Are Crypto Exchanges About To Go De-Centralized?

Cryptocurrencies: Decentralized Products on Centralized Exchanges.

China’s crackdown on crypto exchanges highlights the issue with centralized crypto exchanges.

Decentralized crypto exchanges, like local bitcoins gain favor after China’s crackdown.

Atomic Swaps bypass exchanges altogether.

The Lowest Cost. Period.

Watch the video companion to this blog post on Bitchute

Also watch on Vidme

and You tube below

Buy Gold And Silver Coins

Centralized vs Decentralized Exchanges

Crypto currencies are decentralized products traded largely on centralized exchanges. Cryptocurrency proponents note that an advantage of cryptocurrencies like bitcoin and litecoin is that reliance on or trust in a third party is not required to transact. Centralized exchanges, however, themselves may make it hard to open an account or may place restrictions or ban the withdrawing of funds or cryptos. Centralized exchanges can also be be hacked or closed by governments. Thus, centralized exchanges may run counter to one of the advantages of transacting in cryptocurrencies.

Centralized exchanges provide places for price discovery to take place. On a centralized exchange the operator of the exchange buy and sells its crypto inventory on behalf of its users. The potential for abuse exists, especially absent regulation. A centralized crypto exchange can operate a fractional reserve system of trading and credit user accounts with crypto currencies that may or may not exist at the exchange. The exchange may rely on the knowledge that many account holders may not withdraw their crypto currencies. The possibility of this type of practice most likely was one of the reasons for China’s decision to close crypto exchanges.

Regulated centralized exchanges, however, hold promise as a way of integrating the entire crypto currency space with the existing financial system. In “Crypto Currencies Fiat Strenghteners or Killers?” we noted that solutions like tenx and others that allow for a variety of crypto currencies to be brought onto Visa cards so that they may be spent worldwide.

Fidelity Investments recently provided its nearly 70 million customers with an integration option whereby they could access their coinbase accounts on their Fidelity dashboards. Coinbase accounts as of this writing were at 10.5 million. If crypto currencies are to become fiat strengtheners, heavily regulated exchanges are necessary to track transactions and collect taxes.

Enter Decentralized Exchanges

Decentralized exchanges don’t require users to provide indenitfying information and their servers reside in different locations. A decentralized exchange holds no assets or customers funds and therefore there is nothing to sieze or central location to shut down. Using a decentrazlized exchange users can buy and sell crypto currencies with other users on the platform or off platform in person. Decentralized exchanges make it extremely difficult to track transactions and collect taxes.

Currently, the volume of crypto currency trading on centralized exchanges is vastly greater than volumes trading on decentralized exchanges. With the closing of the Chinese cryptocurrency exchanges, however, decentralized exchanges have seen an increase in trading volumes.

The number of decentralized exchanges are proliferating. Here are just a few of them:

Local bitcoins
Shapeshift’s Prism
Bitshares
Open Ledger
Ether Delta
Coinfeeine

Priced in Fiat or Bitcoin?

Crypto detractors say that Bitcoin and other cryptocurrencies derive their value from the ability to convert into fiat currency to purchase goods and services. Some go as far as to say that this makes cryptos themselves an extention of debt based fiat currencies. If cryptos inevitably become fiat strengtheners with full integration into the banking system, that point of view has validity.

If however, governments crack down on crypto currencies and don’t embrace centralized crypto currency trading, increased trading may occur on decentralized exchanges and the crypto ecosystem may instead of pricing cryptocurrencies and tokens in fiat pairs, price them only in Bitcoin or Ether.

Atomic Swaps

Atomic swaps allow users to by-pass even decentralized exchanges and transact with each other, even if the transaction involves different cryptocurrencies. Atomic cross-chain trading allows users to trade cryptocurrencies on different blockchains. For example atomic swappers holding alt coins like Litecoin can trade with holders of Bitcoin (or vice versa) at an agreed ratio (currently about 75-1; just like the gold silver ratio). Atomic swaps can occur using digital signatures that act as a functioning escrow that prevent one party from sending coins to anther party and not receiving the bargained for swapped coins in return.

Developers are currently testing atomic swaps. Charlie Lee, creator of Litecoin, recently tweeted his sucess in an atomic swap involving Bitcoin and Litecoin.

https://twitter.com/SatoshiLite/status/911328252928643072

Questions:

Will governments embrace and encourage crypto development and regulated centralized crypto exchanges?
Will governments attempt to ban cryptocurrencies?
If so will that halt the use of cryptocurrencies whereby only crimminals use them?
Will both centralized and decentralized exchanges co-exist?

You can buy Bitcoin, Ethereum and Litecoin through Coinbase.
Click HERE to open a coin base account and get $10 of free Bitcoin.*

Buy Silver Bullion Rounds

Click Here to Get the Smaulgld 2017 Silver Report

Check out all the Smaulgld podcasts here.

Not a Smaulgld subscriber? Sign up here.

Donate To Smaulgld.com via paypal

Compare American Silver Eagles for sale at:

BGASC.com
Golden Eagle Coins
SD Bullion
Money Metals Exchange

Buy American Silver Eagle Coins

Donate To Smaulgld.com via paypal

Buy American Gold Eagle Coins

You can compare pricing and shipping charges on American Gold Eagles coins of all sizes at these web sites:

BGASC.com
Golden Eagle Coins
SD Bullion
Money Metals Exchange

Check out ATB mintages

Buy American Gold Eagle Coins

Buy 90 Percent Junk Silver US Coins

Compare American Silver Eagles for sale at:

BGASC.com
Golden Eagle Coins
SD Bullion
Money Metals Exchange

Buy American Silver Eagle Coins
—————————————–

If you have enjoyed this report, please consider sharing it, buying your precious metals through the Smaulgld affiliates linked to on this site* and subscribing (for free) to Smaulgld.com.

Please consider making a small (or large!) donation to Smaulgld.com. Thanks!





Get Free Updates From Smaulgld.com

Subscribe to Smaulgld.com and get the free In Case You Missed Itweekly email as well as updates and analysis on gold, silver, real estate and the economy.

Also get the free report “Twelve Key Differences Between Gold and Silver” when you subscribe.






Subscribe to Smaulgld.com to receive free gold and silver updates, news and analysis.

Please visit the Smaulgld Store for a large selection of recommended Kindles, books, music, movies and other items.


You can support Smaulgld.com by making all your Amazon purchases through the search widget below and by ordering your gold and silver by clicking on the BGASC, Money Metals Exchange, Gold Broker, Golden Eagle Coin, GoldMoney, SD Bullion and Canadian Mint ads on the site.


Browse Silver Coins on Amazon

Buy Silver Austrian Philharmonic Coins

Browse Collectible Coins on Amazon

*DISCLOSURE: Smaulgld provides the content on this site free of charge. If you purchase items though the links on this site, Smaulgld LLC. will be paid a commission. The prices charged are the same as they would be if you were to visit the sites directly. Please do your own research regarding the suitability of making purchases from the merchants featured on this site.

Disclaimer: Information presented here has been obtained from third parties and is presented for information purposes only. Smaulgld can not and does not guarantee the accuracy or timeliness of the data displayed on this site and therefor the data provided should not be used to make actual investment decisions. You should always consult a professional investment adviser before investing in precious metals or any type of investment. You acknowledge that Smaulgld assumes no responsibility for the integrity of data on this site.

The content provided here is for informational purposes only. Making investment decisions based on information published by Smaulgld (SG), or any Internet site, is not a good idea. Accordingly, users agree to hold SG, its owner and affiliates, harmless for all information presented on the site. SG presents no warranties. SG is not responsible for any loss of data, financial loss, interruption in services, claims of libel, damages or loss from the use or inability to access SG, any linked content, or the reliance on any information on the site.

The information contained herein does not constitute investment advice and may be subject to correction, completion and amendment without notice. SG assumes no duty to make any such corrections or updates. As with all investments, there are associated risks and you could lose money investing. Prior to making any investment, a prospective investor should consult with its own investment, accounting, legal and tax advisers to evaluate independently the risks, consequences and suitability of that investment. SG disclaims any and all liability relating to any investor reliance on the accuracy of the information contained herein or relating to any omissions or errors and as such disclaims any and all losses that may result.

Post Navigation