Centralized exchanges have become the banks of the cryptocurrency world

[bearexin]

Mostly centralized exchanges have been made KYC mandatory which might identify each of their user according to their nation, etc. Also these information about our KYC documents might be stored in a centralized server which might be accessible by any of the centralized authorities.

This makes us least safer in terms of cryptocurrency trades and that is the major reason behind why most of the people choose decentralized exchanges over the centralized exchanges. There are a number of exchanges in the markets currently but not each of those exchange has greater volume. We need to choose a exchange which has greater volume, is user-friendly, offers us few unique features like margin trading, etc.

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[ScamViruS]

This is an extreme fact. Centralized Exchange lists the shitcoin what they want. Centralized exchanges charge huge listings fees from shitcoin. Their work is worse than the bank. If you look well at centralized exchanges. Then you will understand how they are listing shitcoin and dumping it to retail traders. Because they can do whatever they want. The most annoying thing about centralized exchanges is kyc.

[jostorres]

For now, centralized exchanges are leading the cryptocurrency space, maybe in the future it would be different and decentralized exchanges would take over and be more popular as centralized exchanges are right now.

I won’t really blame everyone that’s making use of CEX, they are more safe to use than using DEX. When it comes to centralized exchanges the middlemen gets involved and ensures that your transactions are safe and that’s quite unlike Decentralized exchanges, since they are decentralized there are no middlemen, traders trades direct and there are risks of losing money.

[Ucy]

This is an extreme fact. Centralized Exchange lists the shitcoin what they want. Centralized exchanges charge huge listings fees from shitcoin. Their work is worse than the bank. If you look well at centralized exchanges. Then you will understand how they are listing shitcoin and dumping it to retail traders. Because they can do whatever they want. The most annoying thing about centralized exchanges is kyc.

I think "they can do whatever they want" is why centralized exchange is very unhealthy for cryptocurrency. They still even manage to do whatever they want under government regulations. There is low chances of such abuses occurring on well-built decentralized exchange.

[travwill]

Personally, I am not happy with the fact that cryptocurrency exchanges have become central links in the distribution of assets of all trading people.
In essence, we have to trade and hold detailed assets on centralized exchanges. We ourselves allow third parties to control our money.
Centralized exchanges are not trustworthy; this has already been proven 1,000 times.

[20kevin20]

Personally, I am not happy with the fact that cryptocurrency exchanges have become central links in the distribution of assets of all trading people.
In essence, we have to trade and hold detailed assets on centralized exchanges. We ourselves allow third parties to control our money.
Centralized exchanges are not trustworthy; this has already been proven 1,000 times.

We've been used to the third-party asset storage. It's hard to change that and it's even harder for someone to familiarize with Bitcoin, third-parties vs controlling your own funds and it's very hard especially for a new crypto owner to differentiate between owning your funds on a centralized, server-sided wallet vs a client-sided one.

Every wallet tells you they do not own the private key to your wallets, and people almost always confuse that with decentralization. If a wallet tells you they are not going to hold your private keys, it doesn't mean you're safe. But again, that's part of the crypto adoption challenge and people will hardly get used to it until next generation grows up ..

[Janation]

This is an extreme fact. Centralized Exchange lists the shitcoin what they want. Centralized exchanges charge huge listings fees from shitcoin. Their work is worse than the bank. If you look well at centralized exchanges. Then you will understand how they are listing shitcoin and dumping it to retail traders. Because they can do whatever they want. The most annoying thing about centralized exchanges is kyc.

It is the worst.

The most reason is that we are using decentralized cryptocurrency because we are wanting to maximize the freedom that we have using them. KYCs are blocking them and we can't do anything about it since if we don't have other choices, we will be doing it. Here in our country, KYC is required to cash out your Bitcoins into fiats, I needed so I did it.

[AniviaBtc]

This is an extreme fact. Centralized Exchange lists the shitcoin what they want. Centralized exchanges charge huge listings fees from shitcoin. Their work is worse than the bank. If you look well at centralized exchanges. Then you will understand how they are listing shitcoin and dumping it to retail traders. Because they can do whatever they want. The most annoying thing about centralized exchanges is kyc.

It is the worst.

The most reason is that we are using decentralized cryptocurrency because we are wanting to maximize the freedom that we have using them. KYCs are blocking them and we can't do anything about it since if we don't have other choices, we will be doing it. Here in our country, KYC is required to cash out your Bitcoins into fiats, I needed so I did it.

KYC are essential to lessen the risk of being scammed that's why. It is essential for the traders to become aware about their customer to prevent losses during transactions. If you don't want that kind of system, try to go to other countries that have a centralized cryptocurrency. A government will not do some adjustment just for you, if you really want to stay to your country and try to make a changes in crypto, try to promote it. It is true that Centralized Exchange uses most of the shitcoins and dumping in some beginners or newbie traders. That's why we must promote freedom in cryptocurrency by sharing our knowledge and thoughts about the advantages of decentralized cryptocurrency in a country and how it can changes the quality of the people using it.

[Kakmakr]

Centralized exchanges are no different than any Banks out there, because the operate under the same rules and regulations that are prescribed by their governments. <KYC & AML regulations>

They are also profit driven financial organizations with shareholders and partners from the financial world. Many of them have worked in the financial industry for years, so it is natural for them to operate in the same manner.

They do not have the goal and aspiration for this technology to grant people financial freedom, because they are purely profit driven. They could care less, as long as they are making a huge profit. They will not even allow you to sign a message with your private key or do it for you, because you are simply a entry on their internal ledger system. <You do not own the Private keys to your Bitcoin address>

They came into the Bitcoin scene to cash in on the opportunity to make some more money, not to make the on-ramp and off-ramp into Bitcoin easier and more convenient.  <They just kill pseudo anonymity and add extra fees to Bitcoin transactions> 

[charlesmichel1]

The sad remark - this isn't the future Satoshi wanted to see for crypto.
Centralized exchanges have already became bitcoin bank. Users have to do KYC verification.

[tabas]

The only solution it seems to me, is to build a community and then get that community to use a decentralised exchange. The only reason Dex's arn't being used is because there isn't volume there - but that can be solved if an entire community decides to use a particular Dex.

But how many people would be that community must have? it's a good solution to encourage more people to dwell with decentralize exchange, however, how many of them are willing to use it.
The ones that don't have a good experience with one of it, doesn't have the balls to try it again.

[el kaka22]

Of course they are different, I don't get how people think that Banks and centralized exchanges are even remotely the same. Banks are not stock exchanges, at least they are not "just" stock exchanges, they are literally doing loans, savings, investments, insurance and many other stuff with their business plus the ability to have a card where you can spend your money anywhere you go.

Centralized exchanges are just a place where you can change your coin to another coin and that's it, you can also deposit and withdraw, this is literally the only thing you can do with a centralized exchange and that is all you allow them to do. Plus, banks can use your money however they want as long as they can allow you to withdraw, centralize exchanges can't really do that.

[buwaytress]

I'm not surprised, and I think anyone who's surprised has to be really naive. Of course centralised exchanges are banks. So are the so-called custodians. Biggest wallets have long ago belonged to these people, and BitGo, Coinbase, Binance etc. have only gotten bigger and grown fatter. Sure, that's all funds legally belonging to their users, but you know as well as most of us do, technically, the users have no control over their coins.

And now that many of these exchanges are also offering lending options. They truly are following in the footsteps of banks.

[Averim]

I suppose in Satoshi plans there was no decentralized exchanges. I am not familiar with the profits registered by various DEX but in percentage probably goes hand in hand with the banks(20-30% profit netto).

[pixie85]

Sadly, to build a community around a coin, you'd still need staunch supporters right? And most, if not all, would try and use the money to advertise it so in the end, it falls to the factor of, again, the problem of money.

Besides the lack of promotion and lack of volume, DEX also the trustless system which need require deeper knowledge to control it, this is what the newcomers avoid the platform, plus the UI/UX that are not familiar in the eyes.

It's strange how much time it takes for people to get familiar with changes and accept them. The first step was making them go from a completely centralized fiat system to semi-decentralized Bitcoin. Now they're slowly getting ready for a completely decentralized system with anonymous cryptocurrencies and DEX.

I'm only afraid that it will take another 20 years and we'll be old farts unable to fully enjoy it when it comes.

[hatshepsut93]

It's strange how much time it takes for people to get familiar with changes and accept them. The first step was making them go from a completely centralized fiat system to semi-decentralized Bitcoin. Now they're slowly getting ready for a completely decentralized system with anonymous cryptocurrencies and DEX.

I'm only afraid that it will take another 20 years and we'll be old farts unable to fully enjoy it when it comes.

Why are you calling Bitcoin "semi-decentralized"? It's pretty much the most decentralized cryptocurrency out there thanks to its node count, hashpower and global community. The ecosystem of Bitcoin and cryptocurrency exchanges is centralized, but it's not caused by any of the Bitcoin's properties, so it's wrong to say that altcoins are the future. And privacy has little to do with decentralization, they are different topics, and usually decentralization is needed to achieve privacy - not the opposite.

[googol.star]

Great article, and I think that might be a top two problem in the crypto world. I used to think it was just Binance charging the equivalent of millions of dollars to get listed. I used to hold this coin that had no funding, all community driven. A lot of hope and excitement, except that it's going to go nowhere because to get listed on a major exchange requires hundreds of thousands of dollars that's not available.

[Subbir]

You are right in saying that centralized exchanges can become a drag if cryptocurrency is becoming a world Because they're trying to create a decentralized and decentralized world, these problems can cause many problems. They pay low-interest rates with different banks in their profits. i feel in Binance such a lot but it's no value this is often why these centralized exchanges should be avoided.

[Darker45]

Centralized exchanges suck. They literally suck the money out of projects that want their coins to get listed on their platforms. Other than that, they also suck the personal information of their users through their KYC implementation. And then they suck traders with their trading fee and withdrawal fee.

Despite all these, they are quick to delist coins and pairs with low or no trading volume even if listing fees are already paid. They also freeze accounts and hold withdrawals of users despite KYC due to suspicions.

With all these, I wonder why DEXs remain as options when they are clearly way much better than centralized exchanges.

[deisik]

With all these, I wonder why DEXs remain as options when they are clearly way much better than centralized exchanges

They are not much better

The sad truth is, it actually remains to be seen if they are overall better at all. The vast majority of so-called decentralized exchanges are in fact as centralized as any other exchange out there, though they may be centralized at a different level. To make such an exchange competitive, with trades as fast as possible, you will have to run a private (read, centralized) blockchain, and how is that different from a regular cryptocurrency exchange in terms of centralization and control over users funds and assets?