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Binance to Launch Decentralized Cryptocurrency Exchange

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Brenden Weberhttp://alteredoutlook.fireside.fm/
Brenden Weber is a recent college graduate from the University of Iowa with a degree in Political Science and Philosophy. He is a writer in journalism and opinion pieces; podcaster in politics, philosophy, and cryptocurrency; and owns a small business in Salt Lake City Utah. https://steemit.com/@brendenweber https://thephilosophyguy.fireside.fm/

Leading cryptocurrency exchange company Binance released a statement on March 13th announcing the company is officially developing a public blockchain for a decentralized exchange.

“On the decentralized exchange we’ll have less control. More likely anybody can list any coin. That’s the philosophy of the decentralized exchange, it’s freedom of choice, freedom of investments,” Binance founder and Chief Executive Officer Changpeng Zhao told Bloomberg in an interview.

Regulations and security issues have provided cause for concern regarding centralized cryptocurrency trading platforms. The SEC recently released a statement warning about “potentially unlawful” trading on some cryptocurrency platforms. In addition, there is a history of centralized exchanges succumbing to hacks with Mt.Gox and Bitfinex as examples. As Bloomberg noted, “Since the start of this year, hackers have stolen tokens worth about $700 million from venues in Japan and Italy” and that these “robberies have added pressure on both exchanges and regulators to do more to protect investors.”

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Binance appears to be making a move to address these concerns.

Binance announced in their statement that the intentions of this move are to transition from “a company to a community.” Binance further explained in their statement:

After extensively researching decentralized exchange frameworks and analyzing existing implementations, we believe significant improvements can be made in providing Biance users with a level of trading experience to which they are already accustomed. Centralized and Decentralized exchanges will co-exist in the near future, complementing each other, while also having interdependence. We stand here today because we believe that Blockchain technology will change the world. In the face of adversity, we have always elected to tackle issues head-on, instead of retreating. As such, we have decided to officially launch the development of the Binance Chain.

With a centralized crypto exchange, as Binance currently operates, traders are obligated to entrust their crypto assets with a third party platform in order to trade. Cryptocurrencies themselves are typically decentralized; however, when traders store them with centralized third parties, they’re sometimes vulnerable to security breaches. Notably, Binance recently experienced a failed hack attempt.

A decentralized exchange helps to counter the need for third-party trust by functioning as a trading platform while allowing users to trade directly with each other via a peer to peer mechanism. Binance Chain looks to provide a reliable decentralized alternative by focusing on this peer to peer mechanism.

[RELATED: Reality Check: Is Crypto Backed by “Radical Transparency”?]

Decentralized exchanges are not new, as such trading platforms already exist including BitShares and EtherDelta. Even though decentralized exchanges are more difficult to hack, some exchanges lack crucial features and functionality found in centralized exchanges.

One issue faced by further integration of decentralized exchanges is blockchain interoperability, where cross-chain peer to peer transactions is currently an obstacle as differing types of blockchain technologies make it difficult to trade various coins without having a third party to moderate the exchange.

Binance briefly highlighted synchronicity between centralized and decentralized exchanges by stating that the two “will co-exist in the near future, complementing each other, while also having interdependence.”

It appears they plan to use an upgraded Binance Coin. They continued in the statement by saying:

As a public blockchain, Binance Chain will mainly focus on the transfer and trading of blockchain assets, as well as provide new possibilities for the future flow of blockchain assets. Binance Chain will focus on performance, ease-of-use, and liquidity. Binance Coin (BNB) will be upgraded to exist on its own blockchain mainnet, becoming a native coin. At the same time, Binance will transition from being a company to a community.

Zhao noted on Twitter that additional information will be available soon.

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