One of the largest cryptocurrency exchanges by average daily trading volumes – Binance – announced on Tuesday, March 13, the company aims to transform its exchange in a completely decentralized platform thereby launching its own “tailored blockchain” called as the Binance Chain.
In the official blog post, the company announced that the “Binance Chain will mainly focus on the transfer and trading of blockchain assets, as well as provide new possibilities for the future flow of blockchain assets”. The Binance CEO soon took it to Twitter to make the announcement and said:
Binance was growing too quickly, and too busy to start anything else. So, all we could do is, to just start one more Binance. https://t.co/r5RjPNyrDq
— CZ (not giving crypto away) (@cz_binance) March 13, 2018
While explaining the rationale behind its decision, the company said that it has conducted extensive research into decentralized exchange frameworks and has been analyzing the existing implementations. Binance said that it believes that it is the right time where a significant improvement can be made in the user’s digital currency trading experience.
The blockchain technology behind the Binance Chain will provide coin traders a completely decentralized exchange that can handle transactions through an automated process by eliminating the need for any third-party to trade and hold funds. This is certainly a great step forward in the direction of having decentralized platforms that have long been talked about in the crypto community.
Although crypto assets trade and transact through the blockchain technology, one of the major issues traders have been facing is about storing those assets which all take place on centralized exchanges thereby making it more vulnerable to be hacked. Also with increasing hacking attempts in the crypto space, there is a pressing need for having a completely decentralized platform for crypto exchanges.
Things are still not clear as to how Binance’s decentralized exchange will work, but in the near future, the company has assured that both the exchanges will work parallelly. “Centralized and Decentralized exchanges will co-exist in the near future, complementing each other, while also having interdependence,” said Binance while adding that more details will be released ahead.
Binance Coin (BNB) which is basically an ERC 20 token built on the Ethereum blockchain will be “upgraded to exist on its own blockchain mainnet, becoming a native coin”. In that case, Binance will transition from being a company to being a community. Soon after the announcement, the price of Binance Coin (BNB) jumped by 25% pushing it to a 24th spot in the list of largest cryptocurrencies by market cap. At the press time, Binance Coin (BNB) is trading at $10.27 a 26% jump over its previous price, according to the data on CoinMarketCap.
Currently, one of the most well-known decentralized crypto exchanges in business is EtherDelta that makes use of smart contracts to run ERC20 tokens on the Ethereum blockchain. The decentralized exchanges cannot be said to be completely full-proof as their website servers remain centralized, however, they are far less vulnerable to outside attacks and theft in comparison to completely centralized exchanges.
One of the existing limitations of using decentralized exchanges is that they can be used to trade digital currencies only running on a common blockchain. Some powerful technological updates like Lightning Network facilitate cross blockchain trades using atomic swaps, but the technology is yet not completely ready and is seen to be progressing at a good speed.