At a recent TechCrunch Sessions, Vitalik Buterin, Ethereum’s co-founder, widely criticized centralized exchanges, going so far as to say they should “burn in hell”.
Joining Jon Evens for an interview at TechCrunch Sessions: Blockchain, Vitalik Buterin outlined his serious criticism towards centralized exchanges.
“Burn in Hell”
Speaking about centralized exchanges, Buterin didn’t pull any punches, saying:
I definitely hope centralized exchanges go burn in hell as much as possible.
His negativity was sparked primarily because of the practice of charging outrageous amounts of money ($10 to $15 million) in listing fees so that users can trade their tokens on these exchanges. He also noted that their main purpose was to bridge the fiat world and cryptocurrencies, where the former only has “centralized gateways”.
The co-founder of Ethereum also mentioned that crypto-to-crypto exchanges present clear advantages, especially from the point of view of the user. He says that the exchange acts as an input and output tunnel, virtually transferring tokens from one address to another but in two different currencies.
Objective Nevertheless
Despite bashing on centralized cryptocurrencies, Buterin was also fairly objective, noting that decentralized solutions also face serious challenging. One of the biggest issues that have to be considered is user authentication.
For instance, what will happen if a user loses his private key? In a decentralized environment, there is no central authority which would be able to reset the key or to allow the user to recover his password. Hence, the funds stored at one’s wallet might get irrecoverably lost.
Another issue that challenges structures of the kind is simple disagreement between communities. The lack of a central authority makes it harder to ‘move forward’ when there are multiple groups of people, each believing that their way is the ‘right’ way, who dig in their heels and refuse to budge on a certain topic. This is also what leads to the so-called hard forks when the main network is split.
Buterin also went on to explain the importance of formulating the right communities as well as the critical role that early members play:
Growth of the communities definitely depends on what the earliest members believe. I think it is something where we do make a deliberate effort to basically promote the right values and attract the right people both in an inclusive sense and in an exclusive sense.
What do you think of Vitalik’s position on centralization? Don’t hesitate to let us know in the comments below!
Images courtesy of Flickr/Duncan Rawlinson, Pixabay