Where next for Blockchain technology after FTX collapse?
Financial markets were buzzing with stories surrounding the collapse of crypto giant FTX this past week. Here is some of the best media coverage:
CNN — Crypto giant files for bankruptcy as CEO steps down in stunning downturn: “FTX Group said Friday it has filed for bankruptcy in the US and its CEO has resigned, marking a stunning downturn for one of the biggest and most powerful players in the crypto industry.
“FTX said Sam Bankman-Fried, the 30-year-old founder of the exchange, will remain to assist in an orderly transition. The firm named a new CEO, John Ray III, and many employees are expected to continue to operate the company in Chapter 11 .”
CNBC.com — Sam Bankman-Fried resigns as CEO of FTX as his crypto exchange files for bankruptcy: “In the 23-page bankruptcy filing obtained by CNBC, FTX indicates that it has more than 100,000 creditors, assets in the range of $10 billion to $50 billion, which as well liabilities in the $10 billion to $50 billion range. Bankman-Fried also indicated that he wants to name Stephen Neal as the firm’s new chairman.”
BBC.com — FTX – Cryptocurrency market shaken by near-collapse of exchanges: “The world of cryptocurrency is full of big personalities and Sam Bankman-Fried is one of the biggest.
“Since the ‘cryptocrash’ this spring, the young, outspoken owner of FTX has been a beacon of hope for investors big and small.
“While other companies have faltered, Bankman-Fried seemed to thrive. …
“As revelations about the company’s fragile finances emerged in reporting from CoinDesk, these outspoken interviews are now coming back to bite him.
“‘More crypto exchanges will fail,'” he said in an interview, adding that some firms are “secretly insolvent.”
Fortune.com — With FTX on the brink of collapse, customers are wondering what will happen to their crypto. Here’s what to do if you have an account there: “Cryptocurrency and the related business entities are not regulated in the United States the way other financial institutions such as banks or credit unions are. Checking and savings accounts held by many consumers are backed by the Federal Deposit Insurance Corporation (FDIC ), which promises to step in and refund customers in full if a bank fails.
“Retail and institutional investors used FTX to buy and sell cryptocurrency, as well as stocks, ETFs, futures, options, leveraged tokens and non-fungible tokens (NFTs). Customers can use FTX’s native cryptocurrency token FTT to get a discount on trading fees by paying for trades with the FTX token – the more FTT a user had, the bigger the discount. But unlike FDIC-insured accounts, no such safeguards exist for crypto investors using a platform like FTX.”
BEYOND CRYPTOCURRENCIES, BLOCKCHAIN COMPANIES ARE AFFECTED
So how will the events of the past week, and the decline in value of bitcoin and other cryptocurrencies, affect broader trends in blockchain?
Before I address that question, I want to emphasize that many leading experts are predicting major growth in blockchain spending, such as ETF Trends which says that blockchain spending will reach $67 billion by 2026.
In addition, innovation is led by many technology companies leading with blockchain technology. Consider these articles on blockchain innovations:
Entrepreneur.com —Will Blockchain Technology Make Logistics The Best Ever?: “Startups in certain Asian countries like South Korea are also experimenting with blockchain technology to make the last mile delivery process seamless and foolproof. They have created centralized delivery platforms and matching couriers for order delivery using AI and smart contract based applications. A number of multinational shippers are also testing the applicability of blockchain to maintain paperless transaction records in a distributed ledger, thereby reducing the chances of trade counterfeiting and payment disputes.”
CFO.com — 5 Ways CFOs Can Maximize Blockchain Technology: “As the next generation of the World Wide Web comes to fruition, new economic and technological infrastructure is on the horizon. With this new generation, known as Web3, concepts including decentralization, digital currencies, token-based economics and non-fungible tokens (NFTs) are entering the mainstream economy. As the new technology brings terms and tools alien to even the most highly academically credentialed individuals, this new trading arena has created a level playing field for companies of all sizes to exploit.
Forbes — 4 Ways Blockchain Technology Will Change Leadership: “Blockchain technology provides a decentralized, secure way to store and manage data, enabling new levels of transparency and collaboration that transform strategies and operations. With blockchain technology, organizations can create a shared, tamper-proof database to track transactions, assets and interactions between parties. This provides a single source of truth that everyone can trust, eliminating the need for costly intermediaries and manual reconciliation. But leaders must take a strategic approach to ensure their organizations can reap the full benefits of this transformational technology.”
CNBC — Singapore wants to be a hub for blockchain finance, just not speculative crypto trading, MAS says: “Singapore has ambitions to become a global crypto hub, but has hit the industry hard after many retail investors lost their savings to crypto. trade. The city-state has repeatedly warned that cryptocurrency trading is “highly risky and not suitable for the general public” due to its volatile and speculative nature. It even banned crypto advertising in public areas and on social media in January 2021 and proposed new measures to protect retail investors recently after the $60 billion collapse of Terras Luna.
“Nevertheless, Singapore has openly shown its approval for blockchain technology and has embarked on various projects. These include Project Ubin, which successfully completed its experiment with blockchain for the clearing and settlement of payments and securities.
“Another is Project Guardian, which recently completed its first industry pilot involving DBS Bank, JPMorgan and SBI Digital Assets Holdings conducting transactions in tokenized currencies and government bonds.”
FINAL THOUGHTS
As I have listened to blockchain and cryptocurrency experts over the past week, the consensus is that blockchain technology is not going away and will expand in the years to come. The failure of FTX and fall in the value of cryptocurrencies will bring more regulations and changes that will be good for the financial industry overall.
And there are many public sector applications for blockchain technologies, with major advances expected over the next decade.
Nevertheless, the events surrounding cryptocurrencies and the bankruptcy of FTX will no doubt lead to soul-searching and new approaches that will hopefully bring lessons learned and inform the government regulations that will no doubt come.
