For a while I have been wanting to write this post because of something that has been bothering me regarding centralized exchanges. So last year was the year for centralized exchanges scrutiny, we have CEX like Binance being under pressure from regulators to get regulated by authorities. This was something that was a case for most Asian exchanges, and I became worried, so how are these people making it easy to perform the crypto decentralization that was preached to us?
Before you open a bank account, you need documents right? After you open an account, you put your money in this account and also give the control over to the bank, they can decide when you can withdraw, they can decide the minimum you can withdraw, they can also decide the maximum you can withdraw. This is the same thing with centralized exchanges.
Satoshi Nakamuto created bitcoin because it was meant to be decentralized, so decentralized and anonymous that the government can’t reach. During its early days, the only means to get bitcoin was through peer to peer before the creation of centralized exchanges. On peer to peer, you have to find someone in your region that you can trust to send you bitcoin while you send them fiat or someone you send bitcoin and they send you fiat. All these were done anonymously, I don’t even know if there was something like an escrow then, but now, with the help of centralized exchanges, buying and selling bitcoin has been made really easy. With a click of a button you have bought or sold bitcoin or any cryptocurrency.
But this process is not anonymous anymore, we now have something like crypto banks. These crypto banks are banks but instead of the usual banks we know for fiat, they are for crypto. Examples of these banks are all the centralized exchanges you know. Like Binance, coinbase, huobi, FTX etc, killing the purpose of decentralization and freedom of being anonymous. Some of these centralized exchanges later ended up being a scam, we have heard stories of centralized exchanges running off with people’s money and going off. Once again remember the phrase “Not your keys, not your coins”.
These crypto banks can’t function if the regulatory authorities tell them not to, making them the most centralized organization, what differentiates them from banks? I can tell you, while banks products and services are dependent on fiat, crypto exchange product and services are dependent on cryptocurrencies.
This is why it’s advisable to use DEX(Decentralized Exchanges), this one is totally different. Transactions are done anonymously, they are done with DEX Wallets like trust wallet, metamask and other DEX wallets, you don’t need a KYC to have a wallet, there is no limit to what you can withdraw or deposit. No regulatory authorities controlling this and liquidity gets provided by liquidity providers who get rewarded with rewards.
The only disadvantage is that it’s on hot wallet which can easily get hacked. That’s why cold wallets are advised to be used for maximum crypto protection. Your keys, definitely your coin now because no one controls your wallet except you. You can only use centralized exchanges when you want to buy your coins or tokens, but leaving and storing them on your wallet is not advisable, that’s giving too much control to these centralized exchanges.
Hive is also a DEX(Decentralized Exchange), you can leave your coins on Hive and not worry about any central authority controlling your account. You can exchange Hive for any available token on Hive engine. You don’t have restrictions on the quantity you can send I receive and Hive is decentralized, no one owns it and the government can’t come for it and shut it down.
