South Korea’s crypto exchange heavyweight Bithumb has announced that it was all set to launch a decentralized exchange in a bid to cater to its overseas expanding base in the coming few months, reported Business Korea on October 5, 2018.
Although the exchange is yet to put the word out officially, some people familiar with the matter told several local publications about the development. Sources added the latest decision seems to be the company’s strategy to compete with other leading exchanges in the global market by opening a decentralized exchange that receives attention in the global market.
The new decentralized exchange (DEX) will not rely on a third party service provider to trade cryptocurrencies, like centralized exchanges. DEX will allow users to trade cryptocurrencies through an automated process, which will eliminate threats such as hacking.
Although it seems complicated in theory, it is possible to hardcode recurring transaction fees into smart contracts in an effort to incentivize developers and finance operations.
As dodgy as anonymous sources are when it comes to verifying stories, it is difficult not to believe given that the exchange is already working with global blockchain firm, One Root Network (RNT), which is already operating one decentralized exchange.
The name of infant exchange has not been revealed so far. Commenting on the development, an unnamed official from the exchange said:
“Bithumb DEX will be operated by its overseas subsidiary. The company is working together with RNT only in the decentralized exchange sector.”
Decentralized vs. Centralized Exchanges
For the users, it would mean, that the exchange would hold no part of the cryptocurrencies. It would enable traders to store cryptocurrencies in their own wallets. Although the process would be slower, it would still be safer as compared to centralized exchanges. Another issue that users might face is, when potential problems come to the fore, there will be no service provider to assist them.
A month ago, crypto exchange powerhouse Bithumb made headlines when it announced that it was reopening account registrations after it renewed its stalled partnership with Nonghyup (NH) Bank. The partnership was briefly stalled in the light of the security breaches that had taken place in a few exchanges in the country, at the start of the year.
At the time, the South Korean government had laid down some guidelines for the exchanges to adhere to- one of which was- asking users to register with their real names on exchanges, complete with verification from the bank, instead of fake names. However, with the plans to open decentralized exchanges will certainly keep traders safe from hacks.
Can decentralized exchanges compete with the already popular centralized exchanges? Let us know your views in the comments section.