Cryptocurrencies are turning the Fintech world upside down. As the immense power of Blockchain technology continues to unfold, it comes with limitless opportunities that are transforming the global economy. Apart from the decentralized nature of crypto, there’s one fundamental aspect of this mind-boggling technology: the open source aspect of cryptocurrencies. To understand how crypto works, one needs to appreciate the power of an open source cryptocurrency exchange. As you read and analyze cryptos, you will often find the word open source thrown around almost everywhere. So, what exactly is an open source cryptocurrency exchange? Read on to find out more about it, and understand the value it brings to the finance world. What is Open Source in Cryptocurrency? The term open source refers to building a coin or crypto exchange on a software that is freely accessible to the public, and allowing anyone to edit or create a version of it to their own liking. There’s no central authority that controls it. Before we proceed further, you might be wondering is Bitcoin open source? Well, as the pioneer of cryptocurrencies, the creator of Bitcoin made the code public, which has led to all manner of modifications by developers in the crypto community. [cta text='Buy Bitcoin' href='/out/binance'] The greatest strength of having an open source crypto exchange is that it helps improve scalability and secure the network. Since everyone has access to the code, they can modify it, making it better and customized to meet diverse user needs. On the downside, some have discredited the transparency that comes with using an open source cryptocurrency exchange. In business, too much financial disclosure of information can be a dangerous thing. How is Open Source Created? The logistics of creating and deploying an open source cryptocurrency exchange can be a mammoth task at the start, but the massive returns and direct impact are worth the effort. When creating the open source code for such an exchange, the developer needs to ensure that its architecture has superior security and safety features. Luckily, the market has tons of software that one can use to build an open source Bitcoin exchange. A good example is Open-DAX which is a hybrid software that you can use to create an open source cryptocurrency exchange. Value of an Open Source Cryptocurrency Exchange The open source nature of cryptocurrencies plays a major role in the growth of the industry. Regulators, policymakers and other stakeholders in the Fintech space have a corrupted mental model of an open source cryptocurrency exchange or even an open source coin. World-leading crypto exchanges such as Coinbase and Binance have relied heavily on the open source nature of blockchain to build great products. The following are some of the key benefits of open sourcing code in crypto: 1. Fosters Innovation Blockchain technology is still in its early stages of development. The fact that developers and other crypto enthusiasts with a collective interest to grow the technology can do that freely with open source software is incredible. Those working with the same vision and interests go an extra mile to modify and improve different features which makes for great innovation. For example, Bitcoin source code has been forked over 10,000 times which is an indicator of the innovative spirit of the crypto community. Currently, the Bitcoin reference list has thousands of contributors seeking to enhance the coin’s growth. 2. Increased Security Since many people have access to the code of an open source cryptocurrency exchange, it will be relatively easy to spot any defects or malicious bugs in the system. In the event that a bug or flaw is detected in a code, the necessary measures are taken to address it. Depending on the severity, an upgrade will need to be done to boost immunity to such flaws. Consequently, security in such a setting is advanced and boosted. 3. Improved Interactions and Synergies Unlike a closed proprietary setup, an open source cryptocurrency exchange allows synergies and healthy interactions to flourish. A good case in point is the Ethereum network that has a thriving community that is unified by the collective good of innovation and growth especially in the fields of smart contracts and decentralized applications (DApps). Open-source in Coins vs open-source in Exchange While open sourcing code in both coins and exchanges may be similar in terms of purpose, there lies some differences in execution. For an open source cryptocurrency, there’s often no limit to the number of contributors to the network. On the other hand, the amount of contribution to an open source cryptocurrency exchange is limited since governance belongs to the creators of the platform. Another difference is that an open source coin can undergo a fork to help improve its features. There’s no forking for an open source cryptocurrency exchange. The best that can happen is upgrading the system in case of any faults. Top 3 Open Source Cryptocurrency Exchanges The number of open source decentralized and P2P crypto exchanges is growing by the day. Of the hundreds out there, the following are the top 3 based on user friendliness, transparency and ease of transacting: 1. Uniswap Built in 2018, this open source cryptocurrency exchange that runs on the Ethereum network is a force to be reckoned with. Its decentralized nature allows its users to exchange ERC 20 tokens in a seamless and flexible manner. Its model thrives on the concept of liquidity provision through the creation of pools. All users need is to connect through smart contracts and transact directly using their wallets. As the Total Locked Volume (TVL) on Uniswap continues to explode, this open source cryptocurrency exchange is shaking up the traditional financial system through DeFi. Since the Uniswap code is open sourced, anyone with minimal technical capabilities can take it and build a decentralized exchange. 2. BisQ Though a little complex to understand at the start, BisQ is a revolutionary Bitcoin exchange with an open source software. The community driven platform allows one to run their trading platform using their own hardware. Unlike a typical open source cryptocurrency exchange, BisQ doesn’t hold any Bitcoin or any national currency. BisQ has a fiat-based P2P structure which elegantly mixes crypto and other traditional payment methods. Since the peer-to-peer transactions are relatively private, the platform has a target market. On the downside, BisQ has a collateral requirement which requires the users to lock in some of their crypto assets when trading. 3. HollaEx Kit Developed by BitHolla, this open source software suite allows users to build their own digital trading exchange. Within the HollaEx Network, a group of connected exchanges enjoy a strong infrastructure for trading crypto with their peers around the world. The user-friendly crypto platform building software doesn’t require one to have any knowledge in coding. The HollaEx network is built on Ethereum, with tight security measures that helps ensure the safety of all the exchange nodes. Top 3 Open Source Cryptocurrency Coins Most people think of Bitcoin as the only open source crypto available. However, with over 9,000 cryptocurrencies out there, we have other versatile coins running on an open source protocol. They include: 1. Ethereum Co-founded by Vitalik Buterin and other revolutionaries in 2015, Ethereum has enjoyed a meteoric rise to the top of the crypto charts. The network prides itself as a transparent where smart contracts and DApps thrive. On the Ethereum network, individuals can fork code and re-use the functionality to build something useful. Despite the high gas fees on Ethereum, the platform has revolutionized the industry and continues to create endless opportunities in crypto. Using its code, people can create anything that can be traded or represented. Currently, the industry is seeing an explosion of Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs) due to Ethereum’s open source nature. 2. Litecoin As one of the earliest spin-offs from Bitcoin, Litecoin was created in 2011 to increase the speed of carrying out transactions on the blockchain. Charlie Lee created the coin to help with issues such as cashing out large amounts of Bitcoin which would previously take ages to transact. Similar to Bitcoin, it uses a proof of work model with a similar mining process. As an open source global payment platform, Litecoin isn’t controlled by any central authority. Litecoin has continued to implement strong plans geared towards solving the scalability issue experienced by the Bitcoin network. Initiatives such as SegWit, Mimble Wimble, and the Lightning Network have been game changers in the crypto industry stamping the coins authority and strength in matters crypto. 3. ZCash Similar to Monero, ZCash is a privacy-oriented coin built on an open source platform that offers users ‘shielded addresses’. When ZCash launched in 2016, it required its creators to cooperate and build a master key around the world. However, it’s yet unclear whether this approach was actually accomplished. [cta text='Buy ZCash' href='/out/binance'] Using zk-SNARKS, a zero-knowledge proofs technology, ZCash allows shielded transactions to be implemented on the network. Since there’s no communication between the parties involved in a transaction, ZCash provides some form of anonymity to its users. Conclusion Open source coding in crypto is one of the major driving forces of the explosion being experienced in the industry. As an infant in the fintech space, open source cryptocurrency exchanges and coins have provided users with opportunities to constantly improve existing products. Open source software may be free, but it sure is priceless in the growth of the crypto industry.