Internet of Value/internet of money has truly been a long time coming. The world tends to get caught up in old, complicated systems and rather than rethink and rework them, we stick with old tech that’s good enough to get the job done. Sometimes it takes an outsider, masked in anonymity, to really shake things up and incite change.
Bitcoin, independent of any major institutions, introduced a platform where currency is “Immediately liquid, indefinitely divisible… instantly transferable, [and] can be programmed to meet the needs of particular assets, rights, goods, or services or of specific communities.” Bitcoin was the first decentralized digital currency (works without a central bank or single administrator) where transactions use peer-to-peer technology and are verified by network nodes through cryptography and recorded in a blockchain (a public distributed ledger). As this technology matures and adoption increases, it’s becoming increasingly aware that the time has come to say goodbye to slow, expensive, antiquated systems. Furthermore, as banks and large financial institutions continue to face criticism for their recklessness with people’s assets, a decentralized system which involves no third party intermediate to transfer value demonstrates even further reaching benefits.
Following Bitcoin, countless other cryptocurrencies have been created (many of which have failed) so, naturally, the need for exchanges arose. Most of these are centralized exchanges (CEXs) - online platforms which facilitate transactions utilizing third party technology. CEXs have relatively short transaction times, high trading volume and a high liquidity, and many support fiat payment. CEXs, by name, ignore a fundamental aspect of Bitcoin – decentralization. One problem with CEXs: they are much easier to hack than decentralized exchanges, and many new coins are only listed on new and unproven CEXs – often leaving emerging cryptos more vulnerable. We have seen the failings of CEXs (which operate uninsured and unregulated) in various cryptocurrency exchange hacks over the years, most famously when Mt. Gox lost ~850,000 BTC.
An alternative to CEXs are decentralized exchanges (DEXs) which, much like Bitcoin, use peer-to-peer technology. With a DEX, users resume total control of their funds and have the security of trading directly from their own wallets with on-chain settlement and don’t rely on any central authority’s supervision. Transactions can be executed on smart contracts and atomic swaps using what is known as Hashed TimeLock Contracts (HTLCs). DEXs are less vulnerable to attacks, but still in their infancy. Many are not as user-friendly, offer less functionality, and lack the liquidity offered by CEXs.
But what if a trader wants everything cryptocurrency has been touted to offer, including liquidity, low-latency and security? The best solution is an exchange platform that combines a decentralized “trustless” cross-chain “fair exchange” settlement with the technology of a centralized custodial exchange. Such exchanges allow users decentralized options if they feel like settling a transaction without the supervision of a third party (eliminating counterparty risk), but also the efficiency of a low-latency, fully-featured centralized exchange when they need quick and liquid trading for exchanging large volumes. Whatever a users’ needs, they will have the best option available for any scenario, and it will all be available at a single exchange with Blockchain.io.
“The Blockchain.io platform will combine a centralized custodial exchange with a decentralized “trustless” cross-chain “fair exchange” settlement. The centralized exchange will be low-latency and full-featured, with custody services, centralized order booking and efficient order matching.”
The decentralized cross-chain settlement will be based on cross-chain atomic swaps, i.e. cryptographic protocols that allow users to settle transactions across heterogeneous blockchain networks without the need of centralized third-party intermediaries, eliminating counterparty risk.
CEXs and DEXs have their strengths, but they both fail to give most cryptocurrency traders everything they need. A credible cryptocurrency exchange needs to be accessible, efficient and functional; it must encourage trade while ensuring trust. Blockchain.io, a centralized exchange with a decentralized settlement, will do just that.
Check out their website to learn more or to get whitelisted for their token sale. You can also click here to join their bounty hosted on vyper, where prizes range from ~ $20-16,600 in BCIO (the token of the Blockchain.io exchange).
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