The Issue of Centralized Inefficiencies

The need to eliminate the middleman prompted the development of cryptocurrency. Theoretically, the direct line of business meant faster transaction times and lower transaction fees. The true goal of decentralization is represented by this model. Because cryptocurrency is still in its infancy, and due to its explosive growth, the demand for quick transactions has outstripped exchanges' capacity to process them. Third-party centralized processing emerged to process them quickly and cheaply. This marked the beginning of centralized exchanges.

Centralized Exchanges (CEX) ushered in a new era of easy access to cryptocurrency trading. Third parties made exchanges user-friendly and simple to understand. As a result of the widespread adoption, cryptocurrency trading has exploded. However, this came at a cost.

Banks have historically used a single ledger system because they are centralized. This is an accounting system used to manage the finances of a business. Each transaction has one entry, and the majority of entries record incoming or outgoing funds. The fact that the records are kept in-house is an important aspect of this exchange. Cryptocurrency exchanges were designed to conduct transactions on the blockchain, which is visible to everyone. This multi-ledger system was designed to replace the failed single ledger system, which lacked transparency. The 2008 financial crisis was a prime example of this.

When you buy cryptocurrency, it is kept in a wallet. Every wallet has a private key that acts as a password or secret code to confirm that you are the rightful owner of the cryptocurrency. Users had to give third-party entities control over their funds in order for transactions to be processed quickly. This process allows them to automatically deposit, withdraw, and hold funds from your account. It does not use blockchain technology and does not provide transparency into where your money is going. This allowed exchanges to lend users' money to other entities at high interest rates while returning a small amount of the profits to the investor. Here's the issue with that model.

It all goes back to the centralized, banking business model. People began to place their trust in institutions in exchange for the convenience of easy trading and high rate returns. This was valid until 2022, when centralized exchanges began to fail, resulting in the loss of billions of dollars in customer funds. People would put their money into an exchange, only to find out the next morning that their funds had been frozen because a CEO had sold X number of tokens and fled the country.

Cryptocurrency is a relatively new industry, and there have been calls for regulations since fiat integration over the years. The issue is that cryptocurrency is, by definition, a decentralized asset. Biokript believes in providing a better solution to the cryptocurrency industry. The path to transparency should not be paved with centralized regulation, but with self-custody. Users can govern their own funds and not have to worry about what someone else is doing with their money by eliminating the need to trust a third party. Biokript puts its emphasis on how to provide faster transaction speeds, adequate liquidity, and user-friendly platform for everyone. This will allow cryptocurrency to grow in the direction of its intended goal.

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