Decentralized Cryptocurrency Exchanges

I am going to cover what decentralized exchanges are, what are their differences from centralized exchanges, and why they are important for the cryptocurrency ecosystem.

Decentralized vs. Centralized Exchanges
Decentralized exchange: Unlike centralized exchanges, these type of new exchanges aren’t coordinated or run by one entity. Instead, they are implemented in a distributed ledger, alike cryptocurrencies themselves do. This blockchain based structure means that does not hold customers’ positions, funds, or information, and only acts as a matching and routing layer for trade orders.
Centralized exchange: is run by a third party that matches up individuals looking to exchange with each other. The main role of a centralized exchange is to minimize the friction involved in exchange providing liquidity (“market liquidity understood as the ability of a market, such as a city’s real estate market, or a country’s stock market allows assets to be trade at stable prices” — Investopedia) and convenience through an account that holds funds and positions. Stock market exchanges and cryptocurrency exchanges, alike Kraken, Binance, Coinbase, ... are implemented as centralized exchanges.

Implications of Differences Between Centralized and Decentralized Exchanges
Centralized exchanges can be shut down or government interference. Even when part of the strong appeal of cryptocurrencies is that they are beyond the reach of regulators and governments. In the traditional banking system, a government could unrightfully claim and seized the assets of an individual at the bank level, preventing access. Because a centralized exchange operates as any other standard business with a physical location and registry with authorities.
Centralized exchanges add trade volume and users account information, funds, and positions. This is convenient for customers logging into their account with simply an email and password, and it also allows the exchange itself to become a potential point of attack for bad actors. Decentralized exchanges on the other hand run on a distributed ledger and are free from this risk. Cryptocurrency exchanges struggle to maintain proper security, and there have been accounted a series of high-profile hacks resulting of many millions of dollars lost in cryptocurrency holdings. Because centralized exchanges hold so much value, they become an attractive target for hackers looking to pray into the funds or personal information of account holders.
Decentralized exchanges run on a distributed ledger as explained before and can´t be shut down or tampered with in this way.
State of Decentralized Exchanges
Decentralized exchanges offer security, freedom from intervention and anonymity, there are many hurdles they must overcome before they can stand face to face with centralized exchanges. Just to name a few:

Difficult to use: Need to improve ux interface
Limited functionality: This is usually a limitation in order type... no stop loss or limit order available, lack of trade volume, discussed below).
Low volume trade volume: Because of the previous two shortcomings there is low transaction volume, it may be hard to find a counter-party for a trade.
At present, decentralized exchanges offer a nice promise but cannot compete with the functionality that centralized exchanges feature. It will be exciting to see how these projects evolve and what impact they have on the cryptocurrency community.