Trust fading with CEX, time to enhance Web3 education
By James QU@PlatON, Tokyo
Why trust fading away from CEX in the mid of regulators chanting globally? Probably not just because of FTX, there are strong head wind against crypto through out 2022. There are many issues in crypto ecosystem itself, the top one may be the contradiction of independent decentralized ﬁnancial service based on P2P decentralization technology versus extream unbalanced crypto coin distribution, for example a small related groups or individuals control the majority of certain coins. Another one may be the high failure ratio of newly invented crypto currency ecosystems. And then Wall street professional like FTX added another hit.
From the user point of view, why FTX like CEX service vendor is so popular? Does people always want to rely a centralized service vendor? May be not, since this is against the trend of Web3, or AI democracy promoted by PlatON. People from modern society is aware of the beneﬁt of Web3 digital life, willing to self control their own data, crypto asset is one of those data, with dignity. But, this is not always true, the ancient human DNA is constantly delivering “follow those you trust”, “follow strong trends” signals. This is very true for those users from Web2 age, blindly trust or follow the most popular ones, no need to verify due to lack of knowledge.
Even Web3 users, when facing such a strong trends, FOMO will work efﬁciently. The more users join the trends, the more risky it will be, like a car loaded more and more weights and cannot stop. Even with enough knowledge, sociality behavior is deeply rooted in human DNA, in many scenarios people want to follow, want to act as one group, especially there are huge potentials as well as risks when oneself easily lost conﬁdence.
To reduce the blind follow, blind trust, we do need education. Educate more web2 users to web3, to equip more developers to build good web3 services. Web2 style user and developers, like the knights in the old time, it is critical to choose the right Lord to follow. In crypto means pick up the one with great track record, sound ﬁnancial balance, great stable management team, state of art platform, stable and knowledgeable technical team. Only look at the license from a weak governance authority means risk.
Here I am not against centralized service providers, would propose to introduce more web3 style governance into centralized services, to make the service transparent, veriﬁable, trustless. There are recent trends of proof of reserve etc. Another reason is we still need centralized service such as cloud computing, cloud service for backups recovery, even for decentralized social recovery. Imagine when an individual falls into Alzheimer’s disease? Will that be another higher risk? Remember there was a joke that the very sick father starts spelling strange meaningless words at his very last moment, the surrounding kids confused and lost the very important privacy key phrases.
After all, the web3 education is so important, we not only need to educate user as part of investor protection, also need educate more capable developers to translate web2 services into web3, where PlatON is ready and willing to contribute.