Centralized exchanges for decentralized crypto currency - the problem of the entire industry

Crypto currency can be called the last and most successful attempt of a person to rethink the whole concept of money. Money in the blockroom gives people the opportunity to actually own their own money without falling into dependence on various intermediaries and state regulators, carrying out financial transactions.

At a minimum, so everything should work theoretically, and, at first, in fact, everything turned out quite successfully. The problems began to appear after the technologies based on the blockbuster and crypto-currencies began to spread widely. Human greed, along with the usual disorder, revealed weaknesses in the new technology.

Vulnerable side of crypto assets

The technology offered by Satoshi Nakamoto works well with the stated principles, such as the exclusion of various intermediaries, fully decentralized management and transparency of operations. But, alas, all this is so only while operations are going on within the blockade. And when there is a need to go beyond the boundaries of the blockbuster and to interact with the rest of the world, the owners of crypto-currencies again fall into the world of conventional, traditional financial relations filled with dangers, when no advanced algorithms of the so-called " consensus is no longer being saved.

The most obvious example is the conversion of various crypto assets. The process of exchanging one crypto currency for another, as well as for a fiat, occurs outside the limits of the blockage and its advantages, the faster the bitcoin's cost increases, the higher the demand, the less the number of people on the network can trust someone in the exchange of assets. Small forums, meetings in offline - everything, on which the crypto community was born, has left irrevocably in history.

Demand always generates a proposal, and the emergence of large stock exchanges for the trade in crypto assets has become a matter of only time. And if you take into account the huge variety of tokens that appear on the market almost daily, a convenient exchange, without resorting to the help of intermediaries, is now virtually impossible.

The Curse of the Crypto-Turbine

Most crypto traders understand that crypto-exchange platforms are evil. But, for now, the necessary evil.

One of the basic values ​​of crypto currency is that in a system based on blockage, a user can really own his own money in the form of a crypto currency, and without a private digital key, an outsider can not influence his funds. To conduct trading on the exchange platform, the user of his own will must transfer money to the intermediaries against whom Satoshi Nakamoto fought. And this can lead to sad consequences, threatening serious losses.

Centralized stock exchanges are extremely vulnerable to cyber-criminals, bankruptcy is possible, exchanges are completely opaque, stock market management can arbitrarily manage user money - from "unexpected freezing" of accounts, on formal grounds, to routine theft. There are many ways to lose your money, which "lie" on the exchange account.

It all started somewhere from 2013, when the first crashes of large stock exchanges (for example, Mt. Gox) or the loss of huge amounts of funds occurred, here are just some examples of significant thefts from centralized exchanges:

July 2014. Hacking of the stock exchange Cryptsy. 13 thousand Bitcoin and 300 thousand Litecoin are stolen;
January 2015. Theft from Bitstamp. Abducted about 19 thousand Bitcoin;
April 2016. Hacking of the ShapeShift exchange. Damage - 315 Bitcoin;
May 2016. Theft from the Gatecoin Exchange. "Extraction" of criminals - 250 Bitcoin and 185 thousand Ether tokens;
August 2016. Successful attempt at hacking Bitfinex. Estimated damage.

Nobody except criminals is comfortable with this, so the crypto community began to wonder whether it is expedient to maintain such a system of centralized trading platforms.