To Centralize or Not to Centralize – The Future of Cryptocurrency Exchanges

Forgive my butchering of that line from Hamlet, but to answer the question, it is “to centralize.” When trying to make a prediction, especially one of this sort, odds are the prediction that accounts for the human desire for ease is the surest bet.

Centralized Exchanges

If that’s your basis for prediction, American cryptocurrency traders and users will flock to centralized exchanges like Coinbase. Coinbase works, and it is easy to use. It’s also fast and has high liquidity. Decentralized exchanges generally do not have these advantages, as far as I can tell. Also, if you’re an American, you don’t have much choice other than Coinbase and a few others. Foreign exchanges don’t take their business to America because they don’t want to jump through the SEC’s flaming hoops to get licensed.

Now that we have our prediction, what will be the consequences of a centralized cryptocurrency market? Centralisation means monopolisation. Don’t forget that not too long ago, the internet was decentralized. When Google started, it shared the search engine market with Yahoo, Ask Jeeves, MSN Search, and dozens more. Now, Google controls 90 percent of the American search engine market. Likewise, Facebook once competed with sites like Myspace and Xanga; now, you would be hard-pressed to find anyone who remembers Myspace or Xanga.

Google and Facebook were successful because they offered better products; likewise, Coinbase is the same, as they offer better services than anyone else at the moment. Eventually, Coinbase, or someone like them, will centralize and monopolize the cryptocurrency market to their benefit. They will monopolize it to such an extent that you will have no other choice but to use them. And politicians will be all too happy to oblige them, so long as Coinbase’s lobbyists keep their coffers full.

Issues Around Decentralization

Cryptocurrency owners using alternative decentralized exchanges that are anonymous aren’t going to like this, but what are they going to do about it? Write to their congressman? Hah! Complain to the SEC? Double hah! Congress and the SEC have had a decade to break Big Tech monopolies and haven’t done so. What makes you think they will break a future monopoly over the cryptocurrency exchange market? America’s lawmakers and bureaucrats will do nothing of the sort as long as they slurp like swine at lobbyists’ troughs.

For all you people out there who think this situation is impossible because “blockchain can’t be centralized” or some such nonsense, keep in mind that blockchain was invented by human beings, not God. If human beings can create it, they can alter it, either directly through programming or indirectly with regulation. And to all of you who think centralized exchanges with KYC, and all that other regulatory garbage that didn’t exist 100 years ago, are your best bet, ask yourself how that worked out with Google, Facebook, and that weird-beard Jack Dorsey at Twitter.

These Big Tech companies now control the global flow of information and can block your access to it if they don’t like your political opinions. If you think Coinbase won’t kick you out of their monopolized financial system because they don’t like you, think again; in fact, they already did that, having blocked Peter Brimelow’s Vdare. Now, you may think Peter Brimelow’s political opinions are strong meat, especially on immigration, but if they can do it to him, they can do it to anyone.

I harp a lot on Coinbase, but I had to pick one exchange for the flow of the article. Likely, there will be a few others, including Binance. But, choosing between them will be like choosing banks in America, where you get the same crappy fees and interest rates on loans and credit cards no matter where you go.

Centralization may be the easier road, but to modify another old line, “The road to hell is paved with the corpses of those who thought it was the easy road.”

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