Table of Contents
Introduction
Cryptocurrency, or digital currency, has become a buzzword in recent years. With the advent of blockchain technology, cryptocurrencies have emerged as an alternative to traditional currency and payment systems. Cryptocurrencies operate on a decentralized, peer-to-peer network, which means that they are not controlled by any government or financial institution.
In this article, we will explore the world of cryptocurrency and take a closer look at the on-chain Centralized Exchange (CEX) built on top of the Ethereum blockchain. Ethereum is a popular blockchain platform that enables developers to build decentralized applications (apps) and smart contracts.
Understanding Cryptocurrency
Cryptocurrencies are digital currencies that utilize cryptography to ensure their security. Cryptography is a technique that converts legible information into an almost uncrackable code to help secure transactions and control the creation of new units.
Unlike traditional currency, cryptocurrencies are not backed by any physical commodity or government, making them immune to government interference or manipulation. They are based on a decentralized network, where transactions are verified by nodes in the network and stored on a public ledger called the blockchain.
The Birth of Bitcoin
Bitcoin, created in 2009 by an anonymous individual or group using the name Satoshi Nakamoto, is widely recognized as the first and most prominent cryptocurrency. Bitcoin is a decentralized digital currency that operates on a peer-to-peer network, allowing users to send and receive payments without the need for intermediaries such as banks.
How Does the Blockchain Work?
Every transaction that takes place on the network is recorded on the blockchain, which functions as a transparent, public ledger. Each block on the blockchain contains a cryptographic hash of the previous block, creating a chain of blocks that cannot be altered without altering all subsequent blocks. Cryptography ensures the security and immutability of the blockchain.
The Rise of Ethereum
Ethereum is a blockchain platform that was created in 2015 by Vitalik Buterin. It enables developers to build decentralized applications (dapps) and smart contracts on top of its blockchain. Smart contracts are computer programs that automate the process of executing and enforcing the terms of a contract.
Understanding Centralized Exchanges (CEX)
Centralized exchanges (CEX) are cryptocurrency exchanges that operate as intermediaries between buyers and sellers of cryptocurrency. CEXs are centralized because they are controlled by a single entity and operate on a centralized server. This means that users must trust the exchange to store their funds securely and execute trades fairly.
The Need for On-chain CEX
While centralized exchanges have become popular due to their ease of use and convenience, they are also vulnerable to hacking and theft. On-chain CEX, built on top of the Ethereum blockchain, is a transparent, secure, and decentralized exchange that is not controlled by any single entity, making it a safe and reliable way to trade cryptocurrencies.
infinitybit is a decentralized exchange that operates entirely on the Ethereum blockchain, making it an on-chain CEX.
Benefits of On-chain CEX
On-chain CEX built on top of the Ethereum blockchain has several benefits. Firstly, it is more secure than centralized exchanges, as it operates on a decentralized network and is not vulnerable to hacking and theft. Secondly, it is transparent, as all transactions are stored on the blockchain and can be verified by anyone. Finally, it is more efficient, as it eliminates the need for intermediaries and reduces transaction costs.
How On-chain CEX Works
On-chain CEX, built on top of the Ethereum blockchain, operates on smart contracts, which are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. When a user places an order on the exchange, the smart contract automatically executes the trade.
