The current centralised financial system is more fragile than we are led to believe. Trying to establish an evolutionary new way of doing finance is not easy, again reiterating the fact that we really are creatures of habit.
Here is a reminder of some of the biggest #banking failures of all time:
2008 Lehman Brother - $619bn
2008 Washington Mutual - $307bn
2023 Silicon Valley Bank - $209bn
2023 Signature Bank - $118bn
Notice something? The biggest banking failures in history have occurred in the last 15 years. This is a scary realisation.
Don’t fret though, another big bank failing will just mean another bail out and guess who foots the bill in the end? If you guessed the taxpayers, then you are correct.
The 2008 financial crises taught us so much. Are you confident on how the current financial system is run? I am not.
Here are some of the most recent and biggest #crypto failures of all time:
3 Arrows Capital – Hedge fund
Celsius Network – Lending Platform
Voyager – Crypto Lender
FTX - Centralised Exchange
BlockFi - Centralised Exchange
What is the systematic differences between the biggest crypto failures and the banking failures above? Nothing. They are all centralised structures. Outdated business practices.
Centralised structures that fall prey to pure incompetence and greed, normally at the hands of very few people. Key themes of why they collapsed include atrocious mismanagement of customer funds. They do very well when they cosy up to politicians and regulators though (wink).
Now you see what I mean by creatures of habit.
I’m sure you have heard of the saying that doing the same things and expecting different results is insanity. This is where we are.
We have a chance to completely revolutionise how finance works by moving towards decentralised structures and we are going backwards towards the exact same structures that have been failing us. Are we insane?
Let’s remind ourselves on how the #Web3 movement started. #Cryptocurrency such as #Bitcoin came about after the 2008 financial crash to allow the consumer more power and control over their assets, their own economy. To avoid the exact same things that we are seeing now. Centralised exchanges are essentially replacing the banks of today. Adding another layer between us and our #crypto.
Decentralised exchanges will give you more control over your own #crypto. There is no chance of a cowboy CEO being able to misuse consumer funds. There is also no chance of a few bad actors making hopeless business decisions, where greed is the driving factor.
Your #crypto can be kept in a hardware wallet and it is meant to be a peer to peer system cutting out the middle actors. Your hardware wallet can then interact safely with decentralised exchanges to buy, sell, stake, lend and borrow against your #crypto. Use your capital as you see fit. All run by automated computer code.
I don’t know about you, but computer code gives me confidence. It does not play the political game and cannot cosy up to politicians or regulators. It cannot have economic incentives and take risks with user funds. It is completely transparent, permission-less and cannot be censored.
We are at a crucial crossroads on how we move forward to a more decentralised way of doing finance. So the question is, will you still keep your money on centralised exchange like #Coinbase or use a hardware wallet like Ledger/Trezor instead?
Not your keys, not your crypto.
DISCLOSURE - This is an opinion piece and not financial advice. Please do your own research before investing or selling any projects mentioned. -
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