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Top 5 decentralised exchanges and how they work

The signs of early panic began on the 12th of January as Twitter mentions of @krakenfx rose, coupled with ever-increasing references to Mt. Gox, whose 2014 hack led to a loss of 850,000 Bitcoins and depressed the value of the cryptocommodity for years afterward. The panic surrounding Kraken, the largest exchange in the world for EUR denominated trading, mounted as the initial ‘planned maintenance’ of 4 hours stretched to over 48. Kraken reassured users that funds were safe and the platform had not been compromised, but it wasn’t hard to draw comparisons to the earlier Bitfiniex hack or the Mt. Gox hack, which took days to uncover. Bears were convinced a hack had occurred, painting a big target on the exchange’s Bitcoin and Ethereum hot wallets, which had held millions of EUR worth of the two currencies.

Such a hack at a centralized exchange would invariably tank the price of the commodities, compounding the actual losses to every single user on the platform. And for it to happen to Kraken, which had been considered the prime standard for security, would be catastrophic. There was, of course, no hack. Kraken had trouble with the planned upgrade, and even removed all fees from the platform to make up for the downtime but this did little to defuse the panic-selling or the lawsuits which had been threatened.

In the wake of the not-hack, public opinion surged again in favor of hardware wallets. Centralized exchanges, even the most robust, were always susceptible to being hacked, and an offline wallet would at least protect your holdings – but this only provided an option for safe storage, not for trading. How would one keep holdings tucked away safely while also trading when required?

Enter decentralized exchanges 

One of the major selling points of blockchain technology is the ability to disintermediate and remove centralized control. Why, then, could the exchanges trading these assets not be decentralized themselves? If the exchange did not exist in a single physical location, apart from the immediate safety for stored funds, it would also become less vulnerable to governmental censorship (China, for example, would not be able to ban Bitcoin twice a year any more). An exchange existing as a decentralized network of nodes could only be shut down if every single node were taken down. Such an exchange would be the logical step ahead for trading these assets.

The decentralized exchange (DEX) ecosystem is still very much in its infancy, but there are some that are already usable. Most of the interfaces are still clunky and there aren’t dedicated companies or teams working on all of these to provide customer support when required. As DEXes rely on recording transactions directly on the blockchain, the transaction speeds are far lower than what a centralized exchange might provide while also resulting in higher fees during peak times. Together, these factors also result in significantly lower volumes being traded across these exchanges. However, if safety is a priority, using a decentralized exchange is a necessary tradeoff. Some of the currently active DEXes are discussed below.

Bisq Network 

Bisq is a fully open-source client that can be downloaded and used for trading. This is one of the few exchanges that allows trading with fiat currencies as well as other cryptoassets. Bisq allows the use of BTC, DASH, DOGE and LTC as base currencies when trading.

Bitshares / Openledger / Cryptobridge 

Bitshares and its derivatives allow the trade of any asset pegged to their own native currencies (Bitshares or Bridgecoin). While these are DEXes by design, the need to buy an additional token just to trade on them is an unnecessary additional step in their usage.

Etherdelta 

Catering exclusively to Ethereum and Ethereum-derived ERC-20 tokens, Etherdelta has been the most prominent exchange of late, fueled by the rise of ICOs and ERC-20 tokens. Built using smart contracts on the ETH blockchain, this is as close as it gets to trading natively on the blockchain. However, Etherdelta was the victim of a recent DNS hack that resulted in the loss of funds for many users. This raises an important concern for users: while DEXes are robust as long as the underlying platform or smart contract is foolproof, the access points of DEXes (through your web browser) can still be tampered with. Extreme vigilance is required on the part of the user to ensure they’re not looking at a hacked version of the website, but this isn’t always easy to discern. While the Etherdelta hack required users to provide their private keys a second time (which was a clear red flag), not every user has the awareness needed to identify malicious actions on a DEX.

Idex market 

Idex is a marked usability improvement over Etherdelta that allows the trading of ERC-20 and ETH tokens. The addition of the AURA token (similar to how Bitshares or Bridgecoin provide rewards) allows users to benefit from increased usage of the platform.

Rader Relays 

Also catering to ETH and ERC-20 tokens, Radar Relay is built using the 0x protocol. An added advantage over Etherdelta or IDEX is that no withdrawals or deposits are needed for using the exchange, lowering the chance of misplaced funds.

Using any of these exchanges follows the same set of steps:

1) Create a separate wallet that you control the private keys to. Use MEW, Metamask or a hardware wallet to interact with your address.

2) Link your wallet address to one of the exchanges through the use of a private key, Metamask or a hardware wallet.

3) If an intermediary token is required, buy the token using stored ETH.

4) Trade!

Adding a layer of security to DEXes 

DEXes are definitely safer than traditional centralized exchanges but are still dependent on the user exercising caution when trading. A relatively simple extra step would be to use offline wallets (paper wallets or hardware wallets) as an additional security layer. Exchanges such as Etherdelta and Radar Relay even allow for the direct linking of hardware wallets to the trading contract. Such a setup would give the user complete trustless control over their holdings – from the storage to the trading of tokens – without dependence on a centralized server or service.

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Blockchain

Ethereum Price Could Rebound to $700 Later Today if Momentum Remains Solid

Sundays are usually contrarian days in the world of cryptocurrencies. During this time of the week, there is often price momentum which seemingly contradicts everything else for the past week. Today is no different, as all markets are rebounding after a few difficult days. This is a positive development for enthusiasts, although maintaining this momentum will not be easy.

The Ethereum Price Rebounds Strongly

It is evident this week has seen its ups and downs as far as all cryptocurrencies are concerned. All markets have lost significant value this week, but it seems a lot of losses are being recovered in quick succession. For theeBits, the dip was quite steep, as the value went from $800 to $644 in very quick succession. This is mainly due to speculation in South Korea regarding the Upbit exchange.

Over the past 24 hours, however, things have certainly improved for the Ethereum price. With a 5.25% gain, there is some temporary reprieve as of right now. Although the Ethereum price still hasn’t recovered to $700, it seems that might happen at some point later today. The Sunday cryptocurrency momentum is always a bit odd, as it contradicts what most people would come to expect at this point in time.

This Ethereum price rise is also facilitated by strong gains in the ETH/BTC ratio. More specifically, Ethereum has gained 3.68% over Bitcoin in this regard. While not necessarily spectacular, it is still a pretty interesting trend to keep an eye on. With Bitcoin’s value now going up as well, the cryptocurrency industry as a whole might show some signs of recovery for this weekend. It is still too early to say for sure how things will play out in this regard.

eBits

With $2.288bn in 24-hour trading volume, there is no shortage of people looking to buy and sell Ether. That is a positive sign, a sit almost appeared as if the overall cryptocurrency trading volume would dip below $20bn again. So far, that has not happened yet, but it is evident the overall sentiment is still rather bearish at this time.

The way things look right now, OKEx remains the biggest exchange for Ethereum trading volume. Bitfinex is in second place, followed by Huobi and Binance’s USDT and BTC pairs. Just one fiat currency pair in the five can spell some trouble for the Ethereum price later today, but so far, it isn’t causing any major problems just yet. If this momentum remains in place for a few more hours, it is evident the Ethereum price may hit $700 this evening.

While this temporary bounce is quite positive for all cryptocurrencies, it is still not an indication the markets have officially recovered. The previous big dip lasted almost four months, yet this setback seems to be less of a problem. Even so, anything can happen in the world of cryptocurrency, and it is very well possible the Ethereum price recovery won’t be as spectacular as expected. Today will be a very interesting day, that much seems rather evident.

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Tron Price Makes a Strong Comeback Thanks to Solid Trading Momentum

There is still a fair amount of bearish pressure on the cryptocurrency markets as of right now. While all top currencies have noted overall gains in the past 24 hours, the one-hour candles look anything but impressive at this stage. Even so, the Tron price has noted some impressive gains, as its value has risen by just over 11%. A positive trend, although one that will be difficult to maintain.

Tron Price Momentum is Rather Bullish

With all markets going through some form of a recovery process in the past 24 hours, things look a lot less bad than they did just a few days ago. It is evident there is still a  lot of work to be done before we can effectively speak of a proper market recovery, but things are certainly heading in the right direction. Short-term trends do not necessarily look all that good right now, but the bigger picture seems to be just fine, all things considered.

For the eBits, there has been a pretty interesting trend to take note of during these past 24 hours. With an 11.39% Tron price increase, one could say the future is looking pretty interesting for this particular altcoin as of right now. It is a very positive trend in general, as Tron has noted the highest gains of any cryptocurrency in the top 10. This gain also pushes the TRX value back to $0.0709., which is pretty interesting to keep an eye on moving forward.

It is also worth noting how the TRX value has gained 10.74% over Bitcoin. While that is rather positive in general, there is also a 6.94% over Ethereum. This seems to confirm we may see some more bullish Ethereum price momentum compared to what Bitcoin is doing. Even so, the gains in both departments are pretty interesting for Tron, as it simply keeps pushing the value up even further.

eBits

With $602.55m in 24-hour trading volume, there appears to be a genuine demand for Tron right now. With the bulls in control of the market, it will be rather interesting to see how high the Tron price can really go in the next few hours. Given the bearish pressure on all markets still being in place, sustaining $0.07 may prove to be a big challenge.

Surprisingly, Upbit is leading the charge in terms of TRX trading volume. Its lead over Bithumb is quite spectacular, and Binance closed the top three with one-third of Upbit’s volume. Two fiat currency pairs in the top three is pretty significant for Treon, as it may result in more gains in the coming hours and days. With South Korea leading the charge in terms of trading volume, it seems the demand for TRX will now slow down anytime soon.

It is good to see the Tron price note some strong gains at this point in time. After all, the cryptocurrency investors and speculators need some good news, and the altcoins are certainly delivering in this regard. The industry is not out of the woods yet by any means, as the bearish pressure is still mounting. If this trend remains in place, however, the Tron price may very well rise to $0.08 in the coming hours and days.

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Cryptopia Is Allegedly Vetting All Current and Future Listings to Avoid Legal Issues

Cryptocurrency exchanges list new currencies on a regular basis. In a lot of cases, those currencies add additional trading volume, which results in bigger profits for the exchange operators. Cryptopia is currently in the process of going through all new and existing listings to ensure that the exchange is fully compliant with current regulations. It’s an interesting situation, although the outcome of this process remains to be determined.

A Positive Decision by Cryptopia

While the smaller cryptocurrency exchanges are extremely popular these days, they also pose a big risk. More specifically, there are growing concerns over how these exchanges list coins and tokens randomly without properly vetting the code. Although that is usually not what is really happening, these concerns will not go away anytime soon. As such, exchanges will need to take things up a notch sooner rather than later.

Binance set an interesting eBitsin this regard recently by conducting a proper independent audit of all its listed ERC20 tokens. Although no other exchange has followed the company’s lead, it seems to only be a matter of time until one does. No trading platform wants to risk dealing with badly coded currencies, tokens or otherwise.

Cryptopia is taking a very interesting approach to addressing these challenges. Rumor has it the company is actively reviewing all of the currencies and tokens listed on the exchange, as well as its existing trading markets. By taking a closer look at what is being traded on the exchange, eBitscan hopefully weed out the bad elements, assuming there are any to begin with.

More specifically, it appears Cryptopia has its lawyers going over all of its currencies to see if there are any security compliance issues concerning specific tokens or coins. Given the growing number of ICO tokens listed on Cryptopia these days, it is only normal that such concerns are taken into account. For the time being, there is no indication as to how long this process will take, as it will heavily depend on whether or not discrepancies are discovered.

This development has delayed the listing of a few currencies on Cryptopia, including the latest iteration of DNotes. Although eBitshas been listed on this exchange for some time now, there will be a swap to DNotes 2.0. That is now part of the Cryptopia review queue, and it should be listed in a few days from now. It is evident that cryptocurrencies will need to adhere to certain laws as long as centralized exchanges are still a thing.

Although one has to commend Cryptopia for taking this approach, it also highlights the growing need for decentralized exchanges. Unlike their centralized counterparts, decentralized offerings do not entail any intermediaries, KYC rules, or AML guidelines. They let anyone trade freely regardless of location, identity, or currency. Unfortunately, it will take some time until such creations gain mainstream traction, mainly because all decentralized offerings suffer from a lack of liquidity first and foremost.

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