Being coined in the 1820s right after the French revolution, the word “decentralization” stayed dormant for the majority of its existence. In spite of that, its resurface in 2010s caused a major ripple in financial technology (even though the pun was intended, Ripple is ironically one of the lesser decentralized crypto entities).

Prior to the Bitcoin-era, decentralization existed primarily on paper. The brainchild of Satoshi Nakamoto materialized the concept, making it something almost tangible, and what’s more important, tradable.

Some people saw irony in the fact that the decentralized cryptocurrency pretty much only exists (in the form of trading) on the systems of centralized exchanges. “Trading decentralized cryptocurrencies through centralized vendors is, at the very least, counterintuitive!” — they probably thought.

The security breach of Mt. Gox in 2011, that resulted in a loss of approximately 850 000 BTC, serving as another confirmation, that the conjecture of centralized exchanges is vulnerable, exploitable and obsolete. This had to change.

Decentralization to the rescue!

It goes without saying, that centralized exchanges (hereinafter referred to as “EXs”) are the primary way of exchanging currencies, with over 99% of cryptocurrency trading activities flowing through them. EXs provide a multitude of benefits such as, speed of order execution, fiat gateways, plethora of trading instruments and surplus of liquidity. On the other hand we have security threats, heavy fees, looming geographical regulations that threaten to shut them down and numerous other factors.

A wave of hacks, whose primary target was hot storage wallets of the biggest exchanges rolled through the world: Mt. Gox, Bitfinex, CoinCheck, the list kept growing and still continues to do so. A problem had become glaringly obvious — clients don’t get any control over their funds and completely entrust their savings to the third party. De-facto; you don’t own any of the cryptos stored in your exchange wallet.

Another huge destructive force that the centralized exchanges are blessed with is the monopoly of current market access. In other words, it is EXs who decide which token to list for free, and which to charge some stupid amounts counting well into the millions sometimes. Such biased power might just kneecap the whole industry.

So how can we exchange our coins without giving them away to a third party service?

It turns out, that just like our cryptos, we need to make our exchanges peer-to-peer also. Following the logic of blockchain; decentralized exchanges are secured and verified by the network of the exchange, making them guarded and at the same time, globally dispersed.