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Peer to peer exchange is a new kind of decentralised exchange (DEX). It’s important to note not all exchanges are built equally. DCRDEX, is the first of its kind and to my knowledge the only exchange building tools for a true peer to peer environment.
In a world where everyone wants to use different currencies, the exchange is king. Centralised exchanges have taken full advantage of this fact to become the main player in the cryptocurrency space. Centralised exchanges are the whales that determine the price and the liquidity of a market.
Peer to peer cash was just the start!
The harsh reality is, Peer to peer cash is a novelty, rarely used at this time. Exchange is the dominant activity in the crypto space. At the current time, exchange is set up, in a parasitic way, that goes against pretty much all the original cypherpunk ideals.
When we look back, in hindsight, it’s obvious that exchange would be a dominant part of the process. Especially as people try to buy into the system from what already exists. Even when crypto becomes mainstream, exchange will still play a big part in the everyday user experience. It’s unlikely there will only be one cryptocurrency, instead it’s likely there will be a handful of projects that will be used for various financial activities.
In cryptocurrency, there are two main forms of exchange, Fiat to crypto (on and off ramps) and crypto to crypto. In many respects, we need centralised exchanges for their fiat to crypto (on and off ramps). This is due to the regulatory compliance of fiat currencies. It’s likely this will always be the best and most honest way in and out of crypto where government money is involved.
But for crypto to crypto exchange, we should aim to avoid using centralised exchanges where possible. And we should definitely not be leaving the bulk of our crypto on these platforms. To fully embrace the security, custodial, and privacy opportunities of crypto, we should aim to maintain control of our coins. The only point this will not be possible is when buying or selling our crypto for fiat money. At all other times, no-one but you should be holding your coins.
Moving from CEX to DEX to P2P
A dominant argument is, decentralised exchanges don’t have liquidity, or are ghost towns or are hard to use. Remember, peer to peer exchange is a new technology that is still being tested and there are very few projects doing it properly (in my research only DCRDEX can be considered a P2P exchange). This being said, it’s interesting to see even in this bear market, Decentralised Exchanges have continued to gain on their Centralised counterparts.
The market is now in the position of looking for the dominant DEX. The question I keep hearing is “Who will be the Binance or Coinbase of DeFi?”
It's a predictable question from participants looking to gain profits by being a first mover. But it's still framed in a centralised way, where the middlemen and rent seekers aim to take profits from the platform and all trades. Peer to peer (P2P) exchange, means, there is no winner takes all. Anyone can spin up an exchange and there are no fees to trade. There are no middleman!
What makes it a P2P exchange?
If this hasn't quite sunk in yet, let’s think about it. It's not a peer to peer decentralised exchange (DEX):
- If someone else has to hold your coins
- If you have to use an intermediary coin to trade
- If you have to use a platform token to trade
- If a third party collects fees for a trade
- or If you have to give up personal information to trade
Imagine a world where order books are all linked. All projects can be listed without permission. Users never give up their coins, privacy, or identity. Anyone can spin up an exchange and there are no fees to trade.
Using DCRDEX, you can exchange directly from the Decrediton wallet with no middle men. You don't even need Decred DCR. DCRDEX is the only platform that has fee-less trades, is Permissionless, and has P2P exchange with on-chain transactions. Decred is developing for a peer to peer future. And with each release, it gets easier to use with more functionality.
As a final note, in true Decred fashion, the DCRDEX software is open source. Meaning, anyone can help build the platform and implement new pairs or features.
Have you used Decred DCRDEX, how did you find it?