0x is a leading decentralized exchange founded in 2016.
Decentralized exchanges differ from traditional cryptocurrency brokerages because there is no 3rd party needed to process your transactions or hold your funds. Instead, decentralized exchanges like 0x replace the aforementioned 3rd party with code that executes transactions automatically.
More and more cryptocurrency users are turning to decentralized exchanges to trade their ethereum tokens. The main benefit that attracts users to decentralized exchanges is security. By eliminating the 3rd party, the risk of a security breach drops drastically because the tokens go straight from one cryptocurrency wallet to another.
Brief History of 0x
For the decentralized finance industry, 0x has a relatively long history. 0x was created in October 2016 by Will Warren and Amir Bandeali. Their goal for 0x was to create an easy-to-use, trustless exchange which could be built upon by others.
Since its creation in 2016, several exchanges have been built on top of the 0x protocol, including Zerion, Nuo and Defi Saver.
The 0x Protocol
The 0x protocol allows users to exchange ERC-20 (Ethereum-based) tokens through a decentralized network. ERC-20 tokens are the most common type of token on Ethereum’s blockchain; some ERC-20 tokens you may be familiar with include Maker, EOS and Tron.
Not sure whether a decentralized exchange is right for you? Here’s a quick list of some pros and cons of decentralized exchanges.
Pros of Decentralized Exchanges:
- Totally trustless: You no longer have to trust a centralized exchange with your funds.
- Completely decentralized: No need to worry about corporate corruption.
- Better security: Smart contracts allow for bullet-proof security.
Cons of Decentralized Exchanges:
- Generally less liquid: Users rely on each other to provide liquidity to the platform.
- Slower transaction times: You need to interact directly with Ethereum’s blockchain which means transactions may take a few minutes to be confirmed, as opposed to seconds on a centralized exchange.
- 0x doesn’t interact with fiat currency: You need to already own Ethereum or an ERC-20 token in order to use the exchange. Many users start by purchasing ethereum on Coinbase or Gemini.
0x has a key advantage over other decentralized exchanges: its order books operate off the blockchain but the exchange is still completely trustless and decentralized. Directly interacting with the Ethereum blockchain costs users gas (a smaller unit of Ethereum used to calculate transaction costs). By only interacting with Ethereum’s blockchain to settle transactions, 0x allows users to save time and money when placing orders to exchange their crypto.
At its core, the 0x protocol is just a series of smart contracts on Ethereum’s blockchain. This means that the protocol is lines of code that have been uploaded onto Ethereum’s network. This code is what allows users to interact with each other securely and trustlessly. Creators can even build their own projects on top of 0x, allowing them to have a decentralized form of liquidity for their platform (this is an important feature that gives 0x token its value).
The 0x token is an Ethereum token created by the 0x protocol for its users. You need 0x tokens to pay transaction fees when using the exchange, which is one of the two main utilities of 0x which gives it its value. Secondly, 0x is a governance token for the 0x protocol. You can think of a governance token like voting shares in a company –– they allow users to vote on upgrades to the platform. This is especially important for decentralized exchanges like 0x, as creators who build projects on 0x need to buy large stakes of 0x token in order to have influence over the future of the protocol.
You can’t technically trade Bitcoin on 0x, as Bitcoin operates on its own blockchain. However, developers have made WBTC (wrapped Bitcoin) which is synthetic bitcoin that operates on ethereum’s blockchain. In essence, this allows you to trade Bitcoin on Ethereum’s network.
How to Buy 0x
- Open an Online Account
First, you need to make an account with a cryptocurrency brokerage that supports 0x token. Most people’s go-to exchange to buy 0x is Coinbase. Once you link your banking information to your account, you’re all set to purchase 0x.
Typically, you need to provide your legal name, address, email, phone number, photo ID and Social Security number in order to make a crypto brokerage account. However, depending on the exchange, there are different levels of verification needed to begin investing.
Also note that you can use any crypto brokerage to buy any Eth token and then send whichever Eth token you choose to the 0x platform using your crypto wallet. Once you’re on the 0x platform, you’ll be able to trade any token on Ethereum’s network, including the 0x token itself.
- Buy a Wallet
Once you’ve bought your 0x on an exchange, you need to consider where to store your tokens. Although you could keep your tokens on an exchange, this isn’t recommended for security reasons. Software wallets like Argent and Metamask are good choices for a lot of people, but purchase a hardware wallet for maximum security.
Hardware wallets are physical devices that store your cryptocurrency offline. Investors who put significant amounts of money into cryptocurrency often turn to hardware wallets to hold their investments.
- Make Your Purchase
Once you’ve made a cryptocurrency brokerage account and decided how you’ll store your tokens, you’ll need to make your purchase. Similar to stocks, you can place your order on most exchanges as either a limit order or a market order. When you place a limit order, you set a price to buy the token and your order will only be filled once the market price drops to the price you set your limit order to. Conversely, when you place a market order, you buy the token at the current market price of the asset.
Either way, it’s often a good idea to average your buy-in price. This means that instead of buying all of your 0x at once, you average your buy-in price by purchasing different amounts at different times. This alleviates some risks associated with significant short-term price fluctuations.
Best Crypto Broker and Exchange for 0x
Best Crypto Wallets
Best Hardware Wallet: Ledger Nano S
The Ledger Nano S is one of the most popular hardware wallets that cryptocurrency investors trust. This small device can hold Bitcoin, Ethereum, ERC-20 tokens and several other cryptocurrencies. Not only does Nano Ledger S store a wide variety of coins, it has great customer service as well.
Ledger also offers an application to manage your crypto holdings that is intuitive and easy to use. Also, the Ledger Nano S is secured by an offline, encrypted chip and an 8-digit passcode for industry leading security.
Best Software Wallet: MetaMask
MetaMask is a secure software wallet that can be used as a Chrome extension. Its interface is extremely simple, so you shouldn’t have a hard time getting used to it. If you plan on interacting with decentralized exchanges frequently, MetaMask is a great option for you, as the Chrome extension allows you to easily connect your wallet to most decentralized exchanges.
Trade or Sell Your Cryptocurrency
Soon after placing your order to buy 0x, you should see the tokens be credited to your exchange account. It’s not recommended you keep your 0x or any other cryptocurrencies on an exchange unless you are actively trading.
If you plan on holding your 0x for the short term, a software wallet will generally suffice. However, if you intend to keep your 0x for the long term or buy a significant amount of 0x, use a hardware wallet. Your hardware wallet has a unique address which you can send your tokens directly from your exchange to your hardware wallet. When you decide you want to trade your 0x, all you need to do is plug in your Ledger Nano S to your laptop and send the tokens to the exchange you’re using.
Current Crypto Prices
Before purchasing your 0x tokens, you may want to watch the cryptocurrency markets. As a general rule of thumb, watching Bitcoin is a good indicator of the general health of the cryptocurrency markets. Check out some of top cryptocurrencies and their prices to get an idea of how the markets are moving:
0x Offers Great Potential
0x has a long history of being a go-to decentralized exchange. The 0x team is constantly expanding and collaborating with new, cutting-edge protocols and many cryptocurrency enthusiasts agree that the 0x token is severely underrated. More people value decentralized and secure platforms to exchange cryptocurrencies, so 0x offers massive potential in the years to come.
Frequently Asked Questions
What are the benefits of decentralized cryptocurrency exchanges?
Decentralized cryptocurrency exchanges have no third parties and better security.
What are the drawbacks of decentralized cryptocurrency exchanges?
The disadvantages include slower executions on transactions and lower liquidity levels.
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