Crypto is Dead, Long Live Crypto

If you’re out of the loop, cryptocurrency exchange FTX just filed for the largest cryptocurrency-related bankruptcy in history. Sure, the writing may have been on the wall, but Silicon Valley, and specifically the DeFi movement is at its most vulnerable at any point thus far. This thread explains in layman’s terms the details of what happened, but all you need to know is that an exchange once valued at $32 billion dollars evaporated its assets in less than 24 hours. FTX’s collapse is particularly significant because the firm marked the most ‘mainstream’ movement into the conventional financial system. Their backers included the likes of Sequoia and Tom Brady. Not the kind of venture you’d expect to become the next Lehman Brothers.

It’s easy to look at this collapse and make fun of what happened, but the downstream effects of SBF’s monumental flop will be long lasting, in tandem with the looming recession. It’s increasingly clear that FTX’s lack of oversight cause many issues (particularly w/ Alameda Research, a trading firm that SBF co-founded and had intricate ties to FTX’s exchange — I’d recommend reading the article if you’re interested in the specifics of the bankruptcy case). This spells trouble for the DeFi movement and cryptocurrency industry moving forward. Many smaller firms were backed by FTX and similar exchanges, and will face increasing scrutiny and potential regulation in the future. The upside? Nonsense business will be selected out by markets. Only the strong will survive the coming winter.

Despite all of this, right now is probably the best time to be building a company. The 2008 recession proved to be a watershed moment for the last iteration of tech. Airbnb, Uber, Twitter were all forged in the ‘dark times’. Less access to capital means smarter decision making, point blank. As I move forward building in EdTech, I’m excited about the prospects of a market that is no longer over-saturated with nonsense (Suoni demo link here). DeFi & crypto companies will either become default alive or meet the watery fate of FTX. Crypto is dead, long live crypto.

This post was intially published as a part of the Penn State Presidential Leadership Academy. Its contents do not represent The Pennsylvania State University or the Penn State Presidential Leadership Academy

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