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Billy Preston subconsciously explained cryptocurrency theory in his 1974 song “Nothing from Nothing.” As with many economic downturns in history, cryptocurrencies have been dominant for some time. However, the recent clash between FTX and the rules of financial attraction has created a new cryptocurrency reality with new rules. Like Gaul in the 2nd century BC, the kingdom of cryptography is now divided into three parts.
The first group consists of crypto diehards (Kryptonite). They are betting on cryptocurrency as their path to fame and fortune. They will continue to fight in hopes that cryptocurrencies will find intrinsic market value and restore consumer confidence. The wise members of this group believe that every financial revolution has its ups and downs, and like forest fires, this crypto winter will weed out the weak and unfit, making the digital forest stronger in the long run. I point out that it would. They admit that some sort of regulation of the crypto market was always inevitable.
The more illusory members of this group, the crypto-Illuminati, have been hypnotized by the cultural hype and financial independence that cryptocurrencies offer. Digital currencies are a fountain of finance for their youth, offering an alternative to tired and outdated forms of money and investment strategies. Dismiss and fight financial rationality until it flattens them.
The second group is hardened crypto-deniers. They never understood or cared about cryptocurrencies and their lives are not influenced by his FTX or Sam Bankman-Fried, but everyone wants to define the Metaverse. They are used to cash, credit cards, online banking, and the occasional wire transfer, but they don’t understand why the speed and efficiency that decentralized financial services offer makes a difference. They are used to financial ups and downs in life.
In between these two groups are Monday morning cryptobacks, people who understand the complexities and economic peaks and troughs of cryptocurrencies and the business of financial services. Many of them are now busy reminding us that they said so, in tones ranging from angry to hilarious. I saw myself as a patient who ran a mental hospital. And maybe they were right.
One of the explanations of cryptocurrencies I have come across is that those stupid enough to pay real money for the privilege of not moving anything to their end deserve to lose real money. suggesting. Author Dave Barry likewise has his tongue firmly planted in the check, suggesting that it’s probably not a good idea for a dumbfounded FTX investor to entrust his money to a company with a meaningless name and an incomprehensible business model. He said he found no. -Enter the John Belushi lookalike contest. ”
Martin CW Walker’s article describes cryptocurrency companies as “not buying or selling anything for a very long time, and really believing that they take nothing, give names, and sometimes give stories in exchange for various chunks of mostly nothing.” It is characterized by Combined with a little interaction with a friend, it’s not that great of a value. It was perhaps natural, he speculates, that some cryptocurrency players came to believe it was permissible to manipulate the price of nothing and use it for their own ends. increase.
The future of cryptocurrencies could lie somewhere between the worlds occupied by Kryptonite, Cryptodenia and Cryptoback. There will be a market for them — after all, there is a lottery market. can be seen through And as hundreds of federal, state, and international legislatures and regulators jump to the brink, bolting barn doors as the horses gallop, it’s sure to come with shiny new rules and regulations. Target.
Most importantly, the classic due diligence is back again. So, just like in the real world, raising money for Wall Street and Silicon Valley becomes very complicated. And if the past is the prologue to the future, Congress, states, and foreign jurisdictions will kneel to unwieldy and unwieldy legislation that only a fraction of the cryptocurrencies needed or useful. But everyone would be happy to have done so much for so little.
There will be survivors of this crypto winter. They will be the companies that knew that a business that sold nothing would eventually explode into something else. If you are ready to adapt to laws and regulations, you may succeed. They have to look, feel and dress like a serious company. The rest will probably go the Gallic way.
Thomas P. Vartanian is Executive Director of the Financial Technology & Cybersecurity Center and a former regulator and attorney in the financial services industry. His latest book is “An Internet That Can’t Be Hacked: How Restructuring Cyberspace Creates Real Security and Prevents Financial Collapse.”
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