AirSwap, a decentralized Ethereum-based cryptocurrency exchange, managed more than $1 million in transactions on its first day of operations. It’s a stellar debut for a crypto upstart with a novel approach to trading.
AirSwap may be the new kid on the block(chain), but the people behind it have serious crypto street cred. The New York-based company was co-founded by Michael Oved, a former trader at high-frequency trading firm Virtu Financial Inc.
No Central Trading Hub
AirSwap is a virtual currency market with no central gathering place for buyers and sellers so that participants can maintain complete anonymity. Users find each other by posting what they want to trade on bulletin boards on AirSwap’s website and through smart contracts on the Ethereum blockchain.
“What’s novel about that is there’s no New York Stock Exchange or Nasdaq in the middle, setting rules,” Richard Johnson, a blockchain analyst at Greenwich Associates told Bloomberg. “That’s cool, we haven’t seen that before.”
Michael Novogratz is an adviser to Michael Oved’s crypto exchange AirSwap. (Twitter)
While other decentralized crypto exchanges do exist, AirSwap is unique in that it is almost totally hands-off.
“AirSwap does not manage, or ever touch user funds,” Oved said. “AirSwap works simply as a software platform for discovery of peers with whom users can swap tokens on a peer-to-peer basis through ethereum smart contracts. There is no central exchange hub or clearinghouse. The transactions are negotiated peer-to-peer, and then the swap is executed and cleared on the ethereum blockchain.”
AirSwap says its decentralized approach enables it to escape the regulatory crackdowns that have picked up steam in the cryptocurrency industry. One glaring example is China, which has been rabidly shuttering crypto exchanges within its borders.
Michael Oved said that’s one thing that won’t happen with AirSwap. “It’s impossible to shut down,” he said. “You don’t even need an account. People won’t even know Chinese traders are on the system.”
Hacks Are A Concern
Decentralized exchanges could become more popular as users look for alternatives to big exchanges, which have become frequent targets of aggressive cyberhackers.
But anonymous, smaller exchanges are also vulnerable to hacks, as BTCManager has reported. MyEtherWallet, the most popular Ethereum-based wallet, was targeted in a domain name system (DNS) attack on April 24, 2018.
EtherDelta fell victim to a similar hack in December 2017. Cyberthieves stole 308 Ethereum tokens in a brazen heist then valued at $250,000. There, a hacker took over EtherDelta’s DNS server and launched a fake server that looked nearly identical to the original.
The one positive about all these hacks is that market players are increasingly taking proactive measures to prevent them. In March 2018, popular bitcoin exchange Binance set a $10 million bounty for information leading to the arrests of hackers who attack its platform, as BTCManager has reported.
“Binance has currently allocated the equivalent of $10,000,000 in crypto reserves for future bounty awards against any illegal hacking attempts,” the exchange said.
Binance made the bombshell announcement shortly after an unsuccessful hacking attempt on its platform on March 7. The failed heist put potential criminals on notice that some crypto exchanges will actively hunt down cyber-thieves instead of merely reacting after the fact.