• The cryptocurrency ecosystem experienced a turbulent year in 2022 with the collapse of FTX, Celsius, Three Arrows Capital, and the Terra ecosystem.
• Blockchain analytics firm Chainalysis released a report in December of last year that noted weekly-realized losses of $20.5 billion due to the depegging of Terra’s stablecoin, Terra USD Classic (USTC).
• Despite these losses, Dan Morehead, chief operating officer at Pantera Capital, stated that blockchain technology and cryptocurrency have not failed. Companies within the crypto and blockchain sector are still building and releasing products.
The past year was a tumultuous one for the cryptocurrency industry, as the collapse of several notable firms left many investors in the lurch. A report released by blockchain analytics firm Chainalysis in December of 2022 pointed to the depegging of Terra’s stablecoin, Terra USD Classic (USTC), as the primary cause of weekly-realized losses of $20.5 billion. This figure was compounded when Three Arrows Capital and Celsius both collapsed in the same month, resulting in a further $33 billion in losses.
In the wake of these events, it seemed that trust in the crypto ecosystem had been severely undermined. However, Dan Morehead, chief operating officer at Pantera Capital, had a different opinion on the matter. In a December 19th, 2022 letter to investors, he argued that the collapse of FTX had nothing to do with blockchain technology, and that it was not crypto that had failed. He further noted that Bitcoin and other protocols had worked perfectly, signifying that the industry is still alive and well.
Indeed, many companies are still continuing to build and release products in the crypto and blockchain sector. In order to ensure that user trust is maintained, these products now place a heavy emphasis on security and transparency. For example, some blockchain-based wallets will now feature multi-signature authentication to prevent unauthorized access, while others are using smart contracts to ensure that all transactions are conducted in a secure and transparent manner.
It is clear that, despite the recent setbacks, the crypto and blockchain industry is resilient and is continuing to move forward. Companies are taking a more proactive approach to building trust with their products and services, and users can rest assured that their investments and data are safe. While the past year may have been a turbulent one, it appears that the future of the industry is still bright.