Binance CEO Defends Gradual Decentralization Ahead of Semi-DEX Launch
CEO of major cryptocurrency exchange Binance, Changpeng Zhao (CZ), once again added some fuel to the fire with his recent opinion piece on the merits of centralization and decentralization, published ahead of the launch of Binance DEX, a semi-decentralized cryptocurrency exchange.
In January, he insinuated that crypto users should be keeping their private keys on exchanges, which others were quick to shut down and call “absolutely horrible advice.”
Now, in the blog post that Zhao tweeted with the caption, “I expect some controversy or debate on this view,” he said that “the majority of the population out there today holding crypto on a trusted centralized custodian service is probably safer and easier than holding cryptocurrency themselves.” He argued that “the majority of the population today are not able to keep cryptocurrency securely on themselves” and that “good cryptocurrency exchanges invest heavily in security infrastructure that a normal person would not be able to match or even imagine.”
He added that, “In a decentralized world (at least in our history so far), we will experience more chaos. As social animals, we group together. It is human nature to elect and follow leaders.” Other tradeoffs that he mentions are ease of use, where he argues that “even a bitcoin address looks intimidating to many people,” as well as freedom, saying, “While this freedom is great, there is also a large number of scams, hackers, etc. This ties back to security. If we can increase the level of freedom without sacrificing security, that would be awesome.”
In either case, the CEO said he is a "big proponent of decentralization": "I think in our current world, power is too centralized and in the hands of the few, and needs to be more distributed." However, he stressed that "in reality, there is a gradient scale from centralization to decentralized" and "it is more practical and beneficial to increase the level of decentralization in small steps at a time."
And it seems this is the same strategy Binance is following with Binance DEX. The parent company refers to it as a decentralized exchange, however, as CZ has admitted, it is not 100% decentralized.
“Binance Chain will be decentralized in the sense that users hold their own private keys. They no longer need to deposit their funds to a third party platform before being able to trade. However, as a new blockchain, the initial team will naturally have more influence over the strategic direction of its growth,” he said.
Also, last week, during a livestream, he also admitted that Binance will have "a lot of influence" over the Binance Chain (Binance DEX will be running on this blockchain) network and the validators. Moreover, the CEO said that the listing fee on the new exchange "will be probably close to USD 100,000."
"Initially, we want to try to be more centralized that way. Compared to other networks, we’ll have a little more influence. I think it’s important for us to maintain that influence in the early stages. As time goes on, more and more validators are going to join, and our influence will decrease,” he said.
Today, Binance announced that their are targeting to release Binance Chain testnet for public testing on February 20.
Also, the CEO reminded that the exchange offers a decentralized wallet, Trust Wallet, "for securing your crypto on your own." He also estimated that "with more tools being actively developed, I do see more people will be able to hold their own funds (private keys) over time, in a secure and easy-to-use fashion."
Other recent comments on the decentralization issue in crypto:
There's a reason bitcoin had to be created as a new money, instead of being proposed a change to an existing one.— Mario Gibney (@Mario_Gibney) February 11, 2019
I could not agree more. No consumer wakes up and says to herself, "I wish ___ was more decentralized." Decentralization is a feature not a benefit. We collectively need to create use cases and benefits.— Jason Goldberg v0.1 (@betashop) February 6, 2019
Yes but the systems of power that said monopolies are a function of are the foundation of what synthesizes the need for decentralization in the first place. Everything is essential. Dialectic of enlightenment.— Satoshi (@Satoshi87164293) February 7, 2019