2022 has been disastrous for the crypto industry, with sentiment probably at an all-time low, mostly driven by hacks, fraud and embezzlement, but also partly due to the clear fragility in the wider, traditional financial system which is so self-evident right about now.
Despite this, there is good news for the crypto world, and we thought it was worth going through some of the positives which have emerged from the apocalyptic landscape that’s dogged the industry in 2022.
We hope you take heart from this, as being able to think better in a time of peak fear will help you to feel better, and make more informed decisions about your crypto future.
2022 has been the year that crypto investors started thinking about self-custody much more, and this trend has accelerated since the collapse of FTX as more and more, users have finally got the message that believing exchanges were safe places to store crypto assets is a terrible idea.
Google Trends shows the explosion in search interest in crypto cold wallets since the start of Bitcoin’s inception. This marks a considerable turning point for many new crypto holders spooked by the wild failure of CeFi applications as safe havens for custody of their assets.
Whilst Bankman-Fried has been exposed as a total con man, full of absolute Bull about how he planned to make as much money as possible so he could do good in the world with it, there are plenty of other famous names in crypto who may find themselves taken down a peg or two (especially those who’ve previously shilled for SBF and his coterie of fraudsters).
The fallout has made one thing very clear — post-collapse, as crypto enthusiasts are picking through the rubble, and with the benefit of hindsight, there is a sense of increased skepticism with the cult of personality, and this can only be good in the long run.
That’s not to say that all crypto personalities need to disappear, far from it, but perhaps there will be a little bit less listening to the noise of the social media influencers mostly concerned with their engagement rate, and focus on the real builders and thinkers who’ve actually produced something of value in the ecosystem.
We’ve previously talked about the need for greater transparency, especially where third-party custody of funds is concerned, and this month has seen some important moves in this area — again, mostly as a reaction to the FTX collapse and the questions that surround how SBF could have got away with it for so long.
Clearly, the community likes this, and perhaps Binance was rewarded for taking the lead, seeing huge inflows of new capital just days after CEO Changpeng Zhao (CZ) publicly called on exchanges to be transparent and provide “proof of reserves” — and actually went and did it.
This clarion call has now seen other CEX’s lining up to publish their data, with Coinbase, Kraken and Gate.io among those rushing to demonstrate their transparency and fiscal responsibility.
There are of course some others who have refused to publish proof of reserves, and, well let’s just say that making excuses about “data security” isn’t likely to wash, and these platforms may see a huge exodus as nerves are triggered by their unwillingness to publish every rudimentary information proving their solvency. The market does have a way of weeding out bad actors!
Whilst we’re in the doom cycle, it’s very easy to feel like this is the end of the world.
It’s worth remembering, though, that market crashes happen with alarming regularity, and, as crypto markets are driven by the same fundamental force of human psychology, why should they be any different?
In the last 100 years, there have been thirteen major market crashes (not including crypto bear markets), from the Wall Street Crash through to Black Monday, the bursting of the DotCom bubble, and the fallout from Covid lockdowns.
In fact, during the last century, the traditional financial market has crashed on average around once every 7.5 years, although the frequency appears to have increased since the start of the millennium, with half of the major dumps taking place during the last 22 years.
What this tells us is not that this is the end, but rather the natural order of a monetary system propped up by nothing but unshakable belief in money (and aggressive fiscal policies by central banks).
The question really is whether we believe that this really is the financial apocalypse or just another chance for opportunistic and optimistic investors to get in cheap in time for the next bull cycle.
Back in the day, at the height of the 2017 crypto Bull run, all the talk was decentralisation.
Everyone, everywhere, was feeling positive about the next phase in the growth of crypto, and even though it was quickly succeeded by a long crypto winter, there was a palpable excitement around what was coming next.
Fast-forward to today, and one of the interesting results of what’s happened this year in crypto is the redshift of focus back onto decentralisation, as the realisation hits that a great deal of the problems in the space (especially the fraud) has occurred around centralised entities.
Naturally, this puts the spotlight back on DeFi applications, and the very idea of governance being in the hands of the users, and code being law.
DeFi is a great leveller. It doesn't matter how many appearances you have on MSNBC or CNN, if you’re short on collateral, you’re going to get liquidated. For Bumper users, of course, we have a solution to all that!
As crypto re-emerges from the dump, the likelihood is that more of us will be skeptical of centralised products where we have to hand over control of our tokens and more onto those which afford users control over their assets.
Even institutions know this, and formerly crypto-bashing players like JP Morgan are now reminding investors that CeFi was the problem, not DeFi, even as they start making their own moves in the decentralised financial space.
Whilst 2022 has also seen a number of attacks on DeFi services (particularly bridges), these are almost always as a result of code deficiencies — a solvable issue, and one driven by both product teams and ongoing demand from users.
The onus, therefore, is on developers to focus on security, high-level and ongoing audits and the freedom of Web3 teams to continually improve on product features alongside improving code bases and developing ever more useful applications which solve real-world problems.
This year also saw the death of the very concept of generating ridiculous yields. A year ago, it was almost a rush for certain platforms to out-yield one another, with the promise of triple and even quadruple-digit returns being commonplace.
No longer. The crypto-sphere has seen the light, and the focus since the crash in May 2022 caused by the Terra-Luna collapse has absolutely shone a spotlight on the folly of locking up one's tokens to earn yields that just don’t seem to make sense.
The future is looking to DeFi applications which allow their communities to be behind the setting of yield curves (especially in risk markets), and these will, in all likelihood, win big out of this whole fiasco.
As Vitalik Buterin so succinctly put it back in 2021, the tech isn’t the problem — it’s the people around it.
Whilst this related to comments he made about the Ethereum Merge, it’s fundamentally true especially so now. Tech doesn’t mess up, but rather operates exactly as programmed to do so.
Whether failures are caused by poor codebases or nefarious actors, ultimately it always comes down to the human beings causing the problems.
One of the great drivers which encouraged so many smart people to get into crypto in the first place was that the technology promised to exist quite outside of the traditional financial system, which everyone who had any clue about already knew was a rigged game.
And so, with a renewed interest in truly decentralised applications, the natural shift in focus will be back more onto the tech for real, not just the DeFi LARPing which many in the space are engaged in.
If you can keep your head whilst those around you are losing theirs, then you’re probably going to make a savvy investor. Or so the saying might have gone if it had been penned today.
The fact is that as crypto prices bomb, this simply sets up great accumulation possibilities for those who aren’t caught up in the panic and the FUD. If you got in this time last year and were prepared to pay over $60,000 for 1 Bitcoin, then today, paying $16,000 looks like a steal.
Remember, bear cycles are exactly that — cyclic. If you believe in the fundamentals, that is of truly sound money, decentralisation and being personally responsible for your own actions in the market that does oscillate and move in waves, then this bear market could be very profitable for you.
We’d like to remind you that, regardless of whatever price BTC is trading at compared to the dollar, 1 Bitcoin is still worth 1 Bitcoin!
This is your best (and maybe last) chance to buy at prices not seen since the end of 2017, and one thing is for sure — the smart money will be doing the same soon enough!
If past history is to be repeated, or at the very least mimicked, then the next bull run will be magnificent.
At Bumper, we’re building something big. Very, very big.
So far, it’s taken almost 2 years of research, planning and development, and not a small amount of frustration occasionally with long working days demanding more high-octane energy drinks than is good for anyone, but the end result, a provably fair, decentralised solution for dealing with downside volatility and delivering a wholly new kind of DeFi primitive suitable for all users, is drawing nearer.
And this solution has the capability of changing the way that people think, feel, and respond to bear cycles. We hope that this year shakes out the bad actors, finally, and ultimately this will be down to all of us in the crypto space to make sure we never allow Satoshi’s vision of decentralised money to be derailed in such a way again.
So have cheer, keep your spirits up, and take heart from the fact that, despite the doldrums, this year has wrought on our community, this too shall pass.
Let’s head into the new year with a renewed spirit of optimism and focus on Making Crypto Great Again!
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