From Centralized To Decentralized Trading Platform
Many people that get into the crypto world first look for a centralized exchange where they can deposit fiat money and invest in different cryptocurrencies. Which make sense, when I want to open an account in a bank, I want to open an account with a big and reputable bank, not with a small bank with a limit number of branches and services.
This is the right thing to do, to look for reputable Exchange.
What most people fail to do is to shop around when it comes to trading cryptos.
As someone that has an account on 8 different exchanges, seeing this below picture give more space to breathe and trade as I feel if one exchange is down, I can trade on one of the other 7 exchanges.
The only reasons why people should have different accounts:
- Every exchange has some unique cryptocurrencies that are traded only on that platform
- Some exchanges are just good for buying cryptocurrencies
- Some exchanges give you better trading tools for the active trader
- Decentralized Exchanges Cryptos Only (Less Downtime)
- Centralized Exchanges Fiat & Cryptos (More Downtime)
- To see what platform actually suit your actual need
- Better SLA usually with Centralized Exchange
It might sound excessive but when it comes to cryptocurrencies moving your funds is the best thing you can do.
All major exchanges are currently experiencing a big increase in registration and some cause congestion on their network which is affecting all the users.
For example; an organized DDOS attack on several exchanges or on a major exchange while some big ”whale trader” decide to ”dump” their cryptos holding can cause a flash crash.
A Flash Crash, is a significate drop of an instrument price within a very short time, usually within few minutes.
”Flash Crash is just lighting, you don’t see it coming until it does”
Flash Crash so far happened on a centralized exchange, such as Coinbase, Kraken, Gdax,Poloneix , and Bitfinex.
Why does Flash Crash Happen on Centralized Exchanges?
Many people don’t know but by clicking ”Market” or ”Market Price” it allows the user to unload any amount of token at any price. When a user clicks on Buying/Selling at ”Market” he is actually paying higher fees.
Which mean if for example, I have 1 million Neo available, instead of selling NEO at a specific price, the trader is willing to sell his NEO at any price which will cause an instant drop. If you also add for example other major exchanges that are currently under maintenance or under DDOS attack, the drop will also affect other exchanges but not to the same extent.
For the Margin traders usually the small traders, they will lose money as they will have their position liquidate due to the big drop.
A big centralized platform that is down can heavily affect the market.
If you are a margin trader, I will recommend you the following:
- If you decide to trade with margin on a centralized platform, make sure that your liquidity price is at 0. Meaning that if the price reaches 0, you will not be kicked out from the trade.
- Move to a decentralize exchange such as Binance , Livecoin that don’t have ”Market Price”