The primary use-case that blockchain technology brings to the business world is that it enables peer-to-peer transactions by cutting out the middleman.
When sending funds to one another or trading on exchanges in a peer-to-peer fashion, fees are drastically lower than what most are familiar with. On Sept. 5, someone sent $1 billion worth of bitcoin while paying only a $700 fee, which some estimate was still 20x more than needed.
Not only does blockchain technology provide for a cheaper-to-use ecosystem, but there are privacy benefits as well. A blockchain ledger is publicly anonymous, and if you use a non-custodial wallet, then your funds are stored locally on your computer so only you can access them, taking advantage of blockchain technology to the fullest extent.
Despite the benefits that come from non-custodial solutions, custodial solutions, such as Coinbase and Binance, have ironically been attracting the most users over the past few years. But why? Doesn’t this negate all the benefits that blockchain technology has to offer?
The answer is yes, but at first, speculators didn’t seem to care about anything other than potential profit. The reality is that centralized offerings provided better user interfaces and a smoother user experience. The order-matching engines were faster than decentralized networks and customer engagement was better because they know everything about their users.
While these are valid upsides, the harsh downside is that centralized exchanges and custodial solutions are constantly under attack because they are a honeypot for hackers. Billions worth of funds has been stolen from investors […]
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