Binance, the largest cryptocurrency exchange in the world by trading volume, is working on a decentralized crypto exchange.
A decentralized exchange, built on a public blockchain, would greatly reduce the risk of hacking. Binance processes 1.4 million transactions per second, and about $1.5 billion in volume daily.
“Centralized and decentralized exchanges will co-exist in the near future, complementing each other, while also having interdependence,” the exchange said in a blog post.
“As a public blockchain, 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. Binance Chain will focus on performance, ease-of-use, and liquidity.
“Binance Coin (BNB) will be upgraded to exist on its own blockchain mainnet, becoming a native coin.”
A decentralized exchange means Binance will not have to rely on a third-party site to hold the customer’s funds.
Users will transact with other users without the need for a central server. No central authority also means nobody has to maintain order books or custody.
Greater anonymity is another advantage to a decentralized exchange over a centralized exchange.
A disadvantage is that the decentralized exchange may not be as user-friendly or intuitive as a centralized exchange would be for new customers, those just entering the cryptocurrency market.
Another drawback is that a decentralized exchange will need more computing power to verify and record the trades which are made on the platform.
This could mean to slower transfer times and higher fees than a centralized platform.
Some decentralized exchanges that already exist are Waves DEX, BitShares, NXT, and CounterParty.
Changpeng Zhao, the chief executive officer at Binance, has said that the Binance team will have little to no say on what coins become listed on this new decentralized exchange.
This is in contrast to the model that their centralized exchange follows, on which Binance has a firm grip over which digital assets get traded.
Otherwise, conditions to be listed on the decentralized exchange will be the same as the conditions that are already in place for the centralized platform.
“On the decentralized exchange we’ll have less control. More likely anybody can list any coin. That’s the philosophy of the decentralized exchange, it’s freedom of choice, freedom of investments,” Zhao said.
“But with freedom there will be people who are scammers. That’s not something we can control.”
Zhao is planning to launch the new, decentralized exchange sometime in 2018.