Why are centralized exchanges still dominating the crypto space?

[$Andreyka$]

Ever since Bitcoin launched back in 2009, the rise of centralized exchanges has been inevitable. A few years later, and now the whole crypto market is dominated by centralized exchanges. While there have been many alternatives to the solution (such as decentralized exchanges), people are still performing trades at centralized entities.

Now the real question is why this is happening, since after all, Satoshi intended Bitcoin to be free from middleman or third parties? Depending on an exchange or custodian, greatly defeats the purpose of true decentralization. Knowing how oppressive some governments are, it'll be easier for them to stop usage of crypto whenever they want to by just targeting centralized exchanges.

Nonetheless, what are your thoughts about this?

In the absence of regulators, development occurs by the least resistance.
For example, the Etnerdelt Exchange is decentralized. Have you tried to exchange on it? Happened? I did it, but I spent it all day.
The second example is the stock exchange (binance, yobit) bank or account, registered, pressed two buttons and the exchange took place. Many intermediaries provide convenience and simplicity, which means that it promotes the introduction of cryptocurrency to the masses.

[tenakha]

Ever since Bitcoin launched back in 2009, the rise of centralized exchanges has been inevitable. A few years later, and now the whole crypto market is dominated by centralized exchanges. While there have been many alternatives to the solution (such as decentralized exchanges), people are still performing trades at centralized entities.

Now the real question is why this is happening, since after all, Satoshi intended Bitcoin to be free from middleman or third parties? Depending on an exchange or custodian, greatly defeats the purpose of true decentralization. Knowing how oppressive some governments are, it'll be easier for them to stop usage of crypto whenever they want to by just targeting centralized exchanges.

Nonetheless, what are your thoughts about this?

I can not find answer as a reason. Because the handy options in the centralized exchanges also available in decentralized ones. Reliability may be reason. The increase in the quantity of scams left less places to rely on and centralization gives us more confidence in this regard.

[rijaljun]

Do you think it is possible to trade coins cross-chain?
I think the main reason is that most of decentralize exchanges are limited for a single blockchain. It makes people feel hard to trade their coins and tokens from different blockchain. Other reason is the UI and wallet, centralize exchanges have better UI and most centralize exchanges save customers assets on only some wallets and the asset shown on user's page is just the balance and users can trade with others without having real transactions which would not affect the blockchain traffict. However, decentralize exchange will always create a transaction for every trade and make heavy blockchain trafficts.

[IVEXO]

Dominating yes
Hacked, scam exit and leave investors broke yes

Centralized exchange offer so many benefits but all with a risk
Platforms such as binance and co are still safe; but a different story tells for cryptopia and the other hacker exchange

[Nivia1st]

this is all because of profit, people prefer CEX compared to DEX because they have a large trading volume. with a large volume the level of presentation results is greater.
in general, DEX is slow to process transactions because it is influenced by the confirm block. this is also one reason too.

[bamboylee]

There is still a large demand for fiat to crypto exchange that is why centralized exchanges still dominate crypto space.  

There is also a lack of knowledge in using dex exchanges. Another one is trusting your keys to dex exchanges. There is fear since you are submitting your keys to dex, your funds can be easily stolen.

[shakesbear]

Decentralized exchanges are developing slowly and probably because the owners have in less profit. Recently, there are many new decentralized exchanges, and will be more, the main thing that they have trading volumes.

[CryptoCoinArbitrage]

Centralized exchanges are popular as they provide great user experience while the decentralized ones  are not user friendly. Majority feels their funds safer on the centralized exchanges despite it is not the situation. Both exchanges ( centralized and decentralized ) were hacked quite frequently in the past.

[raymondspeaks]

Ever since Bitcoin launched back in 2009, the rise of centralized exchanges has been inevitable. A few years later, and now the whole crypto market is dominated by centralized exchanges. While there have been many alternatives to the solution (such as decentralized exchanges), people are still performing trades at centralized entities.

Now the real question is why this is happening, since after all, Satoshi intended Bitcoin to be free from middleman or third parties? Depending on an exchange or custodian, greatly defeats the purpose of true decentralization. Knowing how oppressive some governments are, it'll be easier for them to stop usage of crypto whenever they want to by just targeting centralized exchanges.

Nonetheless, what are your thoughts about this?

Because very few people understand the pure concept of decentralisation yet, mixed with the effort of having to figure things out for yourself.

I've had some real conversations over the last few days on this forum with people that have told me stupid things like "crypto is just money" and that sort of ilk. I mean I don't blame them per se - a lot of people entered into this industry when Bitcoin was flying high and ICOs were pitted on ANN threads in their hundreds per week. A lot of folks here I'd hazard a guess wouldn't know what it was like to have only Bitcoin, Litecoin and Dogecoin as the main three coins and when someone had the balls to make another coin it was like a whole month event. Hundreds of people would flock together to throw their hard earned money at another coin that promises to do exactly the same as what's currently available but BETTER, and in the end the devs would just give up and run away with our bitcoin. Innovation was non-existent. But boy anonymity was integral - and we valued that above all else. Even if it did mean losing a btc here and there. It wasn't much anyway at the time.

Now we've sort of entered some weird alternate reality where it's all about the money and nothing about the vision - no-one cares about the original vision of satoshi anymore. Most projects pitted to us today are more or less centralised, as are the exchanges, and the people that run them.

But that's people I guess. Never underestimate the human need for control.

[harbin55]

Centralized exchanged are more efficient platform than other ICO.  Through this process we can asure than the system is more productive and less hassle;  wherein you can easily proceed into process faster and no interruption.

[Akoldi_ibk]

this is all because of profit, people prefer CEX compared to DEX because they have a large trading volume. with a large volume the level of presentation results is greater.
in general, DEX is slow to process transactions because it is influenced by the confirm block. this is also one reason too.

You are right with the DEX being slow as a result of process transactions been influenced by the confirmation of blocks. DEX are still evolving and there will more and more improvement overtime. Binance recently announced their launch of DEX and I look forward to seeing how the exchange perform of which I hope it brings more improvements to the DEX ecosystem.

[Mommynigabby]

Personally I think we still cant get over the fact that we have to ID someone before we entrust our money to them. In this case, if its centralized, we know who are the people behind that certain exchange. There's a certain liability that we can hold on to if things mess up.

[alyssa85]

There is still a large demand for fiat to crypto exchange that is why centralized exchanges still dominate crypto space.  

There is also a lack of knowledge in using dex exchanges. Another one is trusting your keys to dex exchanges. There is fear since you are submitting your keys to dex, your funds can be easily stolen.

Spot on. It's because people want fiat. If people were purely trading coins, and then spending coins, there wouldn't be any need for fiat at all, and hence no need for a centralised exchange.

But the crypto commerce space hasn't developed, so the only way to cash out and pay bills is using a centralised exchange.

[jazmuzika217]

In cryptoworld people patronizing centralized exchange site because you have a control in your transaction every trade it has also a good UI and graphics compare to decentralized exchange site and not all have a good volume to trade most of the time decentralized are easy to hack.

[valek.bruno]

Everything is very simple, probably only the fact that today there is an opportunity to use only centralized exchanges and only centralized exchanges today have real opportunities for use, then probably today they are popular.

[xenomorphe1]

Because they are easier to use and more convenient. But you are always going to need a middle man to be certain that both parties receive their coins and you need to collect the trading fees. DEX exchanges still need to receive the coins to their wallets before sending the other coin to your wallet. It is not like just sending something without receiving something.
A real DEX exchange is slower, as you need to make a real transaction on the blockchain to send your coins and wait for another transaction to receive the other coins. Real DEX exchanges can't compete with the speed of a centralized exchange.

[Abiky]

of course, because the centralized exchange has very high security, so cryptocurrency theft more less unlike decentralized

Well, centralized exchanges are not high in security but rather fully compliant with regulations. Not to mention, they're the ones with the most liquidity on the market. Serious investors and traders rely on centralized exchanges because of said reasons. However, none can match the security and censorship-resistance available within decentralized exchanges.

Of course, both centralized and decentralized exchanges have their respective advantages/disadvantages. Depending on our needs, we would need to use either one of them or both. Given how long centralized exchanges have been on the space, it's nearly impossible for them to cease to exist anytime soon.

Nonetheless, time will tell us whenever centralized exchanges will continue to dominate the crypto space as their security is put up to the test. If more attacks and scams occur within centralized exchanges, then people will switch to decentralized alternatives for all their crypto trades. Just my opinion

[Odetolala]

They are very easy to use, and come with little to no complications unlike most decentralised exchanges out there. More to it, most decentralised exchanges these days are not really decentralised, some now even require KYC and whatnot. Best is to stick with what's clear

[Melo20]

most decentralized platforms suffer from a lack of liquidity which makes the exchange of coins very difficult and inefficient. Even in the crypto world, many are unaware of decentralized exchanges. This is a ‘chicken-and-egg’ problem because once more users will trade on the platforms, they will also bring liquidity. The most challenging part will be the development of fiat currency liquidity pools.

[Abiky]

...More to it, most decentralised exchanges these days are not really decentralised, some now even require KYC and whatnot. Best is to stick with what's clear

Exactly. Even decentralized exchanges are now requiring KYC, which greatly defeats their purpose altogether. A good example of this, is CryptoBridge which now requires customers from the US to verify their ID. Considering how decentralized exchanges have started to go down this path, I believe that the only way to trade crypto without middleman would be via the use of Atomic Swaps. This will be a game changer, as it will allow people to swap from one crypto to another in a P2P manner.

Satoshi envisioned a fully decentralized world, where people would take control of their daily lives. But, his/her dream didn't come into a reality since after a decade of Bitcoin's inception, we're still depending on centralized entities. Of course, centralized exchanges may be faster and much easier to use than decentralized exchanges, but they bring huge risks such as government censorship or manipulation by third parties.

Nonetheless, I believe that centralized exchanges will continue to dominate the crypto space for a long time. Unless people stop trusting them altogether (as a result of hacks, scams or theft), they will be the norm of crypto trading. On the other hand, decentralized exchanges will only become an alternative for those looking for true privacy and security over their crypto funds. Just my opinion