The cryptocurrency exchange Binance rose to the fame within six months of its launch, and it is not stopping there. On 13 March 2018, the exchange announced in a public statement that Binance plans to launch a decentralized exchange by implementing a new blockchain called Binance chain.
The blockchain will be responsible for trading and transfer of blockchain assets.
The exchange has its currency named Binance Coin (BNB). And used the cryptocurrency to raise initial funding through an ICO. Learn more about BNB here.
After the launch of Binance Chain, the BNB token upgrades to this new blockchain from the existing Ethereum platform.
What is a decentralized exchange?
As the name suggests, decentralized exchanges are resistant to government shutdowns as the exchange implements a server-less architecture. The workload would be shared to a number servers across the globe, and no one can identify where exactly each service is located.
Also, users do not have to trust third parties to hold their funds like they do in the centralized exchanges. So, decentralized exchanges achieve better security and anonymity.
Things that happen in a Centralized exchange like the employees using user funds for their benefit, and insider hacks won’t be possible with the decentralized exchanges.
But there are events like EtherDelta (a decentralized Ethereum based exchange) DNS hack where the hijackers manipulated the exchange’s domain records and tricked users. Many people lost funds, and it is best not to use the same accounts that were being used during the hack.
Like the centralized ones, decentralized exchanges too are not one hundred percent safe.
Binance believes that in the near future centralized and the decentralized exchanges exist together and will serve each other. Also, they want to transform from a company to community.
Binance is already the top exchange in terms of trading volume. However, we have to wait and see whether Binance can establish and become planet’s best decentralized exchange.