Is crypto better or worse since the collapse? Here’s what CEOs at Davos said
While business leaders displayed cautious optimism at this year’s World Economic Forum (WEF) in Davos, Switzerland, the same sentiment was not felt for crypto.
Compared to the past, the once bustling financial sector had a much smaller presence.
As our Jennifer Schonberger put it, “gone were the every-ten-foot crypto houses, bitcoin-themed pizza stands, and advertisements of yesteryear.”
“I think regulated transparent infrastructure like ours is well suited for this environment,” Jeremy Allaire, co-founder and CEO of stablecoin USDC issuer Circle told Yahoo Finance.
Circle, one of the few crypto firms present this week, offered some optimism. Although it is not regulated as a bank and shut down plans to go public via SPAC last year, it still aims to be a public company at some point in the future, Allaire said.
Meanwhile, it represents 31% of crypto’s $136 billion stablecoin market, which many consider crucial to the industry’s less speculative future.
As Allaire told us, Circle has a money transmitter license in nearly every state. Its stablecoin “has actually grown since the FTX collapse,” by $2 billion since the beginning of November, according to DeFillama.
Still, there was no shortage of critics in Davos.
For them, and more than 9 million retail and institutional investors waiting to get their money back in bankruptcy, FTX’s collapse still looms like a shadow over the room.
“FTX and SBF are not an exception – they are the rule,” Nouriel Roubini, the NYU professor known as “Dr. Doom” for his dire views on global trends, said on Yahoo Finance Live.
“Literally 99% of crypto is a scam. A criminal activity. A total Ponzi scheme with real bubble bursting,” Roubini added. The Economist went on to highlight the reputational damage industrial firms face as a general loss of confidence.
In November, Bitcoin hit a two-year low of $15,682 as FTX filed for Chapter 11. Two weeks later, BlockFi followed.
The following month, Sam Bankman-Fried, a figure many believe to be one of the industry’s biggest stars, was extradited from a prison in the Bahamas to New York to face 8 charges of fraud.
While the total market capitalization has recovered above $1 trillion from last week, the industry’s trading venues are far from regaining confidence.
Instead, these companies have had to let go of thousands of workers. With Genesis’ long-awaited bankruptcy filing on Friday, at least 10 million people have lost their crypto for trusting a crypto firm with their money.
Meanwhile, other attendees, such as IBM Vice President Gary Cohn, would not trash crypto, but also refrained from commenting on digital assets themselves.
“I’m bullish on blockchain, and crypto, I really don’t have a view,” Cohn told our team on the ground, reflecting a popular view of the middle ground.
Of course, even when big companies ditch cryptocurrencies in favor of investing in their own private blockchain platforms, the end product hasn’t always worked.
In late November, IBM, which has been betting on blockchain since 2016, discontinued its global blockchain-enabled platform, TradeLens, launched with Maersk two years earlier.
The technology platform, which digitized and secured the tracking of shipping containers worldwide, was “viable”, Maresk said.
But it did not achieve “the level of commercial viability necessary to continue operations and meet financial expectations as an independent business,” the company added.
“All three of these things, web3, blockchain and the metaverse, are all going to happen,” said Microsoft ( MSFT ) CEO Satya Nadella, offering a partial vote of confidence to WEF attendees.
“But you have to have the killer apps, what’s the use case that gets broad adoption, what’s the ChatGPT moment for blockchain?”
Nadella was referring to the AI tool launched in November, which has quickly gained users and become the most interesting in technology. The executive told news agency Semafor on Tuesday that it was in talks to invest as much as $10 billion in ChatGPT owner OpenAI.
Is the crypto market’s collapse over the last year holding the industry back from finding its coveted ChatGPT moment? Absolutely and not as much as it might seem.
An annual report from venture capital firm Electric Capital shows despite crypto’s seemingly tough 2022, it has more monthly active developers than it did during the bull market.
Based on several years of data, Electric Capital finds that each cycle of crypto software developer activity tends to be less prone to market fluctuations, making their level of engagement a more important barometer than the industry’s Davos gathering of where things might be headed.
It found that in the fourteen years since Bitcoin’s creator Satoshi Nakamoto – who essentially fueled the industry without pay – the industry’s full-time open source developers have risen from 1 to 23,343 and activity has expanded far beyond Bitcoin and Ethereum (28% of the total). .
We will have to wait and see where the thousands of developers plan to take crypto next. In the meantime, their activity in addition to crypto’s less exciting price charts and its shrinking announcements at Davos, the Bahamas’ Baha Mar resort or anywhere else could be just what the industry needs to move beyond such a difficult moment.
“You can’t get rich quick in crypto right now. And that’s actually a good thing,” Chainalysis’ Michael Gronager told me, dressed in a coat in front of the snowy Swiss Alps.
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