On July 6, Vitalik Buterin, co-founder of Ether, responded to a question from the moderator about whether decentralized exchanges would overtake centralized exchanges in terms of market share by throwing out the following idea: "I personally think that centralized exchanges should all go to hell as soon as possible. "

V-God went on to add that the current centralized trading platforms seriously violate the "decentralized" spirit of blockchain, as in his opinion, these platforms hold the power over the future of cryptocurrencies and charge up to $10-15 million in uplisting fees, while decentralized exchanges would better meet the openness and transparency of blockchain value.

Furthermore, V-God noted that when better decentralized platforms are developed, the cryptocurrency community will be able to move away from the domination of individuals.

Interestingly, after the announcement of V-God's comments, Zhao Changpeng, founder of the world's largest centralized exchange, Coinan, responded by saying, "Coinan is working on becoming a decentralized exchange and making investments in this area, and expects to come out with a prototype within a few months. "Zhao Changpeng also said he believes that within five to 10 years, decentralized exchanges will beat centralized exchanges.

So the question arises: what are the advantages and disadvantages of a decentralized exchange compared to a centralized exchange?

Today the author will try to answer this question.

First, in theory, centralized exchanges are efficient, good experience, high volume, and liquidity, but with high security risks (coin theft, lost coins, exchange monitoring) and low cost of evil (swiping trading volume, joint sitting, etc.).

As for decentralized exchanges, this is not the case. Since the public key of a decentralized exchange user's account on the blockchain is the identity, there is no need to register personal information with the exchange, so there is no question of personal information security.

On the other hand, because the user's assets are hosted in a smart contract, once the funds are included in the smart contract, then only the person with the private key to the account can access the funds, and as long as the user keeps the private key without a malicious third party knowing about it, the funds are safe. When a transfer of funds occurs, the smart contract operates automatically according to instructions, without the need for manual approval.

But decentralized exchanges are not perfect - while decentralized exchanges solve the security problem by removing trust, flaws in user experience and transaction costs greatly constrain their own growth.

Simply put, the biggest advantages of decentralized exchanges for users are security and fairness, and low transaction fees. It solves the drawbacks associated with centralized exchanges by building a P2P marketplace for transactions directly on the blockchain, allowing users to protect their private keys and account funds themselves.

The biggest problem facing decentralized exchanges today is that the volume performance cap of decentralized exchanges is much less than that of centralized exchanges and liquidity is limited due to the low transaction processing performance of blockchain networks, which cannot handle highly concurrent real-time transactions.

For example, FinChain's own decentralized exchange "YIBIT" is the perfect solution to many of these pain points.

FinChain aims to use blockchain and artificial intelligence technology to aggregate the power of the community and create a global smart financial platform based on smart contracts that integrates the functions of digital asset issuance, trading and management. Simply put, Smart Finance = Smart Crowdfunding + Exchange + Token Bank.

As for the YIBIT exchange, it offers global users a decentralized trading system with up to 100,000 TPS level, with all the features that an ideal trading platform should have. It is a world-class decentralized trading platform that can handle Nasdaq-level trading throughput, as well as light-speed trading speeds, aerospace-grade security levels, and near-zero transaction fees.

It is not difficult to envision that as blockchain technology becomes further popular, centralized exchanges will definitely become a thing of the past, while decentralized exchanges that truly implement the spirit of blockchain will rule the future.

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