INSOLVENCY OF CENTRALIZED EXCHANGES

in cryptocurrency •  6 years ago 

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The feature of daily physical settlement on blockchain is very important.

This relates to the problem of Insolvency of centralized exchanges and imposes the industry to Systemic Risk.

The problem regarding the insolvency of centralized crypto exchanges is unknown, and it seems that the industry does not want to highlight it. This problem stems from the fact that centralized exchanges settle users' funds only when they ask for withdrawal. This is the moment when the exchange physically sends coins through the blockchain. Thus, it is difficult to assess if an exchange is solvent or not and this may be a source of systemic risk in cryptocurrency markets.

BBOD solves this problem by conducting daily physical settlements on the Ethereum blockchain. Thus, all the data required to check if BBOD is solvent is available to the public.

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