The Decentralization of Currency
The advent of blockchain technology and cryptocurrency has allowed millions of users across the world to achieve privacy, freedom and stability. The idea of decentralization in the crypto space is to give users control over their funds, investments and privacy without any interference from banks and third parties. In addition to this, decentralization solves the problem of corruption, inefficient services and systemic failures within the financial system.
What is Cryptocurrency?
Cryptocurrency is virtual currency built on blockchain technology to record and facilitate transactions. The system is decentralized, which means the currency owned by users is not co-owned or managed by a third party, such as governments or financial institutions. Cryptocurrencies may be bought online through centralized or decentralized exchanges.
Rise of Decentralized Cryptocurrency
Bitcoin was the first decentralized cryptocurrency to be developed by pseudonymous developer, Satoshi Nakamoto in 2009. However, the development didn’t stop there. In 2011, Name Coin and Lite Coin were developed. Today there are over 6,7000 types of cryptocurrencies available according to CoinMarketCap.com. The electronic currency, though not familiar to the majority, was intended to give users power over their own finances, removing banks and third parties from the equation.
Decentralized Finance (DEFI)
DeFi allows for financial products to be readily available to the public through a decentralized blockchain network. It is system software written on the blockchain that makes it possible for buyers and sellers, lenders, and borrowers to directly interact with decentralized software.
It cuts contacts with the third party companies handling the transactions. DeFi generally uses smart contracts, designed by the buyers and sellers, making financial products possible.
Decentralized Exchanges (DEX)
This new system of currency came with its fair share of disadvantages. Having a centrally managed exchange, which held all the electronic cash in one place, attracted cyber-attacks and hacks from every corner. This created a shift towards pure decentralization, allowing users to have full control over their crypto wallets, directly interacting for transactions only, allowing for maximum security. This gave rise to decentralized exchanges.
A decentralized exchange is a crypto marketplace that directly connects cryptocurrency buyers and sellers. The previous generation of decentralized exchanges used order books which consisted of records of all open buy and sell orders. However, the newer generation of decentralized exchanges use liquidity pool protocols to determine asset pricing. They also execute trades between user wallets instantly. They are mostly referred to as swaps.
Lacking centralized management, it operates under smart contracts that self-execute under set conditions. The system also records every transaction to the blockchain. Due to its decentralized nature, a DEX has several advantages.
· Lower transaction fees: With the availability of smart contracts, transacting on a DEX is cheaper than transacting on centralized systems.
· Security: Since no third party has access, the currency is secured and well ensured by a digital signature.
· Privacy: Unlike the centralized system, users are not required to give out personal details to any third party.
· Financial inclusiveness: a DEX creates an equal and inclusive ecosystem allowing users across the world to utilize their services.
About Soku Swap:
Soku Swap is hosted on the ethereum network, and Binance Smart Chain. It uses automated market maker smart contracts to create liquidity. Soku Swap has a crypto education system which offers free crypto classes, with the aim of reducing the spread of misinformation about cryptocurrencies and allows users to make informed trades on their platform. Additionally, their 24/7 live chat assures users have all the help they need in making trades on the platform.