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Yes, the cryptocurrency winter never seems to end and, yes, the industry has been marred by the FTX debacle and the arrest of Sam Bankman-Fried.
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Despite this gloom and doom, however, a number of pundits still believe strongly in cryptocurrencies and their value, and will not be deterred by the naysayers’ opinions.
Mark Cuban: The value lies in the utility
Mark Cuban, billionaire entrepreneur and owner of the NBA’s Dallas Mavericks, said he is still optimistic in the space and has invested in cryptocurrencies, despite the FTX crash, mostly because he believes in smart contracts.
“A token’s value comes from the applications that run on its platform and the utility they create,” he tweeted on Nov. 13.
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Bitcoin ‘has staying power’
Consumers appear to be shrugging off the 2022 market volatility and FTX crash, according to a new Bakkt survey: Before the FTX crash, 89% of cryptocurrency holders said they were likely to buy cryptocurrencies in the future, but sentiment fell by just 7% after the FTX events. Meanwhile, crypto curious sentiments have remained stable, according to the survey.
“Cryptocurrency — and Bitcoin in particular — has already proven that it offers real value and has staying power,” said Dan O’Prey, chief product officer of Bitcoin and cryptocurrency at Bakkt. “I believe Bitcoin is unique compared to cryptocurrencies in that it is a truly decentralized leaderless digital money and its utility is only set to grow from here in terms of both adoption and application.”
O’Prey added that while we are in a bear market it is this type of volatility that has exposed some of the unsustainable and nefarious practices.
“It’s not the first downturn and it won’t be the last, but everything that’s happened recently is helping to rid the market of bad players,” he said, adding that what happened with FTX was an institutional failure due to fraud, not a failure of cryptocurrency technology.
He added: “Long-lasting players will be open to transparency about their practices and welcome thoughtful regulation.”
Experts: FTX was not a cryptographic issue
Other proponents of the space include Tim Draper, venture capitalist and founder of Draper Associates, who said in November that Bitcoin would hit $250,000 in June 2023.
Just like many other cryptocurrency advocates, he noted that one of Bitcoin’s main strengths is that it is decentralized.
“FTX was centralized around one person,” Draper tweeted on Dec. 3. “Decentralized currency is the great opportunity we have for economic evolution. Governments need to design software to tax businesses operating in a Bitcoin fenced garden so that they have more trust in Bitcoin.”
The consensus between Bitcoin maximalists and crypto advocates seems to be that FTX was not a “crypto event” and that despite the massive pain it has inflicted on thousands of customers, one positive outcome is that it is weeding out the bad actors and it is helping the industry get back to the basics of what cryptocurrencies and the blockchain are really about.
“Saying you’re not bullish on crypto because of FTX is like saying you’re not bullish on stocks because of Bernie Madoff,” said Ric Edelman, a former financial advisor and founder of the Digital Assets Council of Financial Professionals. “FTX has nothing to do with blockchain or digital assets, any more than Madoff had anything to do with the stock market. Madoff was just another con artist who carried out a massive fraud. And it certainly appears that Sam Bankman-Fried is also a con artist who has been conducting a massive fraud. Madoff used the stock market to perpetrate his scam; SBF used encryption.
Edelman emphasized that the underlying benefits of blockchain and digital assets are unaffected by FTX and SBF, as blockchain technology allows businesses to operate faster, more securely and more cost-effectively, with greater transparency and inclusion.
“This is why 90% of all banks worldwide are developing the technology, with more than 70,000 software engineers involved,” he said. “More than $35 billion has been invested in this technology in the last two years alone; PwC says it will add nearly $2 trillion to the global economy by 2030 and McKinsey says 70% of global GDP will be digital by 2030. Bipartisan support in nearly every country.
The future after FTX
In the aftermath of FTX, Edelman said, there have been several positive developments in the space. To name a few, Warner Music has announced that fans can purchase and listen to music NFTs through the Polygon blockchain; Fidelity announced its retail clients can now trade Bitcoin and Ethereum on their brokerage accounts, and Goldman Sachs announced it plans to spend “tens of millions of dollars” buying or investing in crypto companies.
Indeed, in a Dec. 6 Wall Street Journal op-ed, Goldman Sachs CEO David Solomon wrote: “The rapid collapse [of FTX] raised questions about cryptocurrencies and blockchain technology, the software behind crypto assets.
But, he added, unlike other waves of innovation, blockchain technology has arrived and disrupted heavily regulated industries.
“The invention of email did not make FedEx or UPS obsolete. But blockchain technologies like peer-to-peer payments and the tokenization of traditional assets are changing businesses, from the way they raise money to the way investors trade stocks. This has far-reaching implications for the global economy.”
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