The collapse of FTX triggered a noticeable decline in the price of Bitcoin (BTC), but that in no way means that BTC can be destroyed by failing cryptocurrency companies, according to Bitcoin proponent Samson Mow.
The cryptocurrency industry is still seeing the FTX contagion wave happening, and it is likely to face more similar crashes in the near future, Mow said in an interview with Cointelegraph.
According to the executive, the FTX contagion could be part of the collapse of the Terra ecosystem, which caused a domino effect on the industry, including major crypto lenders like Celsius and Voyager.
“Other things like this will continue to happen in the crypto space because all of these projects are worthless house of cards,” Mow predicted. He added that FTX’s failure was “easy to see coming” because of FTX’s relationship with Alameda.
“A rule of thumb is that if a company prints a token from scratch and sells it at retail or uses it as an asset, you should expect it to crash eventually,” the CEO said. from JAN3.
Mow also argued that industry efforts to prove credibility — including exchanges releasing more and more evidence of reservations — mean little unless they prove accountability. “Any system that can be played will be played,” said, referring to players rigging their reserves by mixing funds with each other just before producing proof.
“Then you have to consider the fiat side – which would require an audit, but that might not help either because FTX also had an auditor,” he noted.
As the FTX contagion continues to spread through the industry, we can expect the worst scenarios for some of the biggest crypto companies in the world. Addressing the question of whether Bitcoin would survive a hypothetical event where crypto giants like Tether or Binance collapsed, Mow expressed confidence that Bitcoin is built to overcome any problem, stating:
“Bitcoin will overcome any problem simply because of its design and the irrefutable need for sound money in human civilization. The failure of any giant would only be a temporary setback, as would the impact of Mt. Gox is no longer relevant.
Although it likely set the crypto industry back a few years, the FTX collapse has done “wonders” for the Bitcoin industry in terms of growing adoption of self-custody and wallets. materials, Mow pointed out. “Unfortunately, most people cannot learn from the mistakes of others, only from their own suffering,” he added.
Related: FTX will be the last giant to fall this cycle: Hedge fund co-founder
The executive also suggested that Bitcoin newcomers are likely to make the same mistakes in the future despite the industry showing the greatest vulnerabilities of centralized exchanges during Bitcoin’s first-ever crash in 2011. He said declared:
“Then things will calm down over the next few years, and newcomers in five or six years will make the same mistakes again and lose their funds. Rinse and repeat.
A former chief strategy officer at Blockstream, Mow is a big bitcoin advocate and founder of game development company Pixelmatic. He is also CEO of Bitcoin technology company JAN3, which focuses on promoting Bitcoin and accelerating hyperbitcoinization. In April 2022, the company signed an agreement with the government of El Salvador and President Nayib Bukele to help the country develop digital infrastructure and establish Bitcoin City.