX requires a WAVES wallet.