Let's now look at the next category for decentralization. Centralized markets, such as exchanges, are yet another classic case to be decentralized. Online exchanges bring lack of trust and hence have a middle man who establishes the trust. A decentralized exchange is an exchange market that does rely on a third-party service to hold the customers' funds. Instead, trades occur directly between users, that is, P2P, through an automated process. This system can be achieved by creating proxy tokens such as crypto assets that represent a certain cryptocurrency or asset that represent shares in a company or through a decentralized, multi-signature escrow system. Among all the solutions that are currently being developed, this system contrasts with the current centralized model, in which users deposit their funds and they exchange issues an IOU that can be freely traded on the platform. When a user asks to withdraw his funds, these are converted back into the cryptocurrency that they represent and are sent to their owners. Ripple is an example of an exchange platform that decentralizes the currency exchange and provides cross-border remittance by using the transitive trust.

There are the following differences between centralized exchanges and decentralized exchanges:

• Centralized exchanges: Centralized exchanges control the funds. You cannot remain anonymous in centralized exchanges. In centralized exchanges, there are hacks and server downtime.
• Decentralized exchanges: Decentralized exchanges allow users to control the funds. You can remain anonymous or pseudonymous in decentralized exchanges. In decentralized exchanges, there are no hacks and server downtime is next to impossible.

Thus we have learned that anything digital can be decentralized and anything that can be represented digitally, can also be decentralized.