The collapse of FTX has institutional crypto investors fleeing and regulators closing in. True believers argue their vision of decentralised digital money still holds. In a less dystopian world, gold may have more appeal, says Edward Chancellor
An attendee wears a t-shirt with the logo of bitcoin that reads "hodl", slang in the cryptocurrency community for holding a cryptocurrency rather than selling it, during the Bitcoin Conference 2022 in Miami Beach, Florida, U.S. April 6, 2022. REUTERS/Marco Bello
True believers haven’t lost faith. They point out that cryptocurrencies were originally intended to provide a decentralised alternative to government-issued fiat money, which didn’t require users to place their trust in intermediaries such as banks. Instead, transactions would be recorded on a distributed ledger. In fact, most dealing in cryptocurrencies ended up on centralised exchanges such as FTX.
Bankman-Fried appeared aware of crypto’s inherent flaws. The FTX founder agreed that digital tokens were impossible to value since they generated no cash flow. He also pointed out the impractically slow speed of transactions over the Ethereum network. In this respect, bitcoin is little better. There’s another problem. Most cryptocurrencies require a so-called “proof of stake” where large holders verify transactions.
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