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5 Web3 Lessons from the FTX Crypto Crash

And five quotes to back them up.

Wordsmith Sebas

Every day after FTX’s collapse, we learn an even darker consequence of one of the most catastrophic Ponzi scams for the crypto environment. 

Here are five lessons we learned from the FTX crypto crash:

Not your keys, not your crypto

Cryptocurrency exchanges aren’t banks. They’re not obligated to keep your money safe, and you shouldn’t trust them to insure anything you own.

As reliable as Binance, Gemini, and others might seem, they’re exchange platforms. There are benefits to keeping your crypto with them:

  • Lower fees by not having to withdraw the crypto to your wallet.

  • Higher yields by keeping your crypto in the exchange.

  • Perceived accountability of the exchange in case anything goes wrong.

Though, I don’t think these are enough to outweigh the possibility of your crypto evaporating overnight! 

Better keep your crypto safe in your wallet. 

Don’t centralize the decentralized. 

“The future will not be centralized. But we must build it.” -Shingo Lavine & Adam Levine.

Satoshi Nakamoto created Bitcoin to provide an alternative, decentralized payment system. Other cryptocurrencies were designed, and this gave birth to Defi.

Web3 is the antithesis of banks. 

Why give your crypto to an even riskier bank without any responsibility for your financial well-being? 

Cults of Personality in Web3 Tend to Backfire

​​"There is trust in a guy that goes around, wears a suit, and gives himself a name like ‘Bankman.’ -Vitalik Buterin. 

FTX got to where it did because of the excessive shilling of their marketplace and Sam Bankman-Fried’s public speaking, donations, and VC support to many rising talents in the Web3 environment.

They had so much marketing that even people out of crypto knew about FTX or knew their favorite celebrities had a stake in the company.

People thought of SBF as the next JP Morgan. Influential firms believed anything he said and took his word for granted until his house of crypto cards crashed. Sequoia Capital invested in them and praised SBF to the moon and back. 

Many crypto traders want to hold someone accountable for their mistakes or at least someone to listen to in an environment with so much conflicting information.

These cults of Internet personalities are just another form of centralization. People thought SBF was a savior figure due to his belief in effective altruism and giving away his fortune to charity. 

Like! What fortune can he give away now? 

Now, crypto Reddit is convinced that he’s a psycho.

Remember Satoshi Nakamoto? Despite creating Bitcoin, no one has heard of him ever again. That’s decentralization. 

Reports of Bitcoin’s Death Are Greatly Exaggerated

“Bitcoin has officially died 466 times.” -Anonymous Redditor.

There’s a page known as Bitcoin Obituaries. They keep track of every time Bitcoin has been pronounced dead.

Its most recent death was on November 14, 2022. Its oldest one was on December 15, 2010.

In 2022, Bitcoin was pronounced dead 26 times. 

People are still investing in Bitcoin, and interest in Web3 remains high as ever, if not higher, due to the bile fascination with the FTX controversies.

Bitcoin already went through Mt. Gox. The crypto industry as a whole survived the TerraLuna collapse.

It will undoubtedly go down. There’s an expected bottom of $11k, or even $9k, which sucks. 

It’ll take time for BTC and other cryptocurrencies to recover. Mark Cuban still has faith in crypto.

FTX will not be the Bitcoin killer. 

Despite everything, crypto has done well in the last few years.

“Stocks are boring. I am a degenerate gambler and need something that is moving faster!” -Anonymous Redditor.

Jokes aside, no kind of investment is for impatient people. You need to do your own research (DYOR) before spending a dime on crypto, but know that it’s not such a badly-performing investment vehicle as the media tends to reinforce.

The issue here is not Bitcoin or crypto altogether. It’s the centralization of these assets. If you invested $100 in Ethereum in July 2016, you’d have $10,900 today. 

If you invested $100 in Amazon back then, you’d have $260.

That doesn’t mean stocks are wrong or that crypto is inherently better.  More than anything, these days have been a tough-love lesson for crypto investors. 

Never put your eggs in one basket or your crypto in a stranger’s hands. 

#web3#crypto#nft#ftx
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