Can Binance DEX Surpass Binance, the Centralized Exchange? CZ: Centralization vs. Decentralization

Can Binance DEX Surpass Binance, the Centralized Exchange? CZ: Centralization vs. DecentralizationDisclaimer: This article does not constitute any investment advice

Can Binance DEX Surpass Binance, the Centralized Exchange? CZ: Centralization vs. Decentralization

Disclaimer: This article does not constitute any investment advice.

Introduction

Binance, the world's leading cryptocurrency exchange, has shown strong momentum during the Chinese New Year. Its platform token BNB entered the top 10 in market capitalization on the second day of the new year and continued to rise, demonstrating independent strong performance against the backdrop of the overall decline in the cryptocurrency market. The rise of BNB is not only due to Binance's long-term stable operation but also driven by positive news such as the launch of BTT on Binance Launchpad, Binance Chain (Binance Chain), and the upcoming launch of the decentralized exchange Binance DEX.

Binance founder Changpeng Zhao (CZ) has stated that Binance Chain can achieve one new block generation per second, supporting instant transactions and meeting the transactional needs of e-commerce and payments. Binance DEX will run on Binance Chain, using BNB as fuel (Gas) and offering a user experience comparable to Binance's centralized exchange.

Centralized exchanges and decentralized exchanges have always been a focus of debate in the industry. Centralized exchanges are known for their high liquidity and ease of use, while decentralized exchanges prioritize security, emphasizing the user's ability to avoid KYC and adhering to the core concept of blockchain decentralization, making them considered the future direction of the industry.

As BNB continues to rise and Binance DEX is about to launch, CZ published a long article on the Binance blog, sharing his thoughts on centralization and decentralization. This article will delve deeper into CZ's views, discuss the advantages and disadvantages of centralization and decentralization, analyze how Binance DEX solves the issues of poor scalability and lack of liquidity faced by decentralized exchanges, and explore whether Binance DEX can surpass Binance, the centralized exchange.

Changpeng Zhao: Centralization vs. Decentralization

In the article, CZ points out that centralization and decentralization are not absolute concepts but rather exist on a spectrum of change. He believes that security, ease of use, and freedom are more important factors than centralization or decentralization, and there is a delicate balance between the two.

Security: A Broader Definition

CZ defines security as a stable and reliable state, away from security crises or personal losses. He believes that regulation can be considered part of security, but this topic will be further discussed in the following section regarding "freedom."

Bitcoin's Security: Code and Personal Custody

CZ first discussed the security of Bitcoin. He believes that the Bitcoin protocol, based on mathematics, is very secure, and its encryption mechanism has yet to be cracked. The Bitcoin network runs stably, and no individual, organization, or government can shut it down.

However, the security of Bitcoin wallets depends on individual management. Users need to safeguard their login email, password, mnemonic phrase, and private key from hacker attacks and security vulnerabilities, and they must avoid losing this information.

CZ admits that most people cannot securely manage cryptocurrencies because they cannot complete these security operations. He points out that to ensure security, users need a computer that is never connected to the internet and must perform multiple backups in case of losing their private keys.

Security of Centralized Exchanges: Trade-offs

Most people choose to store their cryptocurrencies on exchanges or other centralized servers. Mature exchanges invest heavily in building secure infrastructure, but this also means users must rely on third-party forces and trust that they can safeguard asset security.

However, centralized exchanges also face risks such as hacker attacks, team embezzlement, and KYC/AML issues, which can all reduce user experience.

CZ believes that for most people, storing crypto assets through centralized services may be more secure and easier than managing them themselves, although this means sacrificing some freedom.

Over time, developers are launching more and more convenient tools, and users will be able to hold their personal assets more securely and conveniently. Binance also provides a secure decentralized wallet, Trust Wallet, that allows users to manage their own crypto assets.

Ease of Use: Making Cryptocurrencies Easier to Use

Security is essential, but enhancing security often leads to reduced ease of use. CZ believes that if users must learn Unix, mathematics, and cryptography algorithms to manage cryptocurrencies securely, then using cryptocurrencies becomes pointless.

He states that currently, most people face a string of complex numbers when interacting with blockchains and trading crypto assets, leading to a significant learning curve for users. Decentralized exchanges also require users to have technical backgrounds.

CZ points out that the market has "voted with its feet" demonstrating the advantages of centralized exchanges. Centralized exchanges have far higher trading volume and liquidity than decentralized exchanges.

As one of the largest centralized exchanges, Binance is actively promoting the development of the decentralized exchange Binance DEX to provide more options.

Freedom: More Choices Brought by Blockchains

CZ believes that freedom has multiple dimensions. In traditional financial systems, users may be rejected by banks for cross-border transactions or need to fill out a lot of paperwork to invest.

Blockchain technology can empower users with more freedom, enabling faster sending of any amount of funds to any location around the world. However, this also brings risks of fraud and hacking, requiring a balance between security and freedom.

Degree of Decentralization: From Bitcoin to Binance Chain

CZ categorizes the degree of decentralization of cryptocurrencies into several levels:

• Bitcoin: Highest degree of decentralization, with no founder, and no one can control its network.

• Ethereum: Less decentralized than Bitcoin but still quite high.

• Other blockchain networks: More centralized.

• Binance Chain: Emphasizes decentralization, users hold their private keys, no need to deposit funds on third-party platforms.

CZ believes that in a decentralized world, the market will offer more choices, and developers should focus on making products and services more practical, rather than simply complaining or expecting others to operate in a predetermined way.

Psychology and Philosophy

CZ cites the famous saying from "Romance of the Three Kingdoms," "The great trend of the world is that when divided for a long time, it will inevitably unite, and when united for a long time, it will inevitably divide," to explain the cyclical relationship between centralization and decentralization.

He believes that humans have an inherent tendency to gather and elect leaders. When power becomes too concentrated, people will crave decentralization.

Today, the world is becoming increasingly centralized, and governments are wielding more and more power. This is also the reason why people demand decentralization and why cryptocurrencies are becoming popular.

Binance DEX: Solving the Challenges Faced by Decentralized Exchanges

Binance DEX is a decentralized exchange running on the Binance Chain public blockchain, aiming to address the issues of poor scalability and lack of liquidity faced by decentralized exchanges.

CZ states that Binance DEX will offer the following advantages:

• High transaction throughput: Binance Chain can achieve one new block generation per second, supporting instant transactions.

• Low transaction fees: BNB acts as fuel, lowering transaction costs.

• User experience comparable to Binance's centralized exchange: The interface and user experience of Binance DEX will be similar to Binance's centralized exchange, making it easy to use.

• Multi-node support: Safeguarding exchange security.

Can Binance DEX Surpass Binance, the Centralized Exchange?

The launch of Binance DEX will provide users with more options, but whether it can surpass Binance, the centralized exchange, remains to be seen.

Centralized exchanges offer higher liquidity and a more convenient user experience, while decentralized exchanges prioritize security and emphasize user autonomy.

Ultimately, the market will decide. Users will choose the most suitable exchange based on their own needs and risk preferences.

Conclusion

Centralization and decentralization are not opposing concepts but rather complement each other, driving the development of the blockchain industry.

The emergence of Binance DEX is a significant milestone in the development of decentralized exchanges, providing users with more choices and promoting the popularization of decentralized exchanges.

However, whether decentralized exchanges can surpass centralized exchanges remains to be proven over time.

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• Adding more data and examples: You could cite more data and examples regarding centralized exchanges and decentralized exchanges to support your arguments.

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• Exploring the future direction of Binance DEX: You can discuss the future direction of Binance DEX, such as how it will address scalability issues, how it will attract more users, etc.

• Adding more discussions about centralization and decentralization: You can add more debates about centralization and decentralization, such as those related to privacy, regulation, etc., to make the article more profound and interesting.

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