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PARIS. It was like a failed club party decades ago, or perhaps a scene from the movie "The Monster of Wall Street" with blaring music drowning out the speakers on the panel, and scantily clad women and midgets dressed as the Joker promoting online collections. . .
At the very least, Blockchain Week in Paris was a serious rebuke to anyone who thought crypto or the party culture of its financial brethren was dying.
And it was a stark contrast to the world of central banks, who also regularly held official events on how to regulate and keep up with fintech in the sleepy Swiss city of Basel.
For the happy crypto advocates, this month's bank failures confirm their belief that the traditional financial system is flawed. And they encourage everyone who listens to invest their money in the cryptocurrency industry, which has proven to be resilient despite numerous scandals.
After a volatile year for cryptocurrencies, the industry seems to be making a comeback. As traditional banks weakened, the price of bitcoin skyrocketed, prompting cryptocurrency evangelists to warn of a comeback rather than reminisce about conspiracy theories about the last few days of the financial crisis.
Case in point: a tweet by Tyler Winklevoss, co-founder of US cryptocurrency exchange Gemini. “The US government has done a great job of preventing a banking crisis. It was almost as good a job as it was in the beginning.
Of course, one controversial theory that they have not repeated is the idea that the current crisis was caused by the collapse of the FTX cryptocurrency exchange.
Don't trust the system
“Bitcoin is a precious commodity that no one can take away from you,” Paolo Ardoino, chief technology officer of stablecoin giant Tether, told POLITICO on the sidelines of a blockchain conference in the elegant Louvre district of Paris. People shouldn’t put all their money into crypto, he continued, but when it comes to fractional reserve banking, traditional banking where lenders have very little money, “Bitcoin is your insurance.” "
Bitcoin and other cryptocurrencies emerged after the 2008 financial crisis as an alternative economic ecosystem free from government control. Online cryptocurrency transactions are recorded on shared digital ledgers and verified across multiple computers to prevent fraudsters from interfering with the system known as the blockchain.
The idea is that people can use Bitcoin as an alternative to traditional banks that the government has backed with taxpayer money in the past.
However, cold-blooded leaders at the conference warned against addressing the current crisis of confidence in banks, noting that crypto companies still need banks to perform their core functions.
Andrew Whitworth, director of EMEA policy at blockchain company Ripple, who previously worked at the Bank of England and has a PhD in cryptopolitics, said: “It’s not that cryptocurrencies are doing well right now and the banking sector is failing. “Cryptocurrencies cannot exist without the banking system, so the complete disappearance of cryptocurrencies is not good for banking.”
"real alternative"
Despite the banking crisis, the vision of blockchain creators of using cryptocurrencies as a viable alternative to banks remains elusive.
“There is still some growth to come,” said Oliver Lynch, Liechtenstein-based chief executive of Bittrex Global, who worked as a financial services lawyer for Shearman and Sterling LLP.
Despite the recent downturn, the cryptocurrency industry has experienced a severe downturn that has wiped out almost two-thirds of its market value since November 2021.
This "crypto winter" has exposed scams and scandals in some of the mainstays of the industry. It has only been four months since FTX, the world's third largest cryptocurrency exchange, collapsed amid revelations that the company was using customer funds for risky bets elsewhere.
That doesn't make the banking crisis irrelevant, according to Lynch.
“[The crisis] could be quite significant if it dispelled the preconceived notion that banks are the natural choice,” he said. “Perhaps for the first time in history, or since the inception of banks, there is a real alternative.”