Binance’s Plan to Save Crypto – Will it Work?
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Binance has emerged today as the largest crypto exchange in the world based on the volume of transactions carried out on its platform daily. This exchange has been regarded as one of the most secure crypto exchanges for trading. One unique feature that traders find attractive in trading with this exchange is the low commissions charged for trading on their platform.
Amidst the current criticisms directed at centralized crypto exchanges following the crash of the second largest crypto exchange – FTX, its rival exchange – Binance had attempted to redeem the image of the crypto industry by proving their transparency to investors using the platform. Can Binance redeem the image of the Centralized cryptocurrency exchanges again? Will investors still be confident in trading crypto with Binance and other centralized crypto exchanges? This work has examined the efforts from Binance towards saving the crypto industry from collapse amidst the current crisis.
What you need to know about Binance?
When it comes to the largest centralized crypto exchange for trading, the first option that comes to mind is Binance. This exchange has become the most prominent player in the industry with over 30 million users on the platform. This exchange was founded in 2017 by the Chinese-Canadian entrepreneur Changpeng Zhao.
Binance plans to save crypto – Will it work?
In a bid to restore investors’ confidence in using the Centralized Crypto exchanges after the crash of the FTX exchange, the CEO of Binance exchange – Changpeng Zhao has made several tweets informing investors trading with Binance exchange that the exchange will soon publish a transparent “proof of reserves” to assure them that their funds are safe with them and that they have enough funds to pay all withdrawal requests from traders in the future.
Alarmed by this call from the Binance CEO, other crypto exchanges including: OKX, Kucoin Crypto.com, Huobi, and Bitfinex have come to announce that they will be releasing their proof of reserve soon.
Furthermore, to reduce the case of crashed crypto projects, especially those seen in the past, Binance had also announced that the exchange will launch a recovery fund to support good crypto projects on the platform whenever the need arises.
And to crown it all, the Binance CEO who has become the foreplayer in the crypto industry moved on to publish what he described as the “Six Commitments for Healthy Centralized Exchanges“.
We have summarized them below:
● Being risk-averse with users’ funds on the exchange
● Avoid using their native tokens as collateral
● Sharing their life proof of assets
● Keeping strong reserve for funds
● Avoiding excessive offer to traders
● Strengthening and enforcing strong security protocols on the trading platform.
These efforts by Binance to restore the image of the centralized crypto exchanges and revive investors’ confidence in the industry have attracted more investors to invest in Binance exchange. Many crypto traders especially those affected by the FTX crash have now migrated to Binance as a more transparent crypto exchange for trading today.
Advantages of trading with Binance exchange
Here are a few advantages of trading with Binance exchange:
● Has a large trading volume on the exchange
● The transaction fees for trading with the exchange are cheaper compared to other exchanges.
● Has a proof of reserve to process all withdrawal requests.
● The exchange runs on one of the strongest Blockchain known as the Binance Smart Chain network.
Disadvantages of trading with Binance exchange
● How can one trade with the Binance exchange today?
● Uses a hot wallet for storing some of its digital assets which are prone to attack.
● It requires identity verification before one can transfer a large amount from the exchange.
● Not all tokens have been listed for online trading on the exchange.