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Decentralized crypto trading

Fév 9, 2022
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Decentralized crypto trading, what exactly are we talking about, what are the benefits for traders? Analysis of the benefits and example of a platform.

decentralized crypto trading

Decentralized crypto trading, or can we make them? Decentralized trading dedicated to cryptos can be done on a decentralized trading platform, a specialized platform that does just that or on a decentralized crypto-currency exchange operate in a decentralized manner, without any interference from a third party, which allows users to make peer-to-peer transactions. Sometimes you can find both services, like on Binance.

Crypto-currency exchanges are platforms that facilitate trading in crypto-currencies, it is indeed easy on such platform to buy and sell tokens, which represents a certain form of trading. We can better understand this by taking the example of the stock market. In the same way that stock exchanges display the use of stocks, crypto-currency exchanges manage the trading of virtual assets.

Crypto-currency exchanges are a relatively new concept and people still need to get used to them. However, since many investors are interested in crypto-currencies, it is important to decode the types of crypto-currency exchanges. Decentralized crypto-currency exchanges are one such platform. However, what we are more interested in, would be to be able to trade as at a centralized broker, crypto-currencies.

It turns out that it is possible, some exchanges allow to do so and some specialized platforms as well. This allows you to quickly take a buy or sell position, with or without leverage, and to close your position in the time you want, either by scalping or day trading, some, but it is rarer, will practice swing trading.

Decentralized crypto trading, its advantages:

As we have just seen, it is possible to trade easily with leverage, sometimes high, this being an advantage for those who master this type of trading and a big disadvantage for beginners and uninitiated who can usually lose all their money.

Having said that, the real advantages are: possibility to trade without registration, therefore without going through a broker. What follows directly from this is the fact that you trade with your money directly from your Metamask account or others, so you remain in possession of your money at all times, no need to send it to a third party and then have to ask them for the money you have earned.

Main disadvantages of centralized platforms:

Exchanges that offer a trading platform, such as Binance or others, on the other hand, offer a much less decentralized platform since you will often, if not always, have to fill out a KYC, i.e. create an account, identify yourself and send money to the platform.

This means that all the advantages of a decentralized platform disappear.

Therefore, if you want to trade without an account, keeping control of your money, it is advisable not to use an exchange, it is better to use them to buy or sell tokens, but for trading, they do not offer any advantage, on the contrary, compared to a decentralized trading platform like gains trade or others.

In short, if the platform you are thinking of using is truly decentralized, it should allow you to keep full control over your wallets and funds. This means that in order to make transactions, it does not require you to transfer funds to a wallet or exchange account that will be managed by them. You should be able to get the money you invested in your trades back at any time without asking the platform, you should be able to do it directly so without any intermediary. This avoids having to trust a broker, having to justify his requests, etc.

The best solution is therefore to trade on a fully decentralized platform, without registration and use a centralized exchange when you need to transform your crypto-currencies into fiat, since decentralized exchanges will usually not be able to offer you this service.

Warning: it is advisable before trading cryptos to be well informed about the market. Tip: Bitcoin technical analysis gives you an idea of what is going to happen not only to bitcoin but also to other cryptos that generally follow the trend it does. This will allow you to do decentralized Bitcoin trading and other cryptos with a good knowledge of technical price analysis.


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Christian Tornare

Trader, investor and creator of ecosystems with direct links to DeFi. Trader, investisseur et créateur d'écosystèmes en lien direct avec la DeFi.

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