by Zain Jaffer
It was more than one year ago in early November 2022 that the crypto exchange FTX crashed, losing most of their investors money in the process. The crash was precipitated by a Coindesk report that stated that the exchange balance sheet was propped up mostly by their own FTT trading token. Subsequent investigations revealed that founder Sam Bankman Fried, co-mingled FTX customer funds with the sister hedge fund trading company Alameda Research, headed by his top lieutenant and former girlfriend Caroline Ellison.
Flashforward one year later to November 2023. Sam Bankman Fried has been found guilty in his US trial, and may spend many decades or even the rest of his life in jail. His associates, including Ellison, still have their own legal problems. But since they cooperated with the Justice Department in convicting Bankman-Fried, they may have a more lenient treatment from the prosecutors.
The crypto markets were starting to recover from their slumber. Bitcoin is now more than half of its price last November 2022, after crashing from a high of around $67k to around $16k. The other altcoins had also made good gains in early November, although market prices can go in any direction at any time. However, the dynamism of the markets is a far cry from the fear emotion that dominated after Binance’s CZ pulled the plug on their rescue of FTX.
All important technologies that came before crypto and blockchain, have had their share of charlatans, fraudsters, scammers, exploitable weak points, and other weaknesses that were improved over time. This is true of airplanes, trains, automobiles, telephones, the Internet, email, and others. The credit card for example is still being used for fraud, but decades of improvements in response to fraud and scam attempts have made it harder to misuse it.
Blockchain and crypto will help to improve the networks that handle the world’s financial systems. Remittances between workers abroad and their families back home will be faster and cheaper. Stock sellers can get their money immediately in their account, not just after two days (T+2). Office buildings, now suffering from low valuations because of high vacancy rates, can be fractionalized in terms of ownership, and even a low budget investor can own a share of a NY, SF, or LA skyscraper. The possibilities are endless.
Betting against technology because it goes against your mental paradigm about how things are done is a big mistake. The world is full of large industries and companies that thought that new technologies were nothing to worry about because their commanding lead would be like a moat to protect them. Blockbuster, Pan Am, Sears, are just some examples of former leading companies that made that fatal mistake.
Netflix for example, offered to be bought out for a small sum, if Blockbuster would agree. Blockbuster declined the offer. Kodak did not take digital photography seriously, and lost its leadership in photography to the likes of Apple and Samsung.
Likewise the flush out of the likes of Bankman-Fried and other scammers and fraudsters from the crypto and blockchain industry will only make it better and stronger, and earn the people’s trust.
Blockchain and crypto is the future of the banking and financial industry. Experts and leaders may say otherwise, but eventually technology wins all the time.
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