“The public attitude toward cryptocurrencies is the same as it is for any other asset class,” said Adam White, vice president of the top American crypto exchange Coinbase. “Investors are interested in the daily volume of transactions, the result of the investment flow, and how many people are investing,” he added. There is, however, another parameter that has a special effect on the crypto space, and that is the ways to trade cryptos.
The widely spread crypto exchanges have recently faced harsh criticism, in particular, from the co-founder of Ethereum Vitalik Buterin. Crypto guru John McAfee said that "our exchanges are connected with banks and our governments," and he sees the future of currency trade in "distributed exchanges.” Are the existing crypto exchanges so bad, though?
Yes, they are centralized, and Changpeng Zhao, the CEO of Binance, one of the largest sites for trading cryptocurrencies in the world (considering only those that charge commissions), believes that crypto trading instruments are now in demand among investors in cryptocurrencies. He believes that it is not worthwhile to mythologize the principle of decentralization, since, in reality, 100-percent decentralization cannot be achieved, and the principle itself should not be absolutized. Centralized exchanges really play a big role, and Zhao is right when he says that with the help of them, it was possible to increase the flow of money to the market, and also to speed up the process of making transactions with cryptocurrencies.
Josh Goodby, the head of crypto exchange Huobi U.K., said that "the world has a place for both centralized and decentralized exchanges, each of which has its pluses and minuses." Among the drawbacks, one can note the accusation that their leadership has turned blind eyes at the manipulations of some cryptocurrencies, for example, the frequent printing of the Tether cryptocurrency. In addition, the management of exchanges cannot keep an objective view of the business processes taking place on them, if the exchange itself is the owner of certain currencies, as this was said by the crypto entrepreneur Kevin Pham when drawing attention to the fact that Coinbase President Brian Armstrong "now owns a large amount of Ether in comparison with how much he used to invest in Bitcoin."
Another drawback to centralized platforms is the excessive fee for listing new cryptocurrencies. Despite such disadvantages, however, the centralized sites have become popular, partially because behind each of them stands a team that promotes services and constantly improves the user interface. One of the advantages usually associated with decentralized sites is heightened security, but recently this advantage was called into question. On July 9, hackers got access to the Bancor decentralized platform and stole $23.5 million. But this was not the only reason for the criticism of Bancor, as Charlie Lee, the founder of Litecoin, drew attention to the fact that the exchange "froze" a smart contract that was connected with several million BNT tokens. Summarizing what was happening, Lee said: "Any exchange is not decentralized if it can cause loss of client funds, or if the site can ‘freeze’ their accounts. Bancor can do both, and so we are dealing with a false understanding of decentralization."
The discussion itself about centralized and decentralized platforms can take an unusual turn, as one of the most famous crypto enthusiasts Anthony Pompliano, who previously worked for Snapchat, said on his Twitter page after a month-long lull that he was investing "funds in infrastructure" and does not buy or sell cryptocurrencies on exchanges. Explaining his point, he said that "trying to guess which cryptocurrencies will be the winners is, for most, a hopeless affair." Then what is important? Technology development? Pompliano says that "most people concentrate on technology issues in the crypto world, but only those teams launching cryptos that have the largest number of users will be the winners in the long run." Pompliano’s line of thought lies in the fact that you need to invest in maximizing the number of ways of trading cryptocurrencies.
And in this respect, the criticism of both centralized and decentralized platforms is justified, since it is always necessary to look for new ways. And while we are already getting used to the idea that decentralized exchanges will become the new El Dorado for cryptocurrency, on July 13, Pompliano drew attention to the fact that projects aiming at creating points of cryptocurrency exchange in the form of digital wallets are the next stage in the development of trade in cryptos. And indeed, the story is unfolding before our eyes, as the Opera browser contains a built-in digital wallet in its latest update for Android, with the help of which 322 million users can carry out transactions with cryptocurrencies. For starters, we are talking about ethers, as well as tokens such as ERC20 and ERC721. Perhaps, this step, like the rapid development of Brave's blockchain browser with its cryptocurrency BAT, is what is leaving traditional banks behind.
While in Switzerland, crypto enthusiasts are trying to resolve the issue of allowing local banks to buy and sell cryptocurrencies in the political circles of the country, such deals are possible on the Internet in just a couple of clicks. The traditional financial infrastructure is clearly lagging behind the pace of the new technologies. The same applies to the launch of exchange-traded funds, as requested by the Chicago CBOE exchange. No one is ruling out the possibility that even after the launch of such a tool that is accessible to banks and investment funds, many of them will still ponder whether it is worth investing in cryptocurrencies. We can hope for market growth with the appearance of an ETF, as it was previously associated with the appearance of futures for Bitcoins and additional issuance of stablecoins, and we are now facing a more radical transformation of trade in cryptocurrencies. It has already migrated to browsers, but this is not the limit, as, after all, deals with cryptocurrencies are already possible without the internet and without mobile connections. Cryptocurrencies are appearing from nowhere and are spreading everywhere.