Christmas Crypto Family Dinner - How did you handle it?
Over the last few years, Christmas family dinner/ outing has been a fantastic opportunity to talk to our loved ones about the prospects of crypto and how it’s changing the world.
I remember a 3-hour-long crypto talk with my late dad in 2019 - May his soul rest in peace! Thankfully he was a visionary, a trait I strongly carry.
Conversations like this usually turn awkward as they sound like rocket science to the uninitiated.
Thankfully, Crypto has taken long leaps - only to crash hard in 2022! A lot of fortune got wiped out in days!
This makes the conversation even harder this time. There’s almost nothing to talk about except the contagion of big failures and wipe-outs.
It’s hard to tell your “bruh” to get into crypto if centralized exchanges delete their socials and disappear with customer funds.
The terrible downfall was triggered by many external factors - macroeconomic pressures such as growing inflation, rate hikes from the US Federal Reserves, the Ukraine-Russia conflict.
All these led to a lack of investor confidence across global markets, resulting in sell-offs.
However, the crypto sell-off was peculiar to poor internal decision-making from trusted industry leaders, starting with the Terra collapse. How the industry thought we finally had the golden decentralized stablecoin in UST! The $40b ecosystem was brought to ruins in days, causing a ripple effect on several other firms who had their reserves in UST. Lenders such as Celsius and Three Arrows Capital were hit the hardest and filed for bankruptcy.
Surprisingly, FTX, who emerged as the bail-out king of the industry, was next in line as the industry’s biggest failure. The crypto exchange was using its native tokens to leverage against multi-billion dollar valuations.
Former FTX CEO Sam Bankman-Fried, who cut a philanthropic figure, turned out to be an outright fraud, mismanaging customer funds. SBF was finally arrested in the Bahamas on Dec 11. However, he managed to secure a bail plea against a $250m bond paid by his parents who put up their house to cover the bail bond.
While this brings a bit of relief for customers, the new FTX CEO John Ray, mentioned over the SBF trial that it would be impossible to recover all of the customer losses. Lawyers have also predicted that it might take years, or even decades to recover the funds. Mt. Gox should serve as a pointer to that.
The 2022 collapse has been devastating and a step back for the industry; however, we can always look at the bright side as people learn more about the bad business models, the mistakes, and ways to improve the industry. A good side is the introduction of proof of reserves that users can monitor in real-time.
Centralized entities are under a lot more scrutiny. Bad projects will find it harder and harder to thrive in the next bull run.
If you’re looking to have a family crypto conversation, you can bring up these factors - and to be fair, it’s better to have these incidents happen earlier than later.
The industry is still nascent, and there's a lot of room to make things better, as well as opportunities to change your lives!
Crypto is here to stay!
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