They say that in order to process a traumatic event or any major change that takes its course, it is necessary to go through five stages of grieving: denial, anger, bargaining, depression, acceptance. It’s fair to say that denial and anger, as well as a great deal of grief, have been publicly emerging since the reality of what was happening at the failed FTX cryptocurrency exchange 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 reach the sixth step of the grieving process, the most necessary of all: moving on.
The fall of FTX and the subsequent arrest of its disgraced former CEO was a heavy 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.
Be honest about the speculative elements of cryptocurrency
It’s time for the industry to grow up, that much is clear. The speculative elements of the crypto environment need to be reined in because we still have trouble ahead – at least in the short term – and we need to tackle it together if we want crypto to survive.
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Moving on, if we want it to progress, we’re going to have to be honest with ourselves about what we need to do differently.
Of course, regulators still need to come up with a clear legal framework for the industry, and the collapse of FTX could scare them into overreacting any future legislation. But that’s their right – and there’s very little we can do about it.
Remember the internet bubble of 2001
What anyone who believes in the validity of the principles underlying crypto should remember is that we can easily equate this situation with the internet bubble of 2001. We know how that ended, right?
Much like the events of two decades ago cemented the Internet as we know it today, in some ways FTX proves the value of decentralization, not the other way around.
People can’t seem to distinguish between the blockchain technology itself and the flagrant abuses of its potential, but it’s important that we start educating regulators and the general public about what it looks like and why it matters.
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The traditional financial sector is replete with examples of fraud, abuse, negligence and all kinds of suspicious or outright criminal activity. We are all able to distinguish the principles on which our financial system stands from individual cases of its abuse. We wouldn’t dream of conflating the two to punish those who want to mock our legal system.
Why should cryptocurrencies be any different?
Rebuild the crypto industry on trust and transparency
By using the Bankman-Fried actions to take a stand against any speculative, criminal, or otherwise immoral elements that crypto may still foster, we can finally move forward and rebuild the kind of industry we dreamed of in the first place: one built on trust, self-governance, and transparency. One that has a real benefit, not what Bankman-Fried had in mind.
Five, or ten years from now, what is unfolding before our eyes will undoubtedly be considered a true turning point for what was an immature technology turning into a true grown-up powerhouse capable of reshaping our collective future.
What is now an overcrowded space has the opportunity to develop into a flourishing economy suited to our new ways of life, and the FTX debacle will be seen as the turning point that will allow it all to happen.
Any alternative is just too bleak to entertain.
Lars Seier Christensen is the president of Concordium and the founder of Saxo Bank. Follow him on Twitter: @larsseier