A Failed Exchange is not a Failure of Crypto
Large crypto exchange FTX has shit the bed so people are asking if crypto is dead. An exchange is not crypto. An exchange is how you trade crypto and convert your fiat money to crypto, but it’s not crypto. Bitcoin is crypto. Ethereum is crypto. Uniswap, a decentralized exchange built on Ethereum- which has proven very stable even during market volatility, IS crypto. Compound Finance, a decentralized lending protocol, IS crypto. MakerDAO, maker of Dai, the algorithmic stablecoin pegged to the US dollar, IS crypto. USDC, a stablecoin backed by the US dollar that allows you to send a dollar to anyone with a smartphone, IS crypto. You see the difference? The latter examples are built on the power of blockchain protocols. They live in the crypto world. Centralized exchanges sit on top of crypto, they are not crypto. Matt Levine, ex Goldman Sachs now finance writer and crypto skeptic, just dropped an amazing piece on What is Crypto? Go read it.
https://t.co/0HxlRiI6Sy was an offshore exchange not regulated by the SEC.
— Brian Armstrong (@brian_armstrong) November 10, 2022
The problem is that the SEC failed to create regulatory clarity here in the US, so many American investors (and 95% of trading activity) went offshore.
Punishing US companies for this makes no sense.
And yes, the failure of FTX does nothing to move crypto forward, it does the opposite. It sets the industry as a whole back because this stuff is complicated and headlines matter. It also further proves Coinbase CEO Brian Armstrong's point he has been making all along- the US government must do its job and provide more clarity on crypto regulation. But if you understand what crypto is. If you understand it is unstoppable, verifiable, trustworthy, open code that runs 24/7/365 without a hitch. If you understand crypto is about building a very reliable and trustworthy system that apps can be built on. If you understand this is a tool that will allow humanity to organize themselves like never before. If you understand that, you understand that an exchange is not crypto and a failure of one is not a value judgment on the tech breakthrough in 2008 that started it all. The release of the Bitcoin whitepaper by Satoshi Nakamoto.
Exhale. I do feel a little crazy because this is the first time in my life where I feel I am going against major consensus and putting my money where my mouth is. I bought more Bitcoin and Ether yesterday (I’m extremely skeptical of all other crypto). I bought more because I truly believe this tech will change the world, it already has. I believe humanity will come to rely on it. I believe in this stuff. I built a PC strictly for running both a Bitcoin and Ethereum node, it's running as you read this. It’s possible Bitcoin and Ethereum go the way of the dodo bird, but I believe the underlying tech is here to stay. Maybe a new cryptocurrency comes along and becomes the champion. Who knows. But blockchain is categorically a computer science breakthrough, and I believe that means something and has value. And I will continue to be excited about the new things humanity can build with this tool chest.
And let me say this: of course Bitcoin and Ether are still risky investments. No one should invest more in crypto than they are willing to lose. Crypto is not even close to the bulk of my investment portfolio. The bulk is in US based equity index funds- a strategy I have been championing for years to build long term wealth.
tl;dr Long Live Crypto.
Looking to build in the crypto space or software in general? We have experience. I cofounded Fullsend, a studio helping innovative companies build best-in-class apps. Let's talk, reach out to me at dick@fullsend.io.