opinion With the quick double win of FTX and Binance, crypto is finally losing its luster as the next money revolution.
I was recently in Manhattan at the Linux Foundation and Fintech Open Source Foundation (FINOS) Open Source in Finance Forum New York (OSFF) 2022 event. There, the topic of the day was fintech. It was about how open source and the cloud are revolutionizing how banks, financial companies and exchanges handle money. You know what we haven’t talked about? crypto.
Crypto bros are still chattering about how their bitcoin, ethereum or whatever will fly to the moon. They also insist that with their diamond hands they will HODL, no matter what.
That’s cute. In a pathetic way.
At the conference, finance professionals delved into topics such as data interoperability between platforms and applications, and how to encourage bank managers to let developers contribute to open source projects.
Cryptocurrency? It was mentioned in passing. People would talk about it the same way you would talk about your little brother’s latest embarrassing TikTok video. That is, you would acknowledge that it happened and quickly change the subject.
Why? Because while bitcoin has been the poster child for crypto for over a decade, with its proof-of-work consensus mechanisms as an alternative to fiat currencies like the US dollar, recent events have shown that the crypto emperor isn’t wearing any clothes .
Bitcoin value continues to fall. From its record high of $69,000 in November 2021 to mid-December 2022 as of this writing, it’s worth $17,678. Inflation may be bad, but “nearly 75 percent depreciation” isn’t bad.
At the same time, the market value of other related virtual goods has fallen. Sales of non-fungible tokens (NFTs), for example, fell from $7.3 billion to $1.6 billion globally, down 77 percent, according to NFT tracker Nonfungible. Promoters of perhaps the most well-known NFTs, the Bored Ape Yacht Club, are being sued because their NFTs turn out to be – shock! – have no enduring value: “The truth is that the company’s entire business model relies on using underhanded marketing and promotional activities by A-list celebrities who are highly paid (without disclosing it) to drive demand for the Yuga -To increase stocks by convincing potential retail investors who would appreciate the price of these digital assets.”
Let’s say you still believe in crypto, where can you store or trade it? The formerly market-leading cryptocurrency exchange FTX has collapsed. The allegations are that FTX client funds were used to prop up CEO Sam Bankman-Fried’s private hedge fund Alameda Research.
Although other top crypto firms are not in as hot water as FTX, things are starting to boil around them as well. Take Binance for example. Panicked holders have withdrawn funds from the ailing bitcoin exchange. To calm investors’ nerves, Binance requested accounting firm Mazars to provide a proof of reserves report. While not a full audit, it would have reassured crypto speculators that Mazars was indeed good for the money. But then Mazars pulled the plug on his crypto coverage. Any sane investor or user will be wondering: is this a “temporary pause” or is it a sign that all is not well with Binance?
Better known companies like Coinbase are also in trouble. The stock has faltered over the past few quarters. Recently, CEO Brian Armstrong said the cryptocurrency exchange’s earnings are likely to fall by half or more this year.
let me be honest From where I sit, this is the slow but sure fall of what has always been one giant pyramid scheme. There was never – never – any real value in crypto. Yes, I know all the arguments about fiat currencies having no intrinsic value either. But, you know what? When I go to the grocer, I can use my fiat dollars or pounds to buy milk, bread and butter. Dogecoins? Garlic? Trump NFT trading cards? I do not think so.
I know. It’s hard to admit that you’ve been a financial nut for years, or even a few months. I had friends in the 2000s who “knew” that Bernie Madoff could forever deliver 20 percent returns a year. You were wrong. Some of them lost their homes. All of them lost a lot of money.
There comes a point when you have to stop throwing good money after bad money. With crypto and NFTs, we are well past that point. At least in famous financial scams of the past, like the Dutch tulip bubble and the 2008 housing crash, you ended up getting your money’s worth of tulip bulbs and houses. With crypto, you are left with nothing but meaningless, pointless, worthless blockchains. ®
https://www.theregister.com/2022/12/23/crypto_craziness_craps_out/ Crypto madness craps – and so does time • The Register