How Binance Decentralized Crypto Exchange Launch in 2019 Will Impact the Market

[Ucy]

...
But that platform, or kind of, has been there for centuries. When you exchange fiat person to person, just like gold and silver coins a few centuries ago, that is a peer-to-peer exchange. How are they going to regulate it? Now, with the advent of cryptocurrencies and Internet, we are taking this exchange to the next level by removing distance from the equation completely. If you ask me, that's a natural course of events, and preventing or hindering it would be like trying to stop a freight train. Typically doesn't end well for those trying.

You may be confusing peer-to-peer with decentralisation, these 2 doesn't necessarily go in pairs. Binance is/will still be a central entity providing platform for P2P traders and as such, they could be forced to impose limits and comply with KYC requirements.
Even Localbitcoins seem to require ID verification above certain threshold: https://news.bitcoin.com/significant-trade-volume-triggers-localbitcoins-kyc-requirement/

I think this is still a 'grey area' in many jurisdictions, up until cryptos were introduced - such activities were simply not possible to do online.

Anyhow, the good news is, if there's ever too many restrictions on legal P2P exchanges, new 'underground' exchanges will quickly pop-up and take their place.

   It is Decentralized exchange or nothing.
 A true DEX should operate like Bitcoin/Cryptocurrency -  it SHOULD NOT BE OWNED, should be Open, Decentralized, Trustless etc. A good example of good DEX is Bisq
Perhaps Binance is building a semi-decentralized exchange and not actual DEX

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[tee-rex]

...
But that platform, or kind of, has been there for centuries. When you exchange fiat person to person, just like gold and silver coins a few centuries ago, that is a peer-to-peer exchange. How are they going to regulate it? Now, with the advent of cryptocurrencies and Internet, we are taking this exchange to the next level by removing distance from the equation completely. If you ask me, that's a natural course of events, and preventing or hindering it would be like trying to stop a freight train. Typically doesn't end well for those trying.

You may be confusing peer-to-peer with decentralisation, these 2 doesn't necessarily go in pairs. Binance is/will still be a central entity providing platform for P2P traders and as such, they could be forced to impose limits and comply with KYC requirements.
Even Localbitcoins seem to require ID verification above certain threshold: https://news.bitcoin.com/significant-trade-volume-triggers-localbitcoins-kyc-requirement/

I think this is still a 'grey area' in many jurisdictions, up until cryptos were introduced - such activities were simply not possible to do online.

Anyhow, the good news is, if there's ever too many restrictions on legal P2P exchanges, new 'underground' exchanges will quickly pop-up and take their place.

It is Decentralized exchange or nothing.

I strongly support this attitude. But for the time being a truly decentralized exchange is simply impossible. Well, conceptually, it is possible of course but it will be completely unusable as there is no way to guarantee the execution of orders in real time as all transactions should be written on the blockchain and that takes a fucking amount of time. And to do that on the fly, which is what any regular exchange does in their inner accounting, we need something like Lightning Network implemented across different coins. That means all coins should use the same exchange protocol built in if these coins are to be traded against each other. Technically, it is quite feasible and doable, but there is an insurmountable issue of human factor which clearly reveals how self-centered the cryptocurrency developers are.

[Tory-Tory]

how Binance Decentralized Crypto Exchange Beta Launch in 2019 Will Impact the Market
https://www.ccn.com/how-binance-decentralized-crypto-exchange-beta-launch-in-2019-will-impact-the-market/

Binance, the world’s largest crypto exchange by daily trading volume, is set to launch a beta version of its decentralized exchange (DEX) by early 2019.

Changpeng Zhao, the CEO of Binance better known to the community as CZ, said on Saturday:

    “Just had a productive meeting for Binance DEX (decentralized exchange), where BNB will be native gas, and the exchange don’t control user funds. Aiming for a public beta end of the year/early next year. Yes, we work on Saturdays, non stop.”

Why is Binance Launching a DEX?

In July, on CNBC Crypto Trader hosted by Ran Neuner, CZ stated that he personally believes decentralized exchange is the future of crypto.

In the long-term, CZ explained that users will be able to utilize non-custodial wallets to trade cryptocurrencies in a peer-to-peer manner with full control over their funds.

“I believe that decentralized exchange is the future. I don’t know when that future will come yet. I think we’re at an early stage for that so I don’t know if it’s a year, two years, three years, or five years. I don’t know but we got to be ready for it,” he said.

That's indeed good news.
Binance is a very good exchange, and they will probably make a good work with Dex.
As they have money, it can be safe an easy to use. I agree with him, Dex are the future.

 binance has never been hacked, but they have few month in the market.

DEX surpasses centralized exchanges in all characteristics. The only thing missing is the volume. If the Binance will provides its DEX with big trading volume, then this can be a starting point for all users to switch to DEX and I will immediately buy Waves and BitShares.

[Renal]

Binance is the safest exchange place for the moment, and no one can hack, I believe that Binance is the most decentralized big one, maybe it will become one of the biggest exchanges in the future.

[Rath_]

Considering the demand (or lack thereof) and the number of existing choices for decentralized exchanges, I don't think this move can impact the market in a meaningful way. Not that I dislike the move -- more options is better, just that they'll simply be another competitor for existing options.

I guess that many people are still reluctant to use decentralised exchanges because these exchanges lack liqiduity and haven't been out there for a long time. There still might be some critical bugs which might lead to huge losses. Binance is one of the most popular centralised cryptocurrency exchanges right now. I am quite sure that investors trust them and won't hesistate to try their latest project. Let's hope that bisq won't have any problem with surviving after Binance Dex launches.

[figmentofmyass]

here's the problem. the DEX removes custodial trust, but it requires users to hold a centralized ICO token tied to binance's success (BNB) as native gas for the DEX blockchain. i'll be curious to see how much BNB will be required to post and match orders.

Could you please explain in a few simple words how the whole system is supposed to work? What I'm specifically interested in, will there be orderbooks as we see them on regular exchanges and how fast they will be updated (refreshed). Then, if someone makes a trade, what guarantees the order execution in the specified amount at the specified price?

execution happens by smart contract on a public blockchain. unfortunately, i don't think there's much public info about how the binance DEX will work. i would hope that it's superior to the first generation of DEXs, which are limited to one-off p2p trades. ideally, there would be some kind of algorithmic market making to provide liquidity and fluidity to order book execution. i'm not sure how that would work in a decentralized environment, but it should be possible with more sophisticated contracts.

As I get it, these BNB tokens will be used, but if so, how will it be different from a regular centralized exchange apart from adding an additional layer in the form of these tokens?

have you ever used a DEX like etherdelta? you need ETH to post orders/execute trades. on the binance DEX, you'll use the BNB token instead of ETH. in both cases, your trading funds are held in your own wallet.

[yusupjatigumilar]

binance is a giant market in crypto currencies, it's not impossible if binance comes up with a new system that will kick off the crypto currency market, but I can't analyze whether it will have a good impact or vice versa.

[tee-rex]

here's the problem. the DEX removes custodial trust, but it requires users to hold a centralized ICO token tied to binance's success (BNB) as native gas for the DEX blockchain. i'll be curious to see how much BNB will be required to post and match orders.

Could you please explain in a few simple words how the whole system is supposed to work? What I'm specifically interested in, will there be orderbooks as we see them on regular exchanges and how fast they will be updated (refreshed). Then, if someone makes a trade, what guarantees the order execution in the specified amount at the specified price?

execution happens by smart contract on a public blockchain. unfortunately, i don't think there's much public info about how the binance DEX will work. i would hope that it's superior to the first generation of DEXs, which are limited to one-off p2p trades. ideally, there would be some kind of algorithmic market making to provide liquidity and fluidity to order book execution. i'm not sure how that would work in a decentralized environment, but it should be possible with more sophisticated contracts.

As I get it, these BNB tokens will be used, but if so, how will it be different from a regular centralized exchange apart from adding an additional layer in the form of these tokens?

have you ever used a DEX like etherdelta? you need ETH to post orders/execute trades. on the binance DEX, you'll use the BNB token instead of ETH. in both cases, your trading funds are held in your own wallet.

Honestly, no, I haven't used any decentralized exchange in the past but I understand how bitshares work conceptually and thus I know that truly decentralized exchanges are in fact possible, completely removing a third party risk, that of an exchange. But the problem with bitshares, for example, is that they are not real time. That seems to be the main issue with such exchanges which makes them totally uncompetitive with regular exchanges.

Okay, you mention smart contracts, so you still have wait until the contract gets confirmed by the network, right? If so, we are back to square one, that is how fast a decentralized exchange would work. If trade execution is not close to instant, as is the case with centralized exchanges, the decentralized ones will always remain inferior to exchanges like Binance itself or, say, Bitfinex.

[Kakmakr]

It's his plan B, for the day Binance won't have the choice to abide by the laws in case of a new regulation pop out from Europe. Smart guy, already trying to escape a potential problem .
A question is how long the beta stage will be, because in the crypto world a beta version can be 2 years long; lol

I am just curious, but how would a decentralized exchange with "identified" owners be affective against measures by a government to close them down? The Binance owners will still be held responsible for the development of the technology, even if it cannot be stopped.

They will also be targeted by governments and imprisoned, if they gain any income or profit from these exchanges. This is a flawed argument and business plan, once the owners of this is exposed. 

[Kevin77]

binance is a giant market in crypto currencies, it's not impossible if binance comes up with a new system that will kick off the crypto currency market, but I can't analyze whether it will have a good impact or vice versa.

It is indeed a very giant market and the truth is that with the way things are going, binance is really looking to take the exchange space by storm and that would really make the competition a whole lot hard for other exchanges, with binance being the biggest first centralized high volume exchange, coming up with a decentralized exchange.

Decentralized exchanges have really not been people's first choice over the years, due to lack of liquidity, security and we all know how many times Etherdelta got its own share of hack and vulnerability, let's see if binance is really going to bring huge changes in this aspect and I am looking forward to it.

[fullhdpixel]

It's his plan B, for the day Binance won't have the choice to abide by the laws in case of a new regulation pop out from Europe. Smart guy, already trying to escape a potential problem .
A question is how long the beta stage will be, because in the crypto world a beta version can be 2 years long; lol

I am just curious, but how would a decentralized exchange with "identified" owners be affective against measures by a government to close them down? The Binance owners will still be held responsible for the development of the technology, even if it cannot be stopped.

They will also be targeted by governments and imprisoned, if they gain any income or profit from these exchanges. This is a flawed argument and business plan, once the owners of this is exposed. 

I can imagine it being a plan B, but I would not say this is somewhat of a plan that would fly in the first place, if the government of Malta does not want it. I cannot say for sure how things would pan out in the long run, but for what it is worth, we all know how government really frown upon decentralization and the only thing still holding them back right now, is because they know centralized exchanges can still be regulated but coming up with a decentralized exchange and then see it grow big, that would be some hell of a challenge and threat to the government. That is what I think anyway.

[JMD07]

With this plan BNB could be a huge currency in the future as they will have to use BNB as gas in their new decentralize exchange. This will be a good news to us as we have more options for decentralize exchanges.

[1Referee]

Decentralized exchanges have really not been people's first choice over the years, due to lack of liquidity, security and we all know how many times Etherdelta got its own share of hack and vulnerability, let's see if binance is really going to bring huge changes in this aspect and I am looking forward to it.

Hacks aren't really an issue. If we can reduce hacks of any sort by 90% just by using decentralized exchanges, then it's already a huge gain that we booked.

The good thing about more competition within the decentralized exchange space is that it motivates the different entities to speed up development and even come up with features other platforms don't offer, all to differentiate themselves from the rest. We're going through very exciting times that might change the way we think and transact with each other even further.

We largely don't need centralized entities, they need us, the people. Let them respect the people again by treating them with respect and not as a number that has no importance after you're an existing customer.

[hatsoff2btc]

...
But that platform, or kind of, has been there for centuries. When you exchange fiat person to person, just like gold and silver coins a few centuries ago, that is a peer-to-peer exchange. How are they going to regulate it? Now, with the advent of cryptocurrencies and Internet, we are taking this exchange to the next level by removing distance from the equation completely. If you ask me, that's a natural course of events, and preventing or hindering it would be like trying to stop a freight train. Typically doesn't end well for those trying.

You may be confusing peer-to-peer with decentralisation, these 2 doesn't necessarily go in pairs. Binance is/will still be a central entity providing platform for P2P traders and as such, they could be forced to impose limits and comply with KYC requirements.
Even Localbitcoins seem to require ID verification above certain threshold: https://news.bitcoin.com/significant-trade-volume-triggers-localbitcoins-kyc-requirement/

I think this is still a 'grey area' in many jurisdictions, up until cryptos were introduced - such activities were simply not possible to do online.

Anyhow, the good news is, if there's ever too many restrictions on legal P2P exchanges, new 'underground' exchanges will quickly pop-up and take their place.

   It is Decentralized exchange or nothing.
 A true DEX should operate like Bitcoin/Cryptocurrency -  it SHOULD NOT BE OWNED, should be Open, Decentralized, Trustless etc. A good example of good DEX is Bisq
Perhaps Binance is building a semi-decentralized exchange and not actual DEX

Don't they make a lot of money by charging fee's from the each trade? How would the decentralized trading platform would help them? What would be the method they would make money from it? I understand they are already charging less than almost everyone in the market for the fee, even less with their bnb making the fee go down %50 however its still something.

What would happen if they get rid of that and allow people trade directly? How would they make money at all? I am not sure what their play is doing something that would lose them money and doing it themselves as well. Weird to see, there must be a way to make money for them I can't see.

[tee-rex]

Don't they make a lot of money by charging fee's from the each trade? How would the decentralized trading platform would help them? What would be the method they would make money from it? I understand they are already charging less than almost everyone in the market for the fee, even less with their bnb making the fee go down %50 however its still something.

What would happen if they get rid of that and allow people trade directly? How would they make money at all? I am not sure what their play is doing something that would lose them money and doing it themselves as well. Weird to see, there must be a way to make money for them I can't see.

I should confess that I've been thinking along the same lines too and asking myself same questions. One of the way they can make money is to add a layer to a coin's base protocol that would take some percentage from every trade made using it. Another way to do it, and that's how it is done with bitshares, if I'm not mistaken, is by using some utilitarian token ("gas") for this purpose. Then you can advertise a decentralized network for this token in the same way as you would do while bootstrapping any other new coin. By taking this approach, you will be able to remove a third party risk and still receive royalties or fees from trades on a decentralized exchange built along these principles.

[anjho.ace]

I am looking for a great outcome that will give better things for cryptocurrency.
I still dont know the whole fact about this and future for them.
But this move is really interesting and i am hoping for better days.

[Mihaylovic]

centralized exchange platforms are the main headeche of this ecosystem. i am pretty sure that many big investors give up investing because of security problems in exchange platforms. if there is a good decentralized platform with good volumes, it will increase the trust to crypto market.

[shield132]

Well, binance is famous market but I can't see any impact on market while they require KYC. If they do all kind of exchanges/withdraws without id verification, then they will really have serious power and they have to do it in realiry since they are going to be decentralyzed but I highly doubt any government will allow them to do it, especially usa.
I bet Australia will be first against them.

[exstasie]

Honestly, no, I haven't used any decentralized exchange in the past but I understand how bitshares work conceptually and thus I know that truly decentralized exchanges are in fact possible, completely removing a third party risk, that of an exchange. But the problem with bitshares, for example, is that they are not real time. That seems to be the main issue with such exchanges which makes them totally uncompetitive with regular exchanges.

It'll probably always be that way. No matter how sophisticated decentralized exchanges get, centralized means will always be far faster and more efficient. We live in a world where most trading is automated: often times, every millisecond counts. DEX is for people who value trustlessness and perhaps privacy from exchange KYC.

There is the theoretical possibility that state/payment channel technology (like Lightning network) could be leveraged to allow for near-instant execution. But we're very far away from that possibility, and I have difficulty conceiving how markets could become sufficiently liquid to serve the demand of the spot market. I also don't understand how atomic "trading engines" can exist this way. It's hard to see a DEX functioning beyond peer-to-peer trading.

[figmentofmyass]

Don't they make a lot of money by charging fee's from the each trade? How would the decentralized trading platform would help them?

ideally they wouldn't need to launch a DEX. however, they know the market is heading that direction---see ethfinex for example--- so they're adapting. they know damn well it'll dig into their exorbitant profits, but what's more important for them is market consolidation: they need to secure market share.

What would be the method they would make money from it? I understand they are already charging less than almost everyone in the market for the fee, even less with their bnb making the fee go down %50 however its still something.

i don't think the details are publicly available yet. but here's my personal thoughts:

binance will use a BNB-powered blockchain. regarding fees and potential profit, it partly depends on how the underlying blockchain is secured. is it mined? hybrid POS? a private chain maintained by binance? in most scenarios, binance is likely to be collecting much or all of the gas fees paid to trade on the DEX.

so first, they're collecting BNB gas fees (and perhaps withholding it from market, increasing the price of BNB).

second, they inflate the price of BNB by increasing demand for it: now there's an entirely new use case---it's not just an investment because of their buyback/coin-burning program or for discounted fees anymore. now you need BNB to trade on a DEX (and i'll bet one of the best DEX on the market).

third, they inflate the price of BNB by reducing supply: if everyone needs BNB to trade on the DEX, they first need to buy it at spot then hold it in their wallet for future transactions.

i think they're trying to build an economy around BNB. since binance is the only place BNB can be used, it reinforces the incentives to use their exchanges. and also, last i heard, the binance team holds 80 million BNB---if BNB rises in value, they profit greatly.

What would happen if they get rid of that and allow people trade directly? How would they make money at all?

they're offering people a choice:

use our centralized high-speed exchange like before OR use our DEX which economically reinforces our business and retains our market share