It's been a week of whiplash for us at CoinDesk. On the other hand, we just scored a big win as an organization at Consensus 2022, which concluded on Sunday. The conference was a vast and frenetic four-day affair that proves just how strong and wide the interest in cryptocurrencies is. And with a pat on the back from our fellow CoinDeskers, this proved once and for all that we are a media organization at the heart of it all.
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On the other hand, of course, just two days after consensus ended, the crypto market saw an incredible sell-off, with Bitcoin (BTC) and Ethereum (ETH) both down around 20% .
Currently, Celsius Network, a centralized lending platform, is showing signs of liquidity crunch and even bankruptcy, with the “other shoe” dropping, perhaps after the LUNA/UST unwind. Trouble at Celsius has traders worried about stETH, a key bond-like token associated with the Ethereum 2.0 merge.There's obviously also a liquidity issue. three arrows capitaland on top of that, cryptocurrency exchange Coinbase just laid off 1,100 people.
There's a lot to say about this moment, and we at CoinDesk will be sharing it all in the coming weeks and months to help you navigate the crypto crisis. But before the big dominoes start toppling, I planned to introduce the beauty of consensus in this column. And I still think that's important. Because the vision and passion shown last weekend in Austin, Texas, is exactly how we will find our way out of this mess.
Above all, the consensus was a big tent. In fact, it's huge, both literally and figuratively. The conference itself attracted 17,000 attendees, and satellite events attracted an additional 3,000. There were also concerts by Disclosure and Big Boi, and it was the southwest of crypto. And it will be the same next year.
But more important was the breadth of programming and perspective. For example, I was on my way to moderate a panel discussion and had some time to kill, so I popped my head into a random auditorium. There was Facebook whistleblower Francis Haugen, who had little involvement in cryptocurrencies aside from common concerns about data. Harvesting.
Science fiction author Neal Stephenson and engineer Jaron Lanier were seen speaking with CoinDesk contributor Leah Caron Butler. I myself had the pleasure of interviewing one of the Bitcoin researchers at Baylor University, and had a fun and free conversation with Chris Gabriel aka Meme Analysis about memetics, Freud, black magic, and the CIA.
It seems clear that virtual currencies are becoming the subject of various dissatisfaction with the current situation. Very broadly speaking, a Schelling point is a symbol, site, technology, or other focal point that brings people together to collaborate without the need for explicit communication or coordination. Cryptocurrencies have captured the social imagination and become a place of change, even if it is unclear where it is heading.
And here comes the market crash. I have great sympathy for those who are losing their jobs now and those who will lose their jobs in the coming days and weeks. I’ve been there too – I lost my job as a result of the 2018 crypto crash.
However, there is an immeasurable positive side to the downturn in cryptocurrencies. The failed products, especially Luna and Celsius, were caused by inflated and unsustainable profits and were virtually illusory from the start. It is now becoming clear that the “profits” depositors received in these systems were essentially a game of musical chairs using venture capital funds.
Coinbase, on the other hand, admitted that it made a huge strategic mistake in hiring too quickly despite the brutal cyclicality of the exchange business, as I pointed out when it went public in 2021. And Three Arrows, a highly influential venture firm, appears to be investing heavily in some of the most speculative and risky projects on the market.
I know it's a terrible cliché, but it's still true. All this carnage is actually good news.
While we're sure to see more unwinds, withdrawal freezes, and mysterious silences over the coming weeks and possibly months, the market crash will hit businesses and investors who made the wrong decisions the hardest. Dew. As cryptocurrencies have expanded over the past two years and hype has built, fundamentally worthless projects have proliferated, minting their own ephemeral tokens and hedging unsophisticated retail traders and well-known veterans. It led fund managers to believe it was equally valuable.
This kind of garbage has invaded cryptocurrencies with every expansion cycle. The current slump is a holy cleansing fire that removes it, just as a virgin forest needs a good fire from time to time to regenerate. Cutting out fake garbage based on hype and personality cults means there may be less money flying around over the next year or so, but a much higher percentage of it will go to credible projects. do.
People who are looking to build something based on solid ideas will thrive in this environment. Especially since, unlike in 2018, there still appears to be plenty of venture capital available. As an example, consider that OpenSea, which generated $20 billion in NFT sales in 2021, was founded in 2017 and underwent a lot of construction from 2018 to 2019. Not only was it during a fallow period for cryptocurrencies, but it was before most people got into cryptocurrencies. You may have heard of non-fungible tokens.
There will also be other OpenSeas, other Ethereum Name Services (ENS), and other really useful and profitable services and technologies that will be developed during the upcoming bear market (OK, I'm calling it ” We're ready to call it the “crypto winter”). The best way to survive or even thrive is to build on it and position yourself to benefit during the next big surge.
And remember, these recessions are always shorter than they appear. Personally, after losing my crypto job in 2018, I returned to the industry less than two years later and am enjoying it even more than before.
