Let's Not Get Hacked!

So yet another exchange got hacked last week or had some insider manipulation happen. I believe the verdict is still out, but one fact remains, the users were the ones vulnerable and had their funds stolen. The question is, who stole the funds from MapleChange? Or is that really the question. The old crypto adage goes, “DO NOT LEAVE YOUR FUNDS ON AN EXCHANGE.” Well, what if you could trade without having to put your tokens/coins on an exchange? Directly from your wallet-this is the safest and easiest way to trade crypto.

Functionality
In my opinion, functionality, the code, or how the contract is executed plays a huge role in a project and/or product being decentralized. As many thought leaders have pointed out, decentralization is a sliding scale. Most often when building something in the blockchain or distributed ledger space, you have to make important decisions. Does it scale quickly or is it more secure? Do we rely on the code more or do we rely on humans more? These are hard questions to answer. I think some projects have done a better job than others at decentralizing their products.

Before I go any further, there is a never-ending argument about decentralization for a DEX (decentralized exchange) and other products. I do not want to get into this arbitrary hair-splitting debate (“if people are picking what tokens/coins go on the exchange then it is not decentralized”). This is more of the human factor. We will look solely at the functionality, nothing else. We can discuss semantics on crypto twitter if you want.

Jackson Palmer nails it in an article he wrote this week:

|| WHAT WERE WE BUILDING AGAIN?
To analyze the shifting landscape of cryptocurrency, we can tie the current state back to three broad benefits that decentralized, digital currencies originally aimed to provide:
1. Censorship resistance
2. Trustless transactions
3. Verifiable history
He speaks directly to digital currencies, but the same can be said for certain functions built into exchanges. Let’s first talk about what decentralization isn’t.


Don't believe the hype
The Overhyped “D” word
As we all know, decentralization has become an overused, overhyped, (marketing) buzzword. Please make it stop! This is watering down a core value of the crypto space and people are forgetting the importance of what we are doing.

It’s similar to what the ad agencies did to the word awesome. You started hearing it on every commercial, and now it means nothing or everything. Similarly, exchanges feel the need to say that they are decentralized, even though certain functions say otherwise.

Let’s look at IDEX, you can “trade from your wallet” and they have “DEX” in their name. However, contrary to their name, there is a key function that goes against the decentralization aspect of the exchange. But the marketing trick does work. People do in fact think IDEX is decentralized because they have “DEX” in their name. Similar to people thinking Coca-cola is awesome because they use the word 10 times in one commercial.

If an exchange is taking custody of your tokens/coins (like IDEX), you are at the mercy of said exchanges. This lacks decentralization in a very fundamental aspect of an exchange. Basically where it really counts.


If an exchanges contract gives them the power to “shut something down”, or can lose customers funds, they are in fact, not decentralized. Contrary to what their marketing material says, venture capitalists say, or even crypto twitter says. Bancor made that clear with their highly-publicized $23.5 million hack carried out through a wallet.


Getting locked out
Many people have been locked out of their tokens on centralized exchanges, myself included. Most recently, KuCoin locked up every users PRL. This was in reaction to former CEO Bruno Block’s seemingly manipulative move to mint coins from the ICO contact and sell them on the exchange. You can read all about it here. The actions of KuCoin is very similar to what centralized banks have done and still can do. Which goes against the core values of decentralization and the purpose of cryptoassets.

If you are like me, you find this control to be insanely frustrating. This is especially true if you are watching the price skyrocket, and you can do nothing about your current position. Or vice versa, the price is tanking and you can do nothing. These are just some examples. I have heard horror stories of people getting large amounts of funds frozen for apparently no reason, but they could do nothing about it because the funds were on a centralized exchange. Similar to a bank freezing your account/canceling your card because of supposed “fraudulent activity” or any number of other reasons.


The Future
The Future
Everyone from Vitalik Buterin to Changpeng ‘CZ’ Zhao has admitted that DEXs are the future. Their reasons might vary, but the undeniable truth is that the mechanics give more power to the user. I mean, I feel like some of the people in this space have forgotten why we are doing this. The whole purpose of this movement and Satoshi’s groundbreaking white paper is to give MORE power to the individual and less power to those in control. The purpose is NOT to build old systems in a new space and take advantage and control people.

Control Your Own Wealth, P2P Trading
Using wallets like MetaMask, Parity or Ledger gives individuals control of their own funds without an intermediary or third party. Ethex has built an exchange that allows users to trade with other individuals without taking custody of ANYONE's funds for ANY REASON at ANY POINT IN TIME. Thus alleviating the issues of MapleChange, KuCoin and the other 30+ crypto exchanges that have been hacked, manipulated, or robbed since BTC started trading on Mt Gox. Decentralization is not just a word to us.

Ethex is:

Censorship resistant. There is no central point of failure. No one from our organization can freeze funds or roll back time for any reason.
Trustless Transactions. Every transaction is peer to peer. Your funds are never held by us, and you can trade freely.
Verifiable History. Every transaction is on the Ethereum blockchain, for anyone to view. Ethex has taken it a step further and included the transaction history displayed in the left column of each market. A great example of designing for the user.
Decentralization is at the forefront of our ethos, So much so that we only list useful tokens built on Ethereum. So next time you hear about a hack or people’s cryptoassets getting frozen, know that we are building a product that ensures our traders will not be susceptible to issues related to a central point of failure.

I hope you found this article worthwhile. Feel free to leave a comment below as I am always happy to hear other people’s points of view. If you enjoyed this article give me a clap or 50. Cheers to the future!
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