Vitalik Buterin is definitely one of the most influential people in crypto, and his opinions always get investors talking. His latest take is on centralized exchanges. In an interview with Coin telegraph, Vitalik said that he hopes centralized exchanges, “can burn in hell.” Looking at his arguments with regards to these exchanges, they all make sense. He argues that centralized exchanges have so much power to determine what cryptos grow, and which ones don’t.
This is quite true given that whenever the major exchanges list a new coin, it tends to grow in value. That’s not withstanding the fact that that the said crypto may not be as good as others that are left out. Centralized exchanges have basically created a situation where only coins that can raise fees to get listed can grow. This is not healthy for the crypto community, whose whole point from the start was decentralization. Without centralized exchanges, chances are that bitcoin would not be the dominant crypto in the market. That’s because market volumes around other cryptos would surge too, based on their technical capabilities.
But that’s not the only the only reason why centralized exchanges are bad for the crypto market. They also have lots of power against their customers. In the recent past, we have seen some centralized exchanges raise the minimum withdraw fees for their customers. This is tantamount to holding somebody’s money against their will, but there is little the customer can do about it. This is undue power that defeats the whole essence of blockchain technology and cryptocurrencies. In crypto space, no one should have the power to dictate how much of your money you can take out. This power that centralized exchanges hold is pretty much the same that cryptocurrencies are aiming to take away from centralized entities including banks. Crypto is all about giving power back to the individual, and controlling someone’s money is the furthest thing from it.
Centralized exchanges are also at an ever-present risk of being hacked. This year alone, several of them have been hacked and millions stolen. This is hurting the overall reputation of the crypto market. The more the number of exchanges getting hacked, the more new investors will avoid the crypto market. Crypto volatility in itself is putting off new investors from coming into the market, and exchange hacks are not making matters any better. They usually get hacked because their operations are centralized, making them an easy target for criminals.
Therefore, for crypto to grow, centralized exchanges need to go. Yes, they do provide liquidity, but their disadvantages far outweigh the value that they bring to the market. Besides, decentralized exchanges have the capacity to grow that liquidity too. All it needs is for more people to adopt these exchanges and they will serve the same role as centralized exchanges, but with the added advantage of decentralization.
As the tech behind decentralized exchanges becomes more sophisticated, the whole justification for the existence of centralized exchanges will disappear, and crypto will grow.