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I think we will see a rise of decentralized exchanges like 0x and Airswap. Curious to see if they will be able to scale though.

by sna1l 9y ago

philfrasty 9y ago
I thought so too until I actually used one. The experience is worse than I ever imagined possible (sure there is room for improvement). Additionally the two you mentioned only support ERC20 tokens.
- CryptoPunk 9y ago
  40 of the top 100 crypto assets (coins and tokens) by market cap are ERC20 tokens. Exchanges involving fiat are necessarily centralized since fiat requires a centralized custodian. There are some dollar-pegged ERC20 tokens like Tether (backed by dollars) and DAI (a stable coin) that could allow what is effectively fiat-value <-> token decentralized exchange, but to acquire actual fiat, that can be used in the rest of the financial system, requires interaction with a centralized exchange that has a banking relationship.
oelmekki 9y ago
Stellar already has a decentralized exchange built in, I've used it a bit and it's really a change to be able to use it directly from wallet, instead of sending coins to an exchange and basically giving them to it, hoping it will allow withdrawal. But please note it's not a complete fix either. You still have third parties you must trust (presuming others decentralized exchanges are built like stellar's one). Instead of having one third party for all markets, you have one third party per asset. When you buy xrp for xlm, for example, you don't actually own xrp, you own credits for the xrp anchor, with the promise you can withdraw them. So it's exactly like current exchanges, except if one anchor gets hacked, it does not affects all assets, just the one it manages. That's still better than current situation, and decentralized markets have many other advantages.
mikro2nd 9y ago
I certainly hope we DO see DEXs take off in the near future, but right now, every single one suffers from a severe lack of liquidity, which distorts prices and can make trades difficult verging on impossible if there's nobody with a suitable counter-trade offer. Liquidity is the number one reason traders love the Forex markets, and the reason so many Forex traders will trade only in the major currency pairs. Hell, I've even known a couple of traders who will only trade GBPUSD or EURUSD for that precise reason: If the market is sufficiently liquid, there is pretty-much ALWAYS someone who wants to trade at your price. On the flipside, where liquidity is too thin there's no market, no matter how many bells and whistles the "exchange" has, and no matter how attractive the notion of pure p2p exchange might be.
- cies 9y ago
  > If the market is sufficiently liquid, there is pretty-much ALWAYS someone who wants to trade at your price. Really? Liquid means trading volume right? Not that others are trading as the price that I find reasonable? Lets say I find paying $10 for a BTC reasonable, no matter how liquid, I cannot get that deal.
  - AluminiumPoint 9y ago
    Except that is not reasonable. Myself and many like me would buy way way way above $10. This is the faulty argument in the 'its going to 0' position, there are too many folks like me that will keep buying as long as we can afford it.

I think we will see a rise of decentralized exchanges like 0x and Airswap. Curious to see if they will be able to scale though.

by sna1l 9y ago

I think we will see a rise of decentralized exchanges like 0x and Airswap. Curious to see if they will be able to scale though.

philfrasty 9y ago

I thought so too until I actually used one. The experience is worse than I ever imagined possible (sure there is room for improvement). Additionally the two you mentioned only support ERC20 tokens.

CryptoPunk 9y ago
40 of the top 100 crypto assets (coins and tokens) by market cap are ERC20 tokens. Exchanges involving fiat are necessarily centralized since fiat requires a centralized custodian. There are some dollar-pegged ERC20 tokens like Tether (backed by dollars) and DAI (a stable coin) that could allow what is effectively fiat-value <-> token decentralized exchange, but to acquire actual fiat, that can be used in the rest of the financial system, requires interaction with a centralized exchange that has a banking relationship.

oelmekki 9y ago

Stellar already has a decentralized exchange built in, I've used it a bit and it's really a change to be able to use it directly from wallet, instead of sending coins to an exchange and basically giving them to it, hoping it will allow withdrawal. But please note it's not a complete fix either. You still have third parties you must trust (presuming others decentralized exchanges are built like stellar's one). Instead of having one third party for all markets, you have one third party per asset. When you buy xrp for xlm, for example, you don't actually own xrp, you own credits for the xrp anchor, with the promise you can withdraw them. So it's exactly like current exchanges, except if one anchor gets hacked, it does not affects all assets, just the one it manages. That's still better than current situation, and decentralized markets have many other advantages.

mikro2nd 9y ago

I certainly hope we DO see DEXs take off in the near future, but right now, every single one suffers from a severe lack of liquidity, which distorts prices and can make trades difficult verging on impossible if there's nobody with a suitable counter-trade offer. Liquidity is the number one reason traders love the Forex markets, and the reason so many Forex traders will trade only in the major currency pairs. Hell, I've even known a couple of traders who will only trade GBPUSD or EURUSD for that precise reason: If the market is sufficiently liquid, there is pretty-much ALWAYS someone who wants to trade at your price. On the flipside, where liquidity is too thin there's no market, no matter how many bells and whistles the "exchange" has, and no matter how attractive the notion of pure p2p exchange might be.

cies 9y ago
> If the market is sufficiently liquid, there is pretty-much ALWAYS someone who wants to trade at your price. Really? Liquid means trading volume right? Not that others are trading as the price that I find reasonable? Lets say I find paying $10 for a BTC reasonable, no matter how liquid, I cannot get that deal.
- AluminiumPoint 9y ago
  Except that is not reasonable. Myself and many like me would buy way way way above $10. This is the faulty argument in the 'its going to 0' position, there are too many folks like me that will keep buying as long as we can afford it.