Believe it or not a decentralized Bitcoin exchange has already existed for 5 years. Ever since the creation of the first Bitcoin mining pool – Eligius – a decentralized exchange was formed. Bitcoin pool mining is in fact a completely functional and currently the most reliable Bitcoin exchange available.
Our definition of a decentralized exchange is a globally accessible network which allows for a secure exchange of fiat currency to digital currency. There are a few forms of decentralized exchanges in existence such as Localbitcoins , Coiffeine , EtherEx . However, due to the peer to peer nature of these exchanges one is faced with high risks of fraud, there are many limits on how many coins one can buy from each vendor, and in some cases one is still required to hand over personal information to a bitcoin seller. The beauty of pool mining serving as a decentralized exchange is that a competent miner can reduce the risk of fraud to zero. A transaction with a bitcoin seller on a platform like Localbitcoins is much more likely to go wrong versus paying the electricity bill.
When one mines Bitcoins using a Bitcoin miner one effectively exchanges electricity dollars to bitcoins. While an initial investment and an ongoing maintenance on the machine is required, one can chose what pool to use and how to store the mined bitcoins. The best part is that there is no third party confiscating funds and closing accounts, there is no need to hand over sensitive identity information that will eventually get leaked, and there is no limit to how many Bitcoins you can acquire.
In a way the electricity company of each bitcoin miner is the exchange which turns one’s dollars into Bitcoins, but it does so unknowingly. At the same time Bitcoin mining is […]
