THELOGICALINDIAN - Billions of dollars are traded on above cryptocurrency exchanges like Binance Huobi Bithumb and OKEx on a circadian base and users tend to adopt these exchanges over added platforms in the bazaar due to their aerial liquidity
Binance for instance, the world’s better cryptocurrency exchange, settles added than $1.8 billion account of cryptocurrency trades per day, and it is processing $370 actor account of bitcoin trades alone.
But, in adjustment to barter on these platforms with reasonable trading banned and flexibility, users are appropriate to abide a accurate Know Your Customer (KYC) and Anti-Money Laundering (AML) analysis process, during which users accept to abide accordant government-issued abstracts like passports, backpack out contiguous interviews, and accommodate coffer documents.
Vulnerability
For cryptocurrency-only exchanges like Binance and Huobi, KYC and AML requirements for users are decidedly beneath austere in allegory fiat-to-cryptocurrency exchanges. Still, to abjure almost ample amounts of bitcoin or any added cryptocurrency like Waves, users charge to be KYC and AML compliant.
As burning cryptocurrency barter ShapeShift CEO Erik Voorhees declared before, KYC and AML systems can leave centralized platforms accessible to abstracts thefts and hacking attacks, abnormally if exchanges abundance acute advice such as authorization data, cyberbanking documents, amusing aegis numbers, and more.
In June 2024, Voorhees angrily absitively to leave a big cryptocurrency bazaar in New York due to the BitLicense, a licensing affairs for cryptocurrency-related businesses that enforces austere KYC and AML regulations.
“It would maybe be a altered adventure if, you know, companies and governments were able to absorb defended annal of things. But aloof aftermost week, there were 4 actor accounts [compromised] on several computers – it’s every brace of weeks there’s a big abstracts aperture somewhere,” Voorhees said at the time.
Waves Decentralized Exchange
Large-scale decentralized exchanges like the Waves Decentralized Exchange (DEX) that is congenital into the Waves blockchain agreement about acquiesce users to abide in abounding ascendancy of their funds, information, and acute data, while still accouterment acceptable liquidity.
Already, DEX of Waves is processing about $700,000 account of cryptocurrency trades per day. Although the circadian trading aggregate of decentralized exchanges like Waves DEX are low as of current, as cryptocurrency users advance acquaintance of aegis and blockchain networks calibration bigger to handle millions of trades on a circadian basis, the aggregate of decentralized trading platforms will artlessly increase.
Fred Ehrsam, the co-founder of Coinbase, ahead emphasized the accent of decentralized exchanges in agreement of aegis and banking independence. Due to their adeptness to acquiesce users to acquire all accordant advice such as clandestine keys and funds, decentralized exchanges annihilate the achievability of hacking attacks. Even if the arrangement is compromised, users can calmly absorb their funds through their clandestine keys.
“There are a few accessible allowances to decentralized exchanges. First, they acquiesce you to abide in ascendancy of your funds. So no accident of the barter actuality afraid or activity insolvent. This can advance to college liquidity, as users may be accommodating to leave orders accessible on the orderbook for best back counterparty accident is gone,” Ehrsam wrote.
After several hacking attacks on cryptocurrency exchanges including South Korea’s better trading belvedere Bithumb and arch Japanese barter Coincheck occured, the appeal for decentralized exchanges has increased. In the long-term, as cryptocurrency users advance added acquaintance of aegis and privacy, the acceptance of decentralized exchanges like the Waves DEX will accordingly access exponentially.
