Secure exchange of BTC to other cryptocurrencies at DEX platforms

Decentralized cryptocurrency exchanges (DEX) are the platforms that work in a decentralized way which means no intermediaries and no centralized authorities.

Decentralized exchangers reduce the risk of theft and hacks because users don’t have to transfer their assets to the platform. Hackers have stolen billions of dollars in digital assets over the past few years and, therefore, there is a huge security issue in the blockchain industry.

Decentralization is the solution to this problem. The intermediaries no longer need to store user money and manage them if all transactions are completely peer as it is in a decentralized exchange. This makes cryptocurrency trading much safer. It also has a positive impact on the adaptation of cryptocurrencies by simplifying the trading process.

Centralized cryptocurrency exchange

Before looking closer at decentralized platforms, let’s analyse a traditional cryptocurrency exchange which is provided by web applications running on centralized servers. As a rule, these applications do not have open source code and their functions include managing user registration data, email addresses and passwords, as well as KYC information (user verification process). Despite a promiced reliability, to looks suspicious that you need to provide such an amount of personal information to a third party.

To make transactions on centralized exchanges (CEX), users must first give a deposit to the wallet provided by a particular platform.

However, the process of funds depositing may take an hour or more, if the network is overloaded since most exchanges require a large number of confirmations before the money is added. Users lose control of their funds already at the stage of making a deposit.

For that reason, when having your money in BTC in the Simba.Storage, you receive ERC-20 standard SIMBA tokens to your wallet in return. This allows you to have a better control over your money.

Disadvantages of Centralized platforms

CEX accepts traders’ money and consolidates them in several wallets. Private keys to these wallets are always under the control of centralized platform management.

Considering the fact that CEX can have tens or hundreds of thousands of users, it’s easy to see how these wallets quickly become a burden. CEX has to control user funds, manage and protect huge amounts of money which makes them an extremely attractive target for hackers and cybercriminals.

Security is a major concern for CEX. Over the past 10 years, hackers have stolen more than $ 1.5 billion from centralized exchanges. In fact, according to research groups, hackers stole from 950 to 1 billion dollars within 2018. Many exchanges, including Mt. Gox, Youbit, Cryptopia, were forced to declare bankruptcy and close because of hackings.

If the centralized exchange is hacked and goes bankrupt, there will be NO loss compensation guarantee for any users who have stored their funds on it. Their money may disappear forever. This is why it is so important to take security very seriously, and therefore many experienced users refuse to exchange their cryptocurrency assets at CEX, but prefer to have them at secure storages such as Simba.Storage.

Another disadvantage of centralized platforms is the need to pay fees for withdrawals and for trading. Commissions vary depending on an exchange, but usually it is about 0.2% of the each transaction value for both sides: the buyer and the seller.

Advantages of Decentralized Exchanges

There are no described above disadvantages if an exchange of cryptocurrencies is completely decentralized.

Today, about a hundred decentralized exchange protocols are under development or available for trading in real time. You should also remember that there are many projects that call a decentralized exchange but which are not really decentralized.

Thanks to decentralized exchange (DEX), your funds are always under your control which solves all the security problems.

Users never have to deposit or withdraw their money to trade on a real DEX platform. Additionaly, DEX provide better privacy, transparency and has more strickt censorship rules.

The main advantage of DEX over CEX is that when you store your assets on DEX, you still store them in your wallet. The smart contract independently and automatically performs a safe exchange from your wallet when exchanging assets. Only you are responsible for the safety of your funds when you use decentralized platforms. Which makes it obviously better to entrust it to the professional and more secure services, such as Simba.Storage.

The ROXY exchange (a part of the ROX project) is an example of a decentralized platform which offers you a reliable trustless platform that provides access to direct asset exchange opportunities. By the way, it is also located in Switzerland, like Simba.Storage. The term “trustless” means the absence of intermediaries or a central authority that needs to be trusted to guarantee transactions. This means that you can count on maximum security and total privacy when exchanging your Bitcoins for other cryptocurrencies.

Such projects as ROX has the goal to build trust between users using smart contract technology which allows to have assets exchanges without intermediaries with minimal time and with minimal fees.

DEX projects are the future in the digital world created with a moto of decentralization since these ideas and solutions are made with good intentions for each person individually.