The founder and CEO of leading cryptocurrency exchange Binance says it’s only a matter of time before decentralized crypto exchanges become so popular that they replace their centralized counterparts.
In a new interview on CNBC’s Crypto Trader, Changpeng Zhao says the transformation is coming, but won’t happen overnight.
“I believe that decentralized exchanges are the future. I don’t know when that future will come here yet. I think we’re at the early stages for that. I don’t know if it’s a year, two years, three years, five years – I don’t know. But we’ve got to be ready for it. We’re now actively investing our efforts, our time into it. We have a dedicated team working on this. I’m hoping to see a working prototype in a couple of months.”
Despite his belief that decentralized exchanges are the future, Zhao says centralized exchanges have a number of advantages that many people don’t often consider.
“I think centralized exchanges right now have much higher efficiency – so much higher trading volume. And today, I think Binance is probably more secure than decentralized exchanges. I think that’s a misconception for people. But decentralized exchanges will give you more freedom, so you can be more anonymous in terms of your trading. You don’t have to hold your assets on the exchange. It doesn’t necessarily mean it’s safer for you. It just means you have more control.
The performance of decentralized exchanges will always be slower than centralized ones because if you have a thousand computers synchronizing with each other versus one computer that just processes it and you’re done with it, the decentralized one will be slower. But once they’re fast enough, I think many of the volumes will move over, but I think that’s going to take a couple years.”
Zhao has previously stated that he hopes to launch the company’s decentralized exchange called Binance Chain sometime this year.
“On the decentralized exchange we’ll have less control,” Zhao told Bloomberg. “More likely anybody can list any coin. That’s the philosophy of the decentralized exchange: It’s freedom of choice, freedom of investments. But with freedom there will be people who are scammers. That’s not something we can control.”
Because of the increased processing power necessary to run Binance Chain, the exchange is also expected to require higher fees than Binance.