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TALES FROM THE CRYPTO OP-ED

What would it take to doom the cryptoverse?

What would it take to doom the cryptoverse?

Every time there is bad news about crypto — like a big hack or sudden price hack or a hatchet-faced regulator somewhere threatening sturm und drang — there can be heard loud and gleeful cheers from certain quarters. CRYPTO IS DEAD! they cry joyfully. There have been exactly 461 crypto obituaries in major news outlets over the past 12 years.

There have been exactly 461 crypto obituaries in major news outlets over the past 12 years. This is a real figure — there is a site that tracks every “crypto is dead” article and stores it for later embarrassing reveals.

Obviously, crypto is not dead — even in the face of the carnage of the past two months, it has by far been the best-performing asset over the last decade. It is roaring back. 

Cryptocurrency prices, transactions volumes, NFT markets, metaverse investments — all starting to look very perky again, especially over the past couple of weeks.  

Which got me to thinking, what would actually kill crypto? Really put a stake through its young and optimistic heart?

Actually, there is something that would put a stake through its heart, but I’ll start with what won’t kill crypto. We’ll come to the kill-shot afterwards. 


Read more news and analysis on the latest in the world of cryptocurrency


Regulation

First, regulation. This is not going to make much difference to the cryptoverse as a whole, and will most likely help it grow. Yes, of course, there have been some heavy-handed attempts to stomp it out. China, for instance, which is building its own national cryptocurrency, to the criminalised exclusion of all other crypto trading. All this to spy on its citizens’ financial affairs and punish them if they so much as raise an eyebrow at the wrong thing.

But nicer and smarter countries than China are developing crypto regulations for at least some of the right reasons — to protect consumers, avoid money laundering, close tax loopholes — that sort of thing. And some countries are opening their arms wide, eschewing tough regulation in favour of early adoption. Crypto will not die on the hill of regulation. 

Unease of use

And then there is the ease-of-use problem. Anyone who has tried to interact with crypto, either through a centralised crypto exchange or more directly through a thing called a “wallet”, (or even worse, tried to figure out the difference between a hot wallet and cold wallet) will know that this stuff suffers from viscous user-experience problems and jargon-heavy foreignness. But this problem is transient — I remember people predicting that cellphones would never penetrate the rural areas for exactly these reasons. 

Volatility

Moving on to volatility. Cryptocurrencies will die because no one can handle the wild price swings. To which the answer is — not all cryptocurrencies have price swings, and for some people, volatility is a feature, not a bug. And most importantly, those peaks and values will certainly flatten as the industry matures. Also, it is easy to forget that “crypto” is a much bigger space than cryptocurrencies — not all crypto tokens are tethered to a market price. 

Scams, thefts and losses

And, penultimately, hacks and grifts and scams. Ill-understood new technologies, sucky interfaces, billions in value floating around. It has been something of a paradise for opportunists everywhere, ranging from state-sponsored hackers (like those in North Korea) to lone dark-hatters, to your garden variety snake-oil salesmen, to unintended bugs lurking in corners of computer code. 

Add a sprinkling of breathtakingly large thefts and losses splashed across major media every month or two, and it is easy to paint a picture of a part of town that you do not want to drive through.

But what is overlooked here is that it is very difficult to steal cryptocurrency and not be seen.

Read more in Daily Maverick: “A nuclear bomb just exploded in the middle of the cryptoverse”

The blockchain is transparent — it is easy to follow the money. So it is quite difficult to get away with it because authorities can now follow illicit flows with ease. And they are getting very good at this and at the problem of identifying the culprits, helped by ever-improving forensics firms like Chainalysis and Elliptical. It is much easier to steal and hide money in the old world of banking, where tracks can be erased. 

More importantly, hacks and thefts have almost always been at the edges of the crypto ecosystem — at the exits and entrances to the blockchain — the wallets and exchanges and so-called “cross-chain bridges” and user fronts-ends and NFT marketplaces and Discord servers. Not to mention the good old human failure to store passphrases securely. 

Hacked blockchains?

But no one has ever hacked the two dominant blockchains themselves —  Bitcoin and Ethereum. They are as hard as the cryptography and decentralised architecture that protects them.

And that’s where the kill-shot lurks. Should anyone ever find a way to directly penetrate the Bitcoin or Ethereum blockchain, hundreds of billions would be drained instantaneously and some of that haul converted to dollars before an inevitable price collapse, and that would be the end of it.

What are the chances of this happening? I suppose one can never say never, but a reading of Satoshi’s white paper leaves little doubt as to the thickness of its armour — impenetrable by design, and now, in 2022, thoroughly battle-tested against the smartest and most incentivised of criminals. DM

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  • Ian Callender-Easby says:

    Crypto will probably last as long as there are clueless, gullible and greedy folks around. Which is a long time if somebody can sort Putin out. A few are making money and a lot are losing it. Sound familiar?

  • Paul Honig says:

    Fair comment. Problem is – nobody transacts in crypto…

    • Jon Cruise says:

      That’s currently true in SA, but Fintech is finally starting to make it easier for merchants to be paid in crypto, and cash out fiat, mainly in US and Asia (see Forumpay). Just like their smartphones made it here, this will too. No doubt what ICASA has done to that industry, PASA will try do here – but stuck in the muds rarely prevent progress fully.

  • Sydney Kaye says:

    You could ask the same question about the casino business which has similar elements. The chips are useless outside the casino, the promoters are the only ones who consistantly win, people are drawn in through greed and the chance of money for mothing and yet it never dies. But does it matter. In spite of past fears that a collapse will harm the real economy it seems it only affects the token holders, so does it matter?

  • Bryan Shepstone says:

    I think you’ve missed the biggest vulnerability. Strangely enough, the viability of crypto is based on its ability to be converted into fiat currency. Take that away and you’re left trying to buy a hamburger with Bitcoin! And taking away that ability lies in the hands of the very agencies that crypto seeks to bypass. It would be fairly easy for the US and others to stop the conversion of crypto into USD etc and render it pretty much worthless should it ever seriously challenge any of the major currencies as a means of trade.

  • Cindy Scott says:

    I could not forgive myself after falling victim to a fake cryptocurrency investment scheme I saw on Facebook, I thought it was a good means for me to make profits as I was getting close to retirement and I also saw reviews under the post that made me believe in the fake investment company called Bitblender. I became depressed and suicidal after losing almost $ 291 k worth of bitcoin to this fake company, until I summoned courage to discuss it with my younger sister who then introduced me to this hacker that she went to the same college with, that the hacker could help me recover the bitcoin, at first I was very reluctant as I thought it was absolutely impossible for the funds to be recovered, I then decided to give it a trial and it was like magic how the hacker named Refund Policy was able to help me recover my funds in less than 24hrs. I will forever be grateful to Refund Policy and I am going to drop their contact details here in case anyone has also been a victim of these scams. Their e mail address is refundpolicy82 @ g mail. Com and their WhatsApp number is + 1. 915. 612. 6883. They can also help you investigate a cheating partner. Do not hesitate to get in touch with them.

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