16. Vulnerabilities CEX

As user become more aware of the vulnerabilities associated with centralized platforms, they are no longer willing to trade their privacy and need for financial transparency for convenience. This threatens the potential growth associated with the centralized markets and suggest the growth we are witnessing in decentralized environment is its infancy. As user trust is manipulated and abused with the “middle-man” on trading platforms, user are and will continue to deviate to more decentralized options where financial transparency is granted, their privacy is upheld, and their assets are in their custody. This progressive transition explains why decentralized finance tokens have been experiencing rapid growth and now make up 4.6% of the $1 trillion market. They are booming in third world environment because they bypass the tedious onboarding scrutiny and welcome the unbanked to participate and invest. Since decentralized platforms do not rely on traditional data to verify identity, they do not alienate and discriminate this huge demographic from using their services.  

Relying on traditional data to verify identity doesn’t just alienate the modern digital consumer, it also leads to huge demographics being unable to access the services. World Bank’s latest report states nearly 1.7 billion people are currently unbanked globally, which is close to one fourth of the world population. The standards of privacy and inclusiveness previously used to label decentralized platforms as “sketchy” are ironically the main reasons behind the current migration towards these platforms. It offers people within communities that are underserved by the broader financial system the opportunity to participate in international financial markets which was previously denied to them due by archaic bureaucratic. Together, these entry points for the unbanked along with the growing user need to safeguard their privacy, control assets, and full financial transparency are a catalyst for the migration from centralized to decentralized platforms. The total cap in 2020 was a little over $2 billion and it is now reported at $43 billion as of beginning of 2021 and $120 billion at the end of that same year. 

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