• Tue. May 28th, 2024

2020 – A Cannibalistic Year for Centralized Crypto Asset Exchanges

Oct 5, 2020
2020 – A Cannibalistic Year for Centralized Crypto Asset Exchanges

Cryptowisser, an analyst of the crypto industry and crypto exchange firms, published its recent report. In the report, Cryptowisser has said that 2020 has turned out be a graveyard for many crypto exchange firms.

The report suggests that a large number of crypto exchanges, in particular, decentralized exchanges have vanished for several reasons. Some of them have been shut down, a few perished and some simply could not sustain.

It has been suggested in the report that increasing competition and imposition of regulations have swept away many exchanges. Some of the reasons noted in the report why exchanges have vanished are due to hacks, scams etc. Government influence to bring exchanges within the regulatory framework is also noticed as one of the reasons.

The report further sheds light upon further aspects that lead to the closure of centralized exchanges. Firstly, the existence of “decentralized exchanges”, secondly derivatives exchanges and thirdly due to non-availability of alternatives to crypto.

Since the servers of decentralized exchanges are available throughout the world, it automatically reduces the chances of unauthorized access. Similarly, the fees being charged by decentralized exchanges as compared with centralized exchange is much cheaper. This gives an extra edge of decentralized exchanges and takes away considerable business from centralized exchanges.

Similarly, due to their expanded network, decentralized exchange is equipped to conduct multiple transactions at a time. They can also handle huge trading volumes without jeopardizing their performance. However, with the centralized exchanges, it is completely opposite.

On the other hand when centralized exchanges are compared with derivatives exchanges, the later often see exceptional growth.

The report also suggested that the statistics show that currently, derivatives exchange are taking a lead in the crypto industry. Their presence is getting stronger than ever before in the crypto world.

Another important factor contributing in the closure of centralized exchanges that they do not have crypto alternatives with them. This is another evident reason for the closure of centralized exchange all around the world.

Similarly being centralized requires the following of regulatory framework of the governments. The report notes that sometimes the new exchanges find it very difficult to cope with the regulations. As a result, the exchanges are indirectly forced to shut down.

The report also referred to a Dutch exchange that very recently started its operations under the name “NLexch”. However, the Dutch exchange was shut down in September this year because it could not comply with the Government regulations.

However, the people who are part of the centralized crypto exchanges are fearing the same fate. They are expecting the Government should own them as a source of helping the country’s economy. Many of the centralized exchanges have also urged the governments to make centralized-exchange friendly policies, Cryptowisser’s report suggested.

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