Topic: Centralised Exchanges are the Biggest Enemies of Bitcoin (Read 410 times)

Even the founders on these exchanges (Kraken and Coinbase) have admitted as of recent that CEX is really not the way to go when it comes to holding your bitcoin, because the government can give orders to then to lock or freeze people’s accounts and they will have no other option than to do it, since they are working with the government.

So, now is the best time for everyone to start considering wallets that are decentralized, and also peer-to-peer exchanges. Though DEXs are hard to understand at first, but if you take your time to study how it works, you will definitely understand it. Although I will also add that DEXs should work on their platforms and make it better, and easy to use.

its fair to not just sling crap around in some tinfoil nutcase rhetoric, but that requires people doing research and understanding how MSB(exchanges operate) and how regulations work in the real world, to know which arguments to actually make and which ones are just tin foil fantasy

EG
idiots hating exchanges with rhetoric of 'government are spying' is incorrect because its the business that collects analyses and stores customer data not the government. the business only reports to government on specific customers it deems as suspect, and to validate their suspicions they need to collect data to cancel out invalid suspicions by knowing who is a clean customer thus no need to report on all acts done by clean customers. lack of knowing things causes more suspicion... not less

but its also fair to highlight the risks of MSB(exchanges) such as when using an exchange as a custodian. you are not under some government insurance that protects your value. so unlike a institutional bank account, a MSB wont get bailed out and there is no consumer protection of value. yes you can try to form a lawsuit to sue a business privately but that then requires proof and accounting and showing you are indeed a customer of theirs in the first place and then prove the value was not lost due to the customer error.

so highlighting to people its safer to not use a exchange as a custodian(savings account) is better then to not inform people and let them lose their value(mtgox case) where they falsely assumed if an exchange closed people would get a cheque in the mail from some insurance/government department

I don't really get why most people pit central exchanges and bitcoin from one another. Both have their own purposes and functionalities. They serve different markets as well. After all, not everyone is into crypto. Some are contented with the current fiat system and we have no control over that. The central exchangers cater those people who are mostly traditional and conservative in holding their finances. Meanwhile, those into crypto prefer broader and different approaches in handling money. I believe central exchangers really take a good part in promoting crypto and making it widely used in most parts of the world. I agree that central exchangers are of importance to the buying and selling since bitcoin is still isn't fully adopted yet. It offers convenience and ease to those people converting, buying, and selling in CEs platform. Of course, this has its set backs as well such as KYC because we still have to comply to the regulations set by the platform in accordance to what the law demands them. If ever bitcoin would be completely used and adopted in most parts of the world, it would be better for our community. Hopefully, in the near future it will happen before our eyes.

fighting what exactly?
the very fact that its not the government gathering data on every customer and only seeking specific data on suspect criminals when the government receives a report of suspicion, pretty much covers your tin foil concerns of 'government overreach' in regards to privacy against the government.

by the MSB collecting the data and only reporting suspect data, addresses one of your tinfoil concerns

as for fighting to evade the need of collecting any data.
the government concerns are tax avoidance, laundering, criminal funding, and terrorism. and so trying to lobby a campaign to evade all data collection at the business level is like trying to fight "no we wont help fight terrorism, we are not patriots we want criminals in our business' .. see how far that gets them

businesses want to keep making dollar profits. bitcoin is just a product of temporary mechanism to make more fiat profit. and so they will lean to protect the fiat more then protect bitcoin.  especially if they are going to be penalised by $5k a day per violation/customer for every day they dont comply with fiat laws.. thats just not good business.

.. but lets say in your utopian tinfoil world. there was a system. try to explain your system of how you see that businesses operate to :
protect against criminals, terrorists, dictator states
protect users funds from being stolen by MSB

EG the freezing of the bitfinex stolen funds and the funds of the virus/hacker groups.. how would you deal with allowing law enforcement to still find and stop this if businesses didnt look into their customers.

take for instance that if businesses never keep logs of which customer makes a bank deposit. then a customer has no claim if a MSB was to go bankrupt or done a 'we been hacked' because there is no trace of their transaction to account for to validate any class action suit against a business

take for instance if a MSB was not to analyse blockchains for clean taint, every taint would have to be treated as suspect. and if a MSB was not to request income/employment status of customers. how can it tell whats a legitimate 'normal' trade based on that customers level, vs a suspicious trade. EG an unemployed hobbiest would look suspicious if moving over $1k a month. but a rich employed person wouldnt get a second glance if moving $10k
however without KYC everyone would be classed as suspicious for moving just $1k a month, thus without analytics and KYC more people would get reported.

so in your world view of utopia, how would you like laws to be wrote and how would you like MSB to operate and still function without real world risks to themselves and customers funds.

please write examples statements of laws and example business policies of customer accounting.

oh and please do not mis-quote the yellen rhetoric where you think yellen is now allowed to implement any policy she pleases. do some research and learn about MSB and the draft bills and realise the latest draft bill you have been indoctrinated into the tinfoil society is actually a change that helps stop yellen from just making policy at a whim

Now there are already 460 exchanges and exchangers in the world, some of them are centralized, and some are decentralized. Cryptocurrency holders can still choose which exchanges to use, but many of them choose centralized exchanges such as Binance. It is necessary to understand that states will always fight against criminal, "dirty" money, financing of terrorism. In addition, states have the full right to impose a tax on any type of activity that brings profit to citizens. Therefore, they will oblige the exchanges at the place of their registration to provide certain information about their customers. If we want the cryptocurrency to be legalized by states, we will need to agree with this.
On the other hand, centralized exchanges and mandatory KYC increases the security of cryptocurrencies located there. In the event of a hacker attack or other unforeseen circumstances, such users can count on damages.

Here's my issue with it. Yes, they are all independent businesses and so they are all driven by staying in business and maximizing their profits, which of course means that they will comply with whatever various governments tell them they must comply with in order to be allowed to continue to operate. I don't agree with those laws and regulations, and so I don't use centralized exchanges. Other people have different views. That's all fine.

My issue is that these centralized exchanges which making billions of dollars of profit of the backs of the community do absolutely nothing to try to help that community and fight some of these laws and regulations. Government says collect KYC on everyone, they do it without a second thought. Government says to start tracking deposits and withdrawals both forward and backward, not only they do they do it without a second thought, but some of them get so good at invading your privacy that they set up subsidiaries specifically for this purpose and then sell that ability to the likes of the FBI and CIA. Government passes some draconian laws regarding reporting requirements or proof of address ownership, and they are completely silent.

Exchanges should be fighting all of these. Where is the lobbying? Where is some of their billions being spent on political campaigns? There was a recent case in the Netherlands where their biggest centralized exchange Bitonic funded a lawsuit against the government and overturned a privacy invading law which would have mandated every withdrawal address to be KYCed. Why do we not see much larger exchanges like Coinbase or Binance, which make many billions more dollars in profit, fight against privacy invasion and the like?

Because they don't care about you and they don't care bitcoin. They care about their own profits and nothing else.

Bitcoin has never regarded any currency as an enemy, because all proportions are the promoters of Bitcoin's determination of the ultimate king's position. Without all kinds of things appearing along the way, how can Bitcoin make people surrender?

I 100% agree with you on this, these centralized exchanges are the enemies. They have really brainwashed a lot of people into thinking that this is how things are meant to be, while in the true sense it is not meant to be like this.

Bitcoin is meant to be fully decentralized and people are meant to be in possession of their private keys and control their wealth, and not have anyone dictate to them what they are meant to do with their money (just like banks would always do). I might agree that these centralized exchanges are easy to use than decentralized exchanges , which is definitely why so many has chosen it, but they are doing more damage than good to the system.

@op, from your point of view, I can understand and like you said, it's truly shameful and highly disappointing, also not forgetting that most of this exchanges force users to perform kyc when that is one of the things bitcoin is against.
But then, on the other hand, we can't really blame the exchanges for doing what they do, they all want to continue to stay in business, and in other to do so, they to obey and comply to governmental laws in other to avoid being sanctioned.
And also speaking of decentralized exchanges, check out uniswap, I believe you've been here long enough to know how much uniswap charges per transaction when Ethereum gas price goes awire, that is not ideal for the common man out there, when gas prices go up like that on decentralized exchanges, causing transactions fees to become too high, the common man resort to centralized exchanges in other to be able to trade their little amount without spending all on fees.
So my conclusion is, centralized exchanges are relevant and will continue to stay relevant in as much as they have their flaws, atleast, until decentralized exchanges become more user friendly in terms of fees.

Yes, it may be, and exactly.
But, so far, we cannot ignore it because mostly, decentralized exchanges are more trusted Moreover if this is about some local exchanges in which we can convert crypto to fiat directly to bank account, it is always about the centralized exchanges. Although we can do it by P2P, so far, I am not using this.
We sometimes have no choice to ignore this. But as long as we can avoid in order to do something, moreover when we are only doing a trade, it may not be exactly big problems as long as we don't want to convert to fiat.
Moreover, if it is about centralized exchanges, what we always take it as prblme is the necessary of doing KYC i whihc it relates to our personal informationa nd soemtimes we are also restrtced inc ertain exchanges becaus eof the countries.

Why it isn't suitable for Bitcoin? If your purpose is to trade Bitcoin, I think CEX is suitable for Bitcoin. We know that CEX provides more pairs for Bitcoin trading, better than the pairs of Bitcoin in DEX. With many pairs of Bitcoin in CEX, people can have many alternatives to sell their Bitcoin. So, it is very good for Bitcoin traders, isn't it?  

You are right about some of your points, but I do not agree with all of them. The first thing to note is that CEX is not the most vocal opponent of Bitcoin, despite the fact that it is opposed to the Bitcoin concept's ideology.But CEX is the thing that helps us connect with bitcoin. Because of CEX, we are being so helpful. Because of those countries where bitcoin is illegal, people are able to buy bitcoin. Because we cannot mine, how can we buy bitcoin? If we can buy bitcoin, what is the purpose of a DEX or a CEX?We may be able to obtain a portion of the bitcoin.If we directly go to mine, we will be in jail. Bitcoin is still illegal in our country, but 2.2%+ of our population uses bitcoin. I think all of them have a binance and a coinbase wallet. Because we started with that. 
 
You know, without CEX, I couldn't be a part of Bitcoin.It helps me to buy Look, they are a company, so if they want to continue their work, they have to give charge to the government. Otherwise, the government will stop their work and they will escape with your money. They keep the government's word, and that's why our money is safe too. And I know lots of people who use cex for the purpose of trade and holding. They use DEX. What you could also doBut declearing CEX enemies of Bitcoin is really like a joke. Please brother, don't mind. We are a community, so it's just my opinion. Other people's opinions can also be different too. Thank you. 

For many years, it has been said that the use of centralized exchanges is not suitable for bitcoin. But normal people can also invest through centralized exchanges. It seems that the use of these exchanges should not be blocked in order for this system to continue. Maybe one day, these exchanges will cease to be used, but it seems like it will be a long time before that happens

Technically you are right but practically we cannot depend on DEX as they not only need to improve the UI but also they need more volume as the volume is key issue over here wherein CEX offers more trading pair and also huge volume along with user friendly interface which drags us towards them through the basics of CEX like KYC itself is against the principle due to which bitcoin was created.

When volume is lesser in DEX we don't get to buy or sell at market price or its even manipulated by some whales who hold a good volume which is enough to turn the tides their way, these things needs to be fixed before we expect users to start using DEX.

CEXs don't force the users to pay tax, they already inform the users about it on their rules. If the users don't agree about it, the users can choose another type of exchange. Regarding freezing assets, it is only applied for a certain case. Basically, CEX has no intention to freeze their users' assets since it only makes the users be not active in trading on the exchange. Freezing the assets is the ultimate decision for a certain case.

No, we can't stop using CEX. CEX has a big role to develop crypto industry. We will have difficulties trading crypto coins if we have no CEX.

I think that even the centralized exchange operators have also realized this, that what they'd be doing can counter act the true purpose of bitcoin but like you said they have no choice. They need to do it continue maybe because they chose their business over btc because they want to profit although they still support btc ( buying and selling of it ).

There are still dex's anyway that we can use if a certain exchange is not available on our country or simply if we are against on the cex because we have the same mindset like the op. You didn't keep your money in cex but you still use a cex to trade. In the end you are still supporting them.

It's true.The reason for the creation of bitcoin is decentralized in nature.It should be an decentralized asset. But the cause of the decentralization was changed with legalization by the government and make allow of binance, coinbase to allow the government to get tax for their investments.


When we keep the money for the emergency. You should keep that on the bank and not on Exchange.Because when the government make allow of taxation. The funds in exchange can be used for the tax of the your holding. So don't do the things of holding in terms of cash.

Right now most governments can't collect taxes on crypto because they have not legalized it. However, since the exchanges have our KYC, imposing tax on the individuals will not be an issue. The exchanges can hand over all the data to the government if they demand it.



That's the risk that comes with centralization. You should only put that money on exchanges, which you want to trade. Excessive money should not be put on the exchanges.

the main drawback of centralized exchanges is that access can be closed at any time and the account balance is gone, but this rarely happens, there are enough topics in other sections. I have an extremely negative attitude towards most cex exchanges, I try to trade on dex where I always have access to my wallet.

I dont see the threat of Centralised exchange in this fashion, they actually dont request for tax, the government collect tax after that transaction fee Recently, Binance improve to help save transactions in a year and sum all the trade to know the actually amount as profit and tax. Most restricted IP are base on the countries and their regulations, Exchanges are forced to do that.