2017 is the year when ICO broke out, and it is also the year when supervision is concentrated. In a year, the price of Bitcoin reached $15,000 for the first time, and Ethereum hit $1,200 from $10 at the beginning of the year. The explosion of wealth in the currency circle has attracted the attention of the mass media. In the past year, the virtual currency exchange has become a big player in the limelight. Binance, which was established only half a year ago, has become the world's largest digital currency exchange. Whether it is a currency exchange or a fiat currency exchange that opens the virtual door to the traditional world, 2017 can be described as a bright year. So what big events will happen in the exchange world in 2018? Let's take a look at the current state of the trading market.
Insecure: Risk of loss and theft of funds due to their centralized nature. They are legally countable and custodians of user funds, 73% of centralized exchanges are custodians of user funds, and only 23% let users control their own private keys. They are extremely attractive to hackers because they are responsible for hundreds of millions of traders every day, storing their information on servers.
Lack of liquidity: Large orders are difficult to match. Even at the peak of the asset's price, trading volume is still low (compared to traditional financial markets).
Fragmented Markets: Divide global liquidity into several major markets. There is no clear market leader in trading volume, which increases liquidity problems.
Users face a high level of risk: due to performance issues, market manipulation, hardware issues, latency issues, and facing issues dealing with large transaction volumes.
Lack of trust and transparency: The real costs and processing of transactions are opaque, contain high transaction fees, often much larger than declared fees, and improper operations during peak traffic times lead to high latency for exchanges. Plus, they are able to use front-end orders, which is illegal.
Uneducated users: The market is filled with pure speculators who are unaware of the safe ways to trade cryptocurrencies.
When centralization brings fast transactions and great liquidity to exchanges, it also brings the biggest problem to exchanges—security issues. Centralized exchanges have assumed too many important roles, such as user asset management, system risk control, transaction data storage, etc. And all assets are stored in a small number of wallets, which can affect the whole body. Once hacked, the loss is self-evident. Moreover, in such a model, the power of centralized exchanges is very large, which also brings potential problems of transparency and security. User data is opaque, transaction data is opaque, and the transaction process is opaque. These opacities allow exchanges to do evil, but as users, they have no ability to understand the truth.