Crypto

Crypto Crash Does Little To Shake The Faith Of Some Blockchain Believers

Crypto is in the midst of its worst streak. Blockchain advocates aren’t necessarily breaking a sweat.

Bitcoin price hovers around $20,000, down about 70% from its all-time high in November. Cryptocurrency exchange Coinbase laid off 18% of its workforce or 1,110 workers. Celsius Network, one of the largest cryptocurrency lenders, stopped withdrawals and transfers last week.

Many industry insiders have warned that these developments are signs of a “crypto winter,” but some advocates of blockchains, the distributed computing technology that underpins cryptocurrencies, NFTs, smart contracts, and more, believe there is a side positive on falls.

“I’m more bullish than ever on crypto,” said Jason Yanowitz, co-founder of Blockworks, a financial media company.

Yanowitz compared the current crypto crash to the tech bubble of the early 2000s.

“That is the period we are in now; we are removing greed and exuberance from the market,” she wrote in an email.

Blockchain-based technologies, once the purview of a relatively narrow and rare corner of the tech world, have become a global focus thanks to the seemingly sudden riches enjoyed by early investors in some cryptocurrencies and, more recently, digital art connected to NFTs. or non-fungible tokens, which also use blockchain technology. That boom has coincided with a growing group of financial analysts and technologists warning that these markets were looking increasingly unsustainable.

And even some in the blockchain community have argued that the rise and fall of cryptocurrencies has been a false signal, diverting the public from the underlying technological benefit of decentralized computing.

Brain Brooks, the CEO of The Bitfury Group, a bitcoin mining company that has been around since 2011, he told CNN which sees the recent collapse of cryptocurrencies as a necessary part of driving blockchain technology forward.

“Forest management is the analogy I think of,” said Brooks, who served as acting comptroller of the currency during the Trump administration. “At some point, the undergrowth has to burn down so the tall trees have room to grow.”

Many blockchain advocates point to a bit of a paradox when it comes to the broader crypto boom: what is supposed to be a decentralized technology is becoming quite centralized.

Blockchains work by involving a network of computers each competing in a way that makes it nearly impossible for a single entity to control the system. But for people who use the major cryptocurrency exchanges, there is not much difference with a centralized bank that owns the assets of one person.

Cleve Mesidor, CEO of The Blockchain Foundation, an educational platform, said that Celsius is not decentralized even though it runs decentralized cryptocurrencies.

NFT New York
An attendee, who appears to be dressed as Doc Brown from the “Back to the Future” film franchise, applauds on NFT.NYC.Julius Constantine Motal/NBC News

“What happened with Celsius will not affect the future of bitcoin,” he said.

Mesidor added that it is a concern when a company like Celsius draws attention and fights back, but is not representative of the blockchain community.

“As you innovate you are going to have problems,” he said. “There are models that are not working and that is what we are seeing with these companies.”

More important than current price points is confidence that decentralizing markets creates opportunities for financial inclusion and resolving economic inequality, Mesidor said. Blockchains are accessible to anyone and a game changer for minorities, he added.

But the blockchain may not be as decentralized as one might think, said Mark Nadal, founder of ERA, an innovation lab focused on building open source internet applications.

Blockchains still require the approval of others on the chain and are just “slow public counting machines,” Nadal said. There are peer-to-peer technologies that allow data to be shared without needing the consensus of others as in a blockchain, Nadal said.

Still, many blockchain advocates seem to be leaning toward collapse, letting the market take its course and claiming that blockchain technology has a bright future.

Even on the verge of a crypto winter, he has a silver lining, said Marta Belcher, director and president of the Filecoin Foundation, an organization that funds development projects that seek to improve the decentralized web.

Belcher said he believes cryptocurrencies are here to stay and are the foundation for a better Internet: “an alternative to big tech that puts people in control of their own data, protects user privacy and security, and permanently preserves privacy.” humanity’s most important information.

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