Chapter 6: Introduction to Blockchain Wallet Features 3: Digital Asset Trading
The current digital asset transactions supported by the wallet mainly include the following three cases: coin exchange, exchange transactions, and OTC transactions.
Through coin exchange, you can exchange assets on different blockchains, for example, you can exchange the BTC (Bitcoin) you own directly to EOS.
A normal transaction can only be made in the form of a base pair, which is then traded into the final destination coin.
For example, if I want to exchange from A to C, I need to go through an intermediary B. A -> B, B -> C;
The coin exchange simplifies this process by directly exchanging A for C
There are currently 3 types of exchanges, namely centralized exchanges, decentralized exchanges, and aggregated exchanges.
The centralized exchanges include Firecoin, Coinan, OKEX, etc. Decentralized exchanges include IDEX on Ether, NewDex, Whale Exchange, DEXEOS on EOS, etc.
Centralized exchanges require us to host the coins in the exchange account and then the transactions only happen in the centralized data of the exchange.
A decentralized exchange, on the other hand, does not require this process.
This greatly reduces the risk of losing user assets if the exchange is stolen or runs away.
With a decentralized exchange, users transfer coins to a smart contract through their wallets, and the smart contract completes an on-chain aggregated transaction and then transfers the coins back to the user.
Contract trading, while enhancing transparency, also greatly reduces the reliance on a central medium.
Aggregate exchanges are a collection of all exchanges to form a trading platform that allows users to easily trade across multiple platforms without having to download numerous apps, and they share the depth of other exchanges and pairs from other exchanges. For example, if you sign up for an aggregated exchange account, you can choose the most cost effective exchange to trade on each time you buy or sell BTC (Bitcoin).
Some wallets are currently starting to support aggregated trading, for example, TokenPocket wallet is expected to go live on aggregated exchanges in December 2019, by which time users can trade directly on big exchanges like Firecoin, OKEX and Coinan through TokenPocket.
OTC (Over The Counter) trading is a peer-to-peer trading method outside of the exchange, guaranteed by a third party, for customers. OTC in blockchain usually refers to the one-to-one trading of fiat and digital currencies between OTC users.
Currently the largest OTCs are mainly exchange-based OTCs, but some wallets also have access to third-party channel providers that offer this service.
For example, TokenPocket has access to OTC services for coin trading. When users use TP wallets, they can easily sell their digital currencies for fiat currency or buy digital currencies with fiat currency.