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Should we trust in Binance?

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Binance

It would seem that Binance's goal is to be the blockchain infrastructure for the entire cryptosphere. Evidently, it has everything in its favor to achieve this goal, supported by the competitive advantage of being the cryptocurrency exchange with the highest volume of operations worldwide. Binance now ventures into the world of DeFi (decentralized finance), the new horizon that captures the attention of digital currency investors.

Binance is more than just an exchanger, it is an ecosystem configured to serve as a common thread towards this new global digital financial network that aims to amalgamate all commercial concepts in the cryptocurrency market. After its successful ICO with which they raised $15 million in 2017, Binance has grown to have its own cryptocurrency, the Binance Coin (BNC) token, the third in market capitalization only behind bitcoin and ether and now they are going strong with their own blockchain, the well-known Binance Smart Chain (BSC); a network that the company claims is decentralized, ready to offer the same as Ethereum but at a lower cost for users.

Those of us who are still beginners in the crypto universe must remember that transactions in a blockchain are not free, for example in Ethereum, the commission to be paid by users for validating nodes to confirm a transaction is called "gas". At Binance, they make use of a mostly centralized mixed model (only 21 validator nodes, to which a number of validator node candidates are added randomly per 24 hours), which makes BSC capable of congregating thousands of transactions without congestion and high fees.

Obviously this is advantageous for users who do not suffer the economic rigors of Ethereum's transaction fees, although Binance's model is highly suspect: it is not decentralized. By making use of a system where only 21 nodes are responsible for performing validations per transaction, users get speed and lower costs but in exchange they lose freedom, beyond the few "independent" nodes involved in the blockchain.

So, is BSC an independent platform, the answer is no. Binance tries to build a more or less decentralized image to the crypto-investor community, they see themselves as a project that has nothing in common with their exchange version which is centralized. On the other hand Binance shields itself in its compatibility with Ethereum, a project that also sells itself as decentralized although some doubt (myself included) this quality of Vitalik Buterin's work.

So far BINANCE has not announced it publicly, but from its actions it gives the impression that it seeks to shape itself as a true monopoly in the world of cryptocurrencies. Offering confidence to investors through its fast but dubiously independent platform has given this company an untapped power in the cryptosphere. Binance is the main exchange in the United States, which implies that the US government has access to the crypto-financial information of each of the company's users. There is also the possibility of blocking accounts if a user is considered a terrorist, a money launderer or simply has a nationality of a country whose government is considered an enemy.

If Binance's bet on BSC goes well, it could become the great host of the world's [de]centralized finance, hosting applications that allow a whole series of functions (borrowing/loaning, leveraging funds, investing, among other things) with cryptocurrencies. To this end, Binance launched a $100 million fund to attract developers who will in turn work their network with this type of tools.

This massification of BSC has resulted in an exponential growth in these first four months of the year of its cryptocurrency Binance Coin, since this altcoin is required to perform any operation in this blockchain. With a market capitalization of Binance Coin exceeding $86 billion consolidates it at this moment as the most powerful centralized cryptocurrency in the world.

It seems clear that Binance Smart Chain hopes to eventually overtake Ethereum as the main recipient of funds within the smart contracts concept, for this it uses its mixed system where it manages to offer faster transactions and lower transaction fees, while Ethereum is still struggling to curdle its 2.0 update initiated this year. For now, the result does not reflect a positive assessment of Ethereum's evolution, a situation that BSC has taken full advantage of.

On the other hand, the issue of security is another worrying factor in the Binance blockchain, especially in view of the attacks received by PancakeSecurities. the attacks received by PancakeSwap and Cream Finance (apps belonging to the BSC ecosystem) a few weeks ago, to which the company states that they are not responsible for what happens to any of the applications, since they are not theirs. Those responsible would be, in any case, the developers of the app and the users who should be aware of their investments.

It is clear that as we give our trust to Binance this company will accumulate more power that we are consciously handing over to a centralized institution, knowing what this means in an environment in which we strive to be free and independent. Binance may have the best intentions but we as users with an awareness of the power of the decentralized way have a duty to ensure that this quality is maintained.

Posted Using LeoFinance Beta