The unsophisticated will lose their homes buying Dogecoin at the top. In the interim, the space is a slot machine for gamblers looking for a payout. But corporations will inevitably rule DeFi with as firm of a fist as Las Vegas. Cryptocurrency founders currently govern this reality like gods (buying NFTs for $60 million, air dropping millions of dollars in tokens and moving entire markets). JP Morgan Chase said DeFi will pose a threat to traditional financial institutions, while Bank of America last week noted that Ethereum “has more features” than Bitcoin. Uniswap, for example, has amassed a market cap of over $17 billion. Even chain analysis firms have started conducting surveillance on blockchain to monitor financial transactions.Ī lot of money is flowing into DeFi. Lawmakers like Rashida Tlaib, meanwhile, have introduced legislation to regulate stablecoins, cryptocurrencies which hold a constant value. The report also revealed that Deutsche Bank had recently opened a digital custody to provide investors “lending, staking and voting” services-popular concepts within DeFi in which cryptocurrency holders can lend out digital assets and earn payments from other holders and exchanges. The World Economic Forum (WEF) in December published a report titled “Crypto: What Is It Good For?” Rather than focus exclusively on Bitcoin, the WEF (which every year sets the trends for the global economy at Davos) identified key players in the DeFi ecosystem, including decentralized exchanges like Uniswap. Related How Cryptocurrency Could Inspire a New Kind of Financial Literacyīut the outlaw days may be ending as institutions flock to DeFi in droves and lawmakers formalize regulation in the space. Much like the mob built Las Vegas before corporations entered to turn the town into a corporate Disneyland, the earlier cryptocurrency use cases involved money laundering, circumventing sanctions and skirting regulation. Thieves, federal investigations, cyberattacks and a new class of brash capitalists chasing a gold rush: It’s the classic American love story with capitalism, exported on a global level, playing out on Telegram rather than oil fields. But does losing the money even matter to a retailer if another low cap DeFi project rockets off? Who knows whether the token’s price will recover or if investors will get their initial investments back. Earlier this month, a hacker attacked the blockchain project PAID Network, causing the PAID token to plummet by more than 80 percent, as the virtual bandit made off with roughly $3 million in Ethereum. The SEC recently opened an investigation into whether Ripple Labs sold unregistered securities via its XRP token. Retail investors who bought cryptocurrencies at the top of 2017, panic selling as the market went sideways, became cautionary tales.ĭeFi today is still very much the Wild West. But the turbulence was too much for many to handle: Ethereum flash crashed from $319 to 10 cents in seconds, and numerous alt-coins were essentially pump-and-dump schemes. 2017’s alt-coin bull cycle was driven primarily by retail investors scouring for the next Bitcoin. Many souls have ventured this landscape, beckoned by the siren calls of establishing generational wealth that funds entire governments and military apparatuses, only to be crushed.
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