The Blockchain never lies

This is probably one of the saddest days in crypto and I'd normally refrain from dropping a "hot take" because many people I know were affected. However, I feel like the recent events concerning FTX and their subsequent capitulation are rubbing off the wrong way.

The crypto industry is once again facing another existential crisis because of yet another overleveraged platform and a healthy dose of hubris to boot. However, it is important to state clearly that in all these events, the blockchain has been an innocent bystander.

In just one year, the crypto industry has faced at least three existential crises that I remember off the top of my head. I thought the events surrounding Luna's eventual demise brought us to our knees but how wrong was I?

I've spoken to some of my close people affected by the FTX issue and it is the same apprehension clutching all of them. Nobody saw this coming; no way the best exchange just ups and goes tits up in the space of a couple of hours but such is the case.

Lesson learned

My father always tells me that the best time to pay close attention is when things turn sour because that's when all the best lessons surface. The universe has a way of teaching and sometimes, doubling down on a message.

Whatever we didn't learn from Luna, we'll learn from FTX and if we don't learn it from FTX, we'll learn it from the next disaster.

We can draw all the conclusions surrounding the liquidity crunch, insolvency, over collateralization of FTT tokens that were printed out of thin air and all the other financial analogies but in reality, I believe that the real cause of the issue is something much simpler.

If you really get to the bottom of the story, you'll find that FTX went under because these kids believed their own hype and bit more than they could chew. It is a similar tale to Luna and thanks to these geniuses, billions of dollars worth of assets were vapourised.

The fact remains that FTX tried to soar too fast and just as Icarus found out, the Sun is a little bit too hot for wings. Those wings were clipped before they could even reach the sun and the fickle foundation that housed the establishment has now been razed to nothing.

One good thing about this whole FTX situation is that it highlights what we've been telling you for the longest time. If it is not your keys, it is not your coins.

Just like your bank account balance, whatever you see in your "exchange wallet" is a number on the screen and not a reflection of cryptocurrencies in your possession. In fact, the moment you "deposit" cryptocurrency into an exchange, you no longer own it, all you own is a number on the screen that tells you that you can trade a certain amount of the asset.

This means that if the aforementioned exchange, like FTX, goes under, you're going down with that sinking ship. FTX customers learnt this the hard way.

The blockchain never lied

I believe exchanges are relevant for the growth of the crypto industry but at the same time, I believe that they should only serve as on-ramp and off-ramps, as well as spot trading platforms. Everything else they do there with loans, leverage trading and the likes always smells wrong.

The aftermath of the FTX issue is that many exchanges are performing "proof of reserve" exercises to allay customer fears amidst the crisis. However, this wouldn't have been necessary if they simply just didn't meddle with customer funds and did what they promised to do; keep funds safu.

DEXES came into the scene a while ago and for the most part, they give crypto traders an opportunity to exchange assets without losing custody. When you think about it, DEXES seem like the natural evolution of the crypto market because they actually epitomise the entire purpose of crypto.

In some way, Central exchanges take us back to the fractional reserve banking system that I thought we were all trying to get away from. Dexes on the blockchain give us more control and the ability to decide our own fate.

Nothing has changed

The narrative that "crypto is in trouble" is a stretch because when you think about it, nothing has changed in the general scheme of things. Hive's value in the market may have dipped but I'm still here, publishing every day, playing Splinterlands and going about my normal activities.

Cryptocurrencies and their blockchains will be fine at the end of the day. As @taskmaster4450 always says, the real value isn't in exchanges, the real value lies in the intrinsic proposition of the network.

Builders will continue building, innovation won't stop, and we will continue using the available resources onchain. Rain, tax, and if it's not your keys, then it's not your coins, these are the only constants in life.

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