Binance BNB releases Proof-of-Reserves but industry still believes in Decentralized Exchanges
Binance releases Proof-of-Reserves report
Binance, one of the world's largest cryptocurrency exchanges, has recently released a report detailing its Proof-of-Reserves. The report is designed to show that Binance holds enough cryptocurrency to cover all customer balances. This is important because it helps to build trust between the exchange and its users. In the report, Binance shows that it holds more than 1% of all Bitcoin in circulation. This is a significant amount of BTC, and it demonstrates that Binance is a responsible and reliable exchange. The Proof-of-Reserves report is a positive step for the cryptocurrency industry, and it will help to build trust in exchanges like Binance.
FTX collapse forced Binance BNB to release proof-of-reserves
FTX is a company formerly headed by Sam Bankman-Fried. In early 2021, FTX was involved in a major scandal when it lost $200 million of user funds due to an alleged hack. This caused a lot of fear and mistrust among crypto users and led many to move their funds from FTX to other exchanges.
Despite this, FTX never learned its lessons and proceeded to use user funds to fund its own projects, eventually leading to problems with liquidity causing the company to file for chapter 11 bankruptcy and taking down people's money with it.
This made a lot of people lose confidence in cryptocurrency despite the fact that decentralized exchanges do not have this problem, in fact, most of the scandals in cryptocurrency that causes a major dip in price and loss in buyer confidence are from centralized exchanges and institutions.
This led to Binance releasing a proof of reserve, championing transparency and advocating for more security. While they are getting brownie points from lay investors and enthusiasts, the majority begs to differ.
Proof of reserves by Binance BNB is useless
Although some people are beginning to accept the usefulness of proof-of-reserves, Jesse Powell, CEO and co-founder of US based exchange Kraken believes it is still a useless practice. He went on to say that "putting a hash on a row ID is worthless without everything else."
The CEO of Kraken said on Twitter "I'm sorry but no. This is not PoR (Proof of reserve). This is either ignorance or intentional misrepresentation. The merkle tree is just hand wavey bullshit without an auditor to make sure you didn't include accounts with negative balances. The statement of assets is pointless without liabilities."
Additionally, he is not the only person to warn about stealing funds. For some, themselves included, the fix lies in going back to a core concept of cryptocurrency: you should not rely on centralized groups. "Proof of reserves is not necessarily a bad solution, but it still doesn’t paint a full picture of an exchange’s solvency or change the underlying fundamental truths,” according to Omer Sadika, Co-Founder of Odsy Network. “Centralized exchanges can try to manipulate their proof of reserves, and to date, exchanges have largely withheld other critical information such as their total liabilities. Without an accompanying breakdown of liabilities, an exchange’s proof of reserves alone is insufficient.”
Industry beginning to go to decentralized exchanges
Decentralized exchanges are becoming more popular in the cryptocurrency industry. There are a few reasons for this. First, they are much less likely to be hacked than centralized exchanges. This is because there is no central point of attack for hackers to target.
Second, decentralized exchanges offer more privacy. Since there is no central authority, users can trade without revealing their identity.
Finally, decentralized exchanges are often faster and more efficient than centralized ones. This is because they don’t have to rely on a single server or database. As a result, they can handle a lot more traffic without experiencing any slowdown.
For these reasons, it’s not surprising that industry leaders are beginning to move away from centralized exchanges and towards decentralized ones.
What are decentralized exchanges and how do they work?
Decentralized exchanges, or DEXs, are digital asset trading platforms that operate without a central authority. Instead of relying on a third-party like a bank or clearinghouse to manage transactions, they connect buyers and sellers directly through peer-to-peer networks.
Unlike centralized exchanges, decentralized exchanges don’t take a custodial role when it comes to people's tokens that's why it is secure in terms of a collapse. Even if a collapse happen, the majority of people will either not be affected or affected little since this is a trustless and permissionless type of exchange, the way cryptocurrency is supposed to be.
Why are decentralized exchanges becoming more popular?
Decentralized exchanges are becoming increasingly popular for a number of reasons. They provide users with more privacy, since there is no central authority to collect user data or track transactions. They also offer better security, since there is no single point of failure that hackers can target.
Finally, they provide faster and cheaper transactions than centralized exchanges. And if those weren't enough, FTX collapse and the like of Sam Bankman-Fried cannot steal your money in a decentralized exchange making it a more and more "only option" type of choice between a centralized and decentralized exchange especially for whales and other giant financial institutions.
How are decentralized exchanges more secure than centralized exchanges?
Decentralized exchanges are more secure than centralized exchanges because they don’t have a single point of failure. Since there is no central authority managing the exchange, there is no way for hackers to target it. Additionally, since the transactions take place directly between two parties, decentralized exchanges are less vulnerable to external interference and manipulation. Finally, they are exponentially less likely to have liquidity problems.
Decentralized exchanges or DEXs are also usually more simple in function that centralized ones that add a lot of bells and whistles to their exchanges causing multiple points of failure.
What are the benefits of using a decentralized exchange?
The primary benefit of using a decentralized exchange is that it offers users more privacy and security. Since there is no central authority, user data and transactions are not accessible to the public. This makes it much harder for hackers to target funds on these exchanges. Additionally, since these exchanges don’t require deposits from users, they offer better liquidity security than centralized exchanges.
Why is Toon Swap decentralized exchange more popular than centralized exchanges?
Decentralized exchanges are becoming increasingly popular for a number of reasons. One of the biggest advantages of a decentralized exchange is that it is not subject to the same level of regulation as a centralized exchange. This means that users can trade anonymously and without having to comply with know-your-customer (KYC) and anti-money laundering (AML) regulations.
In addition, decentralized exchanges are not subject to the same level of hacking risk as centralized exchanges. Because there is no central server, it is much more difficult for hackers to steal user information or data.
Finally, decentralized exchanges typically have lower fees than centralized exchanges. This is because there is no need to pay for middlemen or third-party service providers. As a result, decentralized exchanges offer a more efficient and cost-effective way to trade digital assets.
Toon Finance's Toon Swap is solving all the problems central exchanges pose.
Toon Finance is a decentralized finance protocol that allows users to trade and exchange digital assets in a trustless, permissionless, and secure manner. While Toon Swap is its native decentralized exchange. With Toon Swap, users don't have to worry about the risks of central exchanges – such as hacking risk or KYC/AML compliance – since it is a completely decentralized platform.
Furthermore, Toon Swap can bridge gaps between multiple blockchains making multiple partnerships possible when they never were before and that's just the least of its features.
What are the benefits of using Toon Swap decentralized exchange over other exchanges like Binance, Uniswap, and Pancake Swap?
Toon Swap decentralized exchange DEX is outright better than Binance, Uniswap, Biswap, and Pancake Swap. There are multiple reasons why this is so but the biggest reason apart from security and safety is Space Battlegrounds.
Toon Swap Space Battlegrounds
Toon Swap Space Battlegrounds is a new and admittedly, ingenious approach to p2e or play to earn. Play to earn have been around as a concept for a long time but few succeed with it, one of the biggest reason is because games are both hard AND expensive to make and just because you manage to make them doesn't mean that they'll actually be good.
This is why we have placed our bets on Toon Finance, if the goal is to make money in the first place using games, do you have to make it complicated?
Toon Swap, in a stroke of utter genius, used games such as chess and coin toss instead among other well known and publicly available games. These games will have a winner that'll earn winnings but both players and spectators can join the fun by placing bets.
With this p2e mechanic baked right in a decentralized exchange, this encourages token movement like no other exchange out there.
Proof of reserve and other mechanics by Binance BNB meaningless, go back to basics and support good projects instead.
Website: https://toon.finance/
Presale: https://buy.toon.finance/
Twitter: https://twitter.com/ToonSwapFinance
Telegram: https://t.me/ToonSwapFinance
CoinMarketCap: https://coinmarketcap.com/currencies/toon-finance/
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