FTX is done - What's next for Bitcoin, altcoins and crypto in general?
FTX is gone, and it looks like many centralized crypto platforms will go down with it. But is there a silver lining?
Newsletter
2022 has been a tough year for crypto, and November has been particularly tough for investors and traders.
While it was incredibly painful for many, the explosion of FTX and the ensuing contagion that threatens to bring down other centralized crypto exchanges could be positive in the long run.
Let me explain.
What people have learned, albeit in the hardest way possible, is that exchanges run fractional-reserve type banks to fund their own leveraged speculative investments in return for providing users with a return "guaranteed".
Somewhere across the crypto Twitterverse, the phrase "If you don't know where the yield comes from, you are the yield!" floats around.
This was true for decentralized finance (DeFi), and it was also true for centralized crypto platforms and exchanges.
Who knew that a few ill-timed bank runs would bring down the whole house of cards by proving that while exchanges seem to have high earnings and tons of tokens on their books, many are completely unable to meet user withdrawal requests ?
They took your coins and collateralized them to fund highly speculative bets.
They locked your coins on centralized DeFi platforms to earn yield, some of which promised to share with you.
They placed users' funds, as well as their own reserves, in illiquid assets that were difficult to convert into stablecoins, Bitcoin (BTC) and Ether (ETH) when clients and platform users wanted to access their funds.
Not your keys, not your coins.
Never has the expression sounded more apt.
Let's explore some events happening in the crypto market this week.
Investors pulled a record number of coins from exchanges as a warningAs Cointelegraph reported earlier this week,
FTX is gone, and it looks like many centralized crypto platforms will go down with it. But is there a silver lining?
Newsletter
2022 has been a tough year for crypto, and November has been particularly tough for investors and traders.
While it was incredibly painful for many, the explosion of FTX and the ensuing contagion that threatens to bring down other centralized crypto exchanges could be positive in the long run.
Let me explain.
What people have learned, albeit in the hardest way possible, is that exchanges run fractional-reserve type banks to fund their own leveraged speculative investments in return for providing users with a return "guaranteed".
Somewhere across the crypto Twitterverse, the phrase "If you don't know where the yield comes from, you are the yield!" floats around.
This was true for decentralized finance (DeFi), and it was also true for centralized crypto platforms and exchanges.
Who knew that a few ill-timed bank runs would bring down the whole house of cards by proving that while exchanges seem to have high earnings and tons of tokens on their books, many are completely unable to meet user withdrawal requests ?
They took your coins and collateralized them to fund highly speculative bets.
They locked your coins on centralized DeFi platforms to earn yield, some of which promised to share with you.
They placed users' funds, as well as their own reserves, in illiquid assets that were difficult to convert into stablecoins, Bitcoin (BTC) and Ether (ETH) when clients and platform users wanted to access their funds.
Not your keys, not your coins.
Never has the expression sounded more apt.
Let's explore some events happening in the crypto market this week.
Investors pulled a record number of coins from exchanges as a warningAs Cointelegraph reported earlier this week,
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