ShapeShift.io, the popular cryptocurrency exchange platform that previously did not require any accounts or registration, will begin rolling out an optional membership registration that will soon become mandatory.
The ShapeShift blog post written by founder and CEO Erik Voorhees, describes the “ShapeShift Membership [as] a loyalty program” that will include such features as “higher trading limits, rewards on trading volume, better pricing, private market and trade data, and early access to new coins, products and services”, depending on membership level. There will be five membership levels, with level 1 being free, but membership still “requires basic personal information to be collected”.
Erik went onto described in the blog post that the team is not pleased with the new developments, but is still committed to the original goals of cryptocurrency.
“We would prefer if the collection of personal information was not a mandatory element. We still firmly believe that individuals, regardless of their race, religion, or nationality, deserve the right to financial privacy, just as they deserve the right to privacy in their thoughts, in their relationships, and in their communications. Such privacy is a foundational element of a civil and just society, and should be defended by all good people. We remain committed to that cause and it is best served if we are smart about our approach.”
Nevertheless, the development has drawn quick reactions on social media from individuals disappointed with ShapeShift’s shift to collecting personal information no matter how “basic”. Some have floated rumors, one retweeted by Erik himself, that ShapeShift is being pressured by various governmental authorities to collect some data and is complying with them in order to starve off a bigger crackdown.
Importance of decentralized exchanges
The move by ShapeShift and the following backlash demonstrates the importance of having decentralized exchanges since no one person or group can be pressured into collecting information through a decentralized platform. Having a decentralized exchange (DEX) means that the exchange operates on a series of nodes allowing individuals to transact voluntarily to change their coins rather than having to rely on centralized servers to host the exchange marketplace. The decentralized nature mitigates the risk of any specific party from implementing AML/KYC compliance due to a lack of central control. Also, since the code is open source, users are free to fork the code and create their own platform if the decentralized exchange somehow becomes too centralized or is changed too much. The ShapeShift development has already caused decentralized platforms to gain popularity.
Big news. ShapeShift bowing to KYC regs could mean many more users coming Bisq’s way soon. https://t.co/xj6fL8zdw2
— Bisq (@bisq_network) September 5, 2018
Platforms like Bisq, Bitshares, Komodo, and Waves all provide some form of DEX for consumers. Unfortunately, the decentralization of exchanges typically creates a trade-off for usability when compared to exchanges like ShapeShift that have stood out for their easy user interface and seamless integration into many multi-coin wallets. However, that is already starting to change with Bisq, Komodo, and Waves improving their UX/UI and making it an easier and more enjoyable experience.
Overall, these exchanges are commonly used for two activities by consumers; trading between different cryptocurrencies for investments/trading and moving from one coin to the another in order to utilize a specific coin for its intended use case. For example, during Bitcoin’s high fees, consumers would use ShapeShift or their competitors to move a bulk amount of Bitcoin into Litecoin, Dash, or another cryptocurrency that had lower fees and faster confirmations in order to use cryptocurrency in everyday life.
Dash mitigates the need for changing cryptocurrencies
Dash decreases the necessity to switch out of Dash, and thus, the need to use ShapeShift or another multi-coin exchange because its use cases are for a wide diversity of everyday activities. Dash can be used as payments, a store of value, and privacy whereas other coins like Bitcoin just claim a ‘store of value’ status that periodically makes it unusable for everyday small purchases due to high fees or long confirmation times. Since Dash is able to scale and implement real world usability, it minimizes the need to move to another currency and mitigates the need to use ShapeShift or other similar exchanges.
Additionally, Dash is able to appeal to consumers with its current ease of use and friendly community that makes using Dash a very enjoyable experience. Dash has set the roadmap to implement Evolution, which will make Dash even more usable through improved UX/UI consumer standards. This appeal to consumer usability further reduces the need to change coins since Dash strives to make using Dash as enjoyable as possible so consumers actually seek out and continue using Dash for its pleasant user interface and experience. These features mentioned above demonstrate how Dash is accomplishing its goal to be a single destination for consumers to have monetary and financial freedom through a highly usable, decentralized, digital, and peer-to-peer currency.