What is a decentralized exchange?
Bisq is one of the better known decentralized exchanges. Before we get into the nitty gritty of Bisq, it’s worth understanding the difference between a centralized and a decentralized exchange.
Decentralized exchanges use peer-to-peer networks to facilitate trading. Think of it like Craigslist — it’s a platform that connects buyers and sellers. If you’re using cryptocurrency to diversify your stock portfolio, you may be more used to working with a brokerage that sits in the middle of your trades. A decentralized exchange connects you directly. There’s no middleman.
Depending on your outlook, this could be both a pro and a con. Bisq is not just a decentralized exchange — it’s an exchange that’s dedicated to decentralization. People who like the Bisq exchange like its ideology of decentralized governance, which is also key to cryptocurrency in general. The benefits are:
- Increased privacy and anonymity
- Lower fees
- You keep control of your crypto
- It’s open to unbanked users
And, a bit like a credit union, Bisq is owned and run by its traders and contributors. Its founding principles are user privacy, user security, and censorship resistance. The idea of censorship resistance is a core part of decentralization.
Various payment options
There are a few things to take into account when buying cryptocurrency. How quickly do you want to buy? Are you using fiat (such as dollars) or another cryptocurrency? How much of your personal information do you want to share?
Bisq allows you to buy crypto using U.S. dollars in several ways. You can make a cash deposit, assuming your bank lets you. That can take up to four days. You can also use the Zelle payment system or make an electronic transfer, both of which can take up to three days. Bear in mind, you can’t pay for your crypto with a credit card. Plus, you need to have some bitcoin to use as a security deposit.
Instant approval and no geo restrictions
Unlike centralized cryptocurrency exchanges, Bisq does not ask for any private information. You won’t have to wait while it validates your photo ID, and there won’t be any glitches when you try to fund your account. You’ll pay the seller directly so the money can’t get stuck in the system. That said, there are restrictions on the amount of trading you can do in the first two months to minimize fraud.
The other benefit to Bisq’s system is that anyone can trade from anywhere. Other exchanges are limited to certain U.S. states or certain countries. Anyone with access to a computer can trade with Bisq.
A centralized exchange could freeze your funds for a number of reasons and you wouldn’t be able to stop it. It’s a bit like depositing your money with a bank — the bank, or exchange, has your cash. In contrast, you never need to deposit funds into a decentralized exchange like Bisq.
You hold the keys — just don’t lose them. Seriously. If you forget your password and lose your seed words (we’ll explain these later), you won’t get your wallet back. And it’s your job to back up your data.
Like all the best cryptocurrency exchanges, Bisq takes security seriously. Indeed, it has a big advantage over centralized exchanges. Your personal and banking information is stored on your own computer — it doesn’t go to a central point that could be hacked.
View more information: https://www.fool.com/the-ascent/cryptocurrency/bisq-review/