Crypto and the Foreign Exchange Problem
Most merchants in the United States accept U.S. dollars and well-established credit cards and debit cards such as VISA and MasterCard. Canadians, say from Surrey, BC, who cross over the border into the USA to shop at the Bellis Fair Mall in Bellingham, Washington, can shop with their VISA debit cards without having to deal with the hassle of foreign exchange. VISA and their bank instantly handles the foreign exchange behind the scenes.
Now let us look at how that happens in the crypto world. Let us say that I have Bitcoin and wish to buy merchandise. The seller has what I want to buy but only accepts Ethereum. In practical terms, this means that as the holder of Bitcoin, I cannot conduct a peer-to-peer exchange with a counterparty that seeks Ethereum.
You can think of Bitcoin being Canadian dollars and Ethereum being US dollars. Without an intermediary of some kind, the seller, dealing only in US dollars, can not sell to me, the buyer who only has Canadian dollars.
Why Not Coinbase or Binance?
Anyone who has crypto on a centralized exchange (CEX) like Coinbase is familiar with going through the process of selling crypto, transferring the proceeds to one's linked bank account before making purchases with one's debit card.
Coinbase, Binance and the like are much like online stock market brokerages. Like brokerages, CEXes let you buy crypto by using your debit card. Once you have crypto, you can trade one crypto for another from the CEX itself. That is alike to telling your online stock broker to swap Microsoft (MSFT) for Apple (AAPL) without first having to sell MSFT for US dollars only to buy the AAPL. Never, though, do CEXes facilitate transactions between crypto holders and merchants.
CEXes are part of the business ecosystem of financial institutions. As such, users of CEXes give up privacy in exchange for the perceived ease-of-use of connecting one's bank account, which one's debit card acts as the commercial interface. With this perceived ease-of-use comes high transaction fees.
Ferrum, the CEXy Alternative
Being distributed exchange (DEX) based, the Ferrum Network is part of the Distributed Finance (DiFi) revolution that could disintermediate both financial institutions such as banks, credit card system as well as CEXes.
Launched in June of 2019, the founders of Ferrum (Naiem Yaganeh and Ian M. Friend) have engineered a distributed exchange (DEX) and a consumer UI for peer-to-peer trading of cryptocurrencies and cryptotokens that rivals what major CEXes offer, e.g., Coinbase.
Being DeFi, this lets users who run the UniFyre wallet app, which is the consumer user interface, to trade crypto through Ferrum Network's DEX, which is named Infinity, while maintaining custody of their crypto addresses.
Through the UniFyre app, users swap crypto denominations for a Ferrum intermediary token, which is a proxy abstraction, that gets converted back to the sought after crypto denominations of the respective parties.
To make this happen, UniFyre users must buy and hence possess the Ferrum token (FRM) to pay for trades as well as import and export crypto into and out from the UniFyre wallet. Paying with FRM burns it, which reduces the supply of FRM, though as of now, extant escrow-locked FRM gets unlocked by Ferrum in equal amounts to what gets burned.
Ferrum DEX vs Other DEXes
The Ferrum Network touts itself as being a blockchain agnostic network from the ground up, that is, Ferrum will let you trade nearly any cryptotoken or cryptocurrency regardless of originating blockchain.
Other DEXes suffer from design flaws that require communication relays between blockchains. That leads to transaction lag and higher transaction expenses. Most DEXes are blockchain-specific and thus can only transact cryptotokens of a particular blockchain such as ERC-20 tokens of the Ethereum blockchain. That means users of such a DEX could not swap cyptocurrencies such as Bitcoin, Litecoin and Stellar, which run on their own blockchains.
How it Works
A user first must have the UniFyre Wallet app on an Android phone or an iPhone. With the UniFyre app, to trade, a user then imports into the Ferrum Network, which is the backbone of Ferrum's Infinity DEX, the crypto she or he wishes to swap for the crypto she or he needs. Importing a crypto demonination into the Ferrum Network creates a proxy of that crypto, which then lets the Ferrum Network handle order book matching for crypto swaps.
This lets anyone trade Bitcoin directly for Ethereum over the Ferrum Network. Such trading is known as over-the-counter (OTC) trading. The proxy creation and order matching removes so-called counterparty risk that exists when strangers trade at a distance.
Each party must accept the offered exchange rate booked by the Ferrum Network before execution of the transaction happens. Ferrum's Infinity DEX connects order book makers and takers anonymously.
Gab It
