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The crypto madness ends – and it's about time too • The Register

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Opinion With the quick one-two punch of FTX and Binance, crypto is finally losing its shine as the next cash revolution.

I was recently in Manhattan at the Linux Foundation and Fintech Open Source Foundation (FINOS) Open Source in Finance Forum New York (OSFF) 2022 event. There, the subject of the day was fintech. It was all about how open source and the cloud are revolutionizing the way banks, finance companies and stock exchanges are working with money. You know what we don’t talk about? Cryptography.

Crypto brothers still prattle on about how your Bitcoin, Ethereum or whatever will get you to the moon. They also insist that with their diamond hands they will hold on to life (HODL) no matter what.

So cute. In a pathetic way.

At the conference, finance adults dove into topics such as data interoperability across platforms and applications and how to encourage bank executives to allow developers to contribute to open source projects.

Cryptocurrency? It was mentioned in passing. People would talk about it the same way you would talk about your little brother’s latest embarrassing TikTok video. That is, you would recognize that it happened and quickly change the subject.

Why? Because while Bitcoin, for over a decade, has been the poster child for cryptocurrency with its proof-of-work consensus mechanisms as an alternative to fiat currencies such as the US dollar, recent events have shown that the emperor of cryptocurrency is not wearing any clothes.

Bitcoin’s value continues to fall. From its record high of $69,000 in November 2021 to, as I write this mid-December 2022, it’s worth $17,678. Inflation may be bad, but a “nearly 75% drop in value” is not bad.

At the same time, other related virtual goods have seen their market value plummet. Sales of non-fungible tokens (NFTs), for example, dropped from $7.3 billion to $1.6 billion globally, a 77% drop according to NFT tracker Nonfungible. The promoters of perhaps the best known NFTs, the Bored Ape Yacht Club, are being sued because their NFTs are proving – shock! – have no lasting value: “The truth is, the company’s entire business model relies on the use of insidious marketing and promotional activities by top-notch celebrities who are highly remunerated (without disclosing it), to increase demand for Yuga’s titles , convincing potential retail investors that the price of these digital assets would appreciate.”

Let’s assume you still believe in crypto, where can you keep or trade it? Former market-leading cryptocurrency exchange FTX has collapsed. Allegations are that funds from FTX clients were used to support CEO Sam Bankman-Fried’s private hedge fund Alameda Research.

While other major crypto companies aren’t in as much trouble as FTX, things are also starting to boil over around them. Take Binance, for example. Panicked holders are withdrawing funds from the beleaguered Bitcoin exchange. To calm investor nerves, Binance enlisted accounting firm Mazars to provide a proof of reserves report. While not a full audit, it would have assured cryptocurrency speculators that Mazars was, in fact, good for the money. But then Mazars turned off its crypto reporting. Any sensible investor or user will wonder: is this a “temporary break” or is it a sign that all is not well with Binance?

Even more well-known companies like Coinbase are in trouble. Inventory has been impressive over the last few quarters. Recently, CEO Brian Armstrong said that the cryptocurrency exchange’s revenue will likely drop by half or more this year.

Let me be frank. From where I’m sitting, this is the slow but sure downfall of what has always been a gigantic Ponzi scheme. There was never – never – any real value in cryptography. Yes, I know all the arguments about how fiat currencies have no intrinsic value either. You know what, though? If I go to the grocery store I can buy milk, bread and butter with my fiat dollars or pounds. Dogecoin? Garlicoin? Trump NFT Business Cards? I do not think.

I know. It’s hard to admit that you’ve been a financial fool for years or even a few months. I had friends in the 2000s who “knew” that Bernie Madoff would be able to deliver 20% annual returns forever. They were wrong. Some of them lost their homes. They all lost a lot of money.

There comes a point where you have to stop throwing good money after bad money. We are past that point with cryptocurrencies and NFTs. At least with the famous financial scams of the past like the Dutch tulip bubble and the housing crash of 2008, you had tulip bulbs and houses for your money when all was said and done. With cryptography, you will be left with nothing but meaningless, meaningless, worthless blockchains. 🇧🇷

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