Binance to Offer Mix of Centralization and Decentralization with Trust Wallet Acquisition
Last week, a news broke that Binance, the second largest cryptocurrency exchange by trade volume, has acquired Trust Wallet. Binance’s market leading position is cemented by the fact that it recorded about $300 million in revenue by July and it is expecting profits to reach $1 billion in 2018. Trust Wallet, founded in 2017, has built a decent base of customers and fans who are enamored to its open source, decentralized and anonymous nature. It is also worth noting that within the short period after its launch, Trust Wallet has added support for more than 20,000 ERC20, ERC223, and ERC721 tokens. This piece provides insight into why the acquisition is a win-win for both Binance and Trust Wallet.
What’s in it for Trust Wallet?
The details of the acquisition are still under wraps but Binance did reveal that it paid a mix of its BNB Token, Binance stock, and fiat money for the acquisition. Hence, one can argue that the hard work of the Trust Wallet team over the last couple of years did pay off and the acquisition gives them “bragging rights” of sorts if they want to embark on another project in the cryptocurrency industry.
Featured image from Trust Wallet official website
However, it is more instructive to note that that the acquisition will provide Trust Wallet with the support it needs to become a household name in the cryptocurrency industry. For one, Trust Wallet hadn’t broken into the limelight even though it is one of the best in-class decentralized wallets because the founding team lacked marketing expertise. ‘Having resources will help us grow quicker and so I can focus on adoption for the users that don’t even have wallets,’ Viktor Radchenko, the founder of Trust Wallet, says.
What’s in it for Binance?
The first obvious benefit to Binance is that the acquisition positions it as a strategic player intent on growing its clout in the cryptocurrency industry. In a statement, Binance observes, ‘We’re looking for strong tech teams. Acquisition will be a very key component to continuing to grow and contributing to this industry.’
Featured photo from Binance's official website
Secondly, the acquisition will help Binance outfit its offerings with an on-chain mobile wallet while strategically opening possibilities for future integration. Binance has revealed that Trust Wallet’s founding members and team will stay on board while maintaining autonomy to develop the product further. ‘They haven’t done much marketing which is where we can help. They are strong technically but don’t like doing marketing, HR, etc… Now merging with us they don’t have to worry about money,’ Binance CEO Changpeng Zhao points out.
Thirdly, Binance can leverage Trust Wallet to provide a measure of decentralized storage to the cryptocurrency users who are worried about the growing risks attached to keeping cryptocurrency funds on a centralized exchange. Learning to use Binance is fairly easy; yet, core cryptocurrency enthusiasts will rather use a hard-to-navigate decentralized exchange than Binance or its peers.
A decentralized exchange solves the security issue that plagues many centralized exchanges by removing the possibility of a single point of failure that can be compromised. A decentralized exchange doesn’t hold your private keys; hence, you don’t have to worry that your funds can be stolen if the exchange is hacked.
Of course, one can argue that decentralized exchanges tend to be slower than centralized ones in terms of transaction speed. It can also be argued that the liquidity of decentralized exchanges lags the volume of liquidity offered in centralized exchanges. However, the tradeoff is that decentralized exchanges offer cheaper transaction fees than centralized exchanges.
Interestingly, the fact that Binance has experience running a centralized exchange suggests that it might be able to sidestep some of the problems that plague decentralized exchanges. In fact, it is safe to assume that the acquisition of Trust Wallet is a strategic step that will move Binance in the right direction to build a formidable decentralized wallet.
The best part is that Trust Wallet provides a functional interface for storing and accessing cryptocurrencies while also allowing developers to build DApps on its platform. One can reasonably expect that Trust Wallet will be the default wallet on the decentralized exchange that Binance is planning to build.