Will Crypto survive? by Kenneth Rogoff

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With a storyline full of celebrities, politicians, sex and drugs, the future looks bright for producers of feature films and documentaries about FTX’s astonishing collapse. But, to paraphrase Mark Twain, rumors of the death of crypto itself have been greatly exaggerated.

SAN FRANCISCO The epic collapse of wunderkind Sam Bankman-Frieds’ $32 billion crypto empire, FTX, is set to become one of the greatest financial debacles of all time. With a storyline full of celebrities, politicians, sex and drugs, the future looks bright for producers of feature films and documentaries. But, to paraphrase Mark Twain, rumors of the death of crypto itself have been greatly exaggerated.

Certainly, the loss of confidence in exchanges such as FTX, essentially crypto financial intermediaries, almost surely means a sustained sharp decline in the prices of the underlying assets. The vast majority of bitcoin transactions are done off-chain on exchanges, not on the bitcoin blockchain itself. These financial intermediaries are much more convenient, require much less sophistication to operate, and don’t waste as much energy.

The emergence of exchanges has been a major factor fueling cryptocurrency price growth, and if regulators crack down on them, the price of the underlying tokens will plummet. As a result, Bitcoin and Ethereum prices fell.

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