Wait, shouldn't Bitcoin solve that?

Jill Gunter is a co-founder of the blockchain company espresso systems . Before that, she was a risk capital who concentrated on crypto. She started her career as a trader at Goldman Sachs.

A popular chorus among crypto supporters over the years was "Bitcoin solves this". But the same sentence has also become a popular meme among critics of cryptocurrencies and Blockchains.

skeptics offer this sentence as an answer to overzealous crypto acolythes who try to apply blockchain technology to everything, from salad origin to social media. "Bitcoin solves that", they roll with the eyes and point to the fact that no blockchain will be a panacea for the problem.

In the last week, when the crypto exchange FTX fell into bankruptcy in the middle of reveals about the embezzlement of customer funds, imaginary brands and risky bets, crypto supporters and critics have questioned this sentence alike. "Wait, shouldn't Bitcoin solve that?"

Finally,

the cryptocurrency was explicitly invented in order to counteract the opaque and over -indebted practices of Wall Street. The original Bitcoin WhitePaper proposed a system that would end the dependence on trustworthy financial institutions, reduce fraud and protect consumers. At the moment it couldn't feel more ironic.

but not having to trust anyone is a seductive promise! According to Gallup, trust in governments, the media, banks and beyond for decades has steadily decreased, but they really only have to register on Twitter this week and check the chaos to see that society has a problem problem. It is no wonder that blockchains have inspired many people with their promise to eliminate the need for trust.

And I have to keep to you that blockchains and your applications for "decentralized finances" (Defi) have actually redeemed this promise. Individuals can keep their own crypto assets, check the transaction book themselves and even take part in the entire system as a guardian and supervisor. Millions of people now only have to rely on code.

These cryptocurrency users may have lost their sleep this week when they saw how the value of their assets sank, but at least they were not worried about whether they would ever get access to their funds, as they did with centralized crypto exchanges such as FTX.

While the customers of FTX confused and could not stand out their funds, users of large decentralized financial products may have constant access to their assets and benefited from an orderly and transparent handling of their business, transactions and, yes, liquidations. For the users who keep their own coins and only act on decentralized financial platforms, crypto has prevailed. It turns out that blockchains can reduce the risks from mediators!

Unfortunately, not all crypto owners used these properties. This is because there are big compromises.

In order for cryptobe users to use the advantages of blockchains, you must use new and chunky products that bear your own risks. If you make mistakes, a lot is at stake and you are to blame. The man, who is known to have thrown hundreds of millions of dollars in Bitcoin on a garbage dump, acted "as his own bank". As he demonstrates to us, it has a big disadvantage to be your own bank. You have no recourse, no customer service and anyone you can sue if you lose your own negligence.

Defi users also take the risks that are inherent in anarcho utopia (or dystopia?) in which code is law. If a user makes a typing error in the address to which he sends his assets, there is no way to undo this. If a hacker finds a mistake in the code of a defi product and extracts user money, the victims have little protection in a similar way. It's like the ultimate "Finder Keeper". The technology is still in a state in which this type of hacks constantly pass. For many users it is not worth the inconvenience and the risk of using the advantages of "trustworthy" systems such as those of Defi.

users who do not want to or do not want to keep their own crypto can do so in the old -fashioned way of Wall Street: they can trust an administrator. Custainable exchanges not only enable crypto users to pay and pay coins and tokens, they also record the users' assets as deposits. Of course, users who hold and act are not really using crypto. They do not derive any of the functions that crypto should offer, such as self -storage and censor resistance and transparency. They only hold or speculate whether "numbers rise" or "numbers fall".

Nevertheless, one can say with FUG and right that millions of users benefit from convenience to keep their assets on these stock exchanges. Today it turned out that at least one million of these users - namely those who used FTX - were better off if they had used the promise of value from crypto and kept their money themselves.

and the dark reality is that the cryptocurrency market despite Bitcoin and other blockchain products that offer alternatives to this day has created more agents than eliminated. In recent years, nobody has really taken care of the real benefit that can be found in crypto.

In view of the global floods of light money, which flowed in all kinds of investment classes and further pushed people out of the risk spectrum, entrepreneurs, developers and investors saw themselves suggested to be involved in building a large speculation bubble instead of delivering permanent value.

Too much time, energy, money and attention that has flowed into cryptography in recent years has flowed into the establishment of gaming markets around magical beans - instead of developing products that use the openness, transparency and autonomy that the technology offers.

ftx and his violation of the trust of the users are the clearest reminder that the industry could demand in order to bring them back to their original vision. FTX's downfall feels like the end of crypto, but it could become a catalyst to drive the industry into the areas where cryptocurrencies and blockchains can solve real problems.

Many other depot exchanges have already announced that they will use the transparency of blockchains to provide the public a cryptographic "evidence of the reserves". This is a great example of using the technology for its true benefits: improving responsibility.

It feels optimistic about shame and darkness in this hour, but you can hope that crypto actually delivers a more open and transparent system, so we can look back in a decade and say: Bitcoin has solved.