View profile

Come On Eileen

NOTE: This was scheduled to be sent out yesterday but for some reason it never got deployed. Sorry fo

The Block

June 8 · Issue #49 · View online
Weekly curated #cryptocurrency news and commentary.

NOTE: This was scheduled to be sent out yesterday but for some reason it never got deployed. Sorry for that hiccup!
This is The Block. If Bitcoin was birthed on the idea of a trust-less, decentralized platform eliminating a single point of attack/control and opening up the possibility of a future devoid of centralized power structures, perhaps the cruelest truth is that nine years after its inception, 99% of all cryptocurrency trading occurs on centralized exchanges. About 73% of these exchanges, including the largest and most popular like Coinbase, Gemini, and Bitfinex, are custodial, meaning the exchanges act as managers of customers’ cryptocurrency wallets.
The obvious downside is that the exchange itself represents the single point of failure; whether that failure be an attack against the exchange, a wallet hack, or an agency (or the exchange itself) cutting off access, the centralized nature of the exchange means it is vulnerable. An estimated one out of every 16 bitcoin has been stolen, so the odds that it happened on a centralized exchange are pretty good.
While many users enjoy the ease of use centralized exchanges provide, for users who prize the decentralization aspect of cryptocurrency above all others, this state of affairs is unacceptable. And theft isn’t the only risk.
With regulation uncertain (but almost certainly is coming soon), the chances that a centralized exchange could also be a target of government intervention aren’t small. Thus, Vinny Lingham’s soon-to-be-prescient tweet on the subject of decentralization:

Vinny Lingham
I’m almost certain we will see a top 25 crypto exchange fail or be shut down in the coming months. This will be the catalyst for the emergence of decentralized exchanges and this is a key theme I’m expecting in 2018.
Decentralized exchanges, or DEXs, are platforms in which smart contracts match and execute orders on the order book. No single entity controls the data or has any access to wallet private keys. Should a DEX be shuttered, the wallets remain secure and untouched.
In theory DEXs offer a more ideal solution to the centralization problem. They typically have smaller fees than the centralized exchanges, or even no fees. Their smart contract code can be checked and verified independently by third parties (even you, if you know how to read code). And of course, the user maintains full control over their own wallet.
The downsides to DEXs, currently, are a combination of the lack of ease of use, low liquidity (volume on DEXs are usually fractions of those of centralized exchanges, which can make trading on your coin of choice tricky), and often there are limited trading pair options, which can sometimes mean treading a labyrinthine path to get to the currency you actually want to trade with. Another issue with DEXs is the inability to convert between fiat and cryptocurrency. And while smart contracts can be examined and validated, that does not mean they are immune from hacks. From Jacob Woods:
“Although trusting a third party isn’t necessary, a lot of faith is put on the smart contract itself. Money can and has been stolen from decentralized exchanges despite the fact that many community members considered them unhackable.”
All that said, DEXs will continue to gain in importance and prominence as cryptocurrency industry matures and hopefully users will become more aware of the need for securing their own coins and doing their due diligence in protecting themselves from unnecessary losses.
Should you be interested in exploring DEXs on your own, I recommend IDEX or Bisq. Or you can just check out a list of 200 DEXs here. I can’t recommend EtherDelta (or its cousin ForkDelta) as those platforms have notoriously confusing interfaces which have even given me scares). Obviously, DYOR and tread carefully no matter which platform you use. Be safe. Be secure. And good luck!
Speaking of decentralized exchanges and danger, OpenLedger DEX was compromised (by a domain phishing attack). Not to be confused with a decentralized exchange, Famous Dex was arrested last week on an outstanding warrant.
Forbes has downgraded their Bitcoin year-end estimate to $12,500, and Google searches for the term ‘Bitcoin’ are down 75%. Also, Bitcoin “died” for the 300th time. Could today be a turning point?
Want to travel the world but only pay in crypto for a sweet place to crash? Now there’s an Airbnb-like app for that.
Apparently the global cybercrime industry is expected to hit $6 trillion by 2021. Don’t worry. No need to Szczepanik. The SEC appointed Valerie Szczepanik to newly created “Crypto-Czar" posting.
Links of Note
Is the crypto world sexist? That might be the wrong question.
Bitcoin ETF Dreams Kept Alive With New SEC Filing
Vermont Governor Signs Bill Clearing Way for Blockchain Companies
Buy bitcoin now while it's still cheap, says cryptocurrency investor
A crypto-trader’s diary — week 10; Stellar
Cryptocurrencies could be the way of the future.
When Crypto Meets Conceptual Art, Things Get Weird
U.S. Trade Tariffs Would Support Bitcoin
That is all for this week. Thank you for reading!
Dexy's Midnight Runners - Come On Eileen
Did you enjoy this issue?
If you don't want these updates anymore, please unsubscribe here.
If you were forwarded this newsletter and you like it, you can subscribe here.
Powered by Revue