The Decrypt Daily: Bitcoin & Cryptocurrency News Podcast - Oct 21: DEX vs CEX w/ Hugo Renaudin CEO of LGO Group

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From the Crypt I see how this is a different daily. My name is Matthew Aaron today or decentralized exchanges. Now, we know the ethos the backbone of crypto centralized, but does it really work better for the exchanges or do they have two different paths for their Futures? I sit down with CEO and co-founder of lgo group Hugo rinaldin to talk the future of both exchanges. Enjoy the conversation a few of the show.

Hugo renewed in CEO of lgo, welcome to the show sir. Thanks for having you both. Alright, so we look this is one of these Hot Topics such as exchanges versus decentralized exchanges. We've always had that discussion. We've always been talking about this but things have went to a different level this year because decentralized exchanges or the debt has been recording massive volumes and they're doing a job that exchanges have been able to do before I want to know I wouldn't talk about the evolution of these two exchanges in the future. But before we get into that can we please define? What is a centralized exchange and what is a decentralized exchange for sure. So if you want to buy a tomato, if you want to sell it tomato, you need to centralize venue where you can do so and then meet supply and demand so that's exactly the same thing goes for financial assets or cryptoassets decentralized exchanges a place where anyone can go and buy and sell cryptocurrency.

Against the current score against another cryptocurrency, they're cold centralized for a few different reasons because people go there but also because they're managed by an excellent see which is a company or a group of person or just one person. So that's that's a centralized exchange and you know that you have widely successful examples of centralized exchanging the space like binance to coinbase cracking those big names and they're doing very well on the other hand decentralized exchanges while they busy to serve the same purpose, which is to allow a user to to buy or sell in assets against another one, but the difference is that there's no centralized entity that many managers that there's a smart contract so we can run independently on the blockchain and it can be accessed by anyone anytime from anywhere cream us going into the Innovation Circle pretty much what they are how they work for the for the most part but now we have to

Like where they're going they're talking about being thanks for talking about phones with apps were talking about I'll be able to pay in in deposit withdraw with centralized exchanges were cracking as just moved into the United States as in the state of Wyoming as a sort of new kind of think. We have FDIC insurance for Gemini and and coinbase. They are taking a major leap to be more what's a consumer-friendly then there's the Decks that is kind of just catching up when we're talking about liquidity make it matte matchmaking in this is very specialized because you're talking about investing your time about training your tongue about trading digital assets will be only a small percent of people know what they are into. It is already a nice commodity to be trading. I'm supposed to say traditional stocks when using Robinhood app, where are these two exchanges on ramps or tools for the average person to get into digital currencies or digital?

Classes for virtual currency trading and investing, where are they heading centralized decentralized exchanges because you're right to your bunch of ways need light tools to do on ramps. You are close to bring cash from the shot centralized world into the blockchain ecosystem. And and and today I seen that exchanges are going to be you know, that you mention Kraken are going to be the ones that are going to the main gate keepers of the the decentralized world in the sense that they have the connections to the real world sets with the way this Market is built is built for retail people into being a banking Term Provider makes sense for those exchanges. So differently. They're not going to go away because they're on their function as an unread is an essential one for your consistent decentralized exchanges first smart contract.

Anybody can be schooled and run it as a different version and we send out with sushi swap. I don't know if you remember that the summer I was basically a fourth of June describe that managed to bring credibility to their protocol is that those Gatekeepers. Do on ramp providers while they're going to implement some some smart contracts? I'm cold which is going to look very much like a decentralized exchange and enforce you different reasons. You would like just taking taking our example LG you so obviously, we're not a retail. We're not reach I exchange foreign institutional focused exchange, but still we see some behaviors from our trailer is that could be better if you added some decentralization and some kind of A & M automated market makers that to our clients a train or later on but they have some Capital Bitcoin in dollars that stay in their account that is not used for training and if that means I will capital of course because they're not making money on this Capital which is just sitting with us.

I'm so if we were to implement an automated Market maker that supports Ubiquiti on are centralized exchange. Well, actually we could a have more to create your own are exchanged as a whole and be all of our clients could be able to not only trade in a very sophisticated Fashion on Earth and tries to change but also earned some yield and an earn passive income on their own the capital in or not using for training and so just looking at that, you know you so you so from when you have a better iteration of what's what's next to get some of the stuff I seen that you need centralized version of exchanges. That's that's for sure. You don't have a future with your computer to decentralize at least not in the next few years and just because you get Keepers from the new traditional cat world today to put the world guys and you guys I think the way that they're going to revolve is that they're going to take what works well in the decentralized and centralized world and adapted to their own infrastructure and that's going to be very powerful.

I can see a hybrid system of centralized and decentralized inmate when it comes to liquids and stuff with what you just said. It sounds as though we're still playing Insider baseball. We're still talking about only catering to a choice or select few of individuals that want to dabble or trade or risk investing in digital assets virtual currencies. I guess my brought her question is what happens to centralize exchange in the decentralized exchanges when we try to go for the average consumer or the Mountaintop or the the the masses because yes, we need liquidity. Yes, we need all that stuff. But you know, I think that more people care if they have digital currencies are Bitcoin, but that also can be used as their bank account as their Visa card as their Amazon paying account as their you know, maybe coinbase is using being used as my JP Morgan that that is I guess where I've seen decentralized exchanges going going and it's not as

Insider baseball do you see that? You centralize exchanges have a way to even compete with the possibilities of centralized exchange. And without just being Insider Twitter baseball admits. Let's take an example in the traditional world. Of people in the US there using Robinhood to buy and sell stocks even options. Will when you interact with Robinhood your nuts interacting with NASDAQ, you're not interacting with the New York Stock Exchange, right? You're interacting with a broker which itself interacts with other Brokers which Indian interact with centralized exchange tracking this kind of sandwich of different different providers in different businesses working together is exactly what's going to happen in the crib to a centralized world the medicine and you know, what I do doesn't have to know about how a decentralized exchange works and it how are you and how is centralization work that they just need to do to your Bunch, you know be able to

Store that big going to be able to print transact with it to pay with it to trade if they want to but they they they're they're not going to see the other friend yessica's you always have businesses that are here to make gentle face between the average average consumer and the more the more complex Raiders sweater. I think that's different you are where we're headed for the surf listen to we talked about a lot of positive we talked about a lot of evolution we talked about what the bear with bare bones basics of each exchange is but what about the drawbacks? I mean will you saw decentralized exchange hacks many times already because of smart contract flaws in the design not being audited just horrible code are we saw sense that exchanges because of security Insider security notice social hacking their employees of of the other exchange, you know, so there's definitely times from both of them reconciled.

Massive vulnerabilities between both of them and a roll out into something. That's more mainstream. Well. That's a tough question because the drawbacks that you mention, you know what I like the fact that it's that your Reliance on the on the on the line of code that if you need to reach you lose your assets your crypto assets that you cannot retrieve let me know that there's no decentralized and centralized entity that you can go to and ask for for voucher or something like that. That's that's the value of crypto. I just decide that it's nonsense. You cannot really back so that that's that's precise you wait for prescription. That's why I quit to he's a he's being adopted. That's your way that that's going to to make but that being said, you know, I think that the security Frozen in these problems that can be solved by a knowledge and experience by developers by operators of these exchanges. I mean not a good amount cook the mountain goats at HACC. Sorry that

That we had a couple of years ago. That's definitely not going to happen. I mean not in the same way in a centralized exchange today because people learn from the mistakes of thinking you know, what I just a contract accident the more we have hacks a smart contract or errors of fluids in the code the better we become as an industry building Those Distant rice products with time and experience and then we're developers is one answer a second answer is to have more resilient ecology. So, you know that there's we talked a lot about defy on ethereum, but there's this other blockchain which is which and there's a lot of other options as well. But like this block Chevy in particular one of their specificity is that their code is much more secure because I have what's gold formal proof which allows anyone a developer to formally mathematically verify that their code is correct. And so that's an incredible level of security that you can have a difficult level with the technology to

Answer to today's problems of a security of Acts first. It's the the other side of the coin was supposed to go about cryptocurrencies, which is Chloe going to need freedom and second is something that can be solved by technology and I seen by technology only about two different camps be with this is what I'm looking at. This is how I'm interpreting things right now because no mainstream Solutions going to allow for me losing my crypto for nobody's ever hacked into my JP Morgan these things never happen to me and if they do there's a easy solution and I understand ethos crypto. I understand the ideas that everybody you know, what cleans to win the amazing Solutions of decentralized and all these other nice tag words, but it's not as though your experience play something that isn't going to be palatable for everybody. So therefore even if you are able to use your coinbase app for your Robinhood app and buy things on Amazon or or a link it to your direct deposit for your

Your company or your your paychecks? You would have two different people to people one free people that's going to do the traditional Finance system. And these are Visa cards near jpmorgan's and everything's hunky-dory and the other ones that are kind of like going in in dealing with the possibilities of these failure points is this pressure points, these these beasties point of possible hacks with no recourse and because of the likes this industry or like this solution it is that what I'm getting at its it's a problem that the first has always existed and second that we can talk. So I don't know if she was sure western movies, but you know what I can watch Western is always like the the bad guy sent you that is going to rub money from the bank right when they when they do a civil rights. It's like that the money is not traceable. I mean at the time right now it's not possible to do it because the system is to secure 200 years ago and nobody would think they were supposed to be

And for what school district is entrance, right? So if intermediaries that provide crypto Asset Services are insured against hacks theft losses. Well that settles a big problem for users because they they can they consider it safe to interact with crypto. They can die so they can store whatever amount of fruit do they want and it's going to be it's going to be protected by this insurance coverage in sync you with gold by the way, you know what I can if you buy gold teeth while you were still subject to someone stealing it and you can insure it or not. Depending on that's your you going to have a very out if it's get to get stolen or you can have exactly the same thing. We put the current assets are gone in the funds are gone and then hands of somebody else. I mean look at my credit card has blocked my credit card to cancel transactions. You can notify companies you can you do that with crypto. I mean, what is the actual record for somebody stealing your bar of gold out of your basement or they just give you money?

Interest rate you pay your premium every month or every year in case there's a risk and if the risk happens while that you get a payout if everything is done if the insurance company is is acting exactly Norman last question. I was going through all of my skepticism as always have to deal with that last question is what does the future look like? I mean, we've been talking a lot about the evolution been talking about, you know, all these different bells and whistles or ideas that you know could be added or or are being added to centralized and decentralized exchanges. But the ball down the court was just kick it all the way down to say 10 years from now. I know that's not even long enough to talk about 25 years from now 25 years from now. How will I my kid made my grandkids be interacting with a crypto virtual currency decentralised or centralized or hybrid exchange. There's two things here there. There's two important ideas that that's are released but not the servicing. The first one is.

Cryptocurrency as a as a payment as a store of value like the general adaption of cryptocurrency with the masses first and second the adoption of decentralized Technologies in the day-to-day night for number one. I seen that I'm in this Space Odyssey by his but I can get adoption of cryptocurrencies and especially the adoption of Bitcoin to a certain extent privacy coins ID cash for Monero is going to is going to increase is going to increase our odds in there in the years to come because we have monetary policies that are very fake Canary versus the cryptocurrencies that are known in such an inflationary with a 6 to try because we have more and more skips stitches in which governments tends to make people have a bag for two countries that do not depend on the government your ducks in a cryptocurrency on the one hand is something that is going to grow in the next few years and I wouldn't be surprised if in 25 years from now you even have countries or communities that work.

Only around cryptocurrency as a as their adult the currency of their system. That's number one. Number two option of decentralized Technologies. Well, I am not sure that as a as a regular user that doesn't know so much about the complexities of blockchain and and and smart contracts know that I'm sure that you'll be able to see that what you'll be able to see is the conclusion of that you'll be able to pay your bills as you consume electricity right in real time for a smart contract. You'll be able to place bets on the internet that do not depend on the on the on the broker that can go away with your money. You're going to be able to get paid by the hour Jackie after the hour you worked until this lets Ada's digitization of money on the back end and you know, it's going to be very complex. It's going to be it's going to be your maid of difference different contracts, but on the on the front and if she will on the on the on the user from a user experience perspective, it's going to be very

They're assumed that since it's actually going to be like internet for the information. It's going to be more easier to to to exchange money is going to be easier to transact with other people to transact business is to get the people will see it in 25 years from now. They're not going to talk about at 3 a.m. At his house or the Bitcoin blockchain or how to put a smart contract with the same way when you use a girl you're not asking you not asking your stuff. What's the protocol behind their database or or how they build their upright? You're just looking at what it does, and I think that that's different, see how we're going to interact Lisa with centralized and decentralized exchanges in 25 years from now. Thank you very much for coming on the show at talking exchanges with me and again putting up in my cynicism. Have a great day, sir. Thank you guys. Have a good day as well.

Thank you for listening to this episode of the decrypt daily tomorrow show. We have one of cryptos rising stars Sam Bateman freed answering a question that I really really want to know is the volume on decentralized exchanges bullshit. I'll see you tomorrow. Happy Halloween.
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