Decentralized stock exchanges and currency exchanges allow users to buy and sell cryptocurrencies without having to send them to the custody of the exchange. Decentralized exchange is actually a software or an online site where you have your own wallet, and the opportunity to trade directly from it.
The advantage of this form of trading is that decentralized exchanges generally do not require personal information from users. It is therefore a favorite tool for cautious owners of cryptocurrencies who do not trust intermediaries and value their privacy. The downside is lower liquidity and higher trading fees.
We have selected for you the three best-performing and best-known of decentralized exchanges for Bitcoin.
is a decentralized cryptocurrency exchange that allows direct peer-to-peer purchase. They do not store their users’ resources. To minimize the risk and to shorten the time needed for business, users use their own wallet and escrow service. During the transaction, funds are locked into a multisig address.
Since Hodl Hodl does not store users’ resources, it does not need to be subject to complicated regulations requiring their personal data.
Why trade on Hodl Hodl?
- Security – your assets are under control and you do not trust them to stock exchanges.
- Privacy – without the need to enter personal information
- Speed – trades are done directly between user addresses
- Testing environments – you can try out sandbox trading
- Global community – trade with people around the world
LocalBitcoins is the leading platform for peer-to-peer bitcoin trading with more than a million registered users from 249 countries. Part of the platform is an advanced reputation rating system. Unfortunately, this service has become so popular that regulators have begun requiring user registrations to fill in personal information, it is not entirely anonymous.
How to make a transaction on LocalBitcoins
- Step 1: First, you have to create an ad. By creating an ad, you choose a payment method, set your prices, your limits, and write down the terms and conditions for which you want to buy or sell Bitcoin.
- Step 2: When selling Bitcoin, you need to place it in your LocalBitcoin wallet, and then users will see your ad.
- Step 3: When someone answers your ad, you will receive an email and an SMS alert. Once your business starts, your Bitcoins are moved to a “depository” where they will stay for the duration of the deal.
- Step 4: Once the buyer clicks the Pay button, you receive a notification via email or a text message.
- Step 5: When you confirm that you have received the payment, your bitcoins will be moved to the buyer’s purse and the deal will close.
Warning! Always choose a counterpart with a long history and flawless ratings, and do not let anyone outside of the platform talk you into trading.
After successful trade, be sure to send feedback to the buyer and encourage him/her to do the same. Feedback is important for getting a good name on the platform.
TIP: Despite undisputed advantages, trading on decentralized exchanges is slower and more expensive. To trade actively, read our article on standard cryptocurrency exchanges.
(formerly known as Bitsquare) is a decentralized, open-source exchange. This means that it is not a run-of-the-mill exchange, a central server, nor a company that might require personal information from traders. It is a software that you download and use yourself. It’s maintained by a community of independent developers who, together with users organize in so called
DAO (decentralized autonomous organization).
“Bisq has no employees, no headquarters, and no legal foundation.
Bisq is just code that users run.
The Bisq DAO is how we collaborate to build it.”
– Bisq on twitter
Bisq allows users to buy and sell BTC for other cryptocurrencies, or money, without the need to entrust funds to the intermediary. Transactions are made directly between the buyer and the seller (peer-to-peer) through the software. And because the wallet software is running on your computer, Bisq trading is even safer than at other exchanges.
When someone wants to sell BTC, they insert it into their Bitsquare wallet and create an offer that is sent to all registered users. When someone accepts the offer, the trade begins. For trading, buyers and sellers are required to make an advance payment of 0.1 btc, which is used in case one of the parties violates the trading conditions. The seller and buyer are also required to pay a transaction fee. When the seller confirms receipt of payment for the BTC, the transaction is executed and the deal is closed.
If you choose to do trade on decentralized exchange, you are one of the few people who are willing to give up a little bit of comfort to gain more independence on third parties, which is after all one of the main ideas behind Bitcoin and decentralization.