During an interview at Tech Crunch Sessions: Blockchain 2018, Ethereum Founder, Vitalik Buterin hoped “centralized exchanges burn in hell as much as possible” as he strongly advocated for the use of decentralized cryptocurrency exchanges.
Vitalik’s fiery comments stemmed from his annoyance towards centralized exchanges wielding “stupid king-like power” as they have the power to dictate which cryptocurrencies “become big” after making projects pay extortionate “$10 to $15 million dollar [exchange] listing fees.”
Buterin’s comments caused quite a stir within the crypto community invoking a response from Binance Founder, Changpeng ‘CZ’ Zhao on Twitter. Zhou fired back by highlighting several flaws in Buterin’s arguments by stating that:
“There is no absolute decentralization. Projects with core teams still have centralization. Today, Vitalik probably has more king-like powers than anyone else in this 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.”
Zhou further remarked that “Decentralization” is not safer by default” and this was clearly evidenced by the recent hack of decentralized exchange Bancor with the less of $12m worth of Ether as well as EtherDelta also falling victim to a phishing attack late last year.
On the same day, CZ shared his response, Buterin chose not to reply publicly instead opting to respond to a cheeky Tweet from a new French cryptocurrency exchange Blockchain.io that asked whether their “decentralized settlement feature” would send them to purgatory. Buterin surprisingly — or perhaps not so surprisingly — responded in French saying:
“It’s much better than a fully centralized exchange, but it doesn’t solve the other problem, as centralized exchanges have a lot of control over the market and can choose which currencies become the most popular etc etc.
In all, I think this is a very good idea and I hope that more cryptocurrency exchanges will use this semi-centralized method.”
IDEX, arguably one of the most popular semi-centralized crypto exchanges as they offer features from both centralized and decentralized exchanges is currently ranked #91 in terms of total trading volume for all crypto exchangesin a 24 hour time frame.
Aside from IDEX, there are only a handful of decentralized exchanges ranking within the top 100 overall trading volume for crypto exchanges with the majority of the chart being dominated by centralized exchanges.
There is clearly a long way to go until decentralized exchanges begin to gain greater traction and adoption however, at the end of the day, it does seem both Buterin and CZ agree that decentralized exchanges will be the best option moving forward. In March, Binance announced their intentions to launch a decentralized exchange along with a public blockchain:
“Centralized and Decentralized exchanges will co-exist in the near future, complementing each other, while also having interdependence.” — Binance
In the near future, it’s possible that we may see centralized exchanges shift more and more towards offering hybrid solutions similar to what IDEX offers and what Blockchain.io proposes to do.
The gradual shift will likely be necessary for the wider community to witness greater levels of decentralization in crypto exchanges resulting in less actors who may wield “stupid king-like powers”.