The brewing issue of decentralized cryptocurrency exchanges versus centralized cryptocurrency exchanges took a new dimension as two of the heavy hitters in the crypto world took swipe at each other on social media.
Vitalik Buterin CEO of Ethereum and Changpeng Zhao founder of the largest crypto trading exchange Binance, exchanged some heated words on Twitter.
The root of the issue started as a result of the recent interview Buterin gave suggesting some strong words to centralized exchanges.
Buterin revealed his distaste for centralized exchanges suggesting that they burn in hell due to their grip like control on finance transactions. He also stated his belief that cryptocurrency should adopt more decentralized exchanges to grow faster.
The Ethereum Co-founder also faulted the protocol observed by centralized exchanges when it comes to projects. Major trade exchanges make finance projects to pay exchange listing fees which border in the range of $10 to $15 million this was the major grievance aired by Buterin.
However, Binance Ceo Changpeng Zhao fired back on Twitter faulting Buterin’s Burn in hell remark and expressed his wish for the Ethereum kingpin to be accommodating to centralized exchanges. Zhao insisted that he had to reply due to several users retweeting the interview on his Twitter handle.
Zhao highlighted some faults in Buterin’s interview insisting that there is no true decentralization in the system. He also alluded that projects undertaken with a core team of workers have some levels of centralization.
Zhao also accused Vitalik of hypocrisy in the decentralized system alluding that the Ethereum co-founder has a grip like power like other centralized systems, which he believes Buterin has used in his capacity as adviser to several projects which influences the prices of the ICO to a point.
Buterin was also questioned about the response of Zhao by Blockchain.io which is a new exchange in a crispy tweet. Buterin replied to the tweet without shifting to much ground claiming that a decentralized exchange is better than centralized exchanges.
He also retaliated with his belief that centralized exchanges have a lot of control over the industry and can influence the popularity of cryptocurrency. However, Buterin is willing to scale down and accept a semi-centralized method as a good alternative.
Binance had earlier released a statement in which the crypto exchange revealed that both Centralize and Decentralized exchanges would complement each other and achieve a level of interdependence.
This has been further retaliated based on this spat with Buterin and Zhao as both stakeholders agree on a level of cohabitation between centralized and decentralized exchanges.
What Are Decentralized Exchanges?
Decentralized exchanges have become the go-to in the cryptocurrency industry as opposed to the traditional Centralized system. A decentralized exchange is essentially a service system that does not rely on third-party system.
Instead, it uses peer to peer and transaction is conducted through an automated process, and goes through blockchain technology. This enables a foolproof and secure way to exchange digital coins without the need of employing a broker as opposed to traditional methods
Broadly speaking, the use of blockchain technology in this decentralized exchanges comes with different protocols. The funds are deposited by users on the decentralized platforms, which offer a token which can be traded on several exchanges.
The trading is facilitated using smart contracts on many cryptocurrency platforms with many of this platforms running on Ethereum technology. When a transaction occurs, users leverage the proxy tokens which are mostly Ethereum compatible to secure to get the exchange value of the token.
When a withdrawal request is desired by the user, these tokens are converted to the cryptocurrencies requested and funded into the customer’s wallets.
So, essentially the advent of more decentralized platform is of benefit to Vitalik Buterin whose blockchain company Ethereum dominates the technology market for the platforms. Although TRON has made several inroads in that market.
TRON have been developing a new virtual machine technology that could rival that of Ethereum and increase their market share. However, Ethereum still remains the largest blockchain in terms of transaction done per second.
Binance has also emerged as the largest exchange since its launch in 2017 and currently serves as the most popular exchange for most cryptocurrency transactions. While ranking 15th in terms of market capitalization.