It’s no more news that the centralized and the decentralized cryptocurrency exchanges are no friends with each other. The exchanges differ in the value, ethics, and mode of operations. This ideological differences on how best to run the cryptocurrency business is always a thing of concern for both parties and have caused trouble among the major exchanges for quite a while now.
Trouble In The Cryptospace
Co-founder of Ethreum Vitalik Buterin recently threw caution to the wind, as he blasted the centralized exchanges on Twitter. The writer, a cum crypto enthusiast, made it clear that he is not comfortable with the way the centralized exchanges go about their businesses.
Vitalik accused the centralized exchanges, saying that they are bad for business, as they extort money from crypto developers to have their coin listed. This act he termed a “stupid king-like power” attitude of centralized exchanges.
Binance, a centralized cryptocurrency exchange, wasted no time to respond viciously to the criticism of the Ethereum co-founder. The exchange, responded, via its verified Twitter handle, saying:
“There is no absolute decentralization. Projects with core teams still have centralization. Today, Vitalik probably has more king-like powers than anyone in the industry, and has used it, by serving as advisors to projects, therefore helped to decide their fate, at least fate of their ICOs to a large extent.”
Buterin meanwhile took time to explain the advantages of the decentralized exchanges over the centralized ones at a forum. He said “it’s much better than a fully centralized exchange, but if it doesn’t solve the other problems, as centralized exchanges have a lot of control over the market and can choose which currencies become the most popular, etc. In all, I think, this is an excellent idea, and I hope that more cryptocurrency exchanges will use this semi centralized method.”
Centralized vs. Decentralized Exchanges
Centralised exchanges are structured in such a way that it serves as the point of contact for both the buyer and the seller, the buyer sends their money into the centralized exchange’s platform, and the seller will deliver the product to the exchange, leaving the exchange to deal with the transaction.
Decentralized exchanges, on the other hand, tries to cut the bureaucracy of given up users assets to any one person or group. Using smart contracts, decentralized exchanges can perform simple tasks without human interference. The exchange relates with both parties through software that allows traders to agree on prices and transactions carried out on autopilot. They also use blockchain technology to ease transactions and make it as transparent as possible.