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RE: Exchanges: Is The Future Centralized Or Decentralized?
Decentralized exchanges are trustless. Therefore, they have to rely on cross-chain atomic swaps, which are radically slower than centralized exchanges particularly in the case of PoW coins. A cross-chain atomic swap involves four on-chain transactions, two on both chains. Imagine trading Bitcoin for Litecoin using atomic swaps. A single trade could take over an hour. Goodbye high transaction volume. For PoS or DPoS chains the situation is much less bad but a lot of speed is still sacrificed.
OTC trading can to scale slightly better because you need only one transaction on each chain in a trading pair but it isn't trustless.
All valid pionts @markkujantunen.
The time of atomic swaps, especially on POW, makes it infeasible.
There is no clear "good" solution right now.
Actually, I realized I was wrong because trustless second-tier layers could enable day traders keep their trades off-chain for a day and move them on-chain at the end of the day. But I don't think the Lightning Network is ready for that, yet.