What Is the 0x Protocol?

We are moving toward more decentralized solutions altogether in cryptocurrency. The 0x protocol heralds an entirely new era in the world of cryptocurrency exchanging. It is designed to allow the exchange of ERC20 tokens in a frictionless and decentralized manner. However, the full potential of this platform has yet to be realized, as it seems the possibilities are nearly limitless.

The 0x Protocol Is a Game Changer

It is due time people stopped relying on centralized exchanges for exchanging value. Cryptocurrency and digital tokens have always been about decentralization first and foremost. When it comes to exchanging them for different values or currencies, however, users have often been forced to rely on a centralized platform acting as a custodian of consumer funds. Finding a decentralized way to trade currencies and tokens has not been easy, as few such platforms have any volume right now.

That may all change in the near future, thanks to the newly unveiled 0x protocol. This particular project specializes in decentralizing the way people convert ERC20 tokens. Considering how every cryptocurrency ICO has its own native ERC20 token, there is a huge market here waiting to be tackled. The major exchanges have been pretty slow when it comes to adding most tokens, mainly due to their desire to avoid scams and pump-and-dump schemes.

With the 0x protocol in place, anyone in the world can exchange his or her ERC20 tokens for whatever else they wish. With the number of tokenized assets growing every single month, a dedicated platform had to be created sooner or later. This particular project checks a lot of the right boxes, especially considering that it is not a centralized platform. Instead, it is a decentralized platform that can be integrated into any existing software solution presently known to cryptocurrency users.

The differences between 0x and centralized exchanges are quite stark. 0x does not require user registration, as it is a protocol rather than a user-oriented trading application or software platform. There is no central party to be hacked or subjected to regulation. Given the recent scrutiny shown by the SEC and similar institutions around the world, not being subjected to government influence is a big bonus. Plus, 0x is public infrastructure that is free to use. It does allow for-profit solutions to be built on top of it, though.

The choice to support ERC20 tokens is significant as well. Ethereum’s blockchain is the go-to solution when it comes to creating tokenized digital assets. However, if these tokens cannot be exchanged freely, it is hard to attribute any value to them. With centralized exchanges taking their sweet time to vet individual tokens, the 0x protocol welcomes any of these tokens the same day they become transferable. As long as they adhere to the ERC20 token standard, the protocol will support them regardless.

All things considered, the 0x protocol is exactly what the cryptocurrency world needs right now. It is important not just to promote the value of ERC20 tokens created through cryptocurrency ICOs, but also to move away from centralized trading solutions. Decentralization is the way forward, even if it is less convenient than centralized platforms are for the time being. A decentralized business model has no order book or trading engine to match buyers and sellers like we are all used to. Nor is there an opportunity to enable margin trading. Such a business model will bring speculation to a halt, which can only be beneficial to cryptocurrency in general.

  • Wow, this is the solution the crypto space should have in place as soon as possible ;). More freedom to trade freely without control over centralized exchange!

  • So it begins…the transformation of crypto currencies flourishes once again to a new level.

    • Fred Johnson

      Agree! Never a dull day.Particularly useful for us minor fiat currencies who get ripped off changing Rand to buy BTC and who own many crypto currencies. Now can wallet peddlers wake up??

  • People are already trading directly through the etherdelta contract, and speculation has in no way “ground to a halt”. In fact the 0x token is the top coin at the moment.