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It’s safe to say that cryptocurrency exchange giants, Binance caused a stir when it announced its very own decentralised, blockchain infused platform for trading digital finance in early 2018.
The digital exchange (DEX) has been built on Binance’s own blockchain mainnet, and is set to arrive on the world stage in the coming year. Known as Binance Chain, the blockchain technology has been designed to not only maintain the organisation’s status as the kingpin of crypto exchange platforms, but also facilitate the evolution of financial exchanges as the world continues to sit up and take note of the powers of cryptocurrencies.
But how exactly does Binance Chain work? And what does its cutting-edge technology mean for both the crypto and blockchain space?
Introducing Binance Chain
Rome wasn’t built in a day, and Binance Chain wasn’t a technology that came into being overnight. As the Binance team explains, Binance Chain was the product of ‘extensive research and analysis’ of decentralised exchange frameworks and existing market research.
Significantly, the company also stated its belief that the future won’t see us dealing with a centralised or decentralised monopoly in the crypto exchange market, rather both forms will co-exist “complementing each other, but also having interdependence.”
Introducing their new technology, Binance described Binance Chain as a public blockchain that “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.”
Building towards DEX
Binance showed how deep their intentions run for their decentralised blockchain network when they announced their ‘Binance Dexathon’ in March 2018. The aim of the project was to ‘solicit prototypes of a decentralized exchange with a focus on speed and capacity, or more precisely, a dex blockchain that is low-latency and high-throughput.’
The decentralised exchange coding competition invited entrants from all over the world to share their ideas for a workable decentralised exchange.
Posting their advertisement for the competition in Medium, Binance bemoaned the lack of efficiency and user-friendliness of the decentralised exchanges currently available in the crypto markets.
The article read like something of a call to arms for the coding community, and Binance clearly saw their initiative as an essential solution in keeping up with the rapid rate in which cryptocurrencies were evolving at the turn of the year.
Addressing their readers, Binance’s team wrote:
“This is an all-hands-on-deck initiative, combining the state-of-the-art technological excellence at Binance and the best of the community to once again push the envelope in blockchain technology.”
The result of the collective toil of the company and the coders who entered the competition was Binance DEX, a decentralised exchange that’s set to support ‘millions’ of crypto assets, saving fees and unnecessary delays.
In fact, according to FOTON, a decentralised crypto system can save around $36 billion a year for the entire industry.
Centralised (left) and decentralised system (right). Because there are no intermediaries, the FOTON platform is cost-effective by 7.75%.
This releases more than $36 billion a year in the cryptocurrency market.
From early previews, DEX has been given a major overhaul that helps to set it apart from the traditional Binance framework. It will boast a fresh user interface, eWallet, and block explorer.
Most significantly, Binance DEX represents a significant leap forward for crypto exchange technology. As opposed to centralised exchanges that rely on data being stored safely in one central location in order to operate, a decentralised system has no need for storage in one place and allows users to control their own private keys instead. This, in turn, helps to keep investors’ assets safe while not carrying as much of a data processing burden on one single location.
Fundamentally, Binance outgrew its centralised system, and Binance Chain coupled with Binance DEX is its solution to ensure more growth as it continues to gain popularity.
When you consider the massive rise of coin miner malware in 2018, the most significant improvement that Binance Chain can bring is the increased level of security in cryptocurrency exchanges.
Image Source: Business Insider
At a time where hacks of crypto exchanges are becoming more frequent, Binance’s shift to decentralised blockchain technology paves the way for greater security with digital assets.
The prevalence of these hacks are due, in no small part, to the centralised nature of the majority of the exchanges we’re used to utilising today. With nearly $1bn worth of cryptocurrencies stolen in 2018 alone, security will have no doubt been among Binance’s top priorities when devising a plan for an exchange that’ll catapult crypto trading into a more modern age.
Given that the data stored on Binance DEX will be done so in a decentralised manner, there’s no specific location for hackers to attack. This gives investors an unprecedented level of control over their finances and significantly more peace of mind than through rival exchange companies.
Notably, NewsBTC recognised in their article the importance of decentralised technology in preventing further crypto exchange hacks and labelled Binance Chain’s developments in the industry as ‘the future for cryptocurrency.’
Looking to the future
The visible enthusiasm that Binance held when calling on coders to help them develop Binance Chain illustrates the perceived necessity of developing a coherent decentralised exchange in order to futureproof both the company and the security of crypto trading.
Binance DEX is just the start of the advancements to the industry that Binance Chain can bring. Decentralisation not only helps to keep data more secure from hacking attempts but it also guarantees a more peer-based future for the markets. At its heart, both cryptocurrencies and blockchain should be free from centralised control. Just as Satoshi Nakamoto intended.
CEO at Solvid and founder of Pridicto