While business leaders expressed cautious optimism at this year’s World Economic Forum (WEF) in Davos, Switzerland, the same sentiment was not felt for cryptocurrency.
Compared to before, the once bustling financial sector was less involved.
As Jennifer Schonberger puts it, “gone every ten feet are crypto houses, bitcoin-themed pizza stands, and ads from yesteryear.”
“I think a transparent, regulated infrastructure like ours is well-suited for this environment,” Circle co-founder and CEO Jeremy Allaire, who launched the USDC stablecoin, told Yahoo Finance.
Circle, one of the few crypto firms featured for the week, offered some optimism. Although Allaire is not regulated as a bank and last year shelved plans to go public through a SPAC, Circle still aims to become a public company at some point in the future.
Meanwhile, it accounts for 31% of the cryptocurrency’s $136 billion stablecoin market, which many see as essential to the industry’s less speculative future.
As Allaire told us, Circle carries a money transmission license in nearly every state. According to DeFillama, its stablecoin has “really grown since the FTX collapse,” $2 billion since early November.
However, there was no shortage of critics at Davos.
For them and the more than 9 million retail and institutional investors who were waiting to recover their bankrupt funds, the collapse of FTX still looms large over the space.
“FTX and SBF are not the exception – they are the rule,” said NYU professor Nouriel Roubini, known as “Dr. Doom” for his dire views on global trends, on Yahoo Finance Live.
“99% of cryptocurrency is a scam. Criminal activity. A real bubble Ponzi scheme that is drowning,” Roubini added. The Economist continued to highlight the reputational damage faced by industrial firms as a general loss of trust.
In November, Bitcoin hit a two-year high of $15,682 as FTX headed for Chapter 11. BlockFi followed two weeks later.
The following month, Sam Bankman-Fried, believed by many to be one of the industry’s biggest stars, was extradited from a Bahamas prison to New York to face eight counts of fraud.
Although the total market capitalization rose above $1 trillion last week, industrial trading firms are far from regaining confidence.
Instead, those companies had to let go of thousands of workers. There are at least 10 million people who have lost their cryptocurrency since Genesis trusted an industry firm with its long-awaited bankruptcy filing on Friday.
Meanwhile, others in attendance, such as IBM vice president Gary Cohn, said they would not drop the cryptocurrency, while refraining from commenting on the digital assets themselves.
“I’m bullish on blockchain and cryptocurrency, I really don’t have one,” Cohn told our team on the ground, echoing popular middle-of-the-road sentiment.
Of course, even when big companies ditch cryptocurrencies in favor of investing in their own blockchain platforms, the end product often doesn’t go down well and doesn’t always work.
In late November, IBM, which has been betting on blockchain since 2016, shut down TradeLens, a global blockchain platform launched with Maersk two years ago.
Maresk said its technology platform, which digitizes and secures the tracking of shipping containers around the world, is “viable”.
But it did not reach “the level of commercial viability necessary to continue operating and meet financial expectations as an independent business”.
“All three of these things, web3, blockchain and the metaverse, are all going to happen,” said Microsoft ( MSFT ) CEO Satya Nadella, offering WEF attendees a partial vote of confidence in cryptocurrency.
“But you have to have killer apps, what’s the widely accepted use case, what’s the ChatGPT moment for blockchain?”
Nadella was referring to the AI tool, launched in November, which quickly picked up users and became the hottest thing in tech. The executive told Semafor news agency on Tuesday that he is in talks to invest $10 billion in ChatGPT owner OpenAI.
Is the cryptocurrency market crash over the past year holding back the industry from finding its coveted ChatGPT moment? Completely and not as much as it seems.
Venture capital firm Electric Capital’s annual report shows that even though the cryptocurrency looks tough until 2022, it has more monthly asset developers than it did during the bull market.
Based on multiple years of data, Electric Capital finds that each cryptocurrency developer’s performance is less sensitive to market fluctuations, making their employment levels a more important barometer than where the industry is heading in Davos.
It turns out that in the fourteen years since Bitcoin’s creator Satoshi Nakamoto—who made the industry work for free—the industry’s full-time open source developers have grown from 1 to 23,343, and activity has expanded beyond Bitcoin and Ethereum (28%) . total).
We’ll have to wait and see where these thousands of developers plan to buy the next cryptocurrency. In the meantime, their activity, coupled with less exciting cryptocurrency price charts and shrinking advertising in Davos, the Baha Mar resort of the Bahamas, or anywhere else, may be exactly what the industry needs to move through such a difficult time.
“You can’t get rich quick in cryptocurrency right now. And it’s really good,” said Michael Gronager of Chainalysis, wearing a coat in front of the snowy Swiss Alps.
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