Dan Bilzerian has experienced problems withdrawing from Poloniex, showing the limitations of relying on centralized exchanges for cryptocurrency purchases.
On the popular trading site Poloniex, Instagram personality Bilzerian has been unable to verify his account or withdraw his funds, despite repeated messages to support, according to a recent tweet:
@Poloniex I've emailed your support 5 times,you guys havnt verified my account and havnt allowed me to cash out despite my numerous requests
— Dan Bilzerian (@DanBilzerian) August 28, 2017
It is unclear which currencies Bilzerian prefers or had purchased at that particular juncture, however he did famously mention that he had gone into Bitcoin heavily several months ago.
Decentralized exchanges reduce this centralized risk
While in many cases providing a relatively simple and streamlined cryptocurrency buying experience, large exchanges are vulnerable to certain risks. Many large exchanges, such as the notorious Mt. Gox, have been hacked, causing a significant theft of user funds. More importantly, centralized exchanges hold users’ funds and identities, meaning that in certain circumstances, under pressure from the government for example, they can track user funds, report activity to outside actors, or suspend accounts and seize funds.
While some maintain a level of centralization in order to function properly, exchanges leveraging peer-to-peer buying include a much lower level control over the trading experience, without holding user funds, experiencing lengthy signup times, or requiring extensive identification. Platforms like LocalBitcoins merely connect buyers and sellers, who then can meet up in person to trade. Services like Bisq and Wall of Coins provide escrow services to facilitate bank transfers and counter cash deposits between parties. Bisq in particular is resistant to censorship because it functions by running a client, and has no centralized website that can be shut down.
Dash has several decentralized buying options, more liquidity needed
Dash has access to many decentralized tools for privately buying with fiat currency. The sites DashNearby and Dashous offer a platform for users to connect and meet to trade, however neither has much liquidity at the moment. Wall of Coins supports Dash as well, and submitted a treasury proposal to fund integration of the service directly into Dash wallets. Bisq also has Dash as a base currency, able to be traded for fiat currency as well as for various cryptocurrencies supported by the platform.
The main challenge facing decentralized means of exchange is liquidity and availability. Not all areas have significant user groups, making the experience inconsistent. While this may change as more users demand more private means of purchasing Dash, this is an inherent trade off of not using a centralized service