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As 2022 draws to a close, the Bitcoinist staff decided to launch this Crypto Holiday Special to provide perspectives on the cryptocurrency industry. We speak to several guests to understand the highs and lows of cryptocurrencies this year.
Zhou: “It is not business as usual for a centralized exchange.
In the spirit of Charles Dicken’s classic A Christmas Carol, we look at cryptocurrency from different angles, see its possible trajectory towards 2023, and explore the different industries that could underpin the future of finance. Find common ground in views.
Closes institutional funding round with Wei Zhou. For three years, he was the Chief Financial Officer of Binance, the world’s largest cryptocurrency exchange. Above all, this company and its current CEO, his Changpeng “CZ” Zhao, had a great influence on the industry in its early days and will continue to do so.
Zhou: “Bitcoin, like the Internet, will survive any storm.
Zhou looks back on the biggest moments of 2022 from his own perspective. Furthermore, he talks about the fundamentals of keeping cryptocurrency alive and on track to fulfill its destiny. This is what he told us:
Q: What are the most important differences for the cryptocurrency market today compared to Christmas 2021? Has it changed? Are penetration and liquidity declining? Are the fundamentals still valid?
A: The crypto market has certainly changed a lot over the past year. There are three questions here, so I’ll answer each one separately.
- I think the biggest change this year is due to the collapse of several major industry players, from Celsius and 3AC (Three Arrows Capital) to BlockFi and most recently FTX. Tens of billions of dollars disappeared directly and hundreds of billions indirectly disappeared, making investors cautious. While it has caused immeasurable pain, the collapse of these giants has made them more diligent than ever in their crypto investment decisions, conducting thorough investigations and refraining from entities with unknown licensing and regulatory status. I am confident that things will change and investor confidence will return in 2023, but we cannot afford to forget the lessons learned this year.
- Liquidity – Yes. Adoption – Not at all. Of course, the collapse of big market makers like FTX has affected liquidity as several exchanges depended on it. Investors also withdrew substantial funds from exchanges which further escalated the liquidity crisis. But with adoption, I think it will continue unabated. Traders may have taken a bit of a step back, but adoption surged for those where cryptocurrencies were more than speculation, such as the home market of the Philippines, which relies on cryptocurrencies for play-to-earnings and remittances. will continue to
- The fundamentals are as solid as ever. Despite the turmoil, I would like to point out that Bitcoin has never made a mistake. It hasn’t changed.
Q: What is the dominant narrative driving this shift in market conditions, and what should be the narrative today? What do many people overlook? We have seen massive crypto exchange failures, hedge funds that were considered unruly, and ecosystems that promised a financial utopia. Are cryptocurrencies still the future of finance, or should the community pursue a new vision?
Again, splitting up the question.
- With the collapse of several companies, including the largest bitcoin miners, crypto skeptics and some mainstream media have re-energized their fight against crypto. Let’s fight the coin” is on the bandwagon. This, predictably, raises questions in the minds of some investors. But most people overlook that not all these players are necessary for Bitcoin to succeed. Satoshi designed it to be a decentralized electronic currency. Five years ago there were other players, ten years from now there will be a few more, but Bitcoin remains as solid as he was ten years ago.
- Crypto is still the future of finance. If you remember, when the dotcom bubble burst, there were many questions about the viability of the Internet as a technology and the companies based on it. But today he looks at Amazon, Facebook, Google, etc. They define the world we live in. This is because, despite the turmoil of market players, the underlying technology has been fundamentally transformative. Bitcoin, like the Internet, will survive any storm. There is no question about this.
Q: If you had to pick one, what do you think will be the key moment for cryptocurrency in 2022, and will the industry feel the impact during 2023? Where will the industry be next Christmas? Do you think it will survive this winter? Mainstream is once again declaring the death of the industry. Will they finally get it right?
A:
- It’s hard to pick just one moment to capture the crypto industry’s most eventful year yet. However, coming from the exchange side, I point to the FTX collapse as a breakthrough moment. The impact has been and will continue to be felt in the industry. It impacts the industry in two main ways:
- This has made investors more enthusiastic about who they keep their assets with and how they keep them. Gone are the days when just making a wallet and cruising was enough. Investors are currently digging deeper into self-custody solutions, which I think is a great direction to take, contrary to popular opinion. When they need to trade assets, they currently trade only with fully regulated exchanges like Coins.ph, which is licensed by the Central Bank of the Philippines and regularly audited by the apex bank. I am enthusiastic about it.
- This has made regulators more concerned about the industry. We have already seen moves by countries such as Japan and South Korea to better regulate the industry to prevent another FTX debacle. For us as a cryptocurrency industry to weather the storm and become a mainstream industry, we must be prepared to accept regulation.
- We will definitely survive this winter. Remember when Bitcoin fell to his $3,000 level, and the bonus is that unlike previous winters, there are institutional investors pushing the sector forward. But I think the biggest reason we’re getting through the winter is that we have more use cases than ever before. Remittances, play-and-earn games, NFTs, Web3, the Metaverse – all these things are in the spotlight these days, and they’re all powered by crypto and blockchain.
Q: What will happen to exchanges like Binance after 2023? Do you think the recent events with FTX jeopardize the future of these platforms? So we are already speculating about liquidity moving from centralized exchanges to decentralized exchanges (DEXs).
A:
- It’s not business as usual for a centralized exchange. For one thing, the days of mingling user and exchange assets are long gone. FTX has awakened the entire industry to the dangers of this practice, which is illegal in traditional finance. Proof of reserves is already becoming a major trend as many investors ask how and where their assets are stored.
- Regulators are also cracking down on exchanges. For example, in the Philippines, BSP quickly conducted an audit to investigate whether the exchange had been exposed to his FTX contagion, but thankfully neither Coins.ph nor our peers It was not exposed to FTX.
- There will be more focus on decentralized exchanges and more focus on self-custody. More and more users are looking for wallets that give them full ownership of their cryptocurrencies. I am a big proponent of self-custody for those who have the technical ability to do so successfully. It is recommended to always use
I am truly sorry for what happened this year. Cryptocurrency was meant to be a tool to liberate people and give them new opportunities in finance and beyond. This year has been the worst year for cryptocurrencies and I sympathize with all investors whose funds have been hoarded or wiped out by the crypto epidemic.
But we believe crypto will weather the storm and become even more powerful as we move forward in 2023 and beyond. was to do Despite all the hurdles and setbacks, we believe we are still on the road to achieving this vision.
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