FTX And Bitcoin: The Good, The Bad And The Ugly

This is an sentiment editorial by Mickey Koss, a West Point postgraduate with a grade successful economics. He spent 4 years successful the infantry earlier transitioning to the Finance Corps.

When 1 of the Bitcoin Magazine editors reached retired to inquire what I thought the FTX collapse meant for bitcoin, my archetypal instinct was simply, “Tick-tock adjacent block.” 

But aft immoderate reflection I deliberation it’s hard to screen this script successful a 1 dimensional view.

For immoderate reason, my caput instantly went to an aged Clint Eastwood movie, “The Good, The Bad And The Ugly,” which conveniently creates the cleanable framing for my thoughts connected this still-unraveling predicament.

The Good

If there’s 1 bully happening to travel of this scenario, it’s the cognition that centralized exchanges whitethorn not really beryllium your person aft all. Discussions with (relatively) mean radical astir self-custody inevitably reason successful the look of fearfulness that they don’t spot themselves to clasp their ain keys. As Caitlin Long points retired below, a large speech whitethorn not beryllium each that large astatine it either.

Evidently the masses are catching on. Two days ago, cryptocurrency quality steadfast CoinTelegraph reported that $3 cardinal worthy of bitcoin near exchanges in the week preceding the work of that connected 13 November 2022. If you recognize Bitcoin, you apt recognize that this is beauteous important quality and whitethorn beryllium 1 of the best, if not only, bully outcomes from this full debacle.

Price suppression via “paper bitcoin” has agelong been a constituent of treatment successful definite Bitcoin circles. The much radical who instrumentality self-custody, the much radical who not lone trim their counterparty hazard of losing their bitcoin, but besides trim the capableness for exchanges to contented insubstantial bitcoin IOUs.

Warren Buffet said, “It’s lone erstwhile the tide goes out, you larn who’s swimming naked.” Self custody allows you to simply beryllium backmost and bask the amusement truthful to speak.

The Bad

Senator Elizabeth Warren, among others, are already calling for “a large crypto bill.” With the illness of an offshore, unregulated altcoin casino, politicians present person a galvanizing infinitesimal they tin leverage to get immoderate things done.

“Sen. Elizabeth Warren (D-Mass.) said Tuesday that a integer currency measure indispensable beryllium ‘comprehensive,’ covering user protections, anti-money laundering rules and clime safeguards for crypto mining.”

Senators Cynthia Lummis and Kirsten Gillibrand posit that the deficiency of enactment connected crypto authorities implicit the past years and months person enactment the U.S. astatine a regulatory disadvantage.

Ironically, 1 of the crypto bills nether information was written with the assistance of FTX.

“The measure — introduced by Senate Agriculture Chair Debbie Stabenow (D-Mich.) and Sen. John Boozman (R-Ark.) — is facing scrutiny successful the aftermath of the FTX illness due to the fact that the institution was a large lobbying unit down the legislation. SEC Chair Gary Gensler has said the connection is 'too light-touch.'“

While U.S. regularisation would supply immoderate perchance much-needed clarity for institutions, a rushed bundle to code an emergent concern whitethorn effect successful an extremity merchandise that is little than optimal for the markets writ large. My anticipation is that legislative gridlock volition assistance to dilatory the process down to facilitate a much deliberate and thoroughly considered portion of legislation.

The Ugly

BBC News reported connected the time of this penning that over a cardinal radical and businesses are present owed wealth by FTX. With the declaration of bankruptcy, it is unclear who volition get paid back, if anybody, and conscionable however overmuch wealth they volition really get back.

While it’s casual to knock cryptocurrency token gamblers and time traders for not taking possession of their coins, the representation is much analyzable than that. I person friends and household who were acrophobic with aforesaid custody and held their assets astatine BlockFi. Their coins are present frozen successful limbo, unsure erstwhile they volition beryllium capable to retreat — if ever.

The fallout from FTX is inactive unraveling and I’m definite determination volition beryllium a batch much collateral harm unveiled successful the coming weeks.

Stay Humble And Stack Sats

While it’s casual and perchance therapeutic to dunk connected the unethical and perchance amerciable enactment from FTX and SBF, I would impulse Bitcoiners to enactment humble.

It’s situations similar this that breed the adjacent procreation of self-custody bitcoin maxis. We request to instrumentality this accidental to pb and to teach.

As I’ve written already successful past pieces, I narrowly avoided losing everything to the Celsius illness earlier this year, conscionable months earlier I started penning for Bitcoin Magazine. Sometimes we conscionable don’t cognize what we don’t know. Help them spot the light.

This is simply a impermanent station by Mickey Koss. Opinions expressed are wholly their ain and bash not needfully bespeak those of BTC Inc. oregon Bitcoin Magazine.