Bitcoin on Decentralized Exchanges

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Photo by Chris Liverani on Unsplash

Wikipedia defines a Decentralized Exchange as follows:

A decentralized exchange (DEX) is a cryptocurrency exchange that operates in a decentralized way, i.e., without a central authority. Decentralized exchanges allow peer-to-peer trading of cryptocurrencies.

An excerpt from Investopedia defines Peer to Peer Trading as follows:

In the context of currencies, P2P refers to the exchange of currencies that are not created by a central banking authority, and an especially common application is with cryptocurrency exchange networks such as Bitcoin. Currencies that are not traded through a physical exchange, such as through the use of coins and banknotes, are considered virtual currencies. Virtual currencies are transferred between parties electronically.

Peer-to-peer exchanges allow individuals to move currencies from their accounts to the account of others without having to go through a financial institution. P2P networks rely on digital transfers, which in turn rely on the availability of an internet connection. This allows individuals to use computers as well as mobile devices, such as tablets and phones.

Peer-to-peer currencies are not created or exchanged in the same manner as those created by central banks. The creation of new currency, as well as the recording of transactions between parties, is managed through a network of computers that are not maintained by government authority and is thus maintained by the collective. In cryptocurrency exchanges, these distributed ledgers can confer what P2P advocates consider to be a notable security advantage; with transactions recorded on every peer’s network, it is very difficult to overwrite or falsify ledgers in a cryptocurrency exchange.

Let’s start with those definitions. By understanding these, we can form a general insight into the best practices to ensure that we are truly using the DEX appropriately.

About the author

Henry is the Founder and Executive Managing Director of Compumatrix and Networks International. He is also the Editor-in-Chief of the Compumatrix Bloggers' Network.

Comments

    1. It would be nice if we can get businesses sold on ecurrency, and then we can pay their wallets directly with ecurrency and save all of these fees. Once ecurrency is being used more regularly in the world marketplace, this will probably beccome a more common practice. So we just need to practicew this among our realm of peers and helpi it become a common practice!

    2. Dealing with each other outside peer-to-peer will not affect the value on the market and we exchange crypto for a service or item. This is kind of like trading work for a friend for help with my plumbing. I think that working like this will be an advantageous avenue for many of the transactions we commit on the blockchain with digital currency.

  1. Peer to Peer transactions is how Satoshi envisioned Bitcoin exchanging to flow with no middle man or entity needed. This would avoid fees and help to maintain privacy.

  2. I love Peer to Peer as it is a great way to go. Love the fact there is no middle man or entity needed.

  3. To have that satisfaction that you know that person you are dealing with. Whether a personal contact or a business an almost instant Transaction Peer to Peer.

  4. I love the idea of P2P!
    The transaction is convenient, fast and ease-of-use.
    Transferring funds from one person to another can be accomplished through a click of a button and a very modern way of doing business.

  5. I love P-2-P for the saving in fees, the time is much faster to move products service or money around by cutting out the middle man. As well as moving cryptocurrencies around the world with the interference of the government. Also much faster by transaction by cutting out all the red tape.

  6. Doing P2P (Peer To Peer) transactions on a DEX (Decentralized Exchange) is an excellent way to experience the numerous benefits of using Cryptocurrency and Blockchain Technology. Here are my favorite 3 benefits:
    1. The speed of COMPLETING a transaction is remarkable and usually only takes about 3 seconds, anywhere in the world! (Compare that to 3 to 5 business days with banks and you can begin to appreciate how different this is.)
    2. The transaction fees are tiny, even for large transactions.
    3. You don’t need to get help or permission from a third party, which saves time and empowers individuals to operate globally without even having a bank account.

  7. I cannot wait for P2P to become the norm. I am so tired of the snail paced banking system that takes two working days to effect a payment transaction, and God forbid you try and send money on a weekend!! Then it could take 4 days or longer. I recently had the occasion to have to bank a cheque that someone gave me. 10 days to arrive in my account!! They have the cheek to tell me its their policy. Grrrr. Roll on Decentralization and P2P!!

  8. One of the big advantages of a dex is the fact that there is not a single point of failure. The mainstream exchanges and onramps are centrally controlled. They can determine how much you buy, when you can have your funds, if the government comes knocking they will give your funds away. A dex removes all of these outside factors.

  9. Decentralization & P2P, because of Compumatrix, have become my purpose in sharing with my community, family & friends. Once it sinks into the head & hearts of those who don’t understand how valuable this new ecosystem is, a whole new financial paradigm will be seen and nobody will want to be left out of it. It’s time to educate ourselves and take our power back from the corrupt centralized systems we’re so used to. Bring it, P2P…humanity is ready.

  10. I love p2p for the ease-of-use. and the quickness of the transactions no matter where you are in the world, from one person to another and the other reason is the added perk of the very small costs involved. anyway of saving a bit of money is a good thing in my book.

  11. P2P is really the only way TO exchange – Meaning it is outside any scrutiny and allows us to deal with individuals over institutions. Maybe not face to face, but definitely person to person. This is true business as it is meant to be. And it falls outside the commerce clauses of many jurisdictions and so is not subject to potentially stifling regulations.

    I always wondered why one had to pay a central authority in order to trade a snowmobile for a pickup truck.. As long as the two parties are in agreement and happy with the deal.. No need to involve anyone else.

    DE centralized. Way better than anything centralized.

  12. FIAT is the “drug” of bankers, the “Centralized” entities. We “users” have become heavily addicted to its use, we “gotta have it!”. As long as we are “hooked” and ‘dependent’ on using it (mentally), that is problematic. When we understand and embrace the concept that “decentralization” frees us from that mental dependence, then we can fully appreciate that it can “set us free”.

  13. P2P exchanging and decentralised trading platforms of cryptocurrencies are sure to revolutionise the entire monetary system worldwide by bypassing the centralised government systems and middle men that operate those systems. As more individuals and businesses start to utilise this system for the exchange of not only various cryptocurrencies, but goods and services, then the real revolution will begin and the need to exchange our cryptocurrencies for fiat will no longer be a factor. Hopefully that time is near at hand!

  14. I’m already liking the new blog format. A topic of interest that creates thoughtful comments which further enhances the education provided by the subject matter. Reading not only the blog but the comments provides great insights.Well done to all.

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