Bithumb Launching Decentralized Exchange Within a Month
South Korean cryptocurrency exchange Bithumb, one of the largest in the country, is planning to release a new decentralized exchange (DEX) within the next month, according to a new report. It joins industry leader Binance and others in looking to DEXs as the future of cryptocurrency trading.
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Bithumb Partnering With Third-Party DEX Protocol
The new exchange, called Bithumb DEX, will be available globally at the end of October, according to a report published by Business Korea on October 4th. Bithumb is planning to use a decentralized exchange protocol called R1, which was created by OneRoot Network, a blockchain startup with its own cryptocurrency RNT. The partnership seems to be limited, however, with Bithumb saying it is only working with OneRoot Network on the decentralized exchange and nothing else.
The firm appears to be looking beyond the South Korean market, with an unnamed representative telling Business Korea that Bithumb DEX “will be operated by its overseas subsidiary”.
Bithumb is following in the footsteps of Malta-based Binance, one of the largest crypto exchanges in the world, which announced in March it would be creating its own DEX. In August, Binance gave a preview of the new exchange, which will run on its own distinct blockchain called Binance Chain.
Another popular exchange in South Korea, Upbit, recently invested in the Allbit DEX, according to Business Korea and crypto startup Nexo. And now that Bithumb, which was the sixth-largest exchange by volume in the world in the past 24 hours per Coinmarketcap, is joining the party, the trend of established exchanges investing in DEXs appears to be reinforced.
A Wild Year in South Korean Crypto
The news from Bithumb comes during an unpredictable and wild year in the South Korean cryptocurrency industry. Since the start of 2018, cryptocurrency exchanges in the country have been the target of multiple hacks.
Last June, Bithumb itself was hacked for $30 million USD. It was the largest exchange in South Korea at the time. That occurred a few weeks after the hack of Coinrail, another South Korean exchange, which lost $40 million in a separate incident. After those events, the South Korean government announced it would be speeding up plans to regulate cryptocurrency in the country.
DEXs Have Their Weaknesses As Well
Many have looked to DEXs as a way to solve the security vulnerabilities that centralized exchanges are prone to. DEXs work by matching traders directly and allowing them to always hold their cryptocurrencies in their own wallets.
While DEXs are widely considered an interesting idea, up until now they have had limited functionality, with little liquidity and few token choices (quite a few only allow the trading of ERC20 tokens).
As a result, centralized exchanges, with their faster trade times, wide choice of cryptocurrencies, and large trading volumes, have been the clear choice for most crypto traders. It shows in the numbers, as centralized exchanges host the vast majority of crypto trade volume, despite the many problems that have struck them–kicking off with the Mt. Gox incident in 2014.
Though it should be recognized that DEXs, despite being touted as more secure than centralized exchanges, have had security issues of their own. In July of 2018, the Bancor DEX was hacked and lost more than $20 million.
That happened a month after Denmark-based OpenLedger had its domains hijacked, leading the DEX to temporarily shut down. However, there appears to be a substantial amount of investment in DEXs and DEX protocols, so they may have a better future ahead.
Sound off below. Are decentralized exchanges the future of crypto trading? Or will the efficiency and features of centralized exchanges keep them the preferred choice?
Images via Pixabay, Bithumb