Bisq - The importance of a decentralized exchange - BestDApp


Introduction

Bitcoin came up with the idea of being a fully decentralized and independent digital currency (either from governments or from the users themselves), so its operation is free and will remain this way forever. The way people found to trade these assets, however, suffers greatly from centralization, if you enter a site that lists the highest trading exchanges (such as coinmarketcap) you will find that the absolute majority of them are centralized and this can can be explained by several angles, one of them being the liquidity that these already consolidated platforms present, usually to trade in these platforms is required to do the KYC verification process which in itself already violates part of bitcoin decentralizing scence. Okay, but why is this a problem?

Vulnerability

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It is an undeniable fact that the cryptocurrency market is full of fraud, not for cryptocurrencies themselves but for people who take advantage of new technology and people who are unaware of it to steal their assets. As an example we have several scams and ponzi schemes or 'companies' that come up promising absurd profits daily, centralized exchanges are not at the mercy of these scams.

As an example, let's take the famous Mt. Gox exchange which in 2011 was at the heart of the bitcoin ecosystem, with the largest volume ever recorded with bitcoin transactions being made, thousands of people using the platform as well as leaving their assets. and personal information in custody with it. His first hack came after the custodian of the company's operations control officer, a hacker broke into this manager account and generated large amounts of BTC in Mt.Gox's order book, causing the BTC price to fall from several dollars to about a penny. The second hack came about 24 hours after the first, the stolen exchange personal data gave access to bitcoin wallets that had the same email address and password as Mt. Gox users.

This article shows 4 Major Crypto Exchanges Hacked.

The possibility of theft or hacking attacks on exchanges that keep your KYC information confidential, bank documents and more are extremely high when you have these trading platforms centralized, this brief summary of what happened with exchange Mt. Gox is an example. And although these platforms have evolved in terms of security, it is still extremely complicated to trust that your data is safe in their possession, Mt. Gox was an example but if you do a little research you will find that there are numerous cases like this.

Aside from the vulnerability issues mentioned earlier, there are attack vectors that currencies are likely to receive, such as the Ethereum Classic 51% attack, which took money not from exchanges but arbitrarily double-spent coins.

This article shows How to prevent fraud, loss or theft in the world of cryptocurrencies.

Bisq

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It has been argued that when you trade in centralized exchanges you are doubling your chances of losing your equity as well as your personal information, we now move on to explaining how Bisq and other projects like it are alternative ways to trade your digital assets.

Bisq is not exactly an exchange, it is a platform that allows users to create bitcoin buy and sell offers. Transactions are made directly between the parties, so that Bisq has no control over data or cryptocurrencies, providing only a contact tool between buyer and seller. Unlike other exchanges it is not possible to access it in a browser, being necessary to download a program to perform the transactions and this in itself prevents attacks from the server hosting the site or court orders, as well as this character Decentralized access prevents any other person or representative body from having access to the amount of bitcoins and breaking into their assets. Bisq anonymity is also fully preserved, no personal data is stored and information is only available between the trading parties, registration requires you to enter some personal data but, as mentioned above, this data is not stored.

ERC-20 token trading does not take place at Bisq, however it does have a wide variety of fiduciary and other cryptocurrencies listed, but these are only a reference for Bitcoin trading, so if you want to buy Dash, it means that If you choose to buy Bitcoin using Dash as a payment method, instead, when you select to sell on Bisq and choose Dash, you are saying that you want to sell Bitcoin in exchange for Dash. Nevertheless, you cannot buy cryptocurrencies in exchange for Bitcoin since the operations are done with Bitcoin only.

It has been said that Bisq does not operate on a site like traditional exchanges but on software, to install you need to go to the official site and choose the version of your operating system (MacOS, Windows or Ubuntu) and click it to do it. the download.

It has been said that Bisq does not operate on a site like traditional exchanges but on software, to install you need to go to the official site and choose the version of your operating system (MacOS, Windows or Ubuntu) and click it to do the download.

The installation and configuration is very intuitive so I don't think it is necessary to explain here, there are also tutorials on the site that help you in this process.

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In this screen you can already see the price bitcoin is being negotiated and the offer book, there are two ways to negotiate in Bisq. You can accept an offer from the offer book proposed by another user, or create your own offer. If you want to sell Bitcoin, choose SELL BTC from the menu. When you do this, a window will appear showing all offers to buy. The offers bring in the amount of bitcoins being purchased, the amount in the currency you are trading requested by each seller, and the accepted payment method.

The support option is the way users can open disputes regarding a transaction problem, such as attempted fraud or non-payment. Arbitrators are a system that works to resolve disputes between two clients involved in an operation. As we saw earlier, Bisq's wallets have multiple 3-key signatures. To authorize a transaction, two signatures are required: one is always that of the arbitrator, while the other is that of the seller (in the case of a purchase transaction) or the buyer (in the case of a sale).

 

Conclusion

Bisq is a decentralized P2P transaction platform that makes bitcoin management more private than traditional as proposed by bitcoin. You do not have to go through a KYC process just as you will not deposit your funds in a centralized location that will not retain any of your information either. All your funds, trading information and private data are kept in your local system.

For decentralized exchange to achieve conventional adherence, scalability needs to be addressed, and the user experience and interface design must overcome those of centralized adversaries. I strongly believe that Bisq as a decentralized exchange has fundamental aspects to compete with the large centralized ones although the platform liquidity is still quite low when compared to the centralized ones.

 

Thank you for reading :D

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zulonga
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cryptocurrencies, introduction and analysis
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