On July 6th, Vitalik Buterin, the co-founder of Ethereum, pronounced his negative opinions about centralized exchanges in a TechCrunch Blockchain conference in Zug. He stated:
“I definitely personally hope centralized exchanges burn in hell as much as possible.”
During this interview, the co-founder of Ethereum explained how these centralized exchanges hold the entire power regarding to which tokens should be listed and which ones should grow faster. In other words, centralized exchanges frequently charge $10 million to $15 million listing fees which makes it extremely hard for new projects to entering the market.
Decentralized exchanges seem to be a great fit from a utilitarian perspective; however, it is important to understand the pros and cons of this type of exchange for having a deeper understanding of the current situation.
- No central party: the exchange runs on the blockchain technology meaning that is controlled in a democratic manner. As such, decisions are taken by all participants.
- Security: users hold their own tokens and they have complete control of them. On the contrary, centralized exchanges hold user’s capital which could be lost such as in the case of the Mt. Gox Exchange hack.
- Efficiency: this type of exchange does not rely on a central server, it is fully distributed around the network increasing the efficiency, especially when there is a significant amount of traffic.
- Liquidity: one of the major problems of decentralized exchanges is the lack of liquidity in comparison to centralized ones. This provokes a situation where it becomes more difficult to buy and sell any asset.
- Usability: decentralized exchanges is a relatively new concept meaning that a myriad of individuals are not familiarized with this concept; therefore, they prefer to use the ones that they comprehend more (centralized).
Referring to tokenizing real-world assets, Buterin said:
“In tokenizing real-world assets whether they are securities, gold, bonds, fiat or pixels of some Banksy photo seems interesting.”
This means that essentially anything could be tokenized; yet, the question remains on how feasible this really is. BANKEX is a promising and ambitious project that is planning to help users to tokenize any asset through a financially stable and transparent system. However, the CTO (Chief Technology Officer) of BANKEX, Alex Vlasov, explained that scalability is a major concern for the implementation of this technology.
Vitalik Buterin has proposed a solution namely the plasma protocol which allows users to send tokens to each other in a rapid and commission-free manner. He also talked about BANKEX in the Tech Crunch Blockchain conference where he reiterated his enthusiasm for seeing how this project will work.
#Ethereum Plasma implementation is already happening!@VitalikButerin speaks about @BANKEX Plasma and the #Plasma Protocol potential for increasing liquidity on @TechCrunch Sessions: #Blockchain.#BANKEX #BKX $BKX #Solidity @Ethereum #Fintech #Cryptocurrency #Lighting #ETH pic.twitter.com/raaI7CYD77
— BANKEX (@BANKEX) July 7, 2018
Image Source: “Flickr”