Applying broken windows theory to cryptocurrencies

The broken windows theory was conducted in 1969 by Philip Zimbardo as an experiment to extrapolate human behavior and if there are connecting behaviors triggered as an effect. He parked two cars without license plates and observed what happens to them. One was parked in The Bronx, New York, and the other in Palo Alto, California. The car in The Bronx was wracked and dismantled within ten minutes, while the one in California remained untouched. This happened until Zimbardo broke a window. Once that happened, also the car from California was robbed and vandalized. Why did this happen? Because the broken window incited more violence and vandalism.

Now I come to you and ask if the theory of the broken windows applies in any way also to cryptocurrencies. I think that a negative event can have unforeseen bad ripple effects in that space. We all have seen hacks happening in crypto projects and that will only attract other bad actors to do the same. Like in the Wild Wild West, the bad cowboys are finding here a space where they can manipulate, scam, and hack people with too little knowledge about crypto technology and the risks it implies.

Crypto projects need to ensure that "the windows of their cars cannot be broken so easy" and prioritize this before going into too much depth with the technology innovations. There must be a balance in between, without throwing out of the window the security for the benefit of advancing technologically. Because when the car window gets broken, others might fall as well until the entire car gets wrecked. That translates also to people leaving the project and never going back as the trust is lost forever.

And if we want to avoid the ripple effect of a broken window in crypto as it happened in the past and we have seen new occurrences as well is to not hold your crypto assets on Centralised Exchanges. Not your keys, not your crypto is not a joke, and at some point, it might bite you from the butt. For now, you don't think that it can happen to you, but believe that it will happen. I went through two such bad experiences, but I was lucky enough not to have many funds held on CEXes. One thing I've learned and moved away from those at least for my big number of assets that I am holding.

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