Bitcoin Exchanges are more Centralised than Traditional Exchanges.
Imagine you were an equity trader and used a Stock Exchange to trade between equities and cash and back.
What would happen if they unexpectedly filed for bankruptcy? How much money would you stand to lose? The answer is zero.
You would lose nothing. Your equities would be safe at your custodian bank and your cash would be wherever
you left it.
However, if you were a Bitcoin trader and your Bitcoin exchange went bankrupt, you could have lost everything – as users of Mt.Gox discovered to their cost last week.
How can this be? Isn't Bitcoin supposed to be the ultimate decentralized financial system? Well, yes&hellip the Bitcoin
network is decentralized but many of the major players are not. And, worse, exchanges like Mt.Gox as more
than just exchanges: they are also the Bitcoin custodian, clearing& house and bank.
The diagram below shows the problem. From the time a buyer deposits cash or a seller deposits Bitcoins, they are
utterly dependent on the solvency of that exchange until they withdraw their funds at some later date. You have
counterparty exposure to the exchange for all this time.
Trending Blogs
Cryptocurrency Exchange
Turn Your Memes Into Money With Our Meme Coin Development
Transform memes into profits with cutting-edge Meme Coin Development services. Create a cryptocurren ...
ICO
Amplify Your Digital Assets With Our End-To-End Exchange Listing Services
A crypto exchange is a digital platform where individuals and traders can buy, sell, and exchange va ...
ICO
ICO Marketing Service - Boosting Your Token Sale Success
ICO Marketing Services refers to the specialized marketing strategies and techniques employed to pro ...
NFT
NFT Launchpad Development Services- To Raise Funds For NFT Projects
The emergence of NFT launchpad has provided new opportunities for artists, musicians, and producers ...
NFT
Slot Game Development - To Launch Online Casino Slot Machine Game
Slot Game Development is the process of creating online casino gaming platform like slot machine gam ...
Blockchain
AI & ML Development Services - Build Your Business With Our Innovative AI ML Technologies
Leverage our custom artificial intelligence and machine learning development solutions that are tail ...
NFT
Veve Clone Script - Launch Fandom NFT Marketplace App like Veve
Veve clone script is an app-based marketplace script that helps to build an NFT marketplace app for ...
NFT
Initial NFT Offering Platform Development Company - To Develop Your NFT Crowdfunding Platform
Coinjoker is a top-notch Initial NFT Offering (INO) Platform development company, that has been acti ...
NFT
Top 5 NFT Game Clone Scripts in 2023 - Start your NFT Gaming Platform Immediately
Businesses and startups have started to invest in developing NFT gaming platforms with NFT game clon ...
Cryptocurrency Tokens
Soulbound Token Development Services - Create Web3 Powered SBTs
Soulbound Token Development is an innovation that safeguards the credentials stored in the soul. SBT ...
