What is a centralized exchange ？ this paper MYY1003G Organize and release , Only as a reference for project requirements ！
A centralized exchange is a platform or an application , Traders can be allowed to buy and sell cryptocurrency with legal currency or other cryptocurrency . It's a market for token trading . Users deposit money directly into the exchange , The exchange keeps the money as a purse until the order is made . Exchanges keep their systems down the chain , This means that these transactions are not recorded by the blockchain . Once the order is generated , Exchanges will match orders in real time .
In a perfect decentralized exchange , Users will have control over their money . The goal of a decentralized exchange is to directly build a 「 Individual to individual 」 The market of . Money isn't being channeled to an exchange or wallet owned by a single platform or institution ： contrary , Orders and transactions take place on the blockchain . As a result, , There is no middleman fee , Assets are not affected by hackers , And users really have control of the assets .
What are the characteristics of a decentralized exchange ？
First , Decentralised exchanges are mainly used for trade matching 、 On the chain, asset clearing and settlement, etc , User assets are hosted by smart contracts and controlled by users , Exchanges don't touch user assets .
secondly , The biggest value of decentralized exchanges is that users have absolute control over their assets , All transaction data and records will be linked through the blockchain smart contract , So as to ensure the openness and transparency of the transaction , It greatly reduces the cost of users' trust in the exchange .
Again , It's hard for hackers to steal user assets , Unless it can get every user's private key , Even if the exchange private key is compromised , You can't transfer user assets without a user's private key , So it's very safe . Using decentralized exchanges , Don't worry about losing money any more 、 The risk of stealing money .
meanwhile , Decentralized trading system also has the advantages of centralized trading system , That is, the capital will not flow in the process of trading , Only when the customer needs to withdraw money from the account , The funds flow into the account , According to the characteristics of most node records, the corresponding address and record storage are combined with the liquidity of funds , Form a new flow chain and address .
With the gradual maturity of the underlying technology of blockchain , The trading experience of a decentralized exchange 、 Trading speed and other aspects will also be improved and strengthened , therefore , There is still great potential for the development of the whole decentralized exchange industry , The de centralization and de centralization of exchanges will coexist for quite a long time .