There are several cryptocurrency exchanges in the market, and most of them have their own functionalities, tokens and features. But most of them have one important problem, they are centralized, meaning that the users’ funds are at risk almost at all times. As long as your funds are on a centralized exchange, then they are not yours.
But there are other platforms known as decentralized exchanges. ERC20 is one of these decentralized platforms that allows users to own their funds, and at the same time still be able to exchange them with others. The most important thing here is that users do not need to disclose anything about themselves neither giving away wallet keys.
A centralized exchange, according to ERC20, is a platform that leverages the power of blockchain and smart contracts. There is no user database or wallet, as it can happen on a centralized crypto exchange. Users are represented as an address on the blockchain which is able to trade with others using smart contracts.
ERC20 Exchange Values
ERC20 exchange is settled on different values, including transparency, privacy, reliability and quality.
- Transparency: The smart contract source code is always publicly exposed. Everyone is able to verify that there are no malicious codes in the contracts. The whole trading process – including bids, asks, order books – may be audited at any time due to the fact that this information is also exposed.
- Privacy: It is not necessary to disclose anything about who you are or about your funds you are trading with others.
- Reliability: Users are always able to withdraw their funds used for the trading to their wallets. This value is embedded in a smart contract. The exchange is not able to lock the funds, delay, and block withdrawal requests.
- Quality: The exchange includes beautiful charting library, Mobile-Friendly Experience, and a great service for the users.
What is an ERC20 Token, What is Allowance, and How Does the Exchange Work?
These are tokens on a primary blockchain that expose a set of functions to the outer world so other contracts can successfully interact with them.
Allowance is a limit that the user sets for the exchange. In this way it can trade and exchange on the behalf of the user. It is important to mark that ERC20 Exchange will never use more than what the user allows it to use. And that’s something that is guaranteed by the ERC20 token standard. – it is referred to the “approve” and “transferFrom” functions of the ERC20 standard for technical details.
In order to use the exchange, the user will need some ERC20 tokens to sell or ETC/ETH to buy them. If you are selling your tokens, then you need to set token allowance for the exchange. Once the allowance is set, then the user will be able to put a sell order which will be recorded on the exchange.
Moreover, an important functionality that the exchange permits is to trade directly from the Trezor wallet. Trezor is one of the most recognized and known hardware wallets in the market. If the user has a Trezor, it will need a ‘Trezor connection’ so as to put an order. After it, all the tokens that the user will buy with that order will be transferred to his account once the order is matched.
At the moment, there are different ERC20 coins accepted at the exchange, including Nexium (NXC), Status (SNT), Decentraland (MANA), 0X (ZRX), Patientory (PTOY), Augur (REP), Arcblock (ABT), Aeternity (AE), Aion (AION), AMLT Token (AMLT), Banca (BANCA), BelugaPay (BBI), Rentberry (BERRY), Bytom (BTM), Budbo (BUBO), Chainium (CHX), Clear Coin (CLR), CyberVein (CVT), and Dragonchain (DRGN).
ERC20 exchange has been created as a decentralized exchange that aims to solve one of the main problems of centralized cryptocurrency exchanges. Indeed, it is able to provide a better security than centralized exchanges. Moreover, ERC20 does not hold your virtual currencies, you are always the owner and possessor of them, something that centralized exchanges do not allow.
It can be a good exchange for the future if it is able to prosper. There is a market of users that is searching for increased security and being in possession of their coins at all times.