Why Vitalik Buterin was right about centralised exchanges
Vitalik Buterin, otherwise known as the founder and creator of Ethereum is without a doubt one of the leading figures in the world of cryptocurrency and blockchain. Whatever he says and whatever he does, it gets investors and the media talking and his latest opinion is on centralised exchanges.
Not one to mince his words, Buterin was quoted as saying that he hopes centralised exchanges “burn in hell”. Whilst his response may seem extreme, when we consider his arguments in this regard, they do tend to make sense. His main argument is that centralised exchanges hold pretty much all of the power when it comes to determining which cryptocurrencies are successful and which ones are not.
A centralised monopoly
He is right- when a major exchange lists a new coin, it tends to grow in value almost immediately regardless of how “good” the coin is. Centralised exchanges have created a situation where only the coins that they like and that they want to list, are able to grow. This is not a healthy situation and furthermore, it completely goes against the grain of the point of cryptocurrency- decentralisation. Without centralised exchanges holding such a monopoly on the sector, the chances are that BTC would not be the leading currency in the market and perhaps something else would have pipped it to the post. This is due to the fact that the market volumes around other cryptos would increase as well, based on their technical capabilities.
An unhealthy amount of power
But this is not the only reason Buterin hates centralised exchanges- they also have an unhealthy amount of power over customers. In the recent past, we have seen instances where some centralised exchanges raise the minimum withdrawal fees for their clients meaning that some clients are not able to withdraw at all. This has resulted in a situation where the customer’s money is being held against their will, but there is very little that the client is able to do about it. This is a level of power and manipulation that is completely unfair and goes against the whole idea behind cryptocurrency and blockchain technology. The power that centralised exchanges have over crypto is pretty much exactly the same as the power that centralised banks have over their customers. Cryptocurrency is supposed to be about returning the power to the people, but this manner of controlling crypto is very far from it.
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