Circle announced on Monday that they bought Poloniex exchange at an undisclosed amount, but some reports have the value at $400 million USD.
The startup is backed by Goldman Sachs, the American multinational financial company, which signals that the fincial institution has taken more steps to become involved in the crypto ecosystem. Poloniex handles volume in excess of $2 billion USD on some days, which puts Circle well on its way “to cement its position as one of the leading players in the booming market.”
The other significant part is the role that Circle and Goldman Sachs’ involvement will have on regulations. Circle’s co-founder, Sean Neville, said he knows Poloniex has a backlog of KYC checks and is “not sure that 100 percent of prior clients have gone through all their identity verification requests,” but Circle will ensure they operate the company to be complaint in “every way it needs to be.” With a Goldman Sachs investment backing, Circle brings more capital, experience, and lobbying power to the operations of Poloniex.
Banks’ goal to maintain gatekeeper status threatened by decentralized exchanges
The mainstream doubt around cryptocurrencies along with the regulatory uncertainty has caused banks to avoid crypto for some time. However, that is changing as banks notice the competitive risks cryptocurrencies pose to their status as money movement gatekeepers. To maintain this status, banks are investing in specific coins and startup companies that intend to service users of many cryptocurrencies (i.e. Poloniex cryptocurrency exchange). On one hand, more bank funding will lead to greater competition and better services for consumers, but on the other hand more bank funding will lead to centralization fears.
Centralization is an inherent feature of traditional projects funded by banks, but there is another option in the crypto ecosystem; decentralized exchanges. Decentralized crypto exchanges like Etherdelta, Waves, and Cryptobridge allow users to move between different types of cryptocurrencies, while exchanges like LocalBitcoin and crypto ATMs allow users to move from fiat to crypto all while increasing security and not compromising privacy. However, decentralized exchanges lack the competitive advantages of chartered bank entities when it comes to funding amount and coordinated management to ensure smooth project operations.
Dash offers decentralized methods to fund projects and trade
A binary view of centralization vs. decentralization would not include all the facts since Dash offers ways to get the benefits of both. Dash shines with its treasury system that allows for semi-decentralized funding of projects that also distributes funds methodically to maintain economic incentives for smooth project operations. Trade-offs still exist between centralization and decentralization, as with any other choice, but Dash is able to have features of both sides changing the trade-off dynamic.
Dash aims to serve the many needs of consumers by having decentralized and centralized trading options. Wall of Coins and Bisq offer decentralized online peer-to-peer trading in Dash, while DashNearby and Dashous in addition to Dash ATMs allow for users to meetup in person. Poloniex, Binance, HitBTC, and many more allow centralized forms of trading Dash. The many option available to grow and trade Dash allow for tradition institutions, like banks, to get involved in cryptocurrency without completely sacrificing security and privacy concerns of everyday users for whom cryptocurrency was originally created.