Centralized exchanges collapse with rapid movement in the price of Bitcoin and decentralized platforms take the spotlight
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Answer Centralized exchanges collapse with rapid movement in the price of Bitcoin and decentralized platforms take the spotlight
Several large cryptocurrency exchanges had trouble staying open and up and running during Wednesday’s market crash, which saw Bitcoin and Ethereum lose 30% and 40% of their value respectively within 24 hours.
US crypto market leader Coinbase has reported an “intermittent outage” all morning, while globally popular trading platform Binance has temporarily halted withdrawals of Ethereum-linked cryptocurrencies, and Gemini reportedly experienced transaction processing delays, The Kraken platform reported connectivity problems.
While the decentralized trading platforms managed to remain operational despite the high trading volumes resulting from yesterday’s selling.
Centralized trading platforms such as Coinbase allow people to buy, sell and trade cryptocurrencies through an intermediary that is an exchange.
In this business model, the trades are not recorded directly on the blockchain, but rather within the platform’s own wallets; The platform takes custody of cryptocurrencies.
By contrast, decentralized trading platforms facilitate peer-to-peer trading and do not hold users’ assets.
One of the advantages of decentralized trading platforms is that they are mostly immune to the disruptions faced by their central peers.
This is because they are distributed protocols that use smart contracts on the public blockchain, often ethereum, in the process of their operation.
As long as the blockchain is up and running, decentralized trading platforms will also continue to trade normally.
Blockchain networks have a built-in redundancy that eliminates downtime, as millions of computers run programs around the world.
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Ashley Chap, head of growth at Uniswap, a leader in the decentralized trading platform arena, said that the platform was working flawlessly on Wednesday morning.
But all this does not mean that trading via DEX does not have a downside.
For starters, tradable cryptocurrencies are often limited to those using the same blockchain as DEX, which makes buying assets like bitcoin less easy.
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However, one can buy a “wrapped” version that simulates the price of Bitcoin such as “wBTC”.
The THORChain blockchain, which is integrated with the ShapeShift trading platform, eliminates the need for encapsulated Bitcoin completely.
As for the negatives of decentralized trading platforms, they are high fees with network congestion and difficulty to use if they are characterized by user-friendly interfaces unlike central trading platforms.
However, it remains one of the solutions that can be resorted to at a time when central trading platforms stop, which has become common and usual.
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