Investment review: Trading via a decentralised crypto exchange
Who may be attracted to DEX and what drawbacks should be borne in mind
Mind keeps up the series of articles on the way the blockchain technology financial market works. This article is focused on the operation of decentralised exchanges.
Read also: Cryptocurrency into action: Opportunities and risks of an alternative to traditional investment markets
When writing about "ordinary" centralised cryptocurrency exchanges, the task was simplified by the ability to draw direct analogies with stock and commodity exchanges. Yes, there were many distinctions specific to the crypto sphere, yet in general, the system appeared clear and familiar.
A totally different picture emerges when analysing decentralised exchanges (DEX, Decentralised Exchanges). It is quite difficult to describe this phenomenon without delving into specific terminology and technical details, but we will try.
Decentralisation is much more in line with the cryptocurrency spirit than classic exchanges like Binance or Whitebit.
Bitcoin founder(s) were defining the task as follows: "There is a need for an electronic payment system based on cryptography that eliminates the trust factor and allows parties to send payments to each other directly, avoiding the use of intermediaries."
Intermediaries can include both banking institutions and traditional exchanges. The latter have access to clients' assets, and this implies the risk of losing them through fraud, external interference, or legal action.
A decentralised exchange is not a registered legal entity,
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