Paxful to Drop Ethereum Trading Due to Increased Centralization and Consensus Mechanism Pivot
Paxful, a New York-based, peer-to-peer (P2P) cryptocurrency exchange, will drop Ethereum trading from its platform on Dec. 22. Ray Youssef, CEO of the company, cited different reasons for this decision, with increased centralization and the recent consensus mechanism pivot amongst them. Youssef also stated that tokens built on top of Ethereum have been primarily scams.
P2P Exchange Paxful Drops Ethereum
Paxful, a New York-based, peer-to-peer cryptocurrency exchange, has announced that it will drop Ethereum from its platform. The announcement was made via email, and then using social networks, by Paxful’s CEO Ray Youssef, who stated that the changes the token has undergone recently have changed it into a “digital form of fiat.”
Youssef explained that one of the first reasons behind this action has to do with the pivot that Ethereum executed, changing from a proof-of-work consensus mechanism like the one Bitcoin also implements, to a proof-of-stake mechanism. Youssef explained that proof-of-work is the “innovation that makes Bitcoin the only honest money there is.”
Another reason behind the decision has to do with the increased centralization of Ethereum after this consensus change. Youssef stated that Ethereum is currently managed by a small group of people and that it will become a permissioned network eventually.
Scams and Criticism
Youssef also touched on tokenization and how bad actors have taken advantage of the platform to commit scams using Ethereum. He stated:
The tokens that ETH has spawned have been scams that have robbed people of billions.
Furthermore, Youssef stated that Paxful will always do “the right thing,” even if that costs the company money.
The statements made by Youssef caused various reactions on social media, with some users criticizing the logic behind this decision. When asked if the exchange would become Bitcoin only, Youssef answered that stablecoins issued on top of Ethereum, like USDC and USDT, had real use and they could not completely eliminate Ethereum from the platform because users need to pay transaction fees. However, 94% of the trades on Paxful involve only bitcoin, according to Youssef.
Paxful was one of the exchanges that suspended their services for Venezuelan users on Sept. 2020 due to the set of sanctions applied by the U.S. government. The exchange reported trading volumes of $1.1 billion during the first half of 2020.
What do you think about Paxful’s announcement about dropping Ethereum from its platform and the reasons behind this move? Tell us in the comments section below.
