Privacy-focused cryptocurrency underdog, PIVX, recently launched an alpha version of their upcoming decentralized exchange – ZDEX. The main idea of the exchange is to provide a completely anonymous and decentralized means of exchanging cryptocurrencies by making use of the PIVX masternode network. Read on as we go over some of the features and issues currently facing ZDEX.
Refresher: What Is PIVX?
If you’re already familiar with PIVX, feel free to skip to the next section. For the rest of us, let’s go over briefly what PIVX is. For a more in-depth explanation, you can check out our article on the currency here.
PIVX is a privacy-focused cryptocurrency that was developed as a fork of Dash. In the years since its launch, the currency has seen a number of ups and downs in its price, but has generally seen an upward trend in terms of popularity. By market cap, PIVX is typically in the top 100 cryptocurrencies, typically hovering around number 50.
PIVX makes use of a unique anonymizing method that it calls zPIV. zPIV, in simple terms, works quite a bit like casino chips. That being, users can exchange (or “mint”) their units of PIV (the PIVX currency) within their wallet and receive an equal amount of zPIV. Users can then directly send zPIV to any address such as another wallet or an exchange, and the destination address will receive an equal amount of PIV (and not zPIV). Through this process, transactions are completely anonymous and disconnect both the origin and destination of the funds. This transaction process is facilitated through the PIVX masternode system.
The PIVX project has been working on ZDEX for quite some time. The goal of the project was to create a decentralized exchange that would allow individuals to directly exchange zPIV units for bitcoin, and vice-versa. As zPIV transactions are untraceable, this would provide for an essentially unmatched degree of exchange privacy.
Since the alpha version launched, the project now supports a number of other cryptocurrencies including Litecoin and Bitcoin Cash to name a few.
According to the official site, ZDEX charges a flat fee of 0.25% on each transaction, which puts it in line with the fee structure of most exchanges. This fee is then split apart among counter parties such as masternode operators.
How it works
For those familiar with other decentralized exchanges, ZDEX will seem familiar. Unfortunately, this also means that for those who are less technical or are new to decentralized exchanges, the user experience will seem daunting and inaccessible.
Basically speaking, a user places a buy or sell order and sends their funds to a given address. The order is now live and will wait for a matching offer. If a match is found, the transaction is processed and the exchange is completed. If the offer is not met, then the user has an option of canceling the order and getting their funds back. The sites claims that the ZDEX app “secures your funds and data locally and not in centralized servers.”
One advantage ZDEX has in this regard is that PIV, and by extension zPIV, transaction fees are incredibly low. If we compare this to a standard Ethereum based decentralized exchange, transaction fees will gobble up a larger portion of the transaction. zPIV minting costs 0.01 PIV, and there is no additional fee to send it.
Not quite there yet
Keeping in mind that ZDEX is currently in an early alpha, the application of course still has a long way to go. Currently, in order to use ZDEX, you will need to have access to a Linux based computer, device, or virtual machine. That’s because ZDEX is based on a desktop/laptop computer application and cannot be used simply through a web browser yet. As most computers today run Windows or Mac OS, this means that the alpha version will likely not see much use until additional platforms are supported.
Another major issue will likely be the difficult to use interface. Using PIVX by itself already has a somewhat steep learning curve as it requires an understanding of how zPIV work, how to stake, and other important skills. As ZDEX is a decentralized exchange, it will require a deep understanding of transactions, private keys, buy and sell orders, and so on.
In this author’s humble opinion, ZDEX would be very wise to invest some time into developing a Coinbase or ShapeShift-like interface for less technical or new users. This software has a ways to go until it hits beta and final release, so it’s entirely possible that such a thing could happen eventually. The PIVX development team has proven themselves to be highly adept at producing complex software and innovating completely new blockchain paradigms (such as zero coin staking which went live not long ago, and of which PIVX was the first to successfully implement).
And of course, for the PIVX faithful, ZDEX will provide them with a greater degree of flexibility when it comes to making private coin-to-coin exchanges.