They say that in order to process a traumatic event, or any big change having its course, one needs to go through the five stages of grief: denial, anger, bargaining, depression, acceptance. It’s fair to say that denial and anger, as well as a great deal of sadness, have been publicly playing out ever since the reality of what was happening at the failed cryptocurrency exchange FTX became clear.
Perhaps now that FTX founder Sam Bankman-Fried has been arrested in the Bahamas and will be extradited to the United States, the crypto industry can get to the sixth step of the grieving process, the most necessary of all: moving on.
The downfall of FTX and the subsequent arrest of its disgraced former CEO have been a hard blow to the crypto world, but I believe the time has come to assess the events of the past month and make sure we don’t shy away from the lessons they could teach us.
It is time for the industry to grow up, that much is clear. The speculative elements of the crypto environment need to be reined in as trouble is still ahead for us – at least in the short term – and we need to collectively get a grip if we want crypto to survive.
Crypto’s golden boy now tarnished: What investors can learn from FTX’s failure
Going further, if we want it to thrive, we’ll need to be honest with ourselves about what we need to do differently.
Sure, regulators still need to design a clear legal framework for the industry, and FTX’s collapse might scare them into coloring all future legislation with a touch of overreaction. But such is their right – and there is very little we can do about it.
What everyone who believes in the validity of the principles crypto is based on needs to remember is that we can easily equate this situation with the 2001 internet bubble. We know how that one ended up playing out, don’t we?
Similarly to how the events of two decades ago solidified the internet as what we know it today, in a way, FTX proves the value of decentralization rather than the opposite.
People cannot seem to distinguish between blockchain technology itself and flagrant cases of its potential being abused, but it’s important that we start educating both regulators and the general public about what that looks like, and why it matters.
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The traditional financial sector is rife with examples of fraud, malpractice, negligence and all sorts of dubious or downright criminal activity. We’re all able to distinguish between the principles our financial system stands on and the singular cases of it being abused. We wouldn’t dream of conflating the two in order to punish those who wish to make a mockery of our legal system.
Why should crypto be any different?
By leveraging Bankman-Fried’s actions to take a stand against any speculative, criminal or otherwise immoral elements that crypto might still be fostering, we can finally begin to move forward and rebuild the kind of industry we dreamed of in the first place: one built on trust, self-governance and transparency. One with real world utility, not whatever Bankman-Fried had in mind.
In five years, or 10, what’s unfolding before our very eyes will undoubtedly be considered the real turning point for what was an immature technology turning into a real grown-up powerhouse able to reshape our collective future.
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What is now an overcrowded space has the chance to evolve into a flourishing economy fit for our new ways of living, and the FTX debacle will be seen as a watershed moment allowing it all to happen.
Any alternative is simply too bleak to entertain.
Lars Seier Christensen is chairman of Concordium and founder of Saxo Bank. Follow him on Twitter: @larsseier
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