does it have the potential to replace exchanges like polo and bittrex?
We can't say still that it may have, but it has a potential, but what I am looking for is their Bitcoim wallet where you can have a full control of your currency assets, even in the exchange, you can have full control. The wallet may be still under development, but I know many users are looking forward to it too.
Think outside of the box and make a small comparison:
| | | Traditional exchanges | | | NVO | | |
| | | Centralized | | | Decentralized | | |
| | | Competitive fees | | | Competitive fees | | |
| | | Exit Scam/hack Risk | | | No risk of exit scam/hack. | | |
| | | Private keys owned by the exchange. | | | Private keys owned by individuals. | | |
| | | Privacy loss due to registration and verification tiers. | | | No privacy loss. | | |
Someone could probably come up with a better and more detailed comparison if they spent more time. This makes it perfectly clear why such a project has extreme potential.
- centralised exchanges typically owned by some single entity (e.g. a company); decentralised exchange arguably able over time (more and more, or at least somewhat) to be 'owned' / steered / influenced by those people who use it, who add liquidity to it, who contribute to the sourcecode, who lead the community. In other words, avoid the downside of 'shared fate' if single owner does something you don't like one day
- centralised exchanges possibly can be audited/tracked by governments, tax authorities; decentralised exchange can use privacy/encryption/other means to keep our transactions away from 'unwanted eyes' of the tax man, the police man, etc when they decide to go silly on us sometimes
- question of scale: peer-2-peer nature of decentralised exchange means capacity probably linearly scales as more nodes add themself to the network; centralised exchanges typically rely on single owner knowing how to build a scalable website that can service the users - ask Poloniex how this feels!
- centralised exchange is like Amazon/Facebook/Google website; decentralised exchange is like bittorrent. Arguably: no central decision point, no central server, no central owner to monetise the users' patronage of their service, decide on what content is allowed, exploit your viewing habits, sell your browser history, track your usage for surge pricing model. In other words, exploit you for their gain
- decentralised exchange is like Linux; centralised exchange is like Windows. Open source, crowd sourced means you harness a wide user base who can (potentially) steer, improve and take ownership of the project over time to increase its usefulness, like Linux.org. Try telling Microsoft how to steer/improve Windows codebase over time.
- decentralised exchange depends on users trading with each other, users decide what is traded, what is bid, what is offered, users generate the price discovery and market depth as it suits us; centralised exchange relies on single owner entity acting as market maker, providing liquidity, clearing trades, conducting the market, deciding what to offer, policing rogue traders/HFT's
- centralised exchanges often give preferential treatment (discounts, trading costs, IPO's) to large clients ("whales"); much less likely under decentralised exchange / open source / P2P model
- centralised exchange assumes it can legally avoid or pass off mistakes to us bag holders (tax payers, bail outs, Bernie Madoff, GFC, 'moral hazard', FDIC); decentralised exchange less likely to require 'bail in' from the user base
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