Negative crypto news strengthens the argument for decentralization
There have been several events surrounding cryptocurrency, bitcoin and metaverse development that at first glance appear to be negative for the crypto industry, triggering uncertainty.
However, consider events more closely and it becomes clear that when taken from a broader perspective, any important message they may contain about the state of crypto is actually in a positive direction.
What some recent events have in common is that they reinforce the importance of decentralization, illustrate its benefits and functionality, or emphasize the fact that crypto is built to level the playing field, working to benefit ordinary people rather than large corporate entities accustomed to to exercise disproportionate amounts of power.
DeFi Not CeFi
With the collapse of major crypto entities, such as Three Arrows Capital, Celsius and Voyager, some crypto-skeptics assumed we were witnessing a real-time demonstration of crypto’s fragility. Cynics took the opportunity to point out the irony that bitcoin emerged in 2009 as an alternative to traditional financial disasters, only in thirteen years, for crypto to have repeated the mistakes it was meant to remedy.
This reading is not without merit, the harmful behavior of traditional finance was indeed repeated, but it directs its critical barrage at the wrong target. It’s not bitcoin, crypto as a whole, or DeFi that crashed in 2022’s contagious rips, but rather it’s specific centralized operations that have proved incorrect.
In contrast, decentralized protocols, such as Curve Finance and Aave, have continued to function smoothly and as intended. What this bear market collapse has provided is a strong practical demonstration that DeFi is robust and neutral, while CeFi is vulnerable to corruption and recklessness. Quietly and without fanfare, decentralization comes to a head.
Tesla sells, retail purchase
News recently broke that Tesla had sold 75% of its bitcoin holdings at a loss, with founder and CEO Elon Musk stating that due to uncertainty surrounding covid lockdowns in China, “it was important for us to maximize our cash position .”
Again this was perceived as bearish, but at the same time the market has absorbed any impact and although there was a drop in bitcoin’s price when the news of the sale of Tesla came out, the volatility was not extreme and prices are now behaving much as they were.
Simultaneous, analysis shows that small holders, wallets containing 0.1 to 1 BTC, have accumulated at unprecedented prices. Retail is sometimes caricatured as ill-informed, and that’s just to provide exit liquidity to savvy full-timers. But unlike previous peaks in accumulation, which occurred around all-time highs and actually represent FOMO-driven, ill-timed buying, the current move is occurring after a major downside. Assuming a long-term perspective, these latest accumulations are absolutely astute.
And if you take these two events together, Tesla selling at a loss, retail picking up somewhere near the bottom (although we could still go lower), it paints a picture that Bitcoin’s creator may well be happy with. Bitcoin was built for everyone, regardless of circumstances, to enable unbanked, peer-to-peer transactions, and from that perspective, it’s better to have bitcoin in the hands of ordinary users than giant corporations.
Minecraft says no to NFTs
In recently released guidelines, the sandbox game Minecraft announced that it would no longer allow NFTs to be integrated into its applications. This was bad news for blockchain projects that build on Minecraft’s infrastructure, such as the metaverse platform NFT Worldsif NFTs immediately crashed in price.
NFT Worlds is looking at solutions and viable pivots, and it is notable that other metaverse and blockchain gaming projects reached out to them regarding the development of a GameFi platform. It’s also relevant that Yuga Labs (creators of Bored Ape Yacht Club), in collaboration with metaverse technology developers Improbable, recently ran an interactive first taster of their Otherside metaverse project, which was met with enthusiastic praise.
Put all this together and what we have is an orthodox, web2 platform, Minecraft, which demonstrates exactly the limitations of operating on centralized infrastructure: that users and developers are ultimately tenants who must abide by the dictates of their digital landlords .
It can certainly be argued that this web2 model has advantages. Minecraft is hugely successful and well engineered. But if one purpose of web3, or the metaverse, is to move away from top-down control, then Minecraft showed exactly why it is necessary, strengthening the case for the next generation web3 class of developers building out new ways of doing business on.
Relatedly, if you’ve ever wondered about Ethereum’s origin story, Co-Creator Vitalik Buterin jokingly quotes a event when his favorite game, World of Warcraft, unilaterally changed one of his in-game assets, thus awakening him to the disadvantages of centralized platforms.
When it comes to what can be taken from Minecraft’s position on NFTs, there is a clear message: decentralization is not just a nebulous, abstract concept, it actually serves real purposes, it has users and persuasive advocates, many of whom target a younger age group, and it seems to be gaining momentum as we move through what could turn out to be a memorable transformative decade.
There have been several events surrounding cryptocurrency, bitcoin and metaverse development that at first glance appear to be negative for the crypto industry, triggering uncertainty.
However, consider events more closely and it becomes clear that when taken from a broader perspective, any important message they may contain about the state of crypto is actually in a positive direction.
What some recent events have in common is that they reinforce the importance of decentralization, illustrate its benefits and functionality, or emphasize the fact that crypto is built to level the playing field, working to benefit ordinary people rather than large corporate entities accustomed to to exercise disproportionate amounts of power.
DeFi Not CeFi
With the collapse of major crypto entities, such as Three Arrows Capital, Celsius and Voyager, some crypto-skeptics assumed we were witnessing a real-time demonstration of crypto’s fragility. Cynics took the opportunity to point out the irony that bitcoin emerged in 2009 as an alternative to traditional financial disasters, only in thirteen years, for crypto to have repeated the mistakes it was meant to remedy.
This reading is not without merit, the harmful behavior of traditional finance was indeed repeated, but it directs its critical barrage at the wrong target. It’s not bitcoin, crypto as a whole, or DeFi that crashed in 2022’s contagious rips, but rather it’s specific centralized operations that have proved incorrect.
In contrast, decentralized protocols, such as Curve Finance and Aave, have continued to function smoothly and as intended. What this bear market collapse has provided is a strong practical demonstration that DeFi is robust and neutral, while CeFi is vulnerable to corruption and recklessness. Quietly and without fanfare, decentralization comes to a head.
Tesla sells, retail purchase
News recently broke that Tesla had sold 75% of its bitcoin holdings at a loss, with founder and CEO Elon Musk stating that due to uncertainty surrounding covid lockdowns in China, “it was important for us to maximize our cash position .”
Again this was perceived as bearish, but at the same time the market has absorbed any impact and although there was a drop in bitcoin’s price when the news of the sale of Tesla came out, the volatility was not extreme and prices are now behaving much as they were.
Simultaneous, analysis shows that small holders, wallets containing 0.1 to 1 BTC, have accumulated at unprecedented prices. Retail is sometimes caricatured as ill-informed, and that’s just to provide exit liquidity to savvy full-timers. But unlike previous peaks in accumulation, which occurred around all-time highs and actually represent FOMO-driven, ill-timed buying, the current move is occurring after a major downside. Assuming a long-term perspective, these latest accumulations are absolutely astute.
And if you take these two events together, Tesla selling at a loss, retail picking up somewhere near the bottom (although we could still go lower), it paints a picture that Bitcoin’s creator may well be happy with. Bitcoin was built for everyone, regardless of circumstances, to enable unbanked, peer-to-peer transactions, and from that perspective, it’s better to have bitcoin in the hands of ordinary users than giant corporations.
Minecraft says no to NFTs
In recently released guidelines, the sandbox game Minecraft announced that it would no longer allow NFTs to be integrated into its applications. This was bad news for blockchain projects that build on Minecraft’s infrastructure, such as the metaverse platform NFT Worldsif NFTs immediately crashed in price.
NFT Worlds is looking at solutions and viable pivots, and it is notable that other metaverse and blockchain gaming projects reached out to them regarding the development of a GameFi platform. It’s also relevant that Yuga Labs (creators of Bored Ape Yacht Club), in collaboration with metaverse technology developers Improbable, recently ran an interactive first taster of their Otherside metaverse project, which was met with enthusiastic praise.
Put all this together and what we have is an orthodox, web2 platform, Minecraft, which demonstrates exactly the limitations of operating on centralized infrastructure: that users and developers are ultimately tenants who must abide by the dictates of their digital landlords .
It can certainly be argued that this web2 model has advantages. Minecraft is hugely successful and well engineered. But if one purpose of web3, or the metaverse, is to move away from top-down control, then Minecraft showed exactly why it is necessary, strengthening the case for the next-generation web3 class of developers who are building out new ways to conduct business on.
Relatedly, if you’ve ever wondered about Ethereum’s origin story, Co-Creator Vitalik Buterin jokingly quotes a event when his favorite game, World of Warcraft, unilaterally changed one of his in-game assets, thus awakening him to the disadvantages of centralized platforms.
As for what can be gleaned from Minecraft’s position on NFTs, there is a clear message: decentralization is not just a nebulous, abstract concept, it actually serves real purposes, it has users and persuasive advocates, many of whom target a younger age group, and it seems to be gaining momentum as we move through what could turn out to be a memorable transformative decade.
