Forward! There are no new lessons to be learned from the FTX bankruptcy[Opinion]| coindesk JAPAN


A new year has begun, and I know I don’t have to give crypto skeptics anything for the rest of the year. Because, as an industry, we’ve already spent billions of dollars buying gifts that are truly priceless and never go out of style. Yes, the comforting sense of self-affirmation that the skeptics were always right.

Given all that happened in 2022, it’s good to know that we are busy learning the right and important lessons. But don’t get your hopes up.

Thanks to the miracle of confirmation bias (seeing only information that supports your ideas), Proof of Reserves (PoRs), audits and those who advocate the end of cryptocurrencies will not be allowed until 2022. You will think that what you have already asserted about the events of 1940 has been proved again. I am no exception. Yes, I think we need more audits.

I am writing this sentence in a dark mood. It’s not because exchanges and hedge funds have gone bankrupt, or because the bad guys are letting loose. Nor am I frustrated that cautious consumers and regulators could slow the growth of this wonderful technology. It’s not like that.

What frustrates me is the slow pace of progress in public blockchains, privacy technology, and industrial applications. Blockchain is much more than cryptocurrencies, and our journey is taking too long.

Looking ahead, there are three issues that should have been resolved, but for some reason have not.

repeated failures

First, blockchain programs have short-term financial regulatory history by repeating every mistake, ignoring the useful lessons learned and Nobel prize-winning former Fed Chairman Ben Bernanke. It is that it traces back to .

Too often we have seen poorly/unregulated financial institutions exposed to the risk of bank runs and financial services posing systemic risk to the rest of the economic ecosystem. rice field.

Every time such an event occurs, crypto fundamentalists argue that DeFi (decentralized finance) is the only way forward that works. It’s nonsense. Creating an ultra-low-risk financial system that operates exclusively on-chain defeats the purpose of capital markets. The purpose of capital markets is to channel capital to those willing to take risks who need it for new businesses. The moment you take a risk, you leave the rigid algorithms and enter the world of human judgment.

Slow regulatory development

The second is the slow development of regulations related to blockchain and crypto assets. Law enforcement against the bad guys makes sense, but without positive rules, it’s going to chill the good people who want to get into this business, but are afraid of being exposed to rules that may be put in place in the future. I will put it away.

This is not conjecture, but conviction. EY (Ernst & Young) clients include blue chip financial institutions that are eagerly awaiting regulatory clarity to enter the stablecoin and crypto space.

So we’re in a less-than-ideal situation right now. The bad guys don’t flinch at the lack of regulation, but the good guys hesitate. As a result, the bad guys face far less competition.

Thankfully, it’s not without competition. There are a lot of good people in the field, but the lack of regulatory clarity and standards makes them struggle to differentiate themselves from the bad guys. All the bad guys claim to be audited, professionally run, and take compliance seriously, and few end-users can tell the difference between truth and lies.

Premonition of recession

Third, a looming recession and a never-ending string of crypto failures are sapping the budgets and passions of risk takers. Convincing risk-averse CIOs to invest in emerging technologies is tough enough, but it’s even harder as CIOs consider budget cuts to prepare for a recession.

If there is any silver lining in the fear of learning no useful lessons from this difficult time, it is that advances in public blockchain, Ethereum and privacy technologies are inevitable.

Nothing that happened in the last year has made private or permissioned blockchains more useful or more interesting. But there are also many good things happening. Here are three good things about 2022.

Achievements in 2022

The first is “Merge”. Ethereum developers have finally silenced the voices of their inability to operate globally critical infrastructure. A smooth transition from Proof of Work (PoW) to Proof of Stake (PoS) has quickly eliminated two of the biggest complaints companies had with Ethereum.

“There is no accountability for managing the system responsibly,” and “the carbon footprint is too big.” The Layer 1 battle is over and the Ethereum blockchain has won.

The second is NFTs. While the speculative generative arts market has all but dried up, the market for personal digital trophies, proof of participation and attendance, and collectibles that can be used to demonstrate enduring qualifications and skills is just beginning.

NFTs will soon be everywhere, on everything from concert tickets to race medals. The goal is not to make money. The purpose is to collect stories of life and achievements and share them with the world.

It also has great potential for industrial applications. Most things a company makes are unique and unique, even if it’s just a manufacturing number or serial number. It’s not a fungible (exchangeable) thing, it’s an NFT.

The third is DAO (Decentralized Autonomous Organization). DAO is a beacon of hope in the blockchain ecosystem. It has emerged as a way to build and organize almost anything, from new companies and shared investment vehicles to non-profits. A variety of tools and services make it easy to organize and manage DAOs, and DAOs have grown tremendously over the last year.

2022 is over. I feel relieved. Development continues, and last year’s villain will only be used for quiz questions. Let’s move forward.

Mr. Paul Brody: The global blockchain leader of EY (Ernst & Young).

|Translation and editing: Akiko Yamaguchi, Takayuki Masuda
|Image: Shutterstock
|Original: There Will Be No Lessons Learned From FTX

The post Forward! There are no new lessons to be learned from the FTX bankruptcy[Opinion]| coindesk JAPAN appeared first on Our Bitcoin News.


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