The lesson of the FTX saga? Crypto must grow

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OPINION:

It’s not going to be the happiest of holiday seasons for the kids involved in the FTX saga. Caroline Ellison, former CEO of Alameda Research, and Gary Wang, co-founder of FTX, have previously pleaded guilty to fraud charges “in connection with their role in the frauds that contributed to FTX’s collapse”, according to Manhattan U.S. Attorney Damian Williams. On Dec. 20, FTX co-founder Sam Bankman-Fried signed extradition papers and began preparing to leave the Bahamas for the United States, where he faces up to 115 years in prison for electronic fraud, securities fraud, money laundering and others. conspiracy charges.

FTX’s fate may be sealed, as it will be remembered as the most explosive, surprising and disappointing collapse the cryptocurrency world has seen to date.

The future history of crypto itself remains to be written, however.

The start of a new year is always a time for introspection and self-assessment, and I believe the crypto industry needs to do some soul-searching after the events of 2022. With a fundamental crack as important as the fall of one of the largest exchanges in the world, we have to ask ourselves: where does crypto go from here?

I believe it’s time for the industry to grow and evolve into a more mature, stable, and compelling version of what we know today. As 2023 approaches, crypto projects big and small must ask themselves what they can do to burst the bubble we seem to be living in, which is largely comparable to the 2001 dotcom bubble that the tech industry has experienced and helping the sector as a whole to transform. the way we know it should.

People cannot distinguish between blockchain technology itself and its overt abuse, as in the case of FTX and many other scammers treating innovation as a get-rich-quick scheme. It is up to cryptocurrency enthusiasts and blockchain enthusiasts to elucidate the world on the difference.

Because for anyone who truly understands what crypto is and why it will prove so disruptive to the global economy as we know it, the collapse of something as shady and unreliable as FTX proves is the true value of decentralization, rather than the opposite.

Crypto was never meant to be what the likes of Mr. Bankman-Fried tried to be, and its reputation (and future) is suffering. It’s up to crypto itself to become such a pristine, solid, trustworthy environment that people can’t help but change their minds about its value and viability.

More short-term issues are still in store for the speculative crypto environment, and hopefully by the time the market gets its way with the projects that were always doomed anyway, we might have a good starting point to transform the industry. Legislation will undoubtedly come into play soon, and while regulators may feel pressured to overreact to the FTX debacle or simply misunderstand the heart of the crypto, that remains to be seen.

But the industry can’t afford to wait and see what regulators do, nor rely excessively on passing trends and fads, and base a game plan on what the hype of the moment is. . It’s time for us to get serious about what crypto can be and why what we see today falls far short of its potential.

Soon, the world’s largest companies will conduct safe and secure transactions on the blockchain, and verification based on decentralized services will become the basis for the migration from web2 to web3. In order to pave the way for this transformation, we must make trust, transparency and reliability a priority, and we must make business like FTX a thing of the past.

Five years or so from now, the events unfolding now will be seen as the true turning point of a growing immature technology, and we will remember this moment as the crossroads that cryptography had to face in order to discover the necessary way forward. May we bring this energy into 2023 and see where it takes us.

Lars Seier Christensen is chairman of Concordium and founder of Saxo Bank.

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