Can Crypto’s Reputation Be Redeemed?
Like it or not, crypto has a reputation, and it’s generally not a good one. Today, we’re looking into some recent scandals and assessing if and how the market could clean up its image and bounce back. Following that, we’ll give you the lowdown on market events this week. Put your feet up. Grab your coffee. Let’s do this.
Recent Crypto Scandals
The list is so long it’s hard to know where to start. Here’s a smattering of recent examples.
1. FTX crash
FTX was a crypto exchange that famously and very dramatically collapsed in November 2022. This implosion was caused by a liquidity crisis, which led to a run on the exchange. FTX was then unable to cope with the volume of customer withdrawals, and the exchange was forced to file for bankruptcy.
The crash was significant as it is the largest bankruptcy in the history of crypto. It also showed how fragile the wider market is to such isolated events, leading to a loss of confidence across the board, and the price of many cryptos falling sharply.
The rapid unravelling of Sam Bankman-Fried’s FTX exchange (and Sam Bankman-Fried) is well documented by CoinDesk.
From stable coin to highly-unstable coin.
TerraUSD (UST) was supposed to be pegged to the US dollar via a complex algorithm that would mint and burn UST and Luna, another cryptocurrency created by Terraform Labs.
All good — until it all went wrong in May 2022. The peg between UST and the US dollar broke, and the value of UST dropped like a sack of potatoes. This caused Luna to nose dive also, and both cryptos became worthless, with investors worldwide losing billions of dollars.
If that wasn’t enough, the scandal runs deeper still. TerraUSD founder, Do Kwon has been accused of fraud, market manipulation, and insider trading — all with direct connection to this event.
As a bonus scandal (if you needed one) — he went on the run to avoid prosecution but was arrested last week in Montenegro.
3. Phishing for NFTs
NFTs are a whole other issue with Crypto, but this one takes the biscuit. Actor Seth Green recently had his entire NFT portfolio phished from his grasp.
Unfortunately, Green wasn’t the only one to be targeted in this scandal, as revealed by ZachXBT. This was part of a sophisticated multimillion-dollar scam that affected many people out of their precious NFTs.
Can Crypto Bounce Back?
It is possible for crypto to shake its dodgy reputation, but moving back into the light will take effort and time.
It’s important to remember that crypto is a young and constantly developing industry. It’s facing a number of challenges, but it is also making great progress — though the scandals don’t help!
So, what needs to be done? Well, the industry needs to mature. It also needs to be better at educating the public about the risks and benefits of cryptocurrencies.
More specifically, the following could help:
● Better regulation. The industry needs to develop better regulations that will help to protect investors and reduce the risk of fraud. Right now, there are only a handful of laws that do this successfully, and they cannot be applied universally.
● More transparency. The industry needs to be more transparent about its operations and its risks. This would go a long way to helping both authorities and the public to feel more comfortable with the industry as a whole.
● Better education. As mentioned above already, this bit is crucial. Without this, mass adoption can never happen and the industry needs to educate the public about the risks and benefits of cryptocurrencies.
You can’t magically make someone trust you. Telling someone “I’m trustworthy” is the least trustworthy thing ever. But, the above points are all about building trust.
None of this will be easy, but once these are achieved, Crypto will be taken more seriously by everyone and drag itself back into the light.
Your turn! How do you feel about Crypto? Do you think it’s possible to shake off the dodgy image? Join the debate by tweeting us at @_contentworks!
Top trading events for week commencing 03.04.23
Monday, 3 April
● EUR — Eurozone Economic Forecasts (10:00 AM GMT); German Industrial Production (10:00 AM GMT)
● GBP — UK Construction PMI (9:30 AM GMT)
Tuesday, 4 April
● USD — US Consumer Confidence (10:00 AM GMT); US Durable Goods Orders (10:00 AM GMT); US New Home Sales (10:00 AM GMT)
Wednesday, 5 April
● USD — US GDP (13:30 PM GMT); US Personal Consumption Expenditures (13:30 PM GMT); US Core PCE Price Index (13:30 PM GMT)
Thursday, 6 April
● USD — US ISM Manufacturing PMI (14:00 PM GMT); US ADP Employment Report (13:15 PM GMT); US Initial Jobless Claims (13:30 PM GMT)
Friday, 7 April
● USD — US Non-Farm Payrolls (13:30 PM GMT); US Unemployment Rate (13:30 PM GMT); US Average Hourly Earnings (13:30 PM GMT)
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The Contentworks team