For Crypto to Grow It Needs to Grow Up First

Like the 2017 crypto bull run and 2021 crypto NFT gold rush, we have seen some definitive moments in cryptocurrency that have attracted speculators, investors and institutions alike. But we would be in denial if we didn't mention the dark days of crypto.

The 2018 prolonged bear market and 2022 crypto winter contagion are two dark day moments that come to mind. Perhaps the latter more than the former.

As someone who has participated in crypto in both an investor and developer capacity, I have seen different sides to the ecosystem. Some are in it purely for monetary reasons, others for generosity, and those for the tech.

Admittedly, my involvement in blockchain and crypto, like many, was initially for monetary purposes. Not because I was looking to make a quick buck kind of interest. I liked the idea of a new form of money, the means of spending and receiving without the involvement of banks.

In the early days of crypto, you felt like you were part of an exciting new movement. Most people were not thinking about how they could make 100% profit on a crypto trade, that part didn't happen until the ICO bubble began to form and altcoins sprung out of the ground like weeds.

As time passed, my curious brain became interested in the blockchain side. The money seemed less important when I realised how exciting the future of decentralised application development could be.

And that's how I believe many exchanges and platforms started. People like me who were interested in cryptocurrency naturally filled the spaces this new form of money created. Hackers, outcasts, and people interested in spawning new digital-led revolutions and challenging traditional structures and policies that have been in place for centuries.

Nobody could have predicted cryptocurrency would get as big as it did. Nobody knew how big cryptocurrency would get. The market caps and sheer trading volume are seen across all exchanges, even during bear market conditions. And, I think some people found themselves seemingly in charge of these large exchanges and platforms without knowing how to run a financial business by accident.

Like many others before him, Sam Bankman-Fried had no traditional business or finance experience. Bankman-Fried had trading experience and was good at math, but those two things don't immediately qualify you to run a bank-like business.

People like SBF believed in cryptocurrency and blockchain; their love drove them to create needed products. When these platforms get big, the lack of proper management and business strategy ultimately leads to the demise of said businesses (as we witnessed with FTX).

In the case of SBF, he had a degree in physics and a minor in mathematics. He was allegedly quite good at mathematics and a skilled trader, but the lack of a business or financial degree is evident in how FTX collapsed. He might be good at trading with money but not managing it.

And not to deter entrepreneurialism spirit, but there comes a time when people need to admit when something they have created has scaled to the point where you need to bring in people much more experienced and smarter than them to help operate it. Many of these beleaguered platforms now facing bankruptcy clearly didn't have the right people and processes to spot problems that would have been evident since their inception.

We shout for accountability. We protested in the streets and demanded jailers be jailed during the Global Financial Crisis of 2008; where are the protests demanding crypto platforms be held to the same standards in 2022? How many more people will lose their funds before governments do what the industry cannot and start regulating it?

What kind of message do we want to send? It's okay for traditional banks to be punished and held to high standards, but cryptocurrency should be free to operate in no man's land where people can lose their funds due to an exchange hack or bankruptcy.

It's a common theme in crypto. Many of these billion-dollar exchanges and trading platforms are founded and run by people in their twenties and early thirties. In the case of SBF and FTX, the guy is only 30. Not nearly experienced enough to run a company managing that much money unchecked.

These platforms are no different to traditional banks and financial institutions. The rules might be different in how they run and are regulated (or not regulated), but the premise is the same. Being good at crypto is more than being a good trader.

We keep saying we want mainstream crypto adoption to overthrow fiat and be accepted as a valid currency. Yet, much of the ecosystem is in the hands of inexperienced children that got lucky and have been mostly operating based on favourable market conditions.

Now that market conditions have worsened, we are seeing widespread collapse because FTX and others were run as Ponzi schemes. We can use terms like liquidity crunch or bear market and blame inflation, but the crux is that these platforms have been running as Ponzi schemes.

Ultimately, it all comes down to regulation. I know it's a dirty word, but those running these platforms have shown far too many times that they cannot keep their funds secure (based on DeFi attacks in 2022 alone), and they also can't manage funds.

Either the blockchain community steps up and holds itself to a higher standard, or the inevitable government intervention we know is coming will do it, and people won't like what that entails. Government-led regulation without consultation from the community will inevitably hold back adoption and drive down prices.

Cryptocurrency might not be physical money, but it's not Monopoly money, either. It has real value. It's time for cryptocurrency to take off the nappy, learn to use the grown-up toilet, step out into the real world, and shake the amateurism that plagues cryptocurrency and blockchain.