In an interview with a reporter from TechCrunch on July 6, Ethereum creator Vitalik Buterin commented, “I definitely personally hope centralized exchanges burn in hell as much as possible.”
According to Buterin, decentralization is paramount to the core principles of transparency and openness in the cryptocurrency space by getting rid of the “stupid king-making power.”
Buterin’s assertion has generated debate on the value of centralized cryptocurrency exchanges versus decentralized ones.
Changpeng Zhao — CEO of Binance, a leading, centralized cryptocurrency exchange founded in 2017 — responded to Buterin’s comments on Monday. Zhao tweeted: “Got asked a few times, re: ‘Vitalik’s burn in hell’. Let’s not wish others to ‘burn in hell’. Let’s have a bigger heart, and appreciate the fact that we are part of an eco-system [sic].”
According to Rumi Morales, venture capitalist and partner at Outlier Ventures, it’s understandable that many people opt for centralized platforms since they feel more comfortable with the technology, comparing it to the turbulent early days of the Internet.
Centralized exchanges have made significant strides in contrast to decentralized ones for that very reason. Winklevoss twins’ Gemini platform was recently licensed to exchange Zcash on their site. It was also the first licensed Ether exchange platform and expects to be able to trade Bitcoin Cash and Litecoin in the coming months. Meanwhile, countless unlicensed, decentralized exchanges have been shut down by government regulators, damaging crypto’s reputation in the process.
Morales expects a shift in popularity and widespread use of decentralized platforms in the future, as people become more comfortable with the concept. Meanwhile centralized networks are working to gain users’ trust. One route to this, they have decided, is championing projects for the greater good. For instance, Binance donated over $5 million USD to victims of flooding in Japan in July 2018, and Ripple, a centralized cryptocurrency, has also contributed to the fund.
According to JP Morgan, one-third of centralized crypto exchanges are hacked. Decentralized ones are not immune, though. Just 24 hours after Buterin’s colorful comments, decentralized exchange Bancor suffered a security breach resulting in roughly $13.5 million USD in losses.
Bancor commented on Buterin’s contentious comments, tweeting, “‘Burning in hell’ is a bit extreme, but we do agree with Vitalik Buterin that decentralized solutions — such as Bancor — are the future of blockchain and value exchange.”