After FTX: What Next for Digital Assets?
Separating the Wood from the Trees

The recent furore over the FTX collapse is bittersweet to me.
On the one hand, as a strong digital asset advocate, it hurts to see such a major institution in the space go by the wayside - with all the collateral damage caused. On the other, it is a necessary occurrence that should eventually see the space grow stronger.
Let’s be clear; regardless of the numerous examples of bad actors in the space, the underlying proposition of distributed ledger technology combined with cryptography IS A MASSIVE technological development!
The Bitcoin network is still the best representation of this revolutionary breakthrough. When one remembers that it came about because of the abuse of traditional financial systems, and continues to operate as designed, one is able to discern the wood from the trees.
A network that enables us to store and send a representation of value (in the form of BTC) anywhere on the planet almost instantaneously and without any counter-party risk, is unprecedented.
This unit of value is not controlled by any centralised party(s), and requires the expending of a substantive amount of real energy (by numerous dispersed and unconnected actors) to create. When one adds smart contract technology to this decentralised digital representation of value (eg the original Ethereum network), thereby removing the human element in facilitating/completing economic transactions, the basis for a new form of market economy exists.
The irony of the FTX and prior Terra/Luna collapses is that despite the fact that these platforms utilised blockchain technology, they were not decentralised. They simply replicated the structure (and shenanigans) of traditional (centralised) finance but masked as decentralised blockchain networks.
Characteristics of these platforms that resemble those of traditional finance include: 1) creating units of (alleged) value at their whim from thin air; 2) leveraging those units as collateral to speculate; and 3) the house of cards coming down on itself when the bubble bursts. Sound familiar?
The root concern underlying the design of the most decentralised of blockchains (known as ‘proof of work’ blockchains) is the minimisation of the possibility of human intervention, and by extension the minimisation of reliance on “trust” for people to interact economically- and, eventually, socially and culturally. This is embodied in one of the key themes of truly decentralised blockchain technology; “Do not trust. Verify!”
By removing/minimising the capacity for the manipulation or corruption of transactions, and interactions in general, the opportunity arises for more human (social/commercial/political) interactions to occur and on a more equitable basis. How these will eventually manifest, only time will tell.
The as yet known best use cases for this technology unfortunately lends itself to the critics of its current iterations; enabling smug claims that “crypto doesn’t have any use case” etc. Revolutionary technologies usually find there use cases after they come into being, and in general are adopted for use cases other than those originally intended.
I am still extremely excited by what applications these technologies will eventually be adopted for on a mass scale.