Earlier we wrote a lot about how to build a crypto exchange, which included all the main components like the trading engine, crypto wallet development, UI wrapper, and admin system. In this article, we will make a detailed overview of decentralized cryptocurrency exchange script and what is needed for this.

All of you had already heard the story of blockchain evolving, and that its predecessor is associated with the launch of bitcoin in 2008, which is fundamentally a lie. Nevertheless, this is a topic of another educational topic and probably we cover it later. Let us start with the main thing - how to make decentralized cryptocurrency exchange and what is needed to do it.

Why Decentralization?

I have been involved in the cryptocurrency industry for a while. Living and feeling the crypto community, as a community of close friends, we often share success and setbacks of each other. When someone loses money on one exchange, or notice that some ICO is a scam - he hurries to tell it to the other member. This is how trust is born and relationships created.

Cryptocurrency exchanges boom occurred in the past year. Especially when major players gained worldwide fame and popularity, such as the Korean Coinrail. The more daily trading, the higher you rise and yummier you become for hackers and other intruders of social engineering. Contrary to their ignorance, or negligence, bad people can access and this will affect your finances. Even worse, if there is a radically different situation - the exchange on which you trade hacked and stole coins.

Intel story of vulnerabilities, it becomes clear if there are no holes in the software, hackers look for them in the server part, and further in the hardware, even at the processor level. What then to do and is there a solution?

Security

Decentralized exchanges solve the main and only security issue. The main task is not to store users' funds on the exchange account, and not have access from the owners’ side to funds. This means that once the access to funds and coins are only from users, then it does not make sense to hack the system. After all, what is going to be changed eventually, if the exchange is just a bridge between two users - buyers and sellers well known in exchange industry as takers and makers?

Identification

Decentralized exchange development means that the system works with blockchain technology. Whether it's Ethereum, Bitshares, 0x protocol or others. At the moment there is a limited list of blockchains frameworks who support decentralized exchange.

Decentralized exchange can be completely decentralized or semi-decentralized. By definition, the information recorded on the blockchain cannot be changed or modified once it's recorded. This means that the blockchain technology, in turn, provides a very simple, from the user perspective, possibilities: recording and reading. Modification or removal is impossible; this is the reason that the system is transparent and trust-less.

Components

As you know, any exchange consists of the following components.

1. Graphical user interface (GUI);

2. Trading and matching engine, the core of any system;

3. Cryptocurrency wallets;

4. Liquidity;

5. Admin system.