Centralized Exchanges Lack Compatibility With Web3
The key concept of Web3 is decentralization. A sphere where users and builders own the platform. Centralized exchanges are the opposite. The value they generate goes to a small minority of people. According to Forbes, the wealthiest person in crypto is the founder of an exchange.
They accelerated the growth of crypto but crypto alone is not Web3. Their centralization is antithetical to the idea of trustlessness or the ability to operate without a third party. This concept goes back to the origins of Bitcoin.
The majority of these companies are reputable, but they are based on a Web2 foundation. Many people use their services to connect legacy banking and blockchain. When that connection is no longer needed, Web3 may be actualized.
Slashing Points of Failure
Web3 is expressed as the free flow of value. The ability to create and transfer value without intermediaries. Centralized exchanges are the intermediary. The sign-up process is invasive. The amount of data gathered goes beyond what is required by conventional banking practices.
Exchanges argue this information is required to be compliant. This raises additional concerns since it necessitates a second layer of trust. Now you have to trust the exchange and its jurisdiction. This extends…
