After many cryptocurrency exchanges have become targets of hacks, users are looking for a decentralized alternative in order to protect their assets. Eliminating Risks Over the past few months, the cryptocurrency market had an impressive growth rate, reaching a total market capitalization of $176 billion at its peak. Such rapid growth has not onlygarnered theattention of investors and speculators, however. With the increased interest in cryptocurrency trading, more and more criminals have focused on hacking
Read More End Excerpt –>
After many cryptocurrency exchanges have become targets of hacks, users are looking for a decentralized alternative in order to protect their assets.
Eliminating Risks
Over the past few months, the cryptocurrency market had an impressive growth rate, reaching a total market capitalization of $176 billion at its peak. Such rapid growth has not only garnered the attention of investors and speculators, however. With the increased interest in cryptocurrency trading, more and more criminals have focused on hacking crypto exchanges, which often times hold millions dollars worth of user funds.
The biggest appeal for hackers is the fact that once they gain access to the coins they can easily launder them through “mixers” and thus make very difficult for law enforcement agencies to track the stolen funds. The most famous example of such a hack was the Mt. Gox incident, where hackers were able to steal over 650,000 Bitcoins that, today, have a current valuation of $3.13 Billion. Since most centralized cryptocurrencies have potential security risks, many users have decided to trade on new decentralized exchanges.
Decentralized Exchanges to the Rescue
Some cryptocurrency exchanges store their private keys on centralized servers and thus it is a potential security risk for users’ funds. Decentralized exchanges do not store any coins or private keys on centralized servers, which greatly reduces the chance that users’ coins get compromised.
The most popular decentralized exchange is EtherDelta, with daily trading volume of over $4 million. Other decentralized exchange projects include 0x, Kyber and AirSwap, all of which allow users to trade their ERC-20 tokens for Ethereum through a peer-to-peer network.
In a recent article, John McAfee stated that decentralized exchanges might pose a problem for government agencies since it would make it harder to trace funds and to properly tax their owners. Some governments like China, Japa, and South Korea have recently introduced regulations for cryptocurrency exchanges. Experts and analysts believe that in the future more traders will switch to decentralized cryptocurrency exchanges in order to eliminate security risks.
What are your thoughts on decentralized exchanges? Do you think that more people will use decentralized exchanges over centralized ones? Let us know in the comments below!
Images courtesy of Pixabay
Bitcoinist.com is author of this content, TheBitcoinNews.com is is not responsible for the content of external sites.
Our Social Networks: Facebook Instagram Pinterest Reddit Telegram Twitter Youtube
