Bitcoin Forum

After couple of years in Web3 personally, the evolution of crypto exchanges has been notable. We have endured tough markets and numerous exploits, adapting along the way. CZ’s role in Binance’s rise, from a simple BTC/ETH exchange to a blend of CEX and DEX, is significant.

Exchanges like Bitget and Okx have also emerged, focusing on asset safety with MPC wallets and protection funds. Strategic partnerships, like with TON, have also helped them grow their user base and revenue too. So, 6 years down the lane on some of these exchanges (my personal journey though), I'm still wondering if these exchanges could go "shoulder-to-shoulder" with Binance! What do you think they should do better?

There are many different kind of exchanges in the market.

Dex, basically for ETH/SOL/BNB chains. some good privacy, usually very expensive (gas fees). You usually can't use BTC in those, such as UniSwap.

There are also 2 kind of DEX CEX: Binance, OKX, etc. Where you just send all your documents, complete KYC and make your trades. Low privacy, usually cheap, and you can use Fiat and btc and basically any other blockchain/coin/token.

And the KYC-free CEX, basically swap services. Exch, Godex.io,  and few others. They are centralized, but they are usually KYC-free. You can't use Fiat with those exchanges, but you can trade many different blockchains. They are also usually cheap and good for privacy.

Why not, These exchanges should focus on security and upgrading their support and features, and their CEO should avoid being on the drama that will have them targeted by regulators, but most of all, they should be compliant on countries where they accept traders.

It takes a lot to compete with Binance but traders and investors are not putting their eggs in one basket so every exchange have a chance to be one of the preferred exchanges by traders and investors.

For me, if they have to KYC their customers for the services they offer, they should strive to make this process as less "intrusive" regarding the user's privacy as possible. And if they can offer some services without KYC, for example the exchange of small amounts -- this obviously depends on the country they're located -- they should take into account that possibility.

I have opened a thread here (https://bitcointalk.org/index.php?topic=5477508.0) to discuss KYC methods which are less invasive for users than the traditional "selfie/video/ID document" combination. Video identification is dangerous because if the data is hacked it can lead to identity theft. The methods I list in the thread are safer.

For example, in some countries there are offline KYC verification services. You go to a store (e.g. a post office), show your ID, and the person attending you confirms you are the person you are impersonating. A black-and-white copy from the ID document is often enough to be stored by the service. It's very difficult to trick an online KYC service with a black and white ID copy if the stored data was hacked, if not impossible. So these methods are both safer and less intrusive - only that the customer has to move to the store.

Exchanges should offer these methods always where they are available. It may be cheaper to use the video-identification methods, but some customers would be happy to pay an additional fee for this kind of verification.

It's also a good idea to offer an alternative to the email address for communication, for example a decentralized service like Nostr. Email addresses are often used as identifiers for criminals to link personal data of different hacked services together. More in the thread I linked above.

I think many exchanges have to go back to the basics. For one, KYC shouldn't be made mandatory to everybody. There are many out there who are trading small amounts, less than $50 even. And they're not doing it every single day. Does he/she have to provide the exchange with everything about himself/herself? Even one who simply wants to try will have to go through all the selfies and the turning of heads left and right in front of the camera. They're not opening an account in a central bank with a $1 trillion deposit.

Second, if they truly are supportive of Bitcoin, they should quit enforcing this dirty Bitcoin thing. If some coins are stolen, then they confiscate it, but they shouldn't be grading coins with their flawed ways.

Finally, I hope they stop stealing. If they don't like the money, for example, then they don't accept it, not freeze it in their wallets.

If they want to compete with Binance, they need to give fake/misleading promises like Binance.

1. Starting from no KYC, then ask KYC.
2. Claiming to offer P2P while it's not really P2P since Binance is still become the third party.
3. SAFU.
4. Saying your funds is safe in CEX.

That's what make Binance being the biggest exchange because the CEO use himself to create drama in order to make people know with his project. Many great people are mostly shy and they not willing to sell their soul, that's why the loudest people often successful.

What Binance did is simply amazing! Changpeng Zhao is an amazing and also a very lucky liar. He built this exchange on many lies, the lack of knowledge of people and on dirty practices. That's how Binance went from 0 to the top.
At the moment I think that it's almost impossible for any exchange to reach Binance's levels because Binance has lots of power. Besides an exchange, they also own Coinmarketcap, Trustwallet and some other companies. They both work synergistically to promote and profit each-other. Binance also offers trading and bypassing of KYC documentation behind the scenes, which is illegal and well-known fact. Basically, if an exchange want to reach Binance's levels, they should do illegal things.

Binance and OKX in their original forms are centralized exchanges (CEX). They also have a DEX part, which I didn't know until your post. I did a research and such a thing really exists but I think that the best example of decentralized exchange (DEX) would be Bisq.

Hey, may bad. THat was a typo.

BInance is always CEX. They have a p2p platform, but they are still CEX anyway. As it is centralized in their servers and platform.

It is a p2p centralized platform

The debate for decentralised exchanges and against centralised exchanges is all about user privacy and security of data. Privacy data in this case KYC is a very important data set which a scammer could easily use to get through to a person. No matter how anonymous you seem to be the more detailed your KYC details are, the easier it is to identify you. The constant fight against KYC especially by decentralisation enthusiasts most mostly about keeping these data safe .

The problem is most times these exchanges claim to store your data safe however they don't really do so most times they are more concerned about following governmental rules towards privacy policies and hence they tend to dance to the tune of the government instead of the users who are the owners of these private data.
Personally I believe if centralised exchanges listened more and favoured the Ideas of the owners of these data more then there would be a drop in the oppositions against KYC however what are the chances of these happening.

Time leads to change in everything, so it's possible that some exchanges will reach the same level as Binance in the coming years. As long as these platforms keep improving and remain appealing to beginners, their growth is likely. Most users don’t switch exchanges unless there’s an issue with their current one, which is why attracting new users is important.

Bitget has been doing fairly well, particularly with their recent anniversary events. These events have been timed with the Hamster listing, a period when more newcomers are entering the crypto space. The rewards being offered are attractive even to experienced users, showing that the focus is on drawing in new users, which seems like a reasonable strategy.

I agree with you, i remember that we used to have exchanges that allowed customers trade without kyc for certain amounts and below, but many of these centralized exchanges have made kyc mandatory. To be fair, are they not acting based on pressure from the government, they could be charged for failing to fully comply with aml laws, no?
They do that a lot, or an exchange like okx that has a high BTC minimum deposit amount, and sometimes this catches people out as they deposit lower than the minimum, and just like that, the money becomes okx's.

They could still offer some kind of "test account" without KYC for small transfers, because in most countries the KYC obligation for "obliged subjects" is tied to some concept like a "significant amount". This makes it possible for example for solutions like Paysafecard to still exist even in highly regulated areas like Europe.

If the operational limit is very low, say less than $100 per month (Paysafecard for example has this limit approximately), then it's almost impossible for criminals to use these accounts for malicious purposes. It would simply be too expensive to open many of these accounts.

Exchanges could even make "test account farming" more complicated, like tying an account to a phone number but not require other personal data. Or even some "non-standard" methods like requiring some challinge per month, like moving BTC from on address to another one. You could still open more than one account per person but again it would be more expensive for typical criminal usage than simply using cash.

When it comes to centralised exchange, trust is the first concern. Exchanges can't just do what they want because centralised exchange has many obligations. Exchanges are competitive with each other, so they won't work shoulder to shoulder anyway. But they might work together on some concern, like security and preventing hacked funds, etc. Today or tomorrow most of the centralised exchange will be forced to ask KYC from users, so must be ready to submit documents when using any CEX. 

The OP is mostly about Web3, why is almost everyone talking about the centralized monster Binance*?   // Edit: *They are briefly mentioned, but the main idea is still related to Web3 development.


Decentralized exchanges need an effective way to allow for sitting limit orders, much better bid/ask spreads (more like central exchanges) and a user experience which can compare to the fun and excitement of trading on standard exchanges. That would be a great start, are there any currently available which I do not know about yet?

I get your point, but from what i know about centralized exchanges, they don't really care about their customers nor their privacy, so they wouldn't even think of ways like this to protect privacy of 'small' users. Especially when it could probably get them in trouble with LE, when criminals find a way to abuse it, and with the wherewithal that many of them have, they will.

I think they can; all they have to do is not go through what CZ did, massive marketing and enhancing and introducing new features are the key for them to compete against Binance.

Binance has established themselves as a go-to exchange for every new trader; Bitget and OKX can do that by guaranteeing the safety of the funds of their clients in whatever happens to their exchange, and of course proper coordination with the regulators is important to avoid getting in the radar of the regulators.

Centralized exchange is a multi billion dollar industry. Every exchange should be competitive enough for them to have a share of the market, I think OKX has a good chance to compete with Binance, they need to introduce something new.