The cryptocurrency market has experienced its fair share of ups and downs over the years, and the events of the past few weeks have been no exception. In recent news, the popular centralized cryptocurrency exchange FTX suffered a major outage that left users unable to access their funds and trade on the platform.
The incident at FTX has led many users to consider switching to DEXs, which offer greater security and control for users. DEXs do not hold users’ funds, which means that there is no central point of failure that can be targeted by hackers.
This fact has also focused on the importance of decentralized technologies, such as blockchain, in the cryptocurrency market. Decentralized technologies offer a more secure and resilient alternative to centralized systems, as they do not have a single point of failure and are resistant to tampering and fraud.
There are several reasons why you might want to consider using a decentralized exchange (DEX)
- Decentralized control: DEXs are decentralized, which means that they do not have a central authority that controls the exchange. This can be an advantage for users who value privacy and want to avoid the risks of having their funds controlled by a single entity.
- Greater security: DEXs are generally considered to be more secure than CEXs, as they do not hold users’ funds and do not require users to entrust their funds to a central authority. This can reduce the risk of funds being lost or stolen due to a hack or other security breach.
- Better compliance with regulations: DEXs can potentially be better able to comply with regulations, as they do not have a central authority that can be regulated. This can make DEXs a more attractive option for users in jurisdictions with strict regulatory requirements.
- Lower fees: DEXs often have lower fees compared to CEXs, as they do not have the same overhead costs and do not need to generate profits for shareholders.
These factors may make DEXs a more attractive option for users who want more control over their funds and want to avoid the risks and costs associated with centralized exchanges.
For these reasons, it is important to consider the risks of using a CEX and to carefully research and evaluate the security measures that the exchange has in place to protect your funds. If you decide to use a CEX, it is advisable to only store on the exchange the amount of cryptocurrency that you need for immediate trading purposes and to withdraw the rest to a secure, self-custodied wallet.