If Decentralized Exchanges Are So Great, Why Is No One Using Them?
TL;DR
There are pros and cons to both CEX’s and DEX’s.
We think the reason most of us still use CEXs is: we're all lazy as hell - we started on CEXs and never made the jump, cause we didn't have to.
Full Story
There's a certain level of hypocrisy in the crypto space...
Everyone champions decentralization, but the majority of crypto trades take place on centralized exchanges.
(We're guilty of it).
So, why is that? Let's start here...
When one person wants to buy a token/coin, they need to be paired up with someone else selling that same asset, in the desired amount, at the right price.
That's a lot of plates to spin.
Both centralized and decentralized exchanges do this matchmaking for us users, in a process known as “order matching”.
Okay, so both types of exchanges do order matching...what's the actual difference?
Centralized Exchanges (CEXs)
Strength: They're real fast. Buying and selling on a centralized exchange is a speedy experience (which is v important if you're a high frequency trader).
Plus, they're way easier to use. Email, password, and proof of ID is all you need to get started.
Weakness: It's one entity, holding a whooooole bunch of other peoples money. If the exchange goes under, your money is probably going with it (*cough* FTX).
Plus having everyones crypto in one place draws the attention of hackers. Oh and you give up a bit of your financial privacy when you hand over your ID.
Decentralized Exchanges (DEXs)
Strength: No sign up needed, as long as you have a crypto wallet, you can use a DEX.
Plus, you have custody of your crypto at all times, so if the DEX were to go down, or experience an outage - your money is safe and accessible.
Weakness: From a new user standpoint, DEXs are confusing as hell! ("What the hell is a 'self custody wallet,' why can't I just use my email?")
And from a professional trader's viewpoint, they can be slow, putting their trades at a disadvantage.
But all of those competing pros/cons aside...
We think the reason most of us still use CEXs is way simpler than all of that:
We're all lazy as hell!
We started accounts on centralized exchanges because it was the only way to buy crypto with a credit card.
Since then, we've all been too lazy to make the jump from CEX to DEX.