The entire crypto industry has been shaken by the recent unfolding of events that transpired at one of the largest crypto exchanges in the world. FTX, which was doing billions in trade volume every day, was reduced to ashes in just one week. That is how fast things move in crypto, be it good or bad. For those of you who have no clue what happened, we advise you to get refreshed here. The controversial stories that are surfacing related to the FTX debacle are so complex in nature it will take a full blown investigation for months altogether. We will let journalism do its work meanwhile. So, the focus in today’s article is more towards what’s looming at the corner for the crypto industry.
The fall of a centralized exchange (CEX) like FTX will remain as a black swan event in crypto’s history. This moment has some parallels to the collapse of Mount Gox exchange. The only difference is that Mount Gox’s funds were stolen while FTX’s funds were apparently used to fulfill hidden agendas without the depositors knowledge. While criticisms pouring from every corner are rightfully placed, it is immature to completely dismiss the CEXs.
Though Binance, world’s largest exchange, was involved in some capacity in the fall of FTX, they chose not to sell FTT (token of FTX exchange) which was acquired when FTX purchased back their equity from them. They could have shorted FTT and made profits but they didn’t. Crypto.com, another major exchange, has been transparent about their token movements despite the initial scare of a typical bank run.
India, which has over 15 million customers, has reacted negatively to the FTX collapse drawing strong criticisms over global CEXs. In response to this fear among the crypto participants especially in India, we at Giottus, have chosen to show Merkle tree proof of reserves (concept started by Binance). The Merkle tree proof of reserves is a cryptographic data structure that stores transaction data from the blockchain while maintaining privacy - giving users the ability to verify the exchange's account holdings.
All major protocols like Bitcoin (BTC), Ethereum (ETH) and several others are working normally despite the FTX drama. Their price actions however have taken a huge downturn with BTC revisiting the $15,500 region for the first time in 2 years. This is just a classic example of a bad player getting ousted by the market forces and in time prices of tokens are more likely to bounce because the fundamentals are strong.
In the grand scheme of things, FTX collapse will become a minor obstacle in the journey towards a better future and crypto is at the forefront of financial revolution. Builders in the crypto ecosystem continue to create more robust and secure products for the next billion users to be onboarded. We hope the worst of the bear market could be behind us.
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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.