Nowadays regulations are strict and SEC is also watching and doing crackdown be it biggest centralized exchange (cex) like binance or Coinbase.
There's always that debate in crypto space between DeFi and Cefi and so I'll keep all the things in one place to make this comparison to pick a side.
Pro's of DeFi
There are many good things about DeFi that means multiple Pro's mentioning here;
- You own your keys and asset
- No need of KYC
- Can exchange assets with no limit
- Accessible anywhere, everywhere
- it is transparent
First of all, DeFi is completely decentralized in nature that gives you full control over your assets and you own it without any third party.
Another Advantage of DeFi is it's transparency since everything is on blockchain we can track all the movement and ongoing activity happening onchain.
Cons of DeFi
The only bad thing that you need to worry about DeFi is "hacks or exploit" many of protocol have been hacked because of an exploit or loophole.
And millions of dollars worth of assets have been stolen by hackers in DeFi other than that there are also scam projects or rugpulls like it's risky and requires you to be more responsible with your DYOR.
Pro's of Cefi
When it comes to centralized finance it is more popular and mainly used in crypto and there's some of pro's (good reason) behind it.
Some of those are;
- exchange offers you to trade in large variety of coin
- most liquidity and volume
- Wide numbers of features and options
- Gateway to bring in and out funds in crypto
Image by Sergei Tokmakov, Esq. from Pixabay
All of Centralized exchanges are offering something and since there are many competitors in market they offers different varieties and features to attract investors use their exchange.
Mainly the volume in crypto comes from exchanges so there is liquidity and that's why people use it everyday.
Cons of Cefi
A lot of things could and have been gone wrong in Cefi all these years in Crypto we've seen CEX (exchanges) shutting down, going bankrupt and customer losing funds in these situations.
Those cons include KYC, not being transparent and securities and exchange commission (sec) or regulators chasing these exchanges.
It's been creating uncertain times for investors in crypto and the future of Cefi side is still in hand of authorities and owners of exchanges.
Wrapping Up...
In coming time when SEC vs exchanges case will come to an end and decision will be made in one favors that's gonna increase the weight of one's side. If CEX lost against Sec, we'll see Cefi bad time and DeFi rise.
As I've already mentioned all the Pro's and cons that came around my head after trying both Cefi and defi personally for years. Now I'll leave it on you to pick a side and do let me know your thoughts in the comment.
Fin.
