Welcome to Breach Daily. It’s Thursday, and Thursdays are for getting Skeptic vs Optimist. This is our weekly series where we’ll look at crypto’s less pleasant characteristics. We’ll be speaking to people with years of crypto experience, and tackling tough questions, while honestly weighing the pros and cons of the crypto world. We promise that it’ll not be boring jargon!
Haahahahahahahahahaha.
What’s funny?
Oh, nothing. Just the crash of your beloved crypto.
Here we go again.
Do you remember our conversation about the crypto dip?
I think I do. The one where I explained and debunked the myths you had about the dip?
The one where you did what now?
Hahaha. This should be interesting.
Let’s cut to the chase. I believe that this is the end of crypto.
That’s interesting. What are your facts?
Your beloved crypto has been dipping for so long and there are red flags showing.
What sort of red flags?
Did you see the news of a crypto platform that paused transactions because of the dip? How do you explain a billion-dollar company folding up because the price of crypto went down? That would never happen to banks.
Ooh, that news. First of all, the crypto company is called Celsius and it has not folded up. Secondly, it only paused transactions as a temporary measure to protect its income flow against the dip.
For context, Celsius is a DeFi (decentralized finance) bank that specializes in lending and borrowing crypto.
What this means is that it offers high returns — up to 18% — on crypto deposits compared to traditional financial institutions. During the bull market, these sorts of rates are sustainable because crypto assets increase in value making it easy for the DeFi bank to pay interest rates. However, in a bear market, well…the opposite occurs.
Wait a minute. Why are you mentioning DeFi banks? Isn’t crypto decentralised?
Celsius is what we call a centralized crypto platform just like Binance. Honestly, this is one of the controversial aspects of the crypto ecosystem. Satoshi, the founder of Bitcoin’s ideology, wanted to develop a payment system that was truly decentralized (not controlled by banks, institutions and governments). However, as crypto evolved, it became important to ensure that anyone could easily access and use crypto services. Consequently, this began the rise of centralized platforms — starting from crypto exchanges.
Popular exchanges like Binance, Coinbase and Kucoin are highly centralized. They are controlled by an entity and have the right to freeze your assets stored on their platform. Celsius also falls in this category.
The advantage of centralized platforms is that they are easy to use and are built just like traditional financial apps. However, the trade-off is that you are not in total control of your funds — you gain easy access to crypto, but you lose decentralization.
Thankfully, we have witnessed the development of decentralized finance or DeFi in the last few years.
What the heck is that?
DeFi is a term used to describe financial services developed on blockchains — a system for recording information in a way that makes it difficult or impossible to change, hack or cheat.
DeFi provides services that you’ll typically associate with banks — savings, insurance, lending, trading and more. It is generally faster, cheaper and more flexible than the traditional banking system.
What makes DeFi platforms different from centralized crypto platforms is that you’re in control of your finances. For example, instead of using Celsius as a lending platform, you can utilize DeFi alternatives like Aave and Curve. These platforms provide full access to your funds and you can withdraw them during periods of dips depending on the maturity period of your loans.
However, the truth is that most DeFi platforms are technical and could be complex for beginners and that’s why platforms like Celsius continue to be popular despite the risks associated with centralization. So, there’s a choice for anyone in crypto to either utilize centralized or decentralized platforms.
Ok, I’ve heard your long explanation but I don’t see how crypto recovers from all its current backlash.
You’ve come again with your message of gloom. The crypto market has recovered from worse situations, but this is different. If you look beyond the noise, you’ll notice some trends that have emerged. Trends like the rising adoption of bitcoin and the growth of crypto-based concepts — DeFi, metaverse, Play-2-Earn and Move-2-Earn.
These trends have expanded the crypto ecosystem and made it more sustainable than in previous years. You should read this article to get a true picture of how the crypto space is faring.
I just don’t understand why you’re so optimistic about crypto.
I’m optimistic because crypto has proven that it is more than a bubble as you skeptics call it. A bubble won’t have lasted for more than a decade and grown into a trillion-dollar industry.
The problem is most people view crypto from the point of trading and investment. In reality, the crypto ecosystem is constantly attracting the best talents looking to develop new innovations in different sectors. We’re in an era of advanced payment systems and most platforms are adopting crypto in one form or another.
Think of this, companies like PayPal, Cashapp, Visa and Mastercard have gotten involved in crypto either by adopting it outrightly or creating crypto payment gateways. These are billion-dollar companies but they know that crypto is the digital currency of the future.
The blockchain technology that backs crypto has also been deployed by companies in different sectors. Do you know that companies like tech giant IBM and pharmaceutical firm Pfizer use blockchain in some aspects of their operation?
Blockchain technology is probably not the future of everything, but it does have clear applications outside of its current limited use. To me, crypto looks very much like something that is going to succeed and have a major impact on our everyday lives.
Hmmm. But the odds don’t look so great at the moment. All the charts are currently red…
That’s what you think but many people don’t share your sentiments. By your reasoning, this means that the stock market will suffer the same fate as crypto.
Have you seen the stock charts? Lol!
Pls. Stocks have been around for longer and I also don’t see stock companies laying off their staff.
Hmmm, two things can be true. Stocks have been around for longer. However, you can’t say stock companies are not laying off their staff. There are more than 5,000 stock companies in the world and you cannot say you know the activities of each company. Therefore your claims are wrong and are probably a figment of your imagination.
If a billion-dollar company like Netflix can lay off 150 employees, I can bet that there are more stock companies laying off their staff to curb operation costs. So let’s not limit it to the crypto sector. The current dip is affecting all financial markets.
In God we trust, everyone else must bring proof. Do you have any to back your claim?
Here’s a recent article from the New York Times highlighting the stock market crash. For reference, the U.S. stock market has dipped by more than 20% since January.
So we’re in a similar situation. However, I’m confident that the crypto market will rebound. I’m not so sure about your beloved stock market.
Let’s make a bet: if crypto is still here at the end of the year, I’ll become an evangelist. If not, you’ll never talk about crypto again.
Lmao. Deal.
Oh, it’s on.
