Vitalik Buterin is the 24-year-old that is famous for launching a cryptocurrency called Ethereum. He recently unloaded a tirade against centralized cryptocurrency exchanges. During his tirade, he said that he would like to see the centralized cryptocurrency exchanges crash and burn in hell for as long as possible.
His voice of criticism of the centralized cryptocurrency exchanges is not the only one. Many people echo his sentiment. The first cryptocurrency was created with a mission to avoid middlemen. Bitcoin’s anonymous founder Satoshi Nakomoto hoped that his currency would cause financial middlemen to disappear. It was hoped that Bitcoin and other cryptocurrencies would create a financial system that would be more decentralized.
Instead of disappearing, financial middlemen are thriving of the cryptocurrency trades. They wield enormous power and influence in cryptocurrency right now and control a sizeable share of the cryptocurrency market. Bloomberg News has reported that these financial middlemen earn almost three million dollars a day in service fees and commissions. That is well over a billion dollars in revenue every year. Centralized cryptocurrency exchanges are even attracting the best financial talent away from Wall Street.
There is a great irony with bitcoin and ethereum. They were formed to decentralize the financial system. Instead, they are making middlemen rich and creating more financial middlemen jobs. This is the view held by Peter Johnson from Jump Ventures when talking to Yahoo Finance.
Ethereum founder Vitalik Buterin wants cryptocurrencies to go back towards its original mission. He is encouraging investors, miners and anyone else involved in cryptocurrency to head towards decentralization. The words of Buterin come at a time when the decentralization of cryptocurrency exchanges is gaining some serious steam. Many investment firms are now saying that decentralization is an increasingly hot investment.
Don’t expect the centralized cryptocurrency exchanges to disappear overnight. They handle a large volume of trades right now. These exchanges also perform many important functions. They hold and store funds, align buyers and sellers and help resolve disputes between a seller and buyer. The exchanges offer some security and stability in an otherwise highly turbulent cryptocurrency market.
There is one major weakness to the centralized crypto exchanges, though. Almost a third of the cryptocurrency exchanges have been successfully hacked. They are a prime target for cybercriminals who are looking to steal massive sums of money.
The decentralization movement is gaining traction. People like Buterin believe that technology such as blockchain can help ensure safe and secure trades between people without middlemen. Whether that takes off remains to be seen.