A Decentralized Custody Solution. Why Do We Need It?

Article by Aleph zero on Altcoin Magazine.

Technology is quite strange, don’t you think? Here, we make major leaps unexpectedly and make it a commodity so fast, that we don’t even consider the leap, a ‘leap’. But as we settle with new things so fast, we might be slow at further developments. Or, we might settle for what’s not good enough.

You see, we’ve lived through the boom of the blockchain revolution, then took a step back and now are in a steady movement towards its mass adoption. The first use case was peer to peer financial transactions via Bitcoin. It allowed transferring value in a trustless manner without any intermediaries. But it seems that its ability to make a quick buck (or a quick million) has attracted many speculators, traders, and those who had no idea what they are doing apart from knowing they ‘need’ to invest, awaiting another growth.

They all have been using exchanges to trade and that’s fine.

But it’s time to move on now.

This is what we have done so far. We (technically, Nakamoto) have created this so-called digital gold that is secured by decentralization (and some other mechanisms) — and centralized it.

If you’re not a miner, to buy Bitcoin with fiat, you need to go to an exchange and do it there. Once you obtain the BTC, you’ll get a wallet address and be able to make BTC payments — or even withdraw this to your private wallet.

But then, you want to buy Ethereum. And Zcash. And EOS. And whatever else. You can’t buy that with Bitcoin. You need to either exchange Bitcoin to cash and then buy the other asset on some exchange, or you’ll most likely do the trade of Bitcoin to Ethereum (for example) with exchange acting as an intermediary.

It’s convenient, it’s fast, so why should you do it any other way?

Although there’s nothing to really worry about exchanges in practical terms, theoretically, they might be vulnerable to attacks. The biggest exchanges like Bittrex, Coinbase, or Binance have probably used some…

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