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The article is right that as of now , exchanges are casinos. You can easily pump up coins with a few orders and watch if the rest of the herd will bite. There's

The article is right that as of now , exchanges are casinos. You can easily pump up coins with a few orders and watch if the rest of the herd will bite. There's not much use of them otherwise. Ironically, Coinbase is basically a child of US protectionism that keeps other exchanges away. At some point we must realize that exchanges are the problem, because they centralize activity and become a target for hacking, regulation and centralization. The article is right, that these exchanges have the power, since they are the gatekeepers. But i somehow think that that tech will be over time embedded in desktops and phones, we won't need exchanges.

WJW 5y ago
> we must realize that exchanges are the problem The problem for whom though? Clearly not the problem for the exchanges themselves, owning a busy exchange brings huge amounts of money and power (just look at the coinbase IPO). It's also not a problem for their users, who clearly indicate by their behavior that they prefer to store their coins in exchanges over having to store everything themselves. It's not a problem for the miners and protocol devs either, they don't care either way. And finally any governments are more likely to prefer exchanges over individual holders because it gives them a single point of contact. So, everyone with any power prefers exchanges. The only people who don't are those with no means to move users away from the exchanges.
- cblconfederate 5y ago
  Problem for the users. Exchanges are convenient in the same sense that FB or twitter is convenient. The point of decentralized finance is not to re-centralize finance or else it will have reinvented a slower wheel. As always with tech , you get what you incentivize. If we are incentivizing users to lock themselves inside new walled gardens called "exchange" then we actively promoting evil.
  - WJW 5y ago
    Well you phrase it as "we are incentivizing" but I'm certainly not on the dev team for any crypto (or exchange for that matter). How could you incentivize those dev teams to make exchanges undesirable for the average user? I think it would be very hard, because a dev would benefit most from mass adoption of "their" coin and mass adoption is currently only possible through exchanges. Self-hosting is either too difficult or too dangerous for most would-be users. In any case you state it as a fact that users should want to give up convenience for independence, but simply by observing their behavior we can conclude that most users don't give a shit about anything except convenience (perhaps because they are already so wrapped up in whatever society they live in that independence is not really possible anyway). Until you manage to change that, persuading users to give up convenience for a higher cost and higher complexity solution is always going to be an extremely uphill battle.
    - cblconfederate 5y ago
      > don't give a shit about anything except convenience Yeah what i m saying is people should invest in tech that makes the "right" way more convenient
      - WJW 5y ago
        It seems the people who invest are themselves not incentivized to optimize for anything but convenience.
croon 5y ago
I agree with you that exchanges are the problem, in that you are just reinventing banks, but with worse regulation and extra steps, both cost and environmental. I would though suggest that cryptocurrencies wouldn't be fraction of where it is right now without exchanges enabling everyones grandma to easily enter the casino and pumping up the pyramid scheme.
- cblconfederate 5y ago
  Then i would prefer if bitcoin falls down to $10000 and people start working on actually integrating these payments to the things i use every day (like, this browser?). It feels like we are living the era of future bubbles, where nobody wants to deliver anything because they are afraid that they will break the rally of their stock/coin. We should have a name for this weird era.
  - moffkalast 5y ago
    Well bitcoin still has dollars in transaction fees, so that renders it useless for any day to day purchases. There are feeless blockchains like NANO which solve many problems but mostly get ignored because they can't be mined and people can't create currency out of thin air. What people are missing is that crypto is its own self perpetuating economy at this point, even if it's mostly scheme based.
- chewyland 5y ago
  Beautifully said.
Quindecillion 5y ago
Hopefully decentralised exchanges (DEXes) like Bisq and whatever Jack Dorsey is working on with TBD54566975 at Block will be an answer to this https://block.xyz/ https://block.xyz/
jasode 5y ago
>At some point we must realize that exchanges are the problem, because they centralize activity [...] But i somehow think that that tech will be over time embedded in desktops and phones, we won't need exchanges. Exchanges of some type will always exist and get re-invented as an emergent phenomenon of humans' desire for efficiency. - a seller wants to sell something (corporate stock, or commmodity like corn or oil, or collectibles like Nike shoes, cryptocoins, etc) ... but doesn't know who the future unknown buyers will be to fetch the highest price - a buyer wants to buy something ... but doesn't know the future unknown sellers to try and find the lowest price -- or even availability of an item at any price -- such as hard-to-find NVIDIA video cards Those 2 forces of each side trying to maximize a marketplace will naturally re-create exchanges. Yes, they are "centralized". That's kind of the point because people value efficiency in finding each other to transact. There is no computer science technology that lets buyers & sellers store future unknown market participants locally on their smartphones. Likewise, if you try to get around not having hubs/exchanges on a p2p network by constantly broadcasting buy/sell bids/asks, you're basically asking a billion local devices to recreate in their limited RAM a virtual "order book" of which all participants have an incomplete picture of the total market (because time limitations of network hops, latency, etc) -- which means less optimal selling & buying prices. You're also overwhelming the p2p network with traffic for "bids/asks" (pinging price queries) rather than "settlements" (finalized transactions). In analogous desire for efficiency, this is why p2p bittorrent still has hubs like tracking servers because people want to find the files faster than waiting for cascading peer queries. EDIT reply to: >Decentralized exchanges exist Yes, DEX like Uniswap exist but they do not solve the same problems as centralized exchanges and market makers. There is no protocol invention or DEX that can prevent the re-emergence of centralized exchanges because there's always a gap in desirable functions (efficiency, discoverability, liquidity, convertibility, etc). E.g. convert to fiat on Uniswap not currently possible: https://www.google.com/search?q=uniswap+convert+to+fiat https://www.google.com/search?q=uniswap+convert+to+fiat
- cblconfederate 5y ago
  Decentralized exchanges exist

WJW 5y ago

> we must realize that exchanges are the problem The problem for whom though? Clearly not the problem for the exchanges themselves, owning a busy exchange brings huge amounts of money and power (just look at the coinbase IPO). It's also not a problem for their users, who clearly indicate by their behavior that they prefer to store their coins in exchanges over having to store everything themselves. It's not a problem for the miners and protocol devs either, they don't care either way. And finally any governments are more likely to prefer exchanges over individual holders because it gives them a single point of contact. So, everyone with any power prefers exchanges. The only people who don't are those with no means to move users away from the exchanges.

cblconfederate 5y ago
Problem for the users. Exchanges are convenient in the same sense that FB or twitter is convenient. The point of decentralized finance is not to re-centralize finance or else it will have reinvented a slower wheel. As always with tech , you get what you incentivize. If we are incentivizing users to lock themselves inside new walled gardens called "exchange" then we actively promoting evil.
- WJW 5y ago
  Well you phrase it as "we are incentivizing" but I'm certainly not on the dev team for any crypto (or exchange for that matter). How could you incentivize those dev teams to make exchanges undesirable for the average user? I think it would be very hard, because a dev would benefit most from mass adoption of "their" coin and mass adoption is currently only possible through exchanges. Self-hosting is either too difficult or too dangerous for most would-be users. In any case you state it as a fact that users should want to give up convenience for independence, but simply by observing their behavior we can conclude that most users don't give a shit about anything except convenience (perhaps because they are already so wrapped up in whatever society they live in that independence is not really possible anyway). Until you manage to change that, persuading users to give up convenience for a higher cost and higher complexity solution is always going to be an extremely uphill battle.
  - cblconfederate 5y ago
    > don't give a shit about anything except convenience Yeah what i m saying is people should invest in tech that makes the "right" way more convenient
    - WJW 5y ago
      It seems the people who invest are themselves not incentivized to optimize for anything but convenience.

croon 5y ago

I agree with you that exchanges are the problem, in that you are just reinventing banks, but with worse regulation and extra steps, both cost and environmental. I would though suggest that cryptocurrencies wouldn't be fraction of where it is right now without exchanges enabling everyones grandma to easily enter the casino and pumping up the pyramid scheme.

cblconfederate 5y ago
Then i would prefer if bitcoin falls down to $10000 and people start working on actually integrating these payments to the things i use every day (like, this browser?). It feels like we are living the era of future bubbles, where nobody wants to deliver anything because they are afraid that they will break the rally of their stock/coin. We should have a name for this weird era.
- moffkalast 5y ago
  Well bitcoin still has dollars in transaction fees, so that renders it useless for any day to day purchases. There are feeless blockchains like NANO which solve many problems but mostly get ignored because they can't be mined and people can't create currency out of thin air. What people are missing is that crypto is its own self perpetuating economy at this point, even if it's mostly scheme based.
chewyland 5y ago
Beautifully said.

Quindecillion 5y ago

Hopefully decentralised exchanges (DEXes) like Bisq and whatever Jack Dorsey is working on with TBD54566975 at Block will be an answer to this https://block.xyz/ https://block.xyz/

jasode 5y ago

>At some point we must realize that exchanges are the problem, because they centralize activity [...] But i somehow think that that tech will be over time embedded in desktops and phones, we won't need exchanges. Exchanges of some type will always exist and get re-invented as an emergent phenomenon of humans' desire for efficiency. - a seller wants to sell something (corporate stock, or commmodity like corn or oil, or collectibles like Nike shoes, cryptocoins, etc) ... but doesn't know who the future unknown buyers will be to fetch the highest price - a buyer wants to buy something ... but doesn't know the future unknown sellers to try and find the lowest price -- or even availability of an item at any price -- such as hard-to-find NVIDIA video cards Those 2 forces of each side trying to maximize a marketplace will naturally re-create exchanges. Yes, they are "centralized". That's kind of the point because people value efficiency in finding each other to transact. There is no computer science technology that lets buyers & sellers store future unknown market participants locally on their smartphones. Likewise, if you try to get around not having hubs/exchanges on a p2p network by constantly broadcasting buy/sell bids/asks, you're basically asking a billion local devices to recreate in their limited RAM a virtual "order book" of which all participants have an incomplete picture of the total market (because time limitations of network hops, latency, etc) -- which means less optimal selling & buying prices. You're also overwhelming the p2p network with traffic for "bids/asks" (pinging price queries) rather than "settlements" (finalized transactions). In analogous desire for efficiency, this is why p2p bittorrent still has hubs like tracking servers because people want to find the files faster than waiting for cascading peer queries. EDIT reply to: >Decentralized exchanges exist Yes, DEX like Uniswap exist but they do not solve the same problems as centralized exchanges and market makers. There is no protocol invention or DEX that can prevent the re-emergence of centralized exchanges because there's always a gap in desirable functions (efficiency, discoverability, liquidity, convertibility, etc). E.g. convert to fiat on Uniswap not currently possible: https://www.google.com/search?q=uniswap+convert+to+fiat https://www.google.com/search?q=uniswap+convert+to+fiat

cblconfederate 5y ago
Decentralized exchanges exist