Did you fall for the FTX hype? You were not alone, but a valuable lesson can be learned from its collapse.
Today, FTX’s collapse and Sam Bankman-Fried’s failure of leadership and basic sound financial practices have raised new doubts. Naturally, the crypto market has fallen in kind, plummeting to less than $1 trillion in market cap.Each of these boom-bust cycles has led to more eyes from government leaders and calls for more regulation. But, the recent leak of the proposed Federal regulation should raise more questions than confidence.
Second, regulations alone will not eliminate fraud ; they will merely make fraud more complicated. Regulations become even more dangerous when they arise from individuals who do not understand the industry or technology.Finally, market downturns are painful, but they do nothing to undermine the very reason cryptocurrency exists in the first place: the traditional financial system is broken. It is expensive, filled with greedy, unethical middlemen, slow and undemocratic.
Instead of paying others to hold their money, users themselves control the process — loaning money and receiving payments directly. Some claim that truly decentralized finance could lead to global market disintegration, contagion and collapse. But the strongest pushback to DeFi is much simpler: it’s a nightmare to use, which can breed scammers. The software is clunky. Interfaces are complicated. Even tech enthusiasts are confused. It’s not ready for the masses.With the proper investment and development, DeFi wallets will help limit common errors and guide users away from scams.
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