Blockchain and Crypto in A Post-FTX World: Three Takeaways
“Not your keys not your coin” has never rang more true than it has this week. The industry can’t seem to learn our lesson. As centralized companies go down one after another in a firestorm of uncertainty and seeming deception, we’re left hoping that the ones remaining are trustworthy. Hope is a dangerous thing.
I don’t need to remind you of the drama unraveling that will ultimately be turned into a successful predatory Netflix docuseries. FTX collapse, SBF, Alameda, hacks, draining, CZ - go ahead and search any of these terms and you can catch yourself up.
As the ripple effects settle over the coming weeks / months, there’s an important question we have to consider: what happens to crypto?
Many tout this as the “final straw,” claiming that they’ve liquidated and are officially out forever. As if the Terra / Luna collapse, Celsius, and 3AC headlines weren’t quite bad enough. Some will continue to be bullish while others ask them why. Most are unsure what to think.
I think it’s important to take a step back and analyze what’s happened here, and separate it from what blockchain and crypto is. Blockchain is a technology. Crypto is a use case of said technology. It created many things, like financial freedom for many, but also encouraged bad behavior. They are tools for humans to build new systems on - with the ultimate goal of making our lives better or more interesting. What happened in this most recent debacle, like the ones before it, is a very human issue.
As Mike Novogratz, a crypto investor who expects to lose $77 million in the FTX debacle, put it: “This is a tale as old as time. Some young charismatic guy in Bermuda shorts with the floppy hair charmed the 20 best investors and regulators in the world.”—AR
Nothing is unusual about a company failing or going bankrupt, but it’s unusual when you take billions of dollars of other people’s money with you and call it a “mistake.”
The world will continue putting golden boys on a pedestal, and bail them out when they crash and burn. They’ll walk away richer and more infamous than when they walked in, a feather in their cap for the next venture they decide to pivot to next. It’s happened too many times to even try denying it. In this case, a couple people made irresponsible decisions when handed too much power - and here we are.
So what, then, becomes of crypto and the entire industry that’s emerged, energetically, in the last decade? Here are my three takeaways.
- Self-custody is the true manifestation of decentralized peer-to-peer money / digital assets
In the beginning, decentralization was the goal. People made a lot of money by building companies and systems that were not centralized, and distracted the world. CEXs preyed on greed and lack of education. It leveraged FOMO and social signals. Ultimately, these guys pulled off stuff that banks are regulated to be prohibited from doing. Regulation isn’t just for control, it’s also for protection.
The next wave of blockchain needs to be more focused on decentralization or better practices (or both) if we want it to survive. This means the move to non-custodial, or self-custodial solutions to managing our digital assets. - The strong survive
These events have made headlines. We’re likely only at the tip of the iceberg when it comes to who has been wrapped up in this mess. However, major sections of the industry remain relatively unscathed - and it’s important to look at the underlying mechanics.
To reiterate what I said before, blockchain is a technology. There are core fundamentals to web3 that make it so great, and those that stuck to them are alive. Blockchains themselves are up and running. NFT ecosystems are vibrant. It is possible that the world will take some time to decouple the bad baggage that crypto has brought to blockchain as a technology. However: the definitions and use cases will only become clearer and clearer. Sandeep, the cofounder of Polygon, wrote a great thread on why Polygon is crushing it:
https://twitter.com/sandeepnailwal/status/1591157307152683008?s=46&t=FW49iKvUlAv9tj4pGiRovg
Self-custody is king. - Even at the bottom, there’s light
This probably isn’t even the bottom, but it feels a bit like one for the industry as a hole. People are hurting. The sentiment on Twitter is… odd, to say the least, but it’s incredibly resilient. With this giant dent, we’re still building in an $800 billion industry, with plenty of new applications to tackle. I can tell this isn’t over. In fact, it feels like a clear beginning.
All this to say - crypto is moving to non-custodial. Metamask is trending, and we’re seeing funds flooding into self-custody wallets. This opens another can of worms, one we’re trying to build for at Webacy.
At Webacy, we’re building safety and security tools for non-custodial wallets. We’re non-custody ourselves, and we’re no access - we’re building with trustlessness and self-custody in mind. Our users have already saved their assets from hacks, wallet drains, and lockout, all things that can happen due to simple human error or a small mistake. We’re continuing to create more services that will help you manage your digital assets today, and forever.
If you can’t tell, I’m optimistic. I’m surrounded by teammates and other founders that are creating awesome tools and experiences. Look away from the spotlight and you’ll see the builders.
Onwards,
Maika