Centralized Exchange vs Decentralized Exchange
An announcement by Zhang Jian, the founder of the Fcoin exchange, stirred up the entire currency circle and became a hot topic in the circle in the past two days, and its heat has far exceeded the booming market.
According to information obtained from various channels, Zhang Jian's "running away" this time has caused many traders and partners to suffer heavy losses, with losses of hundreds of thousands, millions or even tens of millions.
Zhang Jian mentioned in the announcement that the amount that cannot be redeemed is about 7,000 to 13,000 bitcoins. This gap is indeed not small, but for the exchange, this is not the first time such an incident has occurred.
Old users who have been in the circle long enough remember that in 2018 Binance had 7,000 bitcoins stolen, and earlier in 2016 Bitfinex had 120,000 bitcoins stolen. These two thefts were calculated according to the price of Bitcoin at the time, and both Binance and Bitfinex suffered losses of the same magnitude as Fcoin at that time -- about 70 million US dollars, but Binance and Bitfinex had a big business and supported it Come down and fill the hole yourself.
And Fcoin couldn't stand it, so it went bankrupt. It shows how important the strength of the exchange is in resisting risks.
So I keep reminding,Don't be attracted by the various temptations thrown by some unknown small exchanges, and risk losing your principal to trade or manage money there.
So is the big exchange 100% safe and sound? Nor is it. The "Mentougou" exchange, which used to be the largest bitcoin exchange in history, ended up with insiders stealing, causing customers to lose 750,000 bitcoins.
Therefore, we have repeatedly emphasized that the exchange is only a place for trading, not a place for making money. Investors buy coins on the exchange for long-term investment. If it is a large amount of coins, they should mention it to their wallets.
Among the various viewpoints on the Fcoin incident, some people suggested that everyone go to decentralized exchanges for transactions, because the security of decentralized exchanges is much higher than that of centralized exchanges.
Looking back at history, we will find that every time an exchange is stolen or closed down, there will always be opinions about decentralized exchanges.
It is precisely because of the high security of the decentralized exchange that the industry has placed high hopes on it as early as 2017, expecting it to replace the centralized exchange as soon as possible.
In a decentralized exchange, users' assets are in their own wallets before and after the transaction, not in the exchange, so users control their own assets from beginning to end. Even if the exchange is stolen, the user's assets will not be lost.
The well-known decentralized exchanges in the circle include Uniswap, Bancor, 0X, Kyber, etc. But the vast majority of users seem to have never heard of their names, let alone trade in them.
Why are decentralized exchanges with high security still not popular among traders? The fundamental reason here is that due to technical immaturity and limitations, their transaction depth is not deep enough, the transaction currency is not enough, and the transaction performance, especially the user experience, is far from our usual centralized exchanges (such as Binance, Huobi, OK, etc.).
It has been almost 3 years since decentralized exchange projects began to emerge in 2017, but the trading volume of decentralized exchanges is still hovering on the fringes, even less than some third-tier exchanges.
If there is no qualitative leap in technology and fundamental improvement in user experience, I am afraid that for a long time in the future, centralized exchanges will still be the home of most user transactions.
So at the moment, considering various factors, most users still cannot do without centralized exchanges. Since we still want to use centralized exchanges, we can only increase our vigilance, strengthen our security awareness, and protect our assets.
