[ad_1]
The doomsayers have been busy ringing the death knell over the past week, proclaiming, not for the first time, that the crypto industry is dead and buried following the collapse of FTX.
‘You Can Forget About Crypto Now’ announced Will Gottsegen in The Atlantic, declaring “what looked like a winter is starting to feel more like an ice age.” Similar sentiments were expressed elsewhere in the non-crypto media as a kind of schadenfreude feeding frenzy commenced.
Learning Lessons
Invariably, comparisons to Enron and Lehman Brothers have been made by many in the past seven days. Funnily enough, the collapse of Enron and Lehman didn’t lead to the demise of the energy and commodities market, nor the financial sector. One company, no matter how big it is, doesn’t represent an entire industry.
We have seen this movie before, of course. The news cycle that kicked into gear following the implosion of the ICO bubble in early 2018 was just as feverish, as reporters breathlessly documented the market crash. The tone of many articles and op-eds was censorious, sneering, an air of “I told you so” barely kept beneath the surface. More than one writer suggested the crypto experiment had failed, that it was time for the traders and true believers to return to reality with burned fingers.
Of course, a sense of haughtiness is to be expected given just how unscrupulously the FTX exchange had been run. A pile-on directed at the company’s hubristic boss Sam Bankman-Fried is completely warranted, particularly given his disingenuous assurances that ‘FTX is fine, assets are fine’ in a since-deleted November 7 tweet. But some will argue that FTX’s collapse will have a purging effect on the industry, compelling other entities to tighten up their operations and avoid risky behavior. Indeed, several major exchanges have now committed to publishing proof-of-reserves to assure customers their deposits are fully backed.
While the FTX imbroglio has financially crippled a great many retail investors, who in some cases held their life savings on the exchange, an important conversation is now being had about self-custody. Binance CEO Changpeng Zhao has urged the community to store their digital assets on self-custody wallets and on-chain exchange flow data shows a huge number of users withdrawing assets from centralized exchanges to private wallets.
A Community Comes Together
Interestingly, while some in the non-crypto media has busied itself by erecting a headstone, many within the space are rallying together to set the scene for recovery. This goes beyond Zhao, Michael Saylor and others simply touting self-custody after the fact. The Binance CEO has announced the formation of a recovery fund “to help projects who are otherwise strong, but in a liquidity crisis,” an obvious reference to those companies impacted by the FTX/Alameda collapse. He has even compelled “other industry players with cash” to co-invest in the fund. Angel investor Simon Dixon, meanwhile, teased the creation of an Industry Creditor Recovery Plan, mentioning creditors of FTX, Celsius Network, Voyager, and BlockFi.
Bitcoin maximalist Udi Wertheimer reflected the prevailing charitable mood in a tweet, saying “The deciding factor [in whether you survive the crash] won’t be how much money you lost or made. It will be whether you focus on supporting people and rebuilding, or on tearing each other apart.”
It is worth noting that this communitarian attitude was entirely absent during the 2008 financial market collapse, when it was governments, rather than banks or money-market funds, who scrambled to find a solution (bailout packages) and reassure customers. Satoshi famously marked this moment in time by including a message on the first ever Bitcoin block mined: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
If the major takeaway from the FTX situation is that centralized entities should be prevented from abusing their power, and that customers can affect this change through self-custody, that development will surely stand the industry in good stead. There may be other positive outcomes, too. Messianic figures like SBF should be viewed with a cynical eye. So, too, companies like FTX which scale at warp speed and vest billion-dollar decisions into the hands of inexperienced twentysomethings like Alameda CEO Caroline Ellison.
As those scorched by FTX lick their wounds, and as the gloomy media coverage continues, Zhao’s message resonates with those who have come too far to shut up shop and find another vocation: “Crypto is not going away. We are still here. Let’s rebuild.”
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
[ad_2]
Image and article originally from www.nasdaq.com. Read the original article here.