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Addressing the risk in centralized exchanges with Bitshare technology!

Ved Prakash, Newsblare
0 Comments| October 22, 2019

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We are living in a world panning towards the digital aspects at a rapid pace. In order to stay in the game we have to be familiar with it. Cryptocurrency trading is one of the latest forms of currency trading done by most of the people in the present times. Since cryptocurrency is a digital currency accepted across the globe, it has successfully brought uniformity of price irrespective of geographical location and economy.

How cryptocurrency exchange is maximising?

There will be no exaggeration if we say that cryptocurrency is ruling the world in recent years. According to a report published in a crypto analytic website Data Light, United States alone have recorded 22 million monthly visits to 100 cryptocurrency exchanges. It is highest number of visit to any currency exchange across the globe.

The WTO (World Trade Organization) introduced the World Trade Report for this year, the report evaluates the contributions of digital technologies in revolutionizing global commerce and also the challenges and prospects created by it. The report also includes Blockchain as one of the technologies.

Main reason for popularity of cryptocurrencies is that they are digital and cannot be counterfeited. While dealing in cryptocurrencies you not only get immediate settlements due to the absence of third party like notary, lawyer or a broker but you also get to pay lower fees as usually cryptocurrency exchanges do not charge any transaction fees. Apart from that unlike credit cards where there is a chance of your identity theft, cryptocurrency exchanges do not pose such kind of threats. It works on push basis where you send the requisite amount of coins to the merchant with no further information of yours.

Massive risks involved with centralized exchanges

With such a raise in cryptocurrency trading, cryptocurrency exchanges are second hot talk of the town. In order to understand the risks involved with the centralized exchange, it is important to understand what the centralised exchange are. Centralized exchange is the place where a person will open his or her bank account and wire all the funds to the bank account of the centralized exchange. Now the client will be able to trade all the products offered by the centralized exchange and in order to withdraw the funds they will need to make a request to the exchange. The funds will go out in the same way as they came in the exchange.

Though centralized exchanges have been able to offer high liquidity to their clients and are responsible for the transactions taking place, but questions have always been raised regarding hacking and security issues at the centralized exchange. Centralized exchange can be easily hacked and clients can lose their funds deposited in the exchange. Theft can be as big as disappearance of entire exchange in a single night. Infamous attacks like Mt GOX and HitBTC puts strong arguments against safety of fund in centralized exchange.

Though centralized exchange adds to the convenience and simplicity to trade of the clients but it can come at a much higher cost.

How BitShare is addressing the issue?

BitShare is basically a decentralized exchange on the Blockchain. It is an open source financial platform seeking to remove risks posed by the centralized exchanges.

High profile hacks in the centralized exchanges have made many people lose their money. But in decentralized exchanges such as BitShare, client data is not stored at one central location and thus security of the system cannot be easily compromised.

BitShare work on the concept of Proof of keys given by famous Bitcoin advisor Trace Mayor. According to this concept, every Bitcoin stored in a centralized exchange should be transferred to the personal wallet of the client. It is mainly due to the fact that when fund is stored with a third party and not the client personally, it will always raise questions regarding security of the funds.

It will be interesting to note that BitShare enhances the privacy of the client as there is no registration or KYC process required in trading with decentralized exchanges. So chances of identity theft or leak of fund information is eliminated by a greater degree.

Apart from that there is no single point of control, regulation or failure in decentralized exchanges such as Bitshare. You do not need to deposit or withdraw the fund. Every peer to peer transaction taking place is handled programmatically by secure smart contracts.

BitShare is an intuitive platform which allows the user to control its crypto funds without any third party setup.

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