About six months ago, I decided it was high time for me to seriously get involved in cryptocurrency trading. I’m not a full-time trader, but I do consider myself a skilled trader on the foreign exchange markets. I’ve done quite well for myself over the years (regardless of my ups and downs), but I wanted a new challenge. A trading experience different than what I’d ever had before. Crypto trading promised me that challenge.
I’d read enough articles about Bitcoin and cryptocurrency. I’d heard enough about the cryptocurrency millionaires (and billionaires), the world-changing decentralized technology, and the wild volatility. I knew I had to get in on the opportunity.
Why crypto trading sparked my imagination
Obviously, the rapidly growing market and high volatility are huge attractions for traders. There’s also the fact that cryptocurrency is a very immature market compared to stocks or FOREX, so there’s opportunities abound for traders who can keep a cool head. But for me, it went a bit deeper than that.
As a trader, cryptocurrency offers something completely unique. A technology that allows peer-to-peer currencies to be created by anyone in the world, that can’t be censored or controlled by outside organizations, and that can be traded instantly, essentially for free. If you tried to tell that to a trader 20 years ago they’d laugh you out of the building.
Source: https://xkcd.com/
Beginning my search
I sat down with my notepad and Google at the ready and started researching the crypto exchange where I’d conduct my trading. I also asked some of my trading buddies for their input. They got back to me with the details about fees and trading limits, and I landed on some of the biggest names in the industry; Coinbase Pro, Bitfinex, Binance.
I initially got caught up in the finer differences between the exchanges, things like which platform offered me the lowest fees for the volumes I wanted to trade and which one had the right combination of currencies. I also quickly learned that my location and local laws were important factors in my decision. (Wait, isn’t crypto supposed to be borderless cash?)
I also found that for each of the big exchanges, I had to:
- Thoroughly verify my identity
- Hand over my private keys (AKA, put my cash in their vault)
- Trust them completely with my funds
- Comply with AML and KYC regulations in their given jurisdiction.
Something just wasn’t sitting right with me. And it would soon become clear as to why.
The inflection point
Being quite new to the crypto trading game, I could see something very clearly that I think a lot of seasoned crypto traders take for granted. Using a centralized exchange misses almost the entire point of cryptocurrency in the first place.
Heavy regulations, fees, insurance, middlemen, and international borders have their purposes in FOREX trading. But they are also a burden in other ways. And it’s not like giving away ownership of my privacy and funds made me safer. In fact, the opposite was true. The history of centralized exchanges is riddled with hacks, exit scams, and other kinds of losses for almost everyone involved.
The cryptocurrency exchanges seemed to have all of these burdens but without the mature market or tools of FOREX. This wasn’t why I signed up for crypto trading. This seemed like regular FOREX trading, but with lower liquidity, higher fees, and significantly higher risks.
That’s when the elephant in the cryptocurrency trading room became very clear to me. While the currencies were decentralized, the trading platforms themselves were completely centralized.
Realizing all this, I started looking into an often overlooked section of the cryptocurrency market: decentralized exchanges (DEXs).
DEXs – The way forward for me (and the industry)
Decentralized exchanges are difficult to understand for traditional traders, much like Bitcoin was difficult for everyone to understand when it first started emerging. But DEXs represent a colossal shift in the way trading can be done.
Source: https://news.bitcoin.com/decentralized-exchange-idex-hits-13-million-a-day-while-etherdelta-falters/
Trading on a truly decentralized exchange means you are trading directly with other traders. Funds don’t pass through any middleman, nor are they stored on anyone’s server. It’s exactly like peer-to-peer Bitcoin blockchain transactions, but scaled up so you can instantly trade multiple currencies with thousands of traders across the world in real time.
This way of trading decentralized currencies on a decentralized platform is how cryptocurrencies are invented to be traded. And doing business this way comes with some major benefits over centralized exchanges:
- You don’t have to trust an exchange to hold your funds
- No government or organization can censor, control, or shut down the platform
- They are much less of a target for hackers
- You have full control over your funds and private keys
Rising decentralized trading platforms
The landscape of decentralized exchanges is improving rapidly. Now, there are complete decentralized ecosystems for traders that want to trade in a truly decentralized fashion, with many of the benefits of traditional trading systems.
My choice is Volentix. Actually, VDEX as part of a digital asset ecosystem; a group of technologies designed and developed by Volentix. All the key tools traders need to make a living in one place:
- A platform for making and executing trades
- An account to send and receive funds from
- Somewhere to get your market data
Volentix offers these features with a decentralized exchange platform (VDEX), a directly compatible cross-blockchain wallet (VERTO), and an integrated market analysis dashboard for traders (VESPUCCI).
The platform and different tools aren’t owned by a company. Each of the individual software tools are tied together by Volentix’s native currency, VTX. Each tool is created by separate groups and incentivized to grow the Volentix ecosystem currency.
One big problem with using a decentralized exchange is converting your fiat currency for cryptocurrency and back again. There are now solutions being developed. Bisq allows for the peer-to-peer trading of cryptocurrency for national currency through its decentralized platform, and it solves the problem of trading without verification by using a decentralized arbitration system. But how about the low liquidity, the questionable user experience,and the stability issues that you might face while using a DEX? Bisq hasn’t worked those out yet.
In fact, up until now, DEXs have been pretty much unusable for beginners. This new way of trading does require a discrete jump in imagination for traders. Some maybe even thought DEXs will never catch on when the centralized exchanges do, however, Volentix is here to prove them wrong.
The coming infrastructure inversion
New technologies are often slow, difficult to use, and don’t perform as well as the old ways of doing things. The technology always comes before the infrastructure needed to implement it fully and reap all of its benefits. We say this with the early Internet. For a long time, the Internet was difficult to use and it was often better just to make a simple phone call. But a few years later, the Internet overtook phone lines in terms of bandwidth and reliability. Now the Internet does so much more than phone lines could ever do. There’s no point in even comparing.
Andreas Antonopoulos calls this the “Infrastructure Inversion”, and it’s already starting to happen with cryptocurrency. Right now, the decentralized infrastructure is slow and unstable. We’re forced to use some hybrid of decentralized currencies with centralized exchanges, which offers the worst of both worlds.
But with platforms like Volentix, the inversion is well on its way. I don’t want to be the traditional phone company exec shouting about how the Internet will never take over phone lines. I want to be like the early Internet adopters, getting their hands dirty in the technology that is destined to revolutionize the world.
The training wheels for decentralized technology are starting to come of as a better, faster, more complete infrastructure is built.
Things are about to get exciting
My crypto trading journey started out like most, but I was quickly disillusioned by the state of centralized crypto trading, and where it was heading. It just seemed to miss the whole point of cryptocurrency and why it’s attractive to trade.
Now, with DEXs and their trading experience improving rapidly, I’m committing to decentralized trading. Beyond the easy gains that crypto traders have seen over the past few years, cryptocurrency is a phenomenal technology. Now the infrastructure is finally catching up with the technology and soon there will be a tectonic shift in the industry. And I’m going to be there, ready to capitalize!