Crypto’s crash does little to shake the faith of some blockchain believers
Crypto is in the middle of its worst race ever. Blockchain advocates do not necessarily sweat.
The price of bitcoin is still around 20,000 dollars, a fall of about 70% from the highest level in November. The cryptocurrency exchange platform Coinbase laid off 18% of the workforce, or 1110 workers. Celsius Network, one of the largest crypto lenders, stopped withdrawals and transfers last week.
Many industry experts have warned that the development is a sign of a “crypto winter”, but some advocates for blockchains – the distributed computing technology that underpins cryptocurrencies, non-fungible tokens or NFTs, smart contracts and more – believe it is a silver lining in the declines.
“I’m more optimistic about crypto than ever before,” said Jason Yanowitz, one of the founders of Blockworks, a financial media company.
Yanowitz compared cryptocurrency to the technology bubble of the early 2000s.
“That is the period we are in now; we are wiping greed and overflowing from the market, ”he wrote in an email.
Once a relatively limited and confused corner of the technology world, blockchain-based technologies have become a global focus of attention thanks to the apparent overnight wealth that early investors enjoy in some cryptocurrencies and, more recently, digital art related to NFT. -er, which also uses blockchain technology. The boom has coincided with an increase in warnings from financial analysts and technologists that the markets looked increasingly unsustainable.
And even some in the blockchain community have argued that the boom-and-bust cycle of crypto has been a false signal, which diverted audiences from the underlying technological advantage of decentralized computing.
Brian Brooks, CEO of Bitfury Group, a bitcoin mining company that has been around since 2011, told CNN that he sees the recent cryptocurrency as a necessary part of pushing blockchain technology forward.
“Forest management is the analogy I think of,” said Brooks, who was the acting controller of the currency in the Trump administration. “At some point, the undergrowth must burn for the tall trees 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.
A blockchain works by engaging a network of computers to compete in a way that makes it nearly impossible for a single device to control the system. But for people who use large crypto exchanges, there is not much difference from a centralized bank that has a person’s assets.
Cleve Mesidor, CEO of Blockchain Foundation, an education platform, said Celsius is not decentralized even though it handles decentralized cryptocurrencies.
“What happened to Celsius will not affect the future of bitcoin,” she said.
Mesidor added that it is a concern when a company like Celsius gets attention and struggles, but that it is not representative of the blockchain community.
“When you innovate, you’re going to have problems,” she said. “There are models that do not work, and that is what we see with these companies.”
More important than current price points is the confidence that decentralization of markets creates opportunities for financial inclusion and for resolving economic inequality, Mesidor said. Blockchains, which are accessible to everyone, are a game changer for minorities, she said.
But blockchain may not be as decentralized as one might think, said Mark Nadal, founder of ERA, an innovation lab that focuses on building open Internet applications.
Blockchains, which still require approval from others in the chain, are just “slow public counters,” Nadal said. There are person-to-person technologies out there that allow data sharing without the need for other people’s consensus, like in a blockchain, Nadal said.
Still, it seems that many blockchain advocates are leaning into crashes, letting the market take its course, and claiming that blockchain technology has a bright future.
Even on the doorstep of a crypto winter, it’s a silver lining, said Marta Belcher, chairman and president of the Filecoin Foundation, an organization that funds development projects seeking to improve the decentralized network.
Belcher said she believes cryptocurrencies are here to stay and that they are the foundation of a better Internet – “an alternative to Big Tech that puts people in control of their own data, protects users’ privacy and security and permanently preserves humanity’s most important information.” ”
CORRECTION (June 23, 2022, 18:20 ET): An earlier version of this article misspelled the first name of the CEO of Bitfury Group. He’s Brian Brooks, not Brain.
