~Snip~
Although, according to the exchange proof-of-reserves they seem to have huge crypto kept inside cold wallet addresses but this still doesn't mean exchange should be used as storage or trust in their native coin that technically has no use case.
Lucky dube said in a song that "too much power in one man's hands is very dangerous for the society"Probably only a matter of time before BNB is included in this list as well. Sure, Binance was the first exchange to grift users with their own coin in order to get ridiculously rich. They may have even managed to get enough adoption to keep this alive for a few cycles. I think it is pretty much inevitable that things like this fail though. Maybe CZ will be the exception, and the BNB rollout along with reduced exchange fees to give it a use case was wildly successful and something that has been emulated many times since, although usually unsuccessfully as was the case with FTT. Just be careful out there. Know the value of the things you're buying and be careful.
Binance was ridiculously rich because of the Safu fund introduced by CZ, I said this because I notice the exchange gained more traffic, and their BNB experience a vast surge.Although, according to the exchange proof-of-reserves they seem to have huge crypto kept inside cold wallet addresses but this still doesn't mean exchange should be used as storage or trust in their native coin that technically has no use case.
I personally think that Binance have managed to gain alot of power in crypto and it is indeed very dangerous for bitcoin, and the entire crypto market, as it is now, if binance goes down, it is likely that the price of bitcoin will go down below $3000, and alot of people will leave crypto.
CZ Binance is an economist by profession and he put his professionalism to work that is the reason why Binance gained power in the CEX ecosystem. As you said, this is dangerous for crypto at large due to the result of much power in one man's hand. Yes, if Binance goes down BTC is likely to downtrend to a $3000 price but only the naive crypto investor will leave the market because of it. In the meantime, there's a chance that this won't happen because the SEC will step in soon and there will be huge level of regulation in the crypto market soon.
The question now is, how did the Binance managed to get this much power and what must be done to prevent the impact binance's fall will bring the market..
If you notice that Binance get much power in the CEX market after the exchange hacked issue. They did 2 things which is the result of what we see today.
1) Build trust among crypto investors, traders, and holders through the introduction of SAFU while they technically increase their capital through a ridiculous withdrawal fee of 0.0005BTC before they later change it to 0.0002BTC last or this year I don't remember correctly.
2) They keep building their ecosystem and introducing more ideas to outshine competitors. In every business setting people that do this will always be on top.
We can not do anything to prevent the impact of Binance's fall since they are the richest CEX but to prevent the exchange and others from falling the SEC needs to come in, do some examination of CEX activities, and prevent future activities like what we see in FTX.
Just like the saying prevention is better than cure.
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