Centralized Exchanges: The Elephant in the Room of Crypto —
The past few months have seen staggering growth in interest and market caps of all cryptocurrencies. No longer is our market an isolated one — big names like Forbes, CNBC, Microsoft, JP Morgan and IBM are beginning to take notice. But with this exponential growth has come enormous growing pains.
Several major exchanges, including Kraken, Poloniex, and even Coinbase were unprepared for the massive influx of users in the past week. The market growing pains were evident in error pages, complaints, ridiculous wait times, and even threats of class action lawsuits. Just as the market grew, so it has begun to decline, and no wonder! New users are immediately discouraged away from our community because of system failures. This is not the experience we want new users of the crypto-community to experience.
Imagine you’re just diving into cryptocurrency for the first time. You’re excited, maybe a bit nervous, and ready to get started. To your horror, you are met with a message saying you’ll need to wait for approximately one month to be verified before you can trade. You promptly open a support ticket, and are outraged when it takes more than three weeks to get an answer. Like anyone else probably would, you decide investing in cryptocurrency is obviously not worth the time and effort.
People may assume that these lamentable problems are with the companies and their short staff or low resources. Even others may say that it’s the particular company’s fault for not anticipating the flood of users. I would argue, however, that the problem is even more structural. The pains we are experiencing comes from one specific problem: centralization.
Centralization means there is too much power and decision-making left to the whims of one single company or individual. For instance, Poloniex, a popular crypto-exchange, delisted a 17 coins on May 2, 2017. Almost overnight, these coins lost 90% of their value. This is an unfortunate example of centralization at work. Poloniex — the number 1 exchange by volume at the time of writing this — was able to decide the fate of all of these coins — not the community at large. This is not how it should be. You could lose 90% of value overnight at the hands of Poloniex and be powerless to stop them. So what do we do?
The way Bitcoin decentralized money, we need a way to decentralize the exchange of decentralized money itself. There are several projects trying to do just that, and getting involved early could mean a huge return on investment. Companies like Waves, Bitshares, and Lykke have started taking steps towards a decentralized exchange, but there is one solution in particular that is ahead of the game: BlockNet, which has a head start since it’s been developing this since 2014, before anyone realized how crucial this will be now in 2017.
BlockNet is one of the only projects that is pursuing a fully decentralized cryptocurrency exchange by utilizing a specific blockchain routing technology which allows for peer-to-peer coin exchange without the need for a middleman. Put simply, you maintain 100% ownership of your coins during any exchange. You never have to trust someone else to hold your coins for you. And this is what blockchain was originally about, that it empowers you to be your own bank!
This is not just theory, the first fully decentralized LTC/BTC transaction has already been completed in April by the BlockNet dev team. The decentralized exchange is now in the final stages of user interface development.
In other words, the BlockNet dev team is now working on making the decentralized exchange more accessible and easier to use.
Too many people are putting their trust in third-party exchanges, despite the horror stories we have seen unfold. MtGox and Cryptsy have lost hundreds, if not thousands, of people’s’ fortunes and life-savings, yet exchanges like these are still the dominant trading solution.
And not only is decentralizing exchange important for the health of the crypto community, it’s also a great investment opportunity, if you’re looking for one.
If you missed out on Bitcoin, and Ethereum is a bit above your price range, this could be a huge opportunity for you. Making huge returns on investment in the crypto market isn’t difficult — you just need to find a problem and a project that solves it in its youth. BlockNet is such a project right now.
At only $3.00 per coin cca. (at the time of writing), and with a tiny supply (currently under 4 million in circulation), BlockNet is a great investment opportunity, and a solid solution to the problem of centralized exchanges. I wouldn’t be surprised to see a $300 BlockNet in the not too distant future. The investment opportunity here speaks for itself.
Some of you might also be interested in running your own decentralized exchange node, which necessitates holding 5000 BLOCK. By doing this, you can earn by collecting fees on your node.
If the cryptocurrency market wants to continue to grow and become mainstream, it cannot afford to send newcomers to these centralized exchanges. We need a decentralized and efficient alternative, and BlockNet just might be it.