The FTX debacle, coming at the end of a testing year, has caused a sense of crisis in the crypto world, from which, broadly, two camps emerge. One is optimistic and takes a long-range perspective, while the other insists that regardless of your timeframe, this storm is categorically different.
The Upbeat Case
According to this view, we genuinely are in an era of significant technological change, and at the center of that shift is a new iteration of money, finance, and the web, based around cryptocurrencies and blockchain technology.
From this perspective, should we be concerned about the implosion of FTX, and the wildly reckless, possibly stimulant-exacerbated behavior displayed at the top levels of its management?
In the short-to-medium-term, yes, we probably should care. There will be serious, ongoing consequences, there are lessons to be learned and changes to be made, and when it comes to extending sympathy to those harmed, absolutely, we should be generous.
But, equally, at the frontiers of any new technological expansion, there will be eccentric behavior that veers across established boundaries, along with explosive bubbles, and raised levels of speculation.
In a recent blog post, Antonio Garcia Martinez, tech veteran and author of Chaos Monkeys, a best-selling insight into Silicon Valley, tech culture, and venture capital, colorfully summarized, partly from historical parallels and partly from his own experience, the reality of such moments:
“Technological progress has always been driven by bubbles led by lunatics. The cover photo above [viewable in the original post] is of the mayhem surrounding the South Sea Bubble which wrecked none other than Isaac Newton; the end result was royal regulation of joint-stock companies….what we’d now call corporations. Innovation starts in mad genius and grift and bubbles, and ends in establishment institutions that go on to reject the next round of mayhem.”
And, Garcia Martinez goes on to observe that,
“Everything you see now has happened before, and it’ll happen again. The script is the same, just the casting and props change.”
This seems not to suggest that what happened at FTX is okay, not by a long shot, and it can be assumed that if we have any remaining trust in our systems, there will be repercussions…