Centralized exchanges have become the banks of the cryptocurrency world

[alyssa85]

https://www.ccn.com/the-dark-side-of-becoming-the-next-bitcoin/

Your favorite altcoin’s path to becoming the “next Bitcoin” is a lot more treacherous than you think.

The CEO of uPlexa (UPX) told CCN.com about the financial and ethical minefield faced by upstart altcoin projects in the cryptocurrency industry. Kyle Pierce – the project’s co-founder and lead developer – paints a miserable picture of an industry that may already have been taken over by its worst people.

The “king-making” ability of centralized exchanges is no secret. The CEO of DigiByte (DGB) claims he was asked for $300,000, plus 3% of his 58th ranked altcoin’s entire coin supply, to get listed on Binance.

The demands made of the 1,371st-ranked uPlexa were equally outrageous. According to Pierce:

    We’ve had offers for 50% of the premine to get listed on an exchange. 50% of our premine that’s allocated to exchange listings, marketing, hiring, founding team, core members, security audits, etc. They somehow believe that one hour of their time is worth nearly 6,000+ of our current man hours into this project.

Pierce says the saturation of centralized exchanges is making matters worse. Over 1,500 exchanges now compete for the same territory. As that number increases, the desperation of each rises accordingly.

    There’s 1500+ centralized exchanges that offer the exact same service, and they’re starting to lose volume. So they artificially boost the volume and hire VA’s to go around soliciting every team member of every project in hopes to quickly make a quick buck before their watering hole dries up.

These exchanges have become a choke-point for the cryptocurrency industry. The only way to get listed is to play their game. That means new cryptocurrency projects have their development plans dictated to them before they’ve even begun.

    For projects who did not participate in the IEO/ICO stages and have no funding, it is nearly impossible to get listed on an exchange. So, firstly, not only are people predominantly trading on centralized exchanges in a decentralized area, but the exchanges that are making huge sums of money are killing off the potential for real-world technologies to get noticed/adopted.

Another exchange told Pierce they would be happy to list his project, if only they moved away from “the whole privacy thing.”

There is a lot more in that article about the perils of launching a coin.

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.

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[Wexnident]

I guess you can say that the saying "Money makes the world go round" still holds true even in the crypto scene. Dex is not much used since one, there isn't really a DEX out there that is as well known as the top CEX's we have like Binance. Two, DEX just doesn't offer what CEX can offer. This makes CEX much more appealing, and over time, the market that was supposed to have been gotten by DEX went to CEX.

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.

[avatar_kiyoshi]

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.

[fiulpro]

Indirectly - yes ofc

But at the same time most of the time these exchanges are the place where the buyer and seller meet each other and strike a deal and I think it's just like a market where you don't have to hunt for what you want and just go and see that everything is there. I think it is completely safe for it to be seen like that since it is rather important one and actually is something that does have a hand in making the market bigger and more popular.

[Ucy]

This is probably so because they are trying to mix the two worlds: centralized and decentralized worlds. You will only end up bringing in the problems associated with centralization (real crypto enthusiasts are trying to solve) into decentralized world.  It's hard to be a good person in a centralized setup...hence the need to avoid/reduce it as much as possible.

[squatz1]

Centralized Exchanges are the banks of the crypto world, if you let them become that. In my mind, if you build a great coin with great features (think of something like XMR), then you're going to get the exchanges to accept you without having to dump tons of money on exchange fees. This is the thought process of 'if you build it, they'll come'

So this means instead of building from the top down (the top being exchanges) you have to built from the bottom up. This is going to take more time, more people, more resources in developing, and so on and so forth but you're going to be rewarded in saving on the exchange fees. A coin like XMR, builds itself in local communites first -- showing that it is a coin that is like cash again, anonymous. That's obviously going to be loved by regular people who value their privacy, people who are protecting their government, people doing shady things (drugs online, etc), online drug marketplaces, etc.

Now that you've built yourself into the community, the exchanges are going to slowly come. From the shitty / scammy ones, to the ones that are legitimate and big and have the volume required. At first you're probably going to have to run your own exchange -- a simple btc to XMR (or whatever your coin is here) conversion that people do manually (requires a good deal of trust)

They are the banks, but you can do a lot to dethrone them.

[btccashacc]

I somehow agree that centralized exchange already became bitcoin bank, because most of the users are now using those centralized exchanges and have been upload their details in order to verificate their account, we can't avoid using echange without verifivation because they will limit some features such a minimum withdrawing or even do a trade.

[outatime1]

Centralized exchanges have the upper hand because there aren't any decentralized ones yet.  Or at least I don't think they are active yet.  I know that there are some in the works, but I think it could be this year before they go live.

[hatshepsut93]

There is a lot more in that article about the perils of launching a coin.

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.

How much of his stash did Satoshi give to exchanges to get Bitcoin listed? Oh wait, it's zero because exchanges listed it for free. The solution is clear - build and they shall come. The guy from the article complains about oversaturation of exchanges, but there's also oversaturation of shitcoins, hence why exchanges can charge big buck for getting a shitcoin listed there. If a project is indeed honest and all around good, it shouldn't matter if its listed or not, people will find ways of exchanging it and using it.

[merchantofzeny]

They basically get all the benefits of being a bank without the additional responsibilities. I don't know how a decentralized exchange would work but I think it's the way to go to avoid the perils of using centralized exchanges, namely government surveillance and possibility of data breaches.

[Darooghe]

It's true. the centralized exchanges have been manipulating markets for too long. storing large amounts of crypto on a wallet that you don't have keys to is the most foolish thing an investor could do. Now all these exchanges are encouraging staking on their platforms in return for a small percentage in annual interest and who know what they're doing with all those staked coins. What is the difference between a savings account paying you interest and these exchanges paying you interest. It's literally the exact same thing.

[alyssa85]

Centralized Exchanges are the banks of the crypto world, if you let them become that. In my mind, if you build a great coin with great features (think of something like XMR), then you're going to get the exchanges to accept you without having to dump tons of money on exchange fees. This is the thought process of 'if you build it, they'll come'

But that is not what is happening, sadly. You can have the best coin in the world, but they won't list it unless a) you pay them money or b) you have proved there is so much volume on a Dex, that they list it anyway to get a cut of the fees on the trading volume.

In order for b) to happen, you need a huge community. It's hard to build a community in the cryotocurrency world because there is no central place any longer where you can gain followers. It used to be this forum, but it's now fragmented into several subreddits, twitter, facebook and elsewhere.

[mu_enrico]

C'mon man, some of them are worse than banks. There is no pump and dump, flash crash, stupid listing fees, etc., in traditional banks. We could argue that the regulated one is somewhat safer. However, KYC makes it uncomfortable since you have to give up a passport, selfie, etc., well, it is then become similar to banks as well with a lesser reputation for data breach.

About listing fees, as others said, it is because of too many shitcoins competing to get listed for the pump. It's difficult for a small community coin to grow if there is no "purge" event.

[alyssa85]

It's difficult for a small community coin to grow if there is no "purge" event.

Yes I agree. What needs to happen is that a lot of these shitcoins need to die a death, freeing up the space for the good coins.

But - and this is the connundrum - as long as a coin is listed, it's alive and will be kept alive by various pump-and-dump artists. So really we need some of the exchanges to die as well, taking some coins with them.

[liuqi]

This is the most negatives spreading website for centralised coins and cryptocurrency market.
You don't believe my words you may go and check their previous six months of news articles about cryptocurrency to understand how they troll all cryptocurrency as much they can.
If you better article you may share it here

[ajiz138]

regarding the centralization of the bank which is the center of crypto exchange, I don't think that will be possible. Obviously the banking system, although it has adopted a blockchain system, is definitely different from the actual crypto system. If that happens, there will be a massive capitalization and monopoly by one party, and will even trigger a dispute.
Is cryypto created by banking people? the answer is no, in essence crypto is made for fun in technology. That is all

[target]

Its making the industry worse. Asking 50% of the premined tokens just to get listed is really not acceptable but to some desperate teams wanting to make their investors happy would probably just give it to the exchange. Its no wonder now that more exchanges are created since 2017 up to today since its listing-to-coins business.

Now that centralize exchanges are pushing all to the edge, its really a good time to make Dex work for us all. If there are just more users concerned to privacy, we could have been giving more volume to trading in dex.

[bangjoe]

the decision can not be one-sided only from the community, but from how each DEX developer to improve the quality of the platform, not only by providing a place and only packaged in a simple way without things that make users comfortable and competitive, the article only discusses the understanding of listings coins on a particular exchange without offering something as an active solution.

[Wysi]

the decision can not be one-sided only from the community, but from how each DEX developer to improve the quality of the platform, not only by providing a place and only packaged in a simple way without things that make users comfortable and competitive, the article only discusses the understanding of listings coins on a particular exchange without offering something as an active solution.

Yes indeed, DEX should be partially blamed as well for indirectly pushing users towards centralized exchanges as DEX lacks the basic quality required for a smooth transactions and they need to learn from centralized exchanges and try implementing the features and interface available at centralized exchange as that's the only way to stop migration of users to CEX and we cannot blame CEX for their rules as it's upto us whether we want to indulge or not.

[hugeblack]

Although the central platforms are worse than banks, the cryptocurrencies (most of shitcoins) that want to be listed are worse than paper money, so I agree with any restrictions that are added even if they are greedy from the platform.

Many cryptos have no future and they are pumping/dumping models. thus may lead you to lose your money in the long run.
Therefore, it is reasonable to place strict restrictions on them, as it is the duty of governments to place restrictions on these platforms.