Would coins be less liquid without centralized exchanges? Binance CEO explains
According to Zhao, the industry would have probably been over 10 times smaller and would have developed much slower without fiat exchanges. He also said that people seem to be choosing centralized exchanges over decentralized ones at the moment.
Binance is currently the second largest cryptocurrency exchange in terms of 24 hour volume, latest data from CoinMarketCap showed.
The tweet was in response to the heated statements by Vitalik Buterin, co-founder of Ethereum, at a TechCrunch event where he said he hoped that ”…centralized exchanges go burn in hell as much as possible.”
He pointed out that Vitalik, with his standing in the cryptoverse, has probably used his influence to help decide the fate of ICOs to a large extent by serving as an advisor for projects.
“Let’s not wish others to “burn in hell”. Let’s have a bigger heart, and appreciate the fact that we are part of an eco-system, not independent projects,” he said, adding that he still supports decentralization,
Why is Buterin against centralization?
Buterin is of the view the centralized exchanges serve as an interface between the fiat world and digital currencies.
He also believes there is no reason why some projects need to pay $10-$15 million in listing fees to allow the public to trade on centralized exchanges.
Buterin intends to make the Ethereum network as decentralized as possible. However, a major hurdle to achieving this is user authentication, especially when people lose their private and public keys required for transactions.
Decentralization may not always be safer
However, decentralized exchanges are clearly not immune to security breaches. Bancor on Monday announced it had faced a “security breach” where a wallet used to upgrade some smart contracts was compromised. The wallet was then used to withdraw Ethereum token (ETH) worth $12.5 million from BNT smart contract.
Charlie Lee, founder of Litecoin, said an exchange that can lose or freeze customer funds is not decentralized. Bancor can do both, Lee claimed.
According to Zhao, who co-founded Binance last year, decentralization is not safer by default.
Image via Shutterstock
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