While business leaders showed cautious optimism at this year’s World Economic Forum (WEF) in Davos, Switzerland, the same sentiment was not felt for crypto.
Compared to before, the once bustling field of finance had a much smaller presence.
As our Jennifer Schonberger puts it, “There were no more crypto houses every ten feet, bitcoin-themed pizza stands, and advertisements from years past.”
“I think a transparent regulated infrastructure like ours is well suited for this environment,” Jeremy Allaire, co-founder and CEO of Circle, which issues the USDC stablecoin, told Yahoo Finance.
Circle, one of the few crypto companies present for the week, showed some optimism. Although it is not regulated as a bank and closed its IPO plans through SPAC last year, it still aims to become a public company at some point in the future, said Allary.
Meanwhile, it accounts for 31% of the crypto’s $136 billion stablecoin market, which many see as essential to the industry’s less speculative future.
As Allaire told us, Circle is licensed to transfer money in almost every state. Its stablecoin “has actually grown since the collapse of FTX,” by $2 billion since early November according to DeFillama.
Still, criticism was not uncommon in Davos.
For them, and the more than 9 million retail and institutional investors waiting to recover their bankrupt funds, the collapse of FTX still hangs like a shadow over space.
“FTX and SBF are not an exception – they are a rule,” Nouriel Roubini, a NYU professor known as “Dr. Doom” for his dire views on global trends, said on Yahoo Finance Live .
“Literally, 99% of crypto is a scam. Criminal activity. A real bubble Ponzi scheme going bust,” Roubini added. The Economist went on to highlight the reputational damage companies in the sector are facing as a general loss of trust.
In November, Bitcoin hit a two-year low of $15,682 as FTX headed towards Chapter 11. Two weeks later, BlockFi followed suit.
The following month, Sam Bankman-Fried, a character many considered one of the biggest stars in the industry, was extradited from a Bahamian prison to New York to face 8 fraud charges.
As its total market capitalization surpassed $1 trillion last week, trading platforms in the sector are far from regaining confidence.
Instead, these companies had to lay off thousands of workers. With Genesis’ long-awaited bankruptcy filing on Friday, at least 10 million people lost their crypto for trusting a crypto company with their funds.
Meanwhile, others present, such as IBM Vice President Gary Cohn, would not destroy the crypto, but also refrained from commenting on the digital assets themselves.
“I’m bullish on blockchain and crypto, I really don’t have a view,” Cohn told our team on the ground, echoing a popular middle ground view.
Of course, even when big companies split cryptocurrencies to invest in their own private blockchain platforms, the end product hasn’t always worked.
In late November, IBM, which has been betting on blockchain since 2016, discontinued its global blockchain-enabled platform, TradeLens, launched with Maersk two years prior.
The technology platform, which digitized and securely tracked shipping containers around the world, was “viable,” Maresk said.
But it has not reached “the level of commercial viability necessary to continue operating and meeting financial expectations as an independent business,” the company added.
“These three things, web3, blockchain and the metaverse, are all going to happen,” Microsoft (MSFT) CEO Satya Nadella said, offering a partial crypto vote of confidence to WEF attendees.
“But you have to have the killer apps, what’s the use case that’s widely adopted, what’s the ChatGPT moment for blockchain?”
Nadella was referring to the AI tool launched in November that quickly racked up users and became the most interesting thing in technology. The executive told Semafor news outlet on Tuesday that it was in talks to invest up to $10 billion in ChatGPT owner OpenAI.
Is the crypto market crash last year preventing the industry from finding its coveted ChatGPT moment? Absolutely and not as much as it seems.
An annual report from venture capital firm Electric Capital shows that, despite a seemingly tough 2022, the crypto has more monthly active developers than during its bull market.
Based on several years of data, Electric Capital finds that each business cycle of crypto software developers tends to be less sensitive to market fluctuations, making their engagement levels a more important barometer than the industry attendance in Davos to find out where things might be headed.
He found that in the fourteen years since Bitcoin’s creator, Satoshi Nakamoto – who essentially started the industry working without pay – the industry’s full-time open source developers have gone from from 1 to 23,343 and the activity extended well beyond Bitcoin and Ethereum (28% of the total).
We’ll have to wait and see where these thousands of developers plan to take crypto next. In the meantime, their activity on top of the crypto’s less exciting price charts and its falling ads in Davos, the Bahamas resort town of Baha Mar or anywhere else could be just what the industry needs to overcome such a difficult time.
“You can’t get rich quick in crypto right now. And that’s really good,” Michael Gronager of Chainalysis told us, wearing an overcoat before the snow-capped Swiss Alps.
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