Binance, the world’s largest crypto exchange by trading value, publicised that it will launch its “tailored blockchain”, for trading digital currencies. The new network is dubbed “Binance Chain” and it is a step forward in building a decentralized exchange (DEX).
Bitcoin gained popularity due to its decentralized nature. However, cryptocurrency trade until now was mostly managed by centralised exchanges. The new Binance Chain will offer traders a decentralized exchange which does not require any third party such as exchanges to hold funds.
Binance, the cryptocurrency exchange giant, noted on its blog that:
“As a public blockchain, Binance Chain will mainly focus on the transfer and trading of blockchain assets, as well as provide new possibilities for the future flow of blockchain assets”
The company in it blog post stated that the company launched Binance Chain after “extensively researching decentralized exchange frameworks and analyzing existing implementations,”
With the use of decentralized exchanges, traders will not need to consign their crypto assets to centralized crypto exchanges. Centralised exchanges are vulnerable to hacks, which the crypto industry has repeatedly seen. The largest hacks in the industry include the Mt. Gox hack and the recent Coincheck hack of over $500m.
The Binance decentralised exchange will not be the only one in the market. EtherDelta is another DEX, that operates on Ethereum Blockchain, permits traders to trade ERC20 tokens in a decentralized manner. However, many regard the speed to be too slow and the liquidity insufficient.
DEX Not Immune To Hacks
Decentralized exchanges are safe compared to centralized exchanges. However, DEX is not completely immune to hacks as their web hosting is centralized. DEX platforms have not gained much popularity as the can only trade digital assets that operate on the same blockchain. However, the introduction of Lightning Network - the “second layer” payment protocol, enables cross blockchain trades, it is still in its development stages.
The Hong-Kong based company Binance have not clarified how it will operate its DEX platform along with its centralized exchange. Although it highlighted that more information will be revealed soon.
The company stated, “Centralized and Decentralized exchanges will co-exist in the near future, complementing each other, while also having interdependence,”
According to Bloomberg, hackers have managed to steal $700 million worth of digital assets since January. These hacks have put pressure on governments to further regulate the crypto market. Just days back, Binance was able to fend off a large scale phishing hack.
Binance Coin (BNB), is Binance’s cryptocurrency which is as an ERC20 token, will be Binance Chain’s native asset. For now, the new decentralized exchange is in its development phase. Binance has not mentioned when the exchange will go live. The news reflected well on the BNB price and saw a surge of about 25%.