❖Centralized Exchanges ❖
The reason for the closure of Fcoin is that the trading platform cannot be restored. If the platform can be restored quickly, it is estimated that Fcoin can continue to play. why? Quite simply, the user speculates in Fcoin, but it is only a change in the ledger. User A bought 0.1 BTC for 1,000 usdt, and user A's ledger increased by 0.1 BTC and decreased 1,000 USDT. Another user B sold 1 ETH to 280 USDT, and his account book increased by 280 USDT and decreased by 1 ETH.
Either user A or user B, they have lost their currency since they recharged their coins to a centralized exchange, and they get a ledger and data on the centralized exchange.
Under this premise, there are two evil spaces in the centralized exchange. Note that this is a space for evil, not that centralized exchanges will definitely do so.
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➤ 2 evil spaces
Misappropriation of funds
After users recharge funds to the centralized exchange, they still retain the ownership of the funds, but they have lost the actual control of the funds. Exchanges can misappropriate users' funds.
Some friends may ask, what should I do when I withdraw cash? Quite simply, centralized exchanges can give you funds recharged by other users. Therefore, as long as not many users withdraw at the same time, centralized exchanges can generally cope with the past.
The reason why Fcoin will fail is because its trading system is damaged and cannot operate normally. Many users come to withdraw coins, which makes Fcoin unable to pay.
In fact, commercial banks also operate in this way. Users' funds are deposited in, and the bank reserves a part of the deposit, and then lends other funds to earn interest.
The problem is that we know what the centralized exchange will do after misappropriating funds. Whether it is a stable investment or a high-risk investment. Therefore, there are many variables in our funds in a centralized exchange.
2. Trading fraud, price manipulation, false pending orders, modification of the K line
Since our currency and transactions are in a centralized exchange, only the ledger and accounts change.
Therefore, a centralized exchange can forge transactions and manipulate currency prices.
Suppose the current price of BTC / USDT is 10250. Centralized exchanges can add two users directly to the ledger, and then they make large transactions at the price of 10,250, which inflates the transaction volume of the centralized exchanges.
According to Tokeninsight's survey report last year, "According to the report, 36% of the exchanges (11) have a real transaction volume ratio higher than 80%; nearly 50% of the exchanges (14) have a real transaction volume ratio of less than half. It is worth special It is important to note that more than 25% (8) of exchanges have a real trading volume of less than 20% of their reported trading volume. "
Many centralized exchanges are suspected of falsifying data. Moreover, Tokeninsight's report is an analysis performed by extracting transaction data from September 3-21, 2019. Of the 11 exchanges with a high proportion of real transactions, they dare not guarantee performance in other periods.
Counterfeit data is still the face of the exchange. But price manipulation may not be necessary.
TVB previously used an exchange called the currency up. Before running last year, I saw a large number of BTC sell pending orders, the price of pending orders was very high, and the amount of BTC was large. On the surface, this exchange is still rich and has a lot of BTC. However, in fact, the exchange does not need to have currency at all. It only needs to add a few data to the account.
For some coins with a large number of users, price manipulation is not easy, but for some small coins with a small number of users, a centralized exchange can perform price manipulation. Centralized exchanges can directly make data and make many high-price orders, so that they can complete the draw.
For example, the user's pending order price 5 sells a coin. Exchanges can falsely place several 4.8 orders. When the user cancels the order of price 54, the exchange immediately cancels the order of 4.8 and becomes 4.7; when the user wants to receive the order of 4.7, he will find that the 4.7 buy order is gone. TVB has really experienced such things.
Even orders that have been at a certain price may be deleted by the centralized exchange, the transaction volume can also be modified at an appropriate price, and finally the K line can be modified.
One of the biggest risks of centralized exchanges is credit risk.
Because centralized exchanges misappropriate user funds, we have no idea what they will use these funds for, nor how much margin will be available for users to withdraw cash, let alone whether the centralized exchange will not be allowed to operate due to operational problems Go on.
Fcoin is because its trading system cannot be restored and cannot be operated.
Fcoin cannot be paid to users because of its unfavorable operation or other reasons.
Users may lose money when speculating in coins, but unless they are leveraged, they will not lose their money.
However, after the credit risk outbreak of the centralized exchange, users' principals cannot be recovered.
Although Fcoin promises to withdraw cash to users, the short-term is 2-3 months and the long-term is 1-3 years.
During this time, the user's funds have a time cost, and any money management can have benefits. Moreover, even if it is not a bull market, it is approaching a bull market, and the user's currency is likely to appreciate through transactions.
Therefore, the credit risk to users from centralized exchanges is: one is moral hazard, and there is no mention of currency; the other is ability risk, which is not profitable.
❖Decentralized exchanges ❖
Decentralized exchanges are different. In decentralized exchanges, users recharge funds in their own wallets, which are on the chain. Users not only have the ownership of the coin, but also the right to execute and use it.
In a centralized exchange, there is no actual fund transfer for user transactions, but only an account record. However, in a decentralized exchange, every transaction has a transfer of funds. User A exchanges 10,000 usdt for 1 BTC of User B, and there will be an increase of 1 BTC in User A's wallet and a decrease of 10,000 usdt, and User B will do the opposite.
Therefore, in a decentralized exchange, no one can misappropriate users' funds.
Therefore, in a decentralized exchange, you want data falsification and price manipulation … Yes, you need real gold and silver transactions, and you have to pay a fee.
And that credit risk does not exist. Decentralized exchanges are always just matching transactions and have never occupied user funds, so there is no credit risk.
In contrast, decentralized exchanges have higher thresholds for evil and almost no credit risk.
❖ Chu River and Han World ❖
Whether the exchange is decentralized or not, this Chuhe Han world lies in where the funds recharged by users are. Users recharge funds in their own on-chain wallets, which have corresponding addresses or accounts and corresponding private keys. This is the decentralized exchange.
Conversely, the user's recharged coins are not in their own wallet, but instead are filled into a wallet without a private key. This is the centralized exchange.
❖Exchange Trends ❖
Having said that, some friends may ask. Since decentralized exchanges have low credit risk and low threshold for evil, the trend must be decentralized exchanges.
But what TVB wants to say is. For the time being, centralized exchanges are still the trend.
There are two reasons:
One is experience, and the other is cost.
➤ Experience the difference
The experience of a centralized exchange is indeed better than a decentralized exchange.
First, what is the private key? For some friends who can't use the blockchain, the private key is a bit cumbersome and difficult to remember. And I do n’t know what the private key is. Sometimes I use a decentralized exchange. There is a password and a private question.
Second, the response is slow. When a decentralized exchange executes a transaction, it is indeed slightly slower than the centralized one. Because when you execute a transaction, you need to be chained. But we know that the price of currency changes instantly.
Third, product experience. TVB does not understand why, from a technical point of view, the decentralization of the exchange interface and operation process has no effect. However, the overall product experience of decentralized exchanges is actually lost to centralized exchanges. In the decentralized exchange used by TVB, I feel that the newdex experience is quite good. A bitshares node has developed a gdex exchange APP, and the experience is ok. The interface like bitshares official website is really intolerable.
➤ Cost variance
Because every transaction in a decentralized exchange requires a transfer, blockchain resources are required. For decentralized exchanges on Ethereum, you need to pay for gas; for decentralized exchanges on eos, you need to occupy cups, broadband, and consume memory …
Some people may say that when a centralized exchange executes transactions, it also uses network resources, which also has fees. this is correct. However, after all, a centralized exchange has only one centralized server, but decentralized exchanges run multiple servers, so the cost must be higher than a centralized exchange.
Poor experience and high costs have led to the decentralized trading volume being far less than the centralized exchange.
❖Centralized Exchange Trends ❖
➤ Exchange pattern
The currency circle has experienced the ICO bubble in 2017, and we will find that there are not as many altcoins around as before, and there are very few funds.
The same is true for exchanges, and the pattern of centralized exchanges will also develop in a pattern of large exchanges.
Especially after this Fcoin explosion, many users dare not use small exchanges anymore. Therefore, the amount of funds and trading volume of small exchanges will decrease. For large exchanges, the relative risk is much smaller.
So some small exchanges will leave. What remains are large and medium-sized exchanges, as well as some decentralized exchanges.
➤ Regulation of exchanges
The lesson Fcoin gives us is that centralized exchanges are terrible. Centralized exchanges did not operate well, and they closed down. As a result, users' assets could not be paid.
Some friends may want to report the case and want to recover their funds through legal means.
Not to mention that currency speculation is not allowed. We will not talk about whether the public security department will control this matter.
Fcoin Zhang Jian he needs to have enough funds to pay users. What if Zhang Jian had no money? How to solve this problem? Even as long as Zhang Jian said in his lifetime, he slowly returned. But after returning it to the user, the user may still have a loss. Because users of these coins may increase in value during this time period through speculation in coins or other investments.
That is to say, the current problems of centralized exchanges are dealt with after the fact, which cannot protect the rights and interests of users.
On the other hand, decentralized exchanges may not be able to carry large-scale transaction volumes in terms of performance and cost.
Therefore, the supervision of centralized exchanges is a trend.
After the regulation, the exchange is in compliance, and the exchange is very happy,
After supervision, user assets are safe and users are happy
After the supervision, first, the government can collect taxes on the exchanges and have financial revenue; second, the supervision of social issues has become smaller; third, after the centralized exchanges are supervised, there are compliant exchanges This can compete with decentralized competitive exchanges, which are relatively difficult to monitor. In the end, the government was happy.
Therefore, the supervision of centralized exchanges is the trend.
First, the establishment of a regulatory agency should establish thresholds. No one can open it. It must have a certain management capacity and capital foundation.
Second, funds supervision. One is the funds recharged by users. These wallets are subject to the supervision of government departments. Centralized exchanges cannot misappropriate funds; or centralized exchanges submit deposits to the government based on the transaction amount. In case of any accident, the government can use this money to users To compensate.
Third, pay taxes. The operation of the exchange must pay taxes, not to say much.
Fourth, the listing supervision. The listing of currency is to be supervised, and you cannot just issue a coin and go to the office.
The above four should be certain. For the latter, TVB's personal ideas may be difficult to implement.
Fifth, the audit of trading platform codes. The symbol of the exchange is to be audited. This program needs to be safe, you can't say that it crashes with use. And be audited regularly.
Sixth, business supervision. It is the exchange that you open leverage business, wealth management and other businesses, all have to be supervised, the supervisory authority can agree to you.
❖ Written at the end ❖
Putting coins in the wallet and going to the big exchange, this is not much to say.
TVB believes that centralized exchanges are still a trend, and that centralized exchanges under supervision are a trend. It is hoped that government departments can expedite exploration and research and come up with a framework and regulations for the supervision of exchanges.
Chicago Mercantile Exchange CME launched bitcoin futures in 2017, and Tim McCourt, managing director of CME Group, said that CME's bitcoin futures transaction volume has reached 100 billion US dollars.
TVB believes that centralized exchanges + supervision should first appear in Europe and the United States, and the United States is more likely. Then other countries would imitate.
Yesterday, some friends said that the risks of platform currency are under supervision. TVB feels that this risk does not exist. First, exchanges can register in some island countries, while other developed countries do not block IP. Second, if centralized exchanges are banned and decentralized trading is allowed to develop, the most rational approach is to supervise centralized exchanges. Third, the exchange as a place of business must also pay taxes, which can increase fiscal revenue. Moreover, the supervision is good, and it will not cause any great harm to the society.
So looking at it now, the risks of large centralized exchanges and their platform currencies are still small.