Binance DEX (decentralized exchange) could kill the dominance of Bitcoin BTC, since all transactions are done on-chain, where Bitcoin BTC transaction fees are 20-200 times more expensive than Bitcoin Cash BCH transaction fees.

Demo for Binance DEX (decentralized exchange):

• https://youtube.com/watch?v=wN1Uvor4Hd8

Currently, everyone holds Bitcoin BTC as their reserve trading currency.

That's because:

1. BTC has legacy status as the default trading pair.

2. Trading costs at traditional crypto exchanges are the same, regardless of cryptocurrency. Ex: Binance trading fee is 0.1%, regardless of coin. That's because transactions are done off-chain.

But we've all known the flaw in traditional crypto exchanges: if the exchange collapses or disappears, you lose all your coins, since you don't have any seed words or private keys.

With a DEX, you hold your seed words & private keys. If the exchange collapses or disappears, you should still be able to access your coins on the respective blockchains.

If DEX exchanges take off, that could be a fatal blow to Bitcoin BTC's legacy status as a reserve trading currency.

That's because:

1. Bitcoin BTC's on-chain transaction costs are 20-200 times more expensive than Bitcoin Cash BCH's transaction costs.

2. Bitcoin BTC has a small block size limit, and can't scale on-chain, so as DEX trading volume increases, Bitcoin BTC's mempool & transaction costs will skyrocket, making it unusable.

I know we have issues with Binance (ticker symbols & no CashAddr support). But there's a good chance that Binance DEX could show the world the huge flaws in Bitcoin BTC's small block size limit.

And when people are looking for a new default currency to hold / trade / spend, BCH will have an advantage since BTC & BCH are the only 2 coins with widespread retail support (supported by Bitpay the #1 payment processor).

submitted by /u/normal_rc
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source https://www.reddit.com/r/btc/comments/a3bohn/binance_dex_decentralized_exchange_could_kill_the/