Today there are two main technological approaches to how cryptocurrency exchanges are handled: Distributed and Decentralized
Distributed Exchanges make up the majority of the space and their approach is a single access point web-site through a URL within your browser. All funds are deposited into a wallet or small series of wallets which are fully owned and controlled by the cryptocurrency exchange. Similar to the way your banking account makes up a small part of what is held within that bank your cryptocurrency trading account makes up a small amount of what is held on that exchange. The record of what piece of the larger wallet you have ownership of is held most likely within some form of relational database which interacts with the web-site upon your login.
The benefits of this approach are the reduction of transaction fees since only deposits and withdrawals occur “on chain” when you execute a trade no coins or tokens physical move from one wallet to another so the process is also fast; however, this single access point approach is subject to having access blocked by governments or corporations and also very subject to attack resulting in loss of access or worse loss of funds. In 2018 almost 200 exchanges were blocked by the Chinese government and $731M worth of digital assets were stolen from exchanges in 2018 also.
Decentralized Exchanges are the alternative approach and offer a wider area of availability because they operate in a decentralized manner through a series of nodes.
In this approach all transactions occur “on chain” so deposits, withdrawals, and even trades are subject to long wait times due to the confirmations needed to successfully complete a transaction and much higher transaction fees as each and every transaction is subject to gas and transaction fees.
Amplify Exchange is developing a new best in breed solution utilizing a proprietary blockchain solution which we call the Amplify Bridgechain. The bridgechain bridges the divide between distributed and decentralized exchanges by bringing the best of both approaches into a single hybrid approach.
The Amplify Bridgechain will serve as a blockchain based digital ledger that will mirror everything that happens within Amplify Distributed to allow decentralized clients to have access to the same trade volume, transact in a fast, secure and cost effective way and still have access anywhere on the planet.