The crypto tech gods originally sold crypto as great as a “trip to mars,” and that rocket ship has crash-landed back to earth. BLUF, the technology behind crypto (the blockchain), is brilliant and will continue to define our world. However, selling a fantasy of decentralized currency for the people and controlled by the people was as real as free tours to mars.
Houston, we have a problem!
Around this time last year, the crypto market cap was on a steady course to mars with a volume of ~ $180B and a market cap of ~$3T. Now, it sits at a volume of ~$70B and ~$800B market cap. The price of ETH sits at $1,190, which is a far cry from its high of ~$4,600. What has happened to crypto? If you have read any of my previous articles, I stated that crypto was not a currency, but a security, which was rocketing its way to being controlled by an ominous 1%. A report by Nansen stated that 64% of staked ETH is controlled by 5 entities(1). The U.S. alone has over 17,000 investment firms that you can choose to invest your money with…ETH essentially has < 7. This means you have few options for staking ETH (because Proof of Work (POW) is no longer viable). This also means you’re more than likely going to have the trust in the leadership of these 5 firms, and the leadership in crypto has been called into question.
Unless you’ve been living under a rock, you heard of the collapse of FTX. But what you probably haven’t heard is the other multiple fraudulent exchanges that existed that stole people’s money. According to Coingeek, the Ethereum network has been the go-to chain for scammers and is the home for DeFi, with so many security holes you can fly a rocket ship through them. SEC has taken the stance that most cryptocurrencies are unregistered securities, which could result in fines and penalties. And let's not forget about Tornado Cash crypto mixing service, which reports state that it's been tied to illegal money laundering for criminals and terrorist organizations. The U.S. treasury department has levied sanctions against tornado cash, finding them complicit with the illegal activities on their mixer(2).
My own experiences with crypto haven’t been the greatest. I ran MYST nodes (a web 3.0 solution). But one day, I received a message from the company I was running the virtual private servers, and they told me illegal activity was being conducted on my nodes. Turns out that the nodes were being used to download and administer copyrighted material. Mysterium security checks failed, and I was given a warning. I had to shut down my nodes because I no longer trusted that the users were going to use my nodes ethically. And, oh yea, Mysterium has little to no liability in the matter because the nodes belonged to me! On top of everything, it was cheaper just to buy MYST instead of running nodes!
The problem is who’s flying the ship!?!?
As stated before, crypto has a leadership problem. Crypto, along with tech, has become a buzzword that flies off the tounges of influencers. FTX elicited the services of celebrities to influence the masses that FTX was a good company. But in the cockpit, the C-Suite was engaged in orgies and video games. Too many people want to be the next Elon instead of just making a great product. Additionally, there are too many fraudulent cryptocurrencies being led by corrupt people whose goals are to get rich by any means. The tech is sound and will help advance business and solve problems. However, poor leadership has directed the ship off course, resulting in a collapsing tower of coins that is on its way to being worthless. Crypto can make a turn-around, but only with good captains flying the rocket ship.
1[nansen report: https://cointelegraph.com/news/64-of-staked-eth-controlled-by-five-entities-nansen]
2[coingeek: https://coingeek.com/ethereum-merge-already-causing-more-problems-than-its-solving/]
