Cryptocurrencies can turn FTX founder Sam Bankman-Fried’s failure into success
They say that in order to process a traumatic event, or any major change going on, you need to go through the five stages of grief: denial, anger, bargaining, depression, acceptance. It is fair to say that denial and anger, as well as a great deal of sadness, have been playing out publicly since the reality of what was happening at the failed cryptocurrency exchange FTX became clear.
Perhaps now that FTX founder Sam Bankman-Fried has been arrested in the Bahamas and will be extradited to the US, the cryptocurrency industry can get to the sixth stage of the grieving process, the most necessary of all: moving forward.
The fall of FTX and the subsequent arrest of its disgraced former CEO came as a major blow to the cryptocurrency world, but I believe the time has come to evaluate the events of the last month and make sure we don’t shy away from the lessons they could teach us. .
Be honest about the speculative elements of cryptocurrencies
It’s time for the industry to grow, that much is clear. The speculative elements of the crypto environment need to be curbed as trouble is still ahead for us – at least in the short term – and we need to gain collective control if cryptocurrencies are to survive.
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Going further, if we want it to thrive, we’re going to have to be honest with ourselves about what we need to do differently.
Admittedly, regulators have yet to design a clear legal framework for the industry, and the collapse of FTX could scare them into coloring all future legislation with a touch of overreaction. But such is their right – and there is very little we can do about it.
Remember the Internet bubble of 2001
What all those who believe in the validity of the principles upon which cryptocurrencies are based must remember is that we can easily equate this situation to the Internet bubble of 2001. We know how that turned out, don’t we?
Similar to how the events of two decades ago solidified the internet as we know it today, in a sense, FTX demonstrates the value of decentralization rather than the other way around.
It seems people can’t tell the difference between blockchain technology itself and flagrant cases of abuse of its potential, but it’s important that we start educating both regulators and the general public about what it looks like and why it matters.
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The traditional financial sector is filled with examples of fraud, malpractice, malpractice and all sorts of dubious or even criminal activity. We are all able to distinguish between the principles on which our financial system is based and individual cases of abuse. We would never dream of conflating the two to punish those who want to flout our legal system.
Why should cryptocurrencies be any different?
Rebuild the cryptocurrency industry based on trust and transparency
By leveraging Bankman-Fried’s actions to take a stand against any speculative, criminal, or otherwise unethical elements that cryptocurrencies may still foster, we can finally begin to move forward and rebuild the kind of industry we dreamed of in the first place: one built on trust, self-governance and transparency. One with real-world utility, not what Bankman-Fried had in mind.
In five years, or 10, what is unfolding before our eyes will no doubt be considered the real game changer for what was an immature technology that has turned into a veritable adult powerhouse capable of reshaping the our collective future.
What is now an overcrowded space has a chance to evolve into a thriving economy suited to our new ways of living, and the FTX debacle will be seen as a watershed moment that will allow all of that to happen.
Any alternative is just too bleak to entertain.
Lars Seier Christensen is chairman of Concordium and founder of Saxo Bank. Follow him on Twitter: @larsseier
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