Crypto party reignites as banks hit hard times

Crypto party reignites as banks hit hard times
Опубликовано: Monday, 03 April 2023 06:29

It’s a far cry from the sober world of central banking.


PARIS — It had the feel of a distasteful club night from decades past, or perhaps a scene from "The Wolf of Wall Street": Blaring music drowned out panel speakers, while scantily clad women and dwarves dressed as the Joker walked around promoting online collectibles.

If nothing else, the Paris Blockchain Week was a rude rebuke to anyone who thought that crypto — or its hard-partying finance bro culture — was on its way out.

And it stood in sharp contrast to the world of central banking, which was at the same time holding a typically buttoned-up event in the sleepy Swiss city of Basel on how to regulate and keep pace with financial technology.

For gleeful crypto diehards, this month’s bank failures seem to vindicate their belief that the traditional financial system is flawed. And they’re telling anyone who will listen that they should plow their cash into a crypto sector that has proven resilient — despite numerous scandals.

After a volatile year for crypto, the industry seemingly has got its mojo back. As traditional banks wobbled, the price of Bitcoin soared — making crypto evangelists herald a comeback, not to mention peddle conspiracy theories about the past few days of financial turmoil.

Case in point: a tweet from the co-founder of U.S. crypto exchange Gemini, Tyler Winklevoss. “The U.S. government did a great job averting a banking crisis. Almost as great of a job as they did starting it.”

One disputed theory they’re not repeating, of course, is the idea that the current crisis was precipitated by the collapse of crypto exchange FTX.

Don’t trust the system

“Bitcoin is the hard asset that no one can take away from you,” Paolo Ardoino, chief technology officer of stablecoin giant Tether, told POLITICO on the margins of the Blockchain conference in the swanky Louvre district of Paris. People shouldn’t put all their money into cryptocurrency, he continued, although when it comes to fractional reserves — traditional banking where lenders only hold a small portion of cash on hand — “Bitcoin is your safe hedge against exactly that.”

As traditional banks wobbled, the price of Bitcoin soared | iStock

Bitcoin and other cryptocurrencies were born in the aftermath of the 2008 financial meltdown as an alternative economic ecosystem free of state control. Online deals with cryptocurrencies are recorded on digital ledgers that are shared and checked by multiple computers to prevent fraudsters from cooking the books, a system known as blockchain.

The idea is that people can use Bitcoin as an alternative to traditional banks, which in the past have received government bailouts using taxpayer money.

Nevertheless, cooler heads at the conference warned against being too gleeful at banks’ ongoing crisis of confidence, noting that crypto companies still need banks to carry out their basic functions.

#bitcoin is volatile, but it never needed a bailout.

— CZ

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