On mutants in the crypto gene pool and Terra in the blo…


Everyone, or at least everyone in the media, loves the bad news about crypto. The headlines drip with merry blood to the slightest murmur or faltering. If I had a penny for every headline that read “Crypto is Dead” over the 12 years of its short life, it would be, well, you know …

Not all, of course. Stakeholders in the cryptographic ecosystem (nearly 200 million of them) don’t like bad news, but they generally don’t write headlines in the media.

There was terrible news last week that I will come across, but as an educator, researcher, and writer in the new magical worlds contained in the many crypto chains (and their most famous offspring, the blockchain), I have been ruminating on this asymmetry. . Lots of noisy haters, less loyal lovers. I hope to change that, even if only a little.

Bitcoin, the OG, is one of the countless issues of interest (a big one) born of the blockchain, which emerged in 2009 from an amazing nine-page white paper written by a pseudonym Satoshi Nakamoto.

But there are others besides Bitcoin. Altcoins and Defi and the metaverse and NFTs and Decentralized Autonomous Organizations and Web3. Not to mention the younger brothers who make their way through the sunlight.

In this column, over the next few months, I will be writing about these new creatures and the great promise they have of improving everything from guaranteeing property rights to financial inclusion to democratic processes. There’s a lot out there in cryptocurrency, most of it is good.

But first, some bad news. Like I said, everyone loves it.

Just over a week ago, a cryptocurrency project failed, taking $ 40 million in market capitalization. The whole house of cards collapsed in a few days. Consider this number again: $ 40 million. About 627 billion rupees. More than half a trillion rand.

That’s a big investor money scam, a serious catastrophe in any industry, especially in an emerging one like this. Everything disappeared in the air. And, according to most observers, the laws were not violated, and a few quiet financial engineers were greatly enriched by the crash.

The project was called Terra / Luna and the details of what happened are a bit labyrinthine, but not impossible (interested readers can find the bloody details everywhere, with Matt Levine of Bloomberg offers the simplest and funniest account here.

It happened in a very important corner of the cryptocurrency called “stablecoins”. In short, the project said “if you buy our crypto-token it will always be worth a dollar, until the end of time, we promise.”

Well, the road to hell is paved, right?

It’s not like they’re hiding anything. He wrote an elegant white paper with a lot of economy to prove his case before he started. He snorted with scorn when some of the first observers said, “Wait a minute, this isn’t solid.” He built an elegant, interconnected set of blockchain stuff and offered his stuff to the public. Who then bought $ 40 billion.

Here’s what’s important in this bad news, which most miss. This world of cryptocurrencies is very, very young. The modern banking system began about a millennium ago with the Medici in Italy; he had time to remove many wrinkles.

Cryptofinance is only 13 years old, and many of the creatures that crawl through its Cambrian swamp are real-time experiments that use real-world money, but are distorted and distorted and unproven, and are subjected to the brutal sacrifice of evolution.

What happened when this news came out is that the headlines accelerated again. Crypto is dead, they shouted. But for those of us with a long-term vision, it was good news: a mutant has been kicked out of the cryptographic genetic stock, leaving large, ancient, solid bastions of the crypto, like Bitcoin (and others we’ll discuss later). standing even taller and stronger.

There is an analogy that can be drawn here from many transformative technologies of yesteryear. We could take the motor vehicle industry. More than 3,000 car companies were established in the first 20 years of the 20th century. Three survived, because they were better than the rest. Or the business of cell phones. Remember Blackberry? Nokia? Motorola? Lost fortunes there too.

Disaster headlines make for a sensational read. And there are certainly real people injured in these events: some gamblers, some unsaved, some innocent but naive victims, even some sophisticated victims. But these events are, in fact, quite rare and also occur in every corner of the real world of non-crypto finance.

So this is where I would like to end this first column on this new and noisy technology. For every sensational story of horrible, there is, I guarantee you, a more nuanced and deeper story.

Stay tuned. DM

Steven Boykey Sidley is the co – author (with Simon Dingle) of Beyond Bitcoin: Decentralized Finance and the End of Banks.



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