The cryptocurrency market has rapidly grown to become a disruptive alternative to the fiat currency market. In a relatively short span of 10 years, this space has seen quite a handsome appreciation in value. But with that said, the digital asset also attracted centralized manipulation practices of the highest order.
Things move fast when it comes to technology, and the decade-old cryptocurrency market is no exception. Unfortunately, the trajectory, in this case, is unhealthy and not by any means leading to progress.
The rapid proliferation of highly centralized cryptocurrency exchanges is one such situation where a slowdown might is crucially required. Power and control over investors’ digital assets have quickly landed in the laps of large exchanges. Hence, there is a crying need for flexible, user-friendly trading platforms.
Many established crypto exchanges are dedicated to securing regulatory compliance with governments and existing fiat financial systems. While this is purely a self-protective mechanism, it flies in the face of the spirit of Bitcoin.
As a result, cryptophiles are turning to new options. With literally hundreds of exchanges in today’s digital asset market, the problem is somewhat alleviated through sheer numbers.
The appreciation in the number of decentralized cryptocurrency exchanges is intended to bring about transparency and decentralization in the market.
According to Alex Altgauzen, COO of cryptocurrency exchange XCOEX:
“The importance of decentralizing this market is massive. The market is still in its infancy. A small number of exchanges controlling the market could eventually result in a centralized catastrophe that we were all trying to avoid in the first place.”
XCOEX is currently running a daily contest till June 30, in an effort to attract new investors.
Altgauzen points out that the rise of such smaller exchanges is a boon to the community as a whole:
“Spreading investors among many exchange platforms is crucial at this point. We all remember the MtGox hack and the resulting negative effects throughout the industry.”
Opportunities for small exchanges to emerge, grow and thrive are abundant. This is due to the growing lack of trust in larger “centralized” cryptocurrency exchanges. Investors are likely to notice and leverage small exchanges for investing in digital assets. Additionally, it is now easier to launch an exchange.
For example, another new blockchain business, Spotware, offers out of the box exchange platforms for anyone looking to launch an exchange. By reducing some of the startup costs exchanges typically face, Spotware too is opening doors to decentralization.
What happened in the market to create this deep need for smaller exchanges, DEX, and other, less powerful alternatives?
The explosive growth of Binance and other large crypto exchanges. They were launched only with the sole purpose of creating a market monopoly for themselves.
Binance: The Apple of Crypto Exchanges
Top performer Binance is a major offender in this regard. The exchange also happens to be one of the most popular cryptocurrency exchanges in the market, with extraordinarily high trading volume.
Binance shot to its current market position in the first six months of its existence.
It is a convenient platform for investors who are looking for just that – convenience. Binance’s exceptionally high processing speeds are a refreshing change from the typically cumbersome transaction rates typical amongst blockchain businesses.
Furthermore, Binance offers low trading fees, and an array of over 130 tokens to invest in. Also offered are financial perks for conducting transactions with BNB, exchange’s native crypto token.
It is essentially the Apple of the cryptocurrency exchange market. The user experience is at the forefront of its growth and development. In today’s society, it is tough to walk away from that.
Banking Giants Worldwide Are Entering the Crypto Market
In addition to the existing cryptocurrency exchange giants, international fiat banking systems are also joining the cryptocurrency trading market in droves. Traditional financial market experts have recognized the enormous profit generation potential in the oversight and management of cryptocurrencies. They are not ready to let the market take off without reaping adequate benefits.
JP Morgan Chase was one of the first banks to join the cryptocurrency market. The bank is integrating blockchain into its existing service structure. It also has future plans to release a proprietary digital token.
Other fiat banking systems such as Fidelity, Wells Fargo, MasterCard, and IBM are also establishing cryptocurrency and blockchain service offerings.
Stabilizing the Industry
In an effort to combat the power exerted by top exchanges, new cryptocurrency exchanges are being built on decentralized platforms.
Centralized crypto exchanges and conventional financial firms seek to control digital assets of users in addition to their fiat monies. Small exchanges will be instrumental in changing this trend.
Many crypto investors are not just here because of the enormous profit potential. Rather, they genuinely believe in the original premise of Bitcoin – a decentralized, autonomous payment method free from oversight and regulation.
Decentralization is not lost. Smaller exchanges, DEX or otherwise, will put power back in the hands of the trader. This is the first step toward a healthier digital economy.
Do you think decentralized crypto exchanges can bring transparency in the market? Share your thoughts in the comments below.
Image via Shutterstock
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