Why are centralized exchanges still dominating the crypto space?

[Abiky]

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?

[coffeeastronaut]

habit of old traders and marketing power I assume

[Yudhisthir]

There are many reasons why people prefer centralized exchange to decentralized one.
Ease of use, people are used to the UI and UX. There is a learning curve for dex.
Lower fees and higher volume in centralized exchange.
Proper support to look at any technical or manual problems.
But all of them can be improved with stiffer competition.

[glendall]

in my opinion why many people prefer centralized because they don't have to bother having to fill in the wallet key code,
and other reasons because exchange centralized is already considered like a wallet for storing assets

[mrdeposit]

Firstly, centralized exchanges are more useful than slower decentralized ones. Secondly, this is our own mistake. It seems that centralized exchanges have influenced the psychology of the majority and everyone wants the coin to be listed in them.

[JeffBrad12]

in my opinion why many people prefer centralized because they don't have to bother having to fill in the wallet key code,
and other reasons because exchange centralized is already considered like a wallet for storing assets

it's not because i have seen some people are asking for the wallet because they don't know how to store it. that's why they are still keeping their crypto in the centralized exchange site wallet. centralized exchange site ease for use that should the main reason why they still prefer using centralized exchange site.

[Chomsy]

habit of old traders and marketing power I assume

Hahaha.. Sometimes I get confused on which is centralised and decentralised exchange. I really do not care these days, once I can make my trade and get fiat, then am good.

[thd26bct]

For crypto new comers, centralized exchanges are better for them, and are their favorite choices.
Some potential reasons are: They don't have knowledge and skills to secure their own private keys, their wallets, and recover their wallets from private keys. They (me too) in early days in crypto, even don't know how to activate 2FA. I do not shamed to admit that. So, it turns to be so complicated for them to join decentralized exchanges at their first days in crypto.
Over time, they tend to familiar with centralized exchanges, and sticked to them, not care about switching to DEX.
For investors, or traders who don't have interests to diversify and  spread their money out to other exchanges to find out chances for their investments, I don't think they have reasons to move from centralized to decentralized exchanges.

[Abiky]

Firstly, centralized exchanges are more useful than slower decentralized ones. Secondly, this is our own mistake. It seems that centralized exchanges have influenced the psychology of the majority and everyone wants the coin to be listed in them.

That's certainly true, mate. Centralized exchanges have greater performance, better trust, and ease of use than decentralized exchanges. That's the main reason why most people prefer to use them on top of decentralized solutions. What I've noticed is that people prefer to use what's easier for them, instead of what's safer. It's a matter of convenience than safety in most occasions. But the hard truth is that centralized exchanges are susceptible to hacks and government manipulation anytime.

Because of the facts said, I believe that we will continue to trade crypto in a centralized manner. After all, the liquidity is much higher on centralized exchanges than decentralized ones. The only reason I see for people to use decentralized exchanges altogether, is that all the governments worldwide take oppressive action against centralized entities. Other than that, people will continue to use centralized solutions on top of decentralized ones for a long time.

Nonetheless, a truly decentralized world is very unlikely to become a reality in the future. Just my opinion

[Emmy92]

You are entirely right, decentralized exchanges is the main motive but time changed everything. The reason most people always go for centralized exchanges is due its User Interface, User friendliness, efficient trading tools and most have high trading volumes etc.

[BusWay18]

I think is psychology trader cause when first crypto exchange is central no dex...cause easy to use...but now binance wat to change to dex...is good sign for dex...people slow Will learn to use dex for security their asset

[taratorly]

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 think people always care about having a conversation. You know, there's no one in DEX. Just confront buyers and sellers. In fact, the future of the business is definitely in the DEX. But places that need to be very careful during trade.

[SundayLottery]

Maybe because you can't deal with fiat gateways in a completely decentralized way...

Most people still use exchanges to exchange from/to fiat money...

[Jating]

Nonetheless, what are your thoughts about this?

I guess there are more traders who "trust" centralizes exchanges because they feel they are safe with them, specially centralizes exchange in the top 10. However, we can't discount that fact that they are prone to manipulation and even hacks.

Personally though, I used a mix of exchanges in my trading, take advantage of most centralizes exchanges feature, but I don't put all of my funds in my exchange wallet. And then I go with decentralizes because there are coins that is so cheap and I can play around with just small capital and then get out as fast as I can get. Sometimes I sell them all on that DEX otherwise I will transfer it to centralize exchange and continue my trading.

[thaliaand]

Apart from better performance and more features, I think the main reason is because the centralized exchange provides an option to trade to fiat and withdrawal to local bank accounts.
Some large exchanges often even do various ways to attract traders to trade in their exchange such as promotions, giveaways, trading competition etc. Thus, the interest of traders is more active in the CEX than DEX.

[znation]

I think it is more secure than decentralized floors and managed by floor owners, which may be cheaper and have more updates from the floor.

[Erickan]

I think there are two main reasons people still use centralized exchange over decentralized:

1. Centralized exchange interface is designed quite beautifully and easier to use. Besides, many people still do not understand smart contracts.
2. People still feel safer when using centralized exchange, in case of disputes, they still think they can get money back. But when using decentralized exchange, they must preserve their personal keys, this is probably still a fear for them.

[bitkube]

decentralized exchange is not suitable for those who practice ultra-fast automated trading. also coins that do not use smart contracts are missing from the listing in decentralized exchange.

[nicecrypto]

I personally don't like the ui of most decentralized exchanges, they often appears to be so confusing and very difficult at times, whereas, in centralized exchanges the ui are very sleek and appealing to use, without any help one can easily navigate their way around to get started, same can not be said about decentralized exchanges, just my personal experience and observation.

[smyslov]

People are used to having support to fix any ussies that they have encountered, decentralized exchange is good but it's to technical for newbies, they want a support that they can rely on in case they want a tutorial on how to trade, and I guess I'm one of this people.