{"id":735936,"date":"2018-04-20T17:03:43","date_gmt":"2018-04-20T07:03:43","guid":{"rendered":"https:\/\/www.finder.com\/ca\/?p=735936"},"modified":"2026-04-14T22:34:17","modified_gmt":"2026-04-15T02:34:17","slug":"decentralized-cryptocurrency-exchanges","status":"publish","type":"post","link":"https:\/\/www.finder.com\/ca\/cryptocurrency\/defi\/decentralized-cryptocurrency-exchanges","title":{"rendered":"The ultimate guide to decentralized exchanges"},"content":{"rendered":"

Are you worried about having your cryptocurrency stolen from a centralized exchange<\/a>? You\u2019re not alone.<\/p>

From Mt. Gox and Bitfinex<\/a> to Coincheck and Bitgrail, there have been many well-publicized examples of exchanges being hacked and millions of dollars\u2019 worth of crypto being stolen. But now there\u2019s another way to trade digital currency without entrusting your coins or tokens to a third-party exchange: decentralized exchanges.<\/p>

Offering peer-to-peer trading and allowing users to retain control of their coins, decentralized exchanges offer a key security advantage over conventional platforms. As a result, they\u2019re experiencing rapid growth at the moment, with several platforms already live and many more in development.<\/p>

Below we explain how they work and what makes them so important. Our goal is to provide you with the information you need so that you can decide if decentralized exchanges offer the experience that\u2019s right for you.<\/p>

\n
\n Disclaimer:<\/b>\n This information should not be interpreted as an endorsement of cryptocurrency or any specific provider,\n service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and\n involve significant risks \u2013 they are highly volatile and sensitive to secondary activity. Performance\n is unpredictable and past performance is no guarantee of future performance. Consider your own\n circumstances, and obtain your own advice, before relying on this information. You should also verify\n the nature of any product or service (including its legal status and relevant regulatory requirements)\n and consult the relevant Regulators' websites before making any decision. Finder, or the author, may\n have holdings in the cryptocurrencies discussed.\n <\/div>\n<\/div>\n

What is a decentralized exchange?<\/b><\/h3>

A decentralized exchange is a platform that cuts out the middleman and allows users to trade cryptocurrency directly with one another. This allows traders to retain control of their funds at all times rather than having to entrust them to an exchange provider, with trades executed using smart contracts.<\/p>

DEXs are hosted on a network of distributed nodes, which not only reduces the risk of hacking but also solves the problem of server downtime that restricts users\u2019 ability to trade. DEXs are designed to offer an open and transparent network that makes crypto trading accessible to everyone.<\/p>

There are several decentralized exchanges that are already live and offering peer-to-peer trading across a range of cryptos. However, this number is expected to increase dramatically in 2018 with a host of new platforms slated to launch.<\/p>

How is a DEX different from a centralized exchange?<\/b><\/h3>

Centralized exchanges are also online platforms where you can buy or sell digital currency, but unlike DEXs they require the use of a third party to complete transactions. Both buyers and sellers trust this middleman, the centralized exchange, to hold their assets. This requires the buyer and seller to trust the exchange to safely complete their transactions and securely store their funds.<\/p>

Known for being easy to use, centralized exchanges allow you to purchase digital currency using fiat or cryptocurrencies. They provide a simple and straightforward entry point to the market and currently account for the vast majority of crypto trading around the world.<\/p>

For a quick rundown of the key differences between centralized and decentralized exchanges, check out the table below.<\/p>
<\/th>Centralized exchange<\/b><\/th>Decentralized exchange<\/b><\/th><\/tr><\/thead>
Trading<\/strong><\/b><\/td>Conducted through the exchange<\/td>Conducted peer-to-peer<\/td><\/tr>
Control of funds<\/b><\/td>Exchange controls your coins and tokens<\/td>You control your coins and tokens<\/td><\/tr>
Anonymous trading?<\/b><\/td>
  • No<\/li><\/ul><\/td>
  • Yes<\/li><\/ul><\/td><\/tr>
Hosting<\/b><\/td>Centralized servers<\/td>Distributed network<\/td><\/tr>
Prone to hacks?<\/b><\/td>
  • Yes<\/li><\/ul><\/td>
  • No<\/li><\/ul><\/td><\/tr>
Subject to government interference?<\/b><\/td>
  • Yes<\/li><\/ul><\/td>
  • No<\/li><\/ul><\/td><\/tr>
Account withdrawal limits?<\/b><\/td>
  • Yes<\/li><\/ul><\/td>