The other day, while I was stuffed into the airport shuttle bus full of passengers (most of them were just as exhausted as me from a seriously delayed flight from Hong Kong), an admired voice suddenly refreshed me from my light-headedness:

“China is now, to a significant extent, a cashless society with widely-adopted online and mobile payment methods. Life here can be really convenient, not to mention that the transaction fees are much cheaper than using a credit card.”

Fine, consider the “admired voice” as a rhetoric.

But our American friend here was not necessarily exaggerating. It might not be a joke that even beggars in my country ask givers to scan a QR code for donations.

Convenience has a price tag though, a big one — privacy.

You can imagine how upset I got when I was forced to upload a soft copy of my ID card to a major third-party payment platform. I would not be allowed to use that tool any more otherwise.

I mean, I get it, the whole point of Know-Your-Customer is to protect the good guys like me. But I don’t really feel comfortable handing sensitive personal information such as my ID to a monopoly payment firm, though they claim it is for protection.

I am not saying these internet giants would deliberately cross the line and act maliciously with the sensitive data, or that they wouldn’t keep updating their security protocols.

They surely will do, just like us and our peers in the crypto world. We all reckon that protecting users’ assets and information is the first priority. We stick to that by all means.

But what if there’s a purely technical solution for this, regardless of the moral hazard? Wouldn’t that be great?

Unfortunately, there isn’t yet. Fortunately, there will be. In our arena, the solution will be a high functioning fully decentralized crypto exchange — the long-term goal for most of us.

A decentralized exchange is a marketplace, like a barter, where transactions are implemented peer to peer, no need to rely-on a centralized custodian service provider and no need for time-consuming KYC. Everyone’s crypto asset balance will be recorded in the fully distributed ledger immutably. The sensitive information will be perfectly protected.

Sounds to be a beautiful future indeed. So why are centralized exchanges still the mainstream? Plus, what are the odds of seeing such highly functional and fully decentralized exchanges any time soon?

I cannot tell for sure, but there are certain aspects deserving the attention of those who have been following decentralized exchanges.

a) It’s a public chain basically. That means there will not be circumventing The Impossible Trinity of public chains.

Let’s put the two angles — privacy and security — aside for one sec. That doesn’t mean they are less important though. But, if we focus on the scalability now, we’ll have to admit that the obstacle might not be as easily removed as some public chains have claimed.

Among the existing public chains, I believe EOS is one of the top performers in terms of transactions-per-second (TPS), achieving a 1000-level TPS, while Bitcoin and Ethereum are still struggling on a double-digit (maybe even single-digit) TPS.

And how are centralized exchanges doing? Our platform is capable of supporting 10k-20k matching orders per second for a single trading pair. We run approximately 400 trading pairs now.

On top of the efficiency of transaction processing, there’s another parameter to quantitatively measure user experience — the latency.

I could still remember the overwhelming media coverage of EOS achieving sub-second latency. Don’t get me wrong, it was, indisputably, a big and meaningful step in public chain development.

But, I mean, centralized exchanges can easily deliver a 100- to 200-millisecond latency, and are heading towards nanosecond latency.

b) In addition to serving the users/traders, exchanges have another primary task — helping projects to list their tokens/coins for proper financial aids and to carry on their long-term goal, which will ultimately contribute to the whole blockchain ecosystem.

Just as the traditional financial market should ideally help move around the money and inject the cash where it’s needed most, crypto exchanges should also shoulder this responsibility — to provide liquidity.

That said, if a decentralized exchange built up a public chain and made projects issue and list their tokens on it, it would basically cut off other funding channels for the projects — or, more simply, the opportunities to get listed on other exchanges and get more funds.

Why?

Well, would other exchanges happily list their rival’s public chain (the coin) on their own platforms just like that? They might not for now. However, if a certain exchange managed to become a monopoly, that’s another story.

So, going with a long-term horizon, decentralized exchanges are indeed the trend, but for the issues that need to be addressed ASAP, like the above-mentioned ones, there’s no bypass.

Just like John Maynard Keynes said: In the long run, we are all dead.