The need for a decentralized exchange and marketplace is growing larger every day. With the collapse of Crypsty, Mintpal, Mt. Gox and others, it’s getting a bit aggravating that people are still losing money this way. Many shake their head when someone is holding 84,000,000 Doge on Cryptsy or keeping large amounts of Bitcoin on a marketplace wallet system. Despite this, people would still like to trade without risk. This is why there is an urgent need for a massive move to the decentralized exchange platform. Marketplaces too could fair better with no third parties involved if trades are to take place, and no money is stolen.
“We shut down the website and file bankruptcy, letting users file claims via the bankruptcy process and letting the court make the disbursements.”
The fact that Cryptsy stated: “about a year and a half ago, we were alerted in the early AM of a reduction in our safe/cold wallet balances of Bitcoin and Litecoin” screams foul play and a possible inside job. Whether true or not, the fact is third parties should take better precautionary security standards or not handle cryptocurrency at all. The tale Cryptsy has presented shows very little truth to the theory and raises the question of whether they even used a cold wallet.
Fortunately, no exchange had collapsed in 2015, but unfortunately, 2016 changed this, and we have seen the demise of another platform. Maybe the smart move is to wait until a robust decentralized exchange appears before trading altcoins and Bitcoin on a centralized exchange. And luckily cryptocurrency marketplaces haven’t been in abundance where there’s a large user base. Despite this someday there will be a vast market using crypto as its vehicle and people are not going to want to hold their money there.
A trustless service operating with zero knowledge proofs and escrow based exchange will be the answer to our woes. The time isn’t quite there yet, but progress towards this development is moving forward every day. Here are a few exchange and marketplace concepts that may bring a better and more secure trading platform to the people.
The peer-to-peer decentralized Bitcoin exchange based out of Spain is a service that operates trades in over 70 countries globally. The project is an exchange algorithm based on game theory that allows users to trade cryptocurrency for fiat in a trustless environment. Designed and founded by four developers the exchange enables users to transact anonymously. Based on multi-signature, time locked and incentive based transactions the exchange created does its mathematical best to ensure funds are kept safe. Coinffiene’s platform doesn’t keep funds on a server nor does the service use a middleman at all. This ceases the concept of an inside job or exit scam we often hear about these days.
The BitHalo project calls itself the “Mother of Smart Contracts and Decentralized Market for everything!” The platform was introduced in 2014 offers an array of decentralized exchange, derivatives, anonymity, and unbreakable smart contracts. The project is also operating in multi-currency fashion by using BlackHalo for its blackcoin interface. The creator David Zimbeck also has deployed BitBay market that also enables a peer-to-peer trustless market and its own smart contract system. These three decentralized marketplace platforms seem promising though they are not privacy-centric. The service doesn’t use Tor-like anonymity or encrypts the platform as Zimbeck told Motherboard Vice he doesn’t want it to be the next Silk Road.
Another marketplace that wants to give the world access to the decentralized beast is Open Bazaar. The founder of Open Bazaar Brian Hoffman also doesn’t want the Silk Road effect to happen to his project either. However, the marketplace will be completely decentralized and allow users to sell whatever they please. The system will deploy multi-signature technology and an escrow based system eliminating third party involvement. The final wait for Open Bazaar is coming to an end, and the community behind it is actively pushing its development. There is a beta client, but it’s not so user-friendly at the moment. The service promises no fees and will be a for-profit operation utilizing certain parts of the market. The team hasn’t been too candid on what these services will be, but it seems like people will enjoy a no-fee trading platform.
Bitsquare is a decentralized cryptocurrency exchange that allows trading fiat, Bitcoin, and altcoins without the need for a third party. Bitsquare is meant to be private and hosts many operations that help provide this method. The founder Manfred Karrer has put some work into the development of this platform as the project is approaching beta shortly. The service is for those who wish to trade Bitcoin and other currencies without “forfeiting control” to a central authority, according to their website. The exchange has finalized its alpha version 0.3.2.2 release on December 28th of 2015.
A Trustless & Decentralized Future
The need for these trustless systems is becoming more critical than ever, and the idea is very attractive. In time, the hope is organized human action will create these networks of markets and exchanges without intermediary and counterparty risk. One of the main foundations of Bitcoin is transfer and settlement minus a central third party or arbitration. So why would anyone want to trade on an exchange or use a marketplace that operate in a central fashion?
Centralized exchanges will continue to fail, providing hackers with a single point of attack like Gox, Bitcoinica, Mintpal, and now Cryptsy. Even regulation cannot stop a hacker that wants access to a marketplace system or exchange. The point is to allow trade without giving hackers and government snoops any access to transaction information at all. A system that doesn’t hold millions of dollars worth of the digital currency in the hands of fallible humans.
A trustless currency like Bitcoin requires a trustless environment where users can trade freely. The answer is simple a zero knowledge solution, and no one holds the coin.
Disclaimer: Bitcoin.com has no affiliation with the platforms mentioned in the given article and is not responsible for any issues users might experience. Safeguarding your private keys is the only way to ensure that your money is safe.
Have you tried any of the decentralized markets and exchanges? Let us know in the comments below.
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