Cryptographic Security

• As we watch the news of Binance paying the largest fine in US History 4.3 billion dollars, and we see the fall of multiple key figures in centralized cruptocurrency trading, some jump to the conclusion that cryptocurrency is inherently bad.
• But the truth is that the answer is far more complex then simplly crypto bad or crypto good.
• I have been active in this space for six years, and I think that CEXs or Centralized Cryptocurrency Exchanges have been a big positive in the evolution of cryptocurrency as we know it, but they have also been the root cause of much of the negatives as well.

• In regard to centralized exchanges and the role they play in the good, the bad and the ugly which occurs in cryptocurrency, to me there are three basic truths:

• First, Centralized Exchanges perform a critical role in the cryptocurrency ecosystem, the onramp of entrance of capitol into the ecosystem and the exchange of a diverse group of cryptocurrencies for Bitcoin or stable coins like USDT or USDC.

• Second, many of the issues with centralized exchanges reflect a lack of regulation, which uses the nouns, verbs and adjectives of this new industry.

• Unfortunately, instead of developing regulations and rules specific to this new industry, most countries follow the lead of US Regulators, who depend on regulations written at the end of the Great Depression in the 1920's. A tortured process of applying rules written before the telephone was widely used, and before the fax and internet even existed.

• I feel an applicable comparison is to attempt to regulate cars and planes with regulations meant to regulate horses and wagons. You can argue they are all forms of transportation, and by focusing on the principles, applying the horse regulations can be done fairly.

• But in reality problems occur with cars and planes, which can't occur with horses, and the potential uses of cars and planes, far exceeds the potential use of horses and wagons. These forms of transportation have very few commonalities, and regulating cars nd planes with regulations meant for horses is a truly a fools errand, destined to fail.

• Third, and last Centralized exchanges are actually the anthesis or opposite of what cryptocurrency is supposed to be about. Cryptocurrency is about completre control of your money, cryptographic protections of assets, peer to peer trades and exchanges, with no middles men or intermediators. These characteristics make much of the fraud and theft we have seen in crytocurrency impossible. And it has been the development of centralized exchanges and centralized investment firms, which by their nature remove all the protections of crypotographic security, eliminate peer to peer exchanges, and insert a middleman. This is the anthesis of cryptocurrency, and it is the root of most of the evil we have seen.

The future looks bright

• As I look to the future I see the continued growth of DEXs or decentralized exchanges, which are the anthesis or oposite of CEXs or centralized cryptocurrency exchanges, and they offer investors most aspects of cryptocurrencies intrinsic safety protocols, and potentials. Examples include Uniswap and PanCalkeswap, as well as Thorswap.
• These DEXs are in their early stages of development, and they have different inherent weaknesses not unlike CEXs or centralized exchanges. But they are evolving towards becoming more perfect entities.
• We are very early in cryotocurrency, and in sum respects we are like early setllers in a wild, untameds new land, dealing with all the dangers, wonders and sometimes great wealth that is possible in such an endeavor of exploration and discovery. But many settlers die on the trail in the journey to the new world. Cryptocurrency is no different.

@shortsegments

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• @shortsegments is a writer focused on cryptocurrency, the blockchain, non-fungible digital tokens or NFTs, Stablecoins, Digital dollars, Bitcoin, Etheteum, and decentralized finance for over six years.
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