One more day, you might say.
The difference, this time around, is that it’s an influential player, perhaps the most important in recent months, who is down. FTX, the cryptocurrency buying-and-selling exchange, has fallen. It was worth $32 billion in February. Its CEO Sam Bankman-Fried, 30, was viewed as a crypto messiah.
But the whole house of cards has come crashing down.
Thousands of investors lost their savings. It goes beyond losses that will affect people’s lives. Let’s not forget the mental illnesses that this disaster may trigger: depression that could even lead to suicide.
Major investors have already begun to take stock of their losses. Every player in the industry is looking to find out if a friend or rival had any connection with FTX. This disaster has managed to do what critics of cryptocurrencies have always hoped for: to bring shame to the entire industry and to discredit it. In the last few days, I’ve heard many critics saying: “you had been warned”.
The recurring critique continues to be: “What are cryptocurrencies even used for? They are of no use.”
This is undoubtedly the misconception of the detractors of digital currencies. They believe that cryptocurrencies are a scam.
Cryptocurrencies are based on a technology, the Blockchain, which is revolutionary. It is the basis of a new internet that is not controlled by big tech like Google (GOOGL) – Get Free Report and Facebook (META) – Get Free Report. It is a decentralized and transparent internet. It’s called web3. In this internet, each of us keeps control of our data and is free to do what they want with it. This decentralization can extend to everything.
For example, the crypto industry offers us the opportunity to directly obtain a loan from someone who is willing to lend us the money. No bank, no centralized financial institution that will take a commission. If I want to send money to my mother in Africa, I don’t have to pay huge fees to Western Union or MoneyGram.
And it’s not only about fees. Western Union confirms my identity and keeps my data. I don’t even know what it does with it. With cryptocurrencies, I do not need to give out my information to anyone.
Inevitably and predictably, when this new technology started to translate into big money, that’s when it got all the attention.
It is clear to me that the benefits of cryptocurrencies are real. These currencies represent a technological revolution. The road is bumpy, but that doesn’t mean that I’m going to discard them as a bad idea.
The internet bubble of the 2000s is a case in point. There is no doubt that the internet has transformed our lives. Yet, there will always be the ones who try to exploit the gaps in people‘s understanding of the new technology or those of an evolving legal framework in order to make easy money.
Yet, no one can dispute the value of the internet in our lives, like, for example, the ability to chat on various platforms with family, friends and colleagues. When the dot-com bubble burst, all the companies which lacked a sound business model disappeared, while the ones which solved a real problem or brought something meaningful to society thrived. Amazon is an example. It almost went bankrupt but was able to survive and has since become a juggernaut.
It will be the same for cryptocurrencies. The industry will be shaken up. Prices will plummet and investors will weed out all vulnerable and worthless projects. It is a necessary evil.
So I’m getting ready. I have fastened my seat belt. I don’t know what is yet to come.
But I trust that, in the long run, cryptocurrencies will prevail, at least the ones which are able to prove their usefulness.