Binance Will Open a Decentralized Exchange

Binance has constantly been in the headlines this year as they are continuously working to become the best cryptocurrency exchange available. The Shanghai based exchange led by rockstar CEO ChangPeng Zhao has just dropped another bomb of exciting news this morning announcing their plans to launch a decentralized version of Binance.

The new decentralized exchange will be called Binance Chain and all though no release date has been stated yet, the project is already in development. In a more detailed message from the Binance support blog:

Binance's BNB coin will be used as gas to power the exchange, similar to how Ethereum uses gas to send transactions. Shortly after the announcement BNB shot up to $11 from it's previous position of $8. The spike is even more impressive considering the bloodbath lasting the past few months in crypto.

As blockchain and ICO may have been the main buzzwords last year, 2018 is all about DEX.

Benefits of a Decentralized Exchange:

1. Ownership of Funds - You know how they always say, don't leave your funds on an exchange? That's because once you deposit your funds onto a centralized exchange, the ownership of the funds belong to the exchange until you withdraw into your own wallet. A DEX will allow you to make peer-to-peer exchanges, from wallet to wallet with out the need for a 3rd party to hold or own your funds at anytime.
2. Decentralized Control - There is no single point of control that ultimately has the power to take over operations as they please. DEX's will also be harder to regulate as they a run on nodes that have no specific owner. We have seen several companies censor complaints, hold funds hostage, or even pull exit scams. This will not be possible with decentralized exchanges, nor will being subpoenad and forced to turn over customer information.
3. Anonymity - There is pretty much no more anonymity when it comes to United States based exchanges like Coinbase and Poloniex. Some sort of ID may be required, as well your real banking information. Even foreign based exchanges will make you submit KYC information if you're trying to withdraw big amounts. A DEX run on the blockchain will not require you to submit KYC documents. Your coins are YOURS and only change authority when you complete a trade directly from your wallet.
4. No Hacks or Downtime - A DEX is hosted by decentralized nodes rather than one big server. Even the best server will crash and experience downtime. When a node that a DEX is using goes down, there are thousands more participating nodes to keep the exchange running. Many centralized exchanges are targeted because of valuable information stored on secure, but not unpenetrable servers. There are no servers full of KYC information or private keys stored on a decentralized server.

There are some drawbacks, customer support being the main one. On a centralized exchange, if you have questions, need deposit help, send to a wrong address (which rarely can be fixed on any exchange), you can contact support and they will help as much as they can. Nobody (besides the community) will be holding your hand on a DEX. There is no authority to turn to. You must be diligent and always know what you're doing. Double check numbers, wallet addresses. You must regulate yourself.

Another downfall of current decentralized exchanges are low liquidity. There just isn't enough traffic, which is understandable as many DEXs are still very new. It will be interesting to see the immediate volume Binance Chain will have after launch considering the millions of users Binance Exchange already caters to.

We will definitely be seeing more decentralized exchanges offered along side centralized exchange this year and moving forward. This is amazing news for Binance, not so great for other DEX projects currently available and being worked on. Competition is not a bad thing though as it'll push other projects to work harder. We have seen Binance's track record of going above and beyond when it comes to business operations. They have set the standard when it comes to centalized crypto exchanges in the short period they've been around, we can only assume that Binance Chain will be a success and the top decentralized exchange.

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