What is Decentralized Cryptocurrency Exchange?

A decentralized exchange (DEX) is a partially-automated cryptocurrency exchange platform where no intermediate third-party can hold customers’ personal information, account balances, portfolio allocations, and fund positions at any stage. In other words, there are no centrally-controlled servers, thus eliminating a single point of failure. A decentralized exchange is popular for trading any cryptocurrencies without the restrictions of centralized platforms. They allow users to buy and sell cryptocurrencies from each other without the involvement of a middleman.

Every decentralized cryptocurrency exchanges require users to register for an account before start trading. however once they have done creating an account they can list cryptocurrencies to sell, or buy someone else's, almost immediately.

The most common Decentralized exchange typically rely on a blockchain platform. This increasing utility of blockchain is moving the world to a trustless economy, thus removing the need for a middle man to exchange goods and services. The blockchain community understands the risks involved in trading cryptocurrencies and creates a better trading experience with Decentralized Exchanges. The main idea here is that traders can remain the custody of their funds.

Advantages of Decentralized Exchange:

1. No single point of failure: Centralized exchanges serve as legal custodians responsible for each trade, all of which are maintained on traditional servers. Thus, centralized exchanges become a hugely attractive target for hackers. On the other hand, Decentralized exchanges, run on a distributed ledger and therefore do not face the risks involved in a centralized exchange process. keep their user's funds and personal data secure.

2. No single point of control: In a decentralized exchange, there is no way for anyone to “take control” of the trading system/ funds, making it much more resistant to censorship, government interference, and power games.

3. Secure: Security is another big advantage of DEX is that are distributed globally, thereby reduces the risks of server downtime as well as hacking.

4. Low Fees: Trading fees on Decentralized exchange platform are significantly low while compared to centralized exchanges. whereas some DEXs are even free. The users can only bear the cost of sending transactions over the blockchain.

5. Government-Resistant: As DEXs are open source codes operating on a decentralized network, making it extremely hard for any government to control it. since no governments can shutdown the regulations towards decentralized exchanges.

6. Trustlessness: The biggest advantage of a DEX is its ‘trustless’ nature, over-centralized exchange. In a centralized system, trust is required for an entire system. As for DEXs, no need to trust the company behind the decentralized since all transactions occur in a transparent and automated system.

7. Privacy: The privacy features provided in decentralized exchanges are increasingly rare to find in a centralized exchange. Unlike centralized exchanges requires KYC procedures, whereas trading on DEXs does not require to provide personal information.

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