Category: Tokens

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Crypto-friendly banks expected to open in Malta in the next 12 months

Categories Blockchain, Cryptocurrency, ICOs, Bank, DLT Regulation, E&S Group, Cryptocurrency Exchange, Tokens, Wallet, Delta Summit

Crypto-friendly banks expected to open in Malta in the next 12 months

Roderick Psaila, a Malta-based banking expert spoke about the future of crypto-banking at the Delta summit in Malta held between the 3rd and 5th of October. The three-day event was the world’s first official and government approved blockchain event of its type, and it attracted over 1500 delegates from all over the world.

Speaking as a part of a discussion panel, he was responding to criticism of traditional banks hesitancy to embrace blockchain, DLT, and cryptocurrencies despite the fact that the Maltese government has approved the DLT legislation in November.

“We are already seeing new, smaller banks show a willingness to adopt blockchain technology, but legacy banks will take longer to come round, because of their systems in place and because they tend to expect higher standards,” he said.

He also stated that he believes that two to three crypto friendly banks will open in Malta within the next year that will be amenable to blockchain and crypto, as well as being conducive to the industry’s growth.

This could be due to the fact that it is unlikely for the banking industry to fully adopt and embrace blockchain technology until matters around its compliance with anti-money laundering framework were finalised. Until this framework has been deemed acceptable to banks, it doesn’t matter how acceptable it is to operators, ultimately the banks have the final say.

Also on the panel was Michael Matthias who is the CEO of digital currency Dascoin and he stated the need for banks to catch up with modern technology instead of shying away from it.

“And yet, as blockchain technology becomes more mainstream, it is not farfetched to imagine a near future in which cryptocurrency is used as the coin of choice in everyday payments and transactions,” he said.

The Delta Summit, the first of its kind has been called a resounding success by all that attended. Dr Christian Ellul, Director of E&S Group also spoke on a panel discussing Malta’s bright future as the “blockchain island”. Other speakers at the event included the Prime Minister of Malta Joseph Muscat, Changpeng Zhao the CEO and Founder of Binance, and other global stakeholders in the blockchain, crypto, DLT, and ICO sectors. If you have any questions in relation to ICOs, and Malta’s legislation regarding ICOs and blockchain please contact us on [email protected]

 

 

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Security tokens are changing traditional finance

Categories Blockchain, Cryptocurrency, Tokens, DLT

Security tokens are changing traditional finance

The creation of blockchain has been one of the most important technological advances of the 21st century and it has opened a number of doors to ways of improving the way we live.

Blockchain and distributed ledger technology (DLT) is the technology that underpins Bitcoin and cryptocurrencies. Tokens also use the same technology and they can be categorised in three different ways, depending on their use and function. These categories are; utility tokens, payment tokens, or security tokens.

Founder and partner at Morgan Creek Digital Assets, Anthony Pompliano believes that security tokens should be considered as digital assets and therefore should be regulated by federal rules. This means that they are essentially a mixture of new digital asset technology and more traditional financial products.

“If cryptocurrencies like Bitcoin are considered ‘programmable money’ then you can consider security tokens a version of ‘programmable ownership.’ This means that any asset with ownership can and will be tokenized (public and private equities, debt, real estate, etc).” Pompliano said.

In another comment from Luc Falempin, CEO of Token, he stated that security tokens have drastically increased the ability to create new and exciting financial products. He also commented on the significant increase in security tokens that offer benefits to both digital assets, and more traditional finance.

“The net effect of tokenized securities is to increase the liquidity of the underlying assets. Using an asset tokenization platform is becoming the de facto method to raise capital by issuing blockchain-based ownership claims.” 

One of the main plus points of a good tokenisation platform is the fact that it is possible to create a way to tokenise funds, services, and assets in an efficient manner. A proper platform will eliminate any of the technical challenges that present themselves in the management and sale of pre and post-sale tokens.

“The issuance of a new security or utility tokens can be easily managed on a tokenization platform. A successful token sale could end up receiving thousands of contributions in the form of fractions of thousands of ETH. The more success you expect to see in your project, the higher the need for a professional tokenization platform that can automate the process,” Mathieu Cottin said in a blog post.

Most importantly, a security token can offer improvements to a number of features of traditional financial services as they have the ability to remove intermediaries from investment transactions. This means fewer fees, increased and free market exposure, quicker transaction completion, and a larger potential customer base. It also makes the market immune to institutional manipulation and automated service functions.

If you have any questions in relation to ICOs, please contact us on [email protected]

 

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The inevitability of security tokens

Categories Blockchain, Cryptocurrency, ICOs, Tokenomics, Tokens, Utility Tokens, Security Tokens

The inevitability of security tokens

Over the last couple of years, we have seen the emergence of the token economy and since then it is marching on at an incredible rate, despite the regulatory and technical hurdles that have been cast in their way. Without getting unnecessarily over complicated, we can break down blockchain issued tokens into three distinct types.

Utility token

A utility token is the most organic type of token for a blockchain-based system as they provide the function of using the blockchain that they operate on. From a legal point of view, they can truly be considered as a digital product rather than as security and the issuance of this kind of token is not subject to as many issues. A utility token is usually integrated into the digital product and can offer some functionality within the product ecosystem.

Backed token

Another type of token is called a “backed” token. These are digital currencies that are backed by fiat currency or a commodity. These are somewhere between a utility token and a security token, in the same way that a traditional commodity instrument and currency cannot exactly be considered as a security.

Equity token

The most controversial and complicated type of token is a security or equity token. These tokens are backed by an equity or profit in a business that does not even have to be related to blockchain. Throughout most global jurisdictions, these type of instruments are regulated by the Securities commissions with the most famous being the US SEC which provides very stringent reporting and compliance rules.

When it comes to the regulatory perspective, issuing utility tokens is the least complex whilst security tokens are the most complicated. This is why blockchain entrepreneurs are attempting to avoid securities laws by attaching some utility function to their ICO token and gaining a legal opinion that it is not a security. In the majority of cases, it does not bode well for businesses when they try to avoid the scrutiny of the SEC.

Stakeholders need to understand that not every ICO token can be a utility token as some projects quite clearly require a security-based token. A good example of this projects is that promise a buy-back of their tokens which essentially qualifies them as a security. It is reasonable to assume that eventually, all markets will use blockchain technology regardless of the nature of the instruments in question. This means that the emergence and development of security tokens are inevitable, despite all of the present legal complications.

E&S Group is a leading corporate & law firm offering various services with regards to ICOs. Feel free to contact us directly on +356 20103020 or by email at [email protected] to find out how E&S can help you in ‘making things happen’.

For more information click the link.

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Halloween Coin, a Truly Ghastly Altcoin

Categories Cryptocurrency, ICOs, Technology, Tokens, Wallet, Halloween Coin

Halloween Coin, a Truly Ghastly Altcoin

Last year, a cryptocurrency was created with the sole aim of celebrating Halloween 2017. This coin was called Halloween Coin or HALLO, but with the ghoulish festival just around the corner, it seems to be getting a bit of attention this year as well.

Whilst the concept of a themed cryptocurrency may not fill investors with confidence, some of them do have a bit of merit. That said, linking an entire project to a certain time of year or a one-of-a-kind event is not going to result in a lot of ongoing buzz. When it comes to Halloween Coin, what exactly is its purpose, has always been a bit of a grey area.

The coin was first announced in April of 2017, full six months before the holiday itself. The project was originally abandoned by its initial developer, again showing that themed or short-term projects are not a great idea. With most altcoin ventures not making their first birthday as it is, limiting the scope of a coin in this way was bound to ensure its doom.

But, Halloween Coin was launched and upgraded with all previous users needing to go through a wallet upgrade as well. After this soft fork, the new developer outlined a roadmap of future developments including mobile wallets, commerce applications, and giveaways. Despite this announcement, not much has been heard since and it appears that there is only one person working on the project at the moment.

In an update published in June 2018, the developer behind Halloween Coin suggested that a new wallet client is worked on and be released by Halloween 2018. So far, nothing has been forthcoming.

That said, Halloween Coin is still being traded on CoinExchange and whilst it is not generating any real value and it is almost impossible to ascertain how many coins are in circulation, it is still generating a bit of attention. On the 26th of October, $61.00 of Halloween Coin was traded on exchanges with each coin commanding a value of $0.0001 in 24 hours.

Interested in ICOs Legislation in Malta? Contact us directly on +356 20103020 or by email at [email protected] to find out more.

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What is a non-fungible token?

Categories Blockchain, Cryptocurrency, ICOs, Technology, Tokenomics, Tokens

What is a non-fungible token?

There is a lot of talk in the crypto-community surrounding fungible and non-fungible tokens but what are they? In this article, we hope to cast some light on what they are and how they can be used.

What does non-fungible mean?

When something such as a token is called ‘fungible’ it means it has the possibility to be replaced by something else that is identical and interchangeable. A good example of this could be a grain of rice or a €5 note in your wallet. If you want to lend that €5 to someone, you can and it doesn’t matter if they do not repay you with the exact same note.

When something is non-fungible, they can look and appear identical at first but each will, in fact, have its own unique information and attributes meaning it is not possible to swap them. A good example of this would be a plane ticket – two plane tickets may look the same but each has different passenger information, destination details, and even prices.

Based on these two definitions, a non-fungible token is one that may have others similar to it, but that carries its own information and attributes meaning it cannot be interchanged with another token of the same, or any other type.

What makes a non-fungible token different from another token?

Most cryptocurrencies are fungible in nature; for example, if you send a BTC and receive a BTC, they will be different coins but you won’t be able to notice the difference.

Whilst we can compare a fungible token to a €5 note, a non-fungible token is best compared to a baseball card – each has a unique set of data and varying levels of rarity. If you were to send a token to someone by accident and get a different one in return you could potentially lose a lot of money.

There is another feature that you also need to consider and that is that fungible tokens are divisible which means you can send a fraction of it to someone, rather than the whole thing. On the other hand, a non-fungible token must be traded or sold as a whole and cannot be divided in any way.

What are non-fungible tokens used for?

Cryptokitties is a good example of a use case for a non-fungible token. As any cat owner knows, it is not possible to simply replace a cat, nor can you divide one. Cryptokitties is a blockchain powered platform that recreates this concept in the digital world, storing each cats personality and genetic material in a digital format. These kitties can be bought or sold using ETH and some are more expensive than others. The platform was a huge success with the most expensive kitty selling for $120,000.

Since the launch of Cryptokitties, many other similar examples have followed.

What are the pros and cons?

A non-fungible token allows you to store and detail more of the attributes that make them unique. You have the ability to include vast amounts of metadata about each asset as well as details of ownership that can be verified in an immutable fashion.

In terms of cons, non-fungible tokens have been criticised due to the fact that the ERC-721 protocol is in its early stages. Some say that it is tricky and complex and that developing a decentralised application is a time-consuming task.

How are non-fungible tokens created?

It can be expensive and complicated to create non-fungible tokens and it can sometimes take months to create a DApp- something that is not practical in the fast-paced world of blockchain.

As a result, some platforms are trying to create a framework that can be adopted and tweaked, but that ultimately unifies and standardizes the tokens. One such platform is Oxcert which provides a plug and play platform meaning that non-fungible tokens can be developed and verified quicker. This means that companies wishing to develop a non-fungible token do not need to acquire a high level of blockchain understanding, and can still avail themselves of the various benefits.

If you have any questions in relation to ICOs, please contact us on [email protected]

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E&S Group is participating in the Malta Blockchain Summit

Categories Blockchain, Cryptocurrency, ICOs, Malta, E&S Group, Technology, Advisory, Tokens, Wallet, Startups, Exchanges, DLT, Malta Blockchain Summit

E&S Group is participating in the Malta Blockchain Summit

The Intercontinental Malta is hosting the ‘Malta Blockchain Summit’ on the 1st and 2nd November 2018. This will be the second most anticipated event in a span of two months after the successful Delta Summit in October.

During the Malta Blockchain summit, the Maltese government will also be enacting the two remaining laws (VFAA and ITAS) becoming the first jurisdiction with progressive and transparent regulations on the diagonal space.

This event has already attracted many organisers from around the world to exhibit their services, all coming from various industries such as Legal, Corporate, Fintech and Real Estate. Furthermore, many speakers will be discussing Malta’s impact on this ever-growing economy sector.

Karl Schranz, E&S Group director will be participating in an event’s panel discussion titled: “Post ICO: with Millions in the Bank, What’s Next?” that is going to be held on the 2nd of November at 5:30 pm. Other speakers joining this panel are: Benjamin Bilski from the Naga Group, Cyrus Fazel from SwissBorg, David Ben Kay from PundiX Nuno Utrust and Igo Khmel from Bankex.

E&S Group will also have a stand promoting their services to potential clients willing to set up a Maltese company to operate in the DLT area under the Maltese jurisdiction.

If you would like to visit our stand we will be situated in Gold #76 where our staff will guide you through all our ICO Legal, Corporate and Tokenomics services offered.

E&S Group has already advised over 90+ ICOs all benefitting from our tailormade services. If you want to know more about our services drop us an email on [email protected] and our experienced staff will assist you with your quires.

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Why businesses need to realise the importance of tokenisation

Categories Blockchain, Cryptocurrency, Tokenomics, Tokens, Ethereum

Why businesses need to realise the importance of tokenisation

One of the most important implementations of the blockchain technology is to reliably record and verify information monitoring when and where it was added to the network.

This combined with its ability to synchronize in real time with an unlimited number of nodes in any location, means that all involved parties can get the same information at the same time. This also means that all stakeholders can have the utmost confidence in the truthfulness of that particular information. The result of this breakthrough is that you can treat blockchains like an infallible digital notary that can record truthful information and share it in seconds. Whilst this is incredibly useful, it does have significant limitations.

Being able to know where and when a product was manufactured, and have an opportunity to trace its entire history is a powerful way of reducing fraud. Whilst this is incredibly useful, it is not an economic unit that can be bought or sold.

The power of digital tokens

Digital tokens, on the other hand, are designed for economic activity and blockchains are perfect for processing them.

Let us consider something complicated such as a packet of prescription medication. Not only is there a requirement to record when and how it was manufactured and packaged, but when the time sell it to pharmacies or distribution partners comes, we still need to keep track of it.

If we create a digital token that represents the packet of medication, we would be able not only to trace the full history of the packet, but also to buy and sell the token by moving the token in between accounts.

Public blockchains such as Ethereum are mainly based on the ability to combine both complicated business logic with smart contracts and an unlimited number of digital tokens. Tokens that represent money can be considered as fungible, whereas other types are unique. Either way, we can safely say that the future of business is in contracts that involve exchanging products and service tokens for money tokens.

Through the use of digital tokens, we can create a type of sophistication that exceeds the existing financial and operational business world by being cheaper and less complex – all using the same single system. The future of business contracting will involve the exchange of product and service tokens for virtual payment tokens.

When we combine tokenisation with the complicated business logic that is facilitated through smart contracts, we can represent very complex business transactions faithfully and much more reliably than companies do at the moment. It is not unusual for companies to discover that their ability to negotiate an agreement often far exceeds their ability to keep their side of agreed.

Example of use

A good example of use case would be a volume purchasing agreement. Generally, businesses beyond a certain size often have many different resource planning systems as well as numerous subcontractors and subsidiaries which can make executing simple tasks very complicated. If you cannot track volume, you cannot get discounts but with blockchain and a smart contract for procurement, it is possible to always calculate the correct price for each PO.

As the token economy matures and businesses put more and more products, services, and assets onto public blockchains, we can expect the delivery of complex financial services to be made digital as well.

Everything from receivables factoring to trade finance can be a one-click activity and once participants have created a trustworthy track record of doing business over the blockchain, a record of precision will far exceed the reliability and accuracy of a traditional credit report.

But to get there, the first and most important step is for businesses to embrace tokenisation and to move far away from just treating blockchains like a techy, digital notary.

At E&S Group, we can help you to understand the benefits of tokenising your business and services. Furthermore, we can take you through every step of the transition. Contact us today by sending us an email on [email protected] to find out more.

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Should you go for utility or security token for your ICO project?

Categories Blockchain, Cryptocurrency, ICOs, Tokens, Utility Tokens, Security Tokens, Securities

Should you go for utility or security token for your ICO project?

In 2017, the traditional method of startup fundraising (using VC methodology) was completely revolutionized. A boom in the launching of ICOs saw literally hundreds of companies turning their attention to the blockchain and creating a digital currency born in the form of an invest-able token. This manner of crowdfunding which has seen unprecedented levels of increased popularity has found its wings clipped by regulators and authorities who have picked up on a few worrying issues. Authorities such as the SEC have taken an in-depth look at the tokens being produced by ICOs and have decided that the majority of them could be classified as a security.

This classification does not, however, apply to all tokens and some that are being developed off the blockchain can be considered as utility tokens.

There are, of course, more than two types of token such as equity, work, share-like, and asset-backed but it is important to focus on the two types – the utility and the security. By understanding the difference between these two types of token each ICO can choose a more suitable regulatory pathway.

Securities token

By the end of July 2017, the SEC dealt a big blow to the ICO world by declaring that DAO (Decentralized Autonomous Organization) tokens were securities and were therefore subject to federal securities laws. It was never the intention of token creators for them to be considered as securities but as the companies that issue these tokens, often increase in value over time, the token begins to perform as a security.

The Chairman of SEC, Jay Clayton added that “Prospective purchasers are being sold on the potential for tokens to increase in value, with the ability to lock in those increases by reselling the tokens on a secondary market or to otherwise profit from the tokens based on the efforts of others. These are key hallmarks of a security and a securities offering.”

But to decide whether a token should be classed as a security, one can put it through the Howey Test. The test seeks to find if a token has the following attributes; does it offer the chance to invest money and then to share in the profits of an enterprise managed and partly owned by respondents, and does the scheme involve investing money in a common enterprise with profits that come only from the efforts of others. As most ICO tokens fall into these categories, as such they fall under the jurisdiction of the US federal law.

Utility Tokens

The other popular type of token is a utility token and it serves a role where security tokens are resulting from the company receiving unwanted attention from securities regulators. In short, a utility token can be defined as representing future access to a company’s product or service. The defining feature of a utility token is that it is not designed as an investment, but rather as an IOU (I owe you) of sorts for future use. If utility tokens are structured properly, this means that they cannot be considered as a security token and therefore cannot be governed by federal laws.

There are already some very successful utility tokens on the market such as the ones issued through Civic. Civic has created 1 billion utility tokens that offer access to identity verification services in a decentralized and token-based system. These tokens each represent a unit of account for the Civic network and the more the network grows, the more utility the token is worth.

Out of 226 ICOs, only 20 of the tokens issued are actually used for the running of the applicable networks and are therefore utility tokens. Another example of a company that uses utility tokens is Storj. These tokens allow the holder to use space on their network and the token crowd-sale  raised over half a million dollars in 2015.

Shawn Wilkinson explains:

“For many companies, utility appears to be an afterthought, but for a token to be successfully adopted into the community, it is the most critical component. With the amount of tokens on the market today, and new ones being launched every day, it’s clear there is a bubble, though the size of it might be debatable. When the market slows, the tokens that have no utility will ultimately not have any value at all.”

Another way of explaining how a utility token works is by describing it as a coupon for the company and the services that it provides. For example, a retailer accepting pre-orders of a video game that has not yet been released. This kind of token differs from the usual ICO token that most people are used to and whilst it cannot be applied to every company, it is perfect for some. There have already been instances where utility tokens have replaced the role of a security token and have therefore allowed the blockchain solution to fulfill its primary goal – an example being Filecoin which raised an impressive $52 million.

Utility over Security

Whilst on paper, choosing a utility token over a security token might seem easy enough, there is more to it than that. If a company is unable to find a place in any categorization for their token, then it will become a securities token but if the token can be placed in them, it makes sense no avoid it being a security and having to negate a regulatory minefield. The first step is to decide whether it is fungible or non-fungible.

Utility fungible and non-fungible tokens

These are tokens that can be interchanged for another token. The fact that it is fungible means that the goods, service, token, or asset is interchanged with another that has an equal value. Gold is often considered as an example of a fungible asset as one ounce of gold, whether in coin, ingots, or dust form is still worth the same amount of money.

A voter token is another example of a situation where both blockchain and tokens can be utilized without the need for a native security-style token. These governance tokens allow those that are using the network to vote and a utility token is sufficient for this purpose. Similarly, membership tokens are also considered to be fungible utility tokens due to the fact that the token is only being used to access the platform and utilize the services.

A non-fungible token is one that is used to determine the ownership of a token or digital asset, such as CryptoKitties. A number of ICOs clearly fit into the above categories rather than that of a non-fungible securities token, so why have many decided on a native securities-style token which leads to regulatory pressure?

The definition and beyond

The very definition of security token and utility token were created before the advance of the blockchain era. Founder of Fusion and creator of QTUM Dejun Qian states that tokens are still a really new idea and they are something that should be defined on a case by case basis.

“The reason people try to figure out if token is a security or a utility is because people are thinking which laws the token needs to be compliant with. When people say that the token is a utility, it means that the token is designed and embedded in the Blockchain infrastructure. Naturally, it can then serve as a very important part in the Blockchain. It is very creative and can then also provide a lot of different opportunities for the Blockchain.”

According to Qian, we should move past the security vs utility point of view: “On the other side, there is the token which is regarded as a security. We have current laws covering the securities industry, and there are a lot of things we need to comply with, so people think about it in a similar way. I think we need to put more effort on the utility side, and even something else far beyond only security vs. utility. Because from my perspective, tokens are neither security or utility, it is a new thing and we cannot put a new thing in an existing framework, to determine what it is.”

Interested in ICOs Legislation in Malta? Contact us directly on +356 20103020 or by email at [email protected] to find out more.

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Artists bringing virtual currencies to life

Categories Blockchain, Cryptocurrency, ICOs, Technology, Bitcoin, Tokens, Market, Art

Artists bringing Virtual Currencies to life

Many artists globally, are starting to look at cryptocurrency as inspiration for their work, hoping that it will help increase the popularity of the industry.

Crypto – Art

‘Stealing the Contents of This Wallet Is a Crime’ by Kevin Abosch’s is a well-known example of Crypto – Art. The leader piece was part of ‘I AM A COIN’, the project during which Abosch created 10 million ERC-20 ‘IAMA’ coins.

Many of his and similar pieces sold out quickly and at high prices. Robert Indiana, the artist who created ‘LOVE cryptograffiti’, recently sold one of his serigraphs. His revolutionary art was bought by crypto-connoisseur Mike Novogratz at an auction for $8,000.

Meanwhile, another cryptograffiti was sold at a separate auction for the value of $33,000, and was named the ‘Terrible Store of Value’. This work was intended as a response to JP Morgan’s Jamie Dimon statement ‘Bitcoin is a terrible store of value’ in January 2014.

Later on, several auctions were organised during HODL in May 2018, where a painting by Terry Cook was sold as well. Terry, a well-known UK-based painter works only with cryptocurrency symbols. He believes that it is ‘natural that art and blockchain technology intersect’.

Cryptocurrency Graffiti

Whilst some art pieces connected to cryptocurrency are being sold at high prices, a lot of artists choose to show their talent for free. Last February an Instagram user posted a work of graffiti showing Bitcoin bringing power to the people. This work was also seen as a threat to the existing banking system.

At this moment, it seems that this art is getting its own admirers as well. Pascal ‘PBOY’ Boyart has received more than $1,000 in digital currency from fans after painting QR codes on his street murals. This code invited admirers to send him BTC. Currently, Boyart is part of an upcoming artists’ celebration paying homage to Bitcoins’ 10th birthday.

E&S Group is a leading corporate & law firm offering various services with regards to ICOs. Feel free to contact us directly on +356 20103020 or by email at [email protected] to find out how E&S can help you in ‘making things happen’.

For more information click the link.

 

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Centralised and decentralised exchanges – what is the difference?

Categories Blockchain, Cryptocurrency, Technology, Cryptocurrency Exchange, Tokens, Wallet, Market, Market Cap, Exchanges, DLT, FIAT

Centralised and decentralised exchanges – what is the difference?

In the world of cryptocurrency, there are two different and very distinct types of exchange, a centralised and a decentralised ones. But what is the difference between the two?

A cryptocurrency exchange is an online platform where digital currencies are traded or exchanged for other digital currencies or even fiat currencies. Both types of exchange are similar in the way that they both facilitate the buying and selling of cryptocurrencies but both suffer from different complications as well as enjoying different benefits.

What is a centralised exchange?

A centralised exchange is one of the most common types of crypto exchange and it allows the user to buy and sell cryptocurrencies with fiat currencies, as well as buying cryptocurrencies with other cryptocurrencies. The majority of these exchanges accepts payments via debit or credit card, as well as bank and wire transfer.

When we call it a centralised exchange, we mean that third parties assist with conducting the transactions that take place on it, whilst all daily operations are supervised by an organisation. They are similar in type to a traditional stock exchanges but deal with crypto and fiat rather than stocks.

Benefits of a centralised exchange include the simplicity of use as well as extreme accessibility. In case if something goes wrong on the exchange, the fact that it is operated by an organisation means that it takes all the responsibility. Another benefit is the high level of trading volume which means that these type of exchanges are not considered as volatile.

Disadvantages include the fact that they are susceptible to hackers because when crypto is bought on a centralised exchange, the users don’t actually own the coins and therefore are not in possession of the funds private keys. As in February of this year, there have been more than 30 crypto exchange hacks that have resulted in a loss of almost a million of Bitcoins.

What is a decentralised exchange?

A decentralised exchange doesn’t rely on a third party to hold the cryptocurrencies which makes it much quicker to conduct a transaction than on a centralised one. Those that opt for a decentralised exchange, trade their assets in a P2P manner automatically.

This type of exchange has seen a big increase in popularity over the last six months due to the fact that they are less susceptible to hackers. Another bonus is that these exchanges do not require any personal information to conduct a trade meaning data-hungry hackers are less likely to strike.

But of course, there are some limitations. For example, they tend to be more difficult and complicated to use than centralised exchanges, particularly for beginners. Decentralised exchanges also have a limited level of functionality when compared to their centralised counterparts, as well as a lower trading volume.

E&S Group is a leading corporate & law firm offering various services with regards to ICOs. Feel free to contact us directly on +356 20103020 or by email at [email protected] to find out how E&S can help you in ‘making things happen’.

For more information click the link.

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