Get ready to handle being the spotlight of the table this holiday season, and to save yourself from (most) embarrassing situations – by explaining everything.
Holiday season is coming, and as the tech-aware person of the family, everyone has appointed you as the “crypto explainer” for the family (and friends). It’s a lot of responsibility to hold, and can get tiring. But don’t worry, we’re here to help out with this one.
It’s very daunting, we get it.
A few gatherings ago, you may have spoken about what great things a “decentralised autonomous organisation” can bring to building a new version of the internet, and how it challenges traditional power structures.
You also may have advised your aunt on how to mint an NFT, and she may have started her digital art career.
However, times have changed. We’ve all seen what terrible things happened in the crypto market this year. After what may seem like disaster after disaster, you’ll probably end up having to explain that what happens in crypto doesn’t only apply to you.
Here’s Run the Chain’s guide on how to answer normie remarks about crypto, and how to explain yourself without (hopefully) embarrassing yourself.
“Well, I told you so!”
This saying is often repeated by crypto sceptics that are usually only aware of crypto news via sensationalist news, or when a huge crypto scandal happens.
However, scandals, corruption, and the like can happen everywhere – not only in crypto.
Money laundering and scams have already long-existed in fiat currencies, alongside corruption from central powers to boot.
“Why did crypto rise and fall so quickly?”
For the past decade or so, banks around the world intentionally kept interest rates low to encourage people to spend and invest, rather than saving up cash – most notably within the US Federal Reserve. After COVID-19 hit the world’s markets dramatically, there needed to be some sort of other way to keep economic action going.
Crypto was seen by investors as a quick way to make easy money by making risky bets and investments. As crypto has the image of being at the far end of the risk curve, ready to soak up excess liquidity, crypto became more popular.
As more people started to invest in crypto, of course the scale of damage can amplify. Crypto isn’t really stopping just yet however – every market, crypto or not – is experiencing downs.
Since June, global inflation rates are at its highest – with a 40-year-high interest rate hike in the US. The world’s three largest economies are reported to be also stalling.
As we’re coming out of a global recession beyond crypto, the OECD has also predicted that the international economy in 2023 would only expand 2.2 percent.
It’s not just crypto, it’s the entire world.
“What’s with all the hype?”
With your family-and-friend-appointed role of crypto gospel-spreader, you’ve probably been also hyping up crypto. However, hype can work both ways, and it’s not all just all good, nor all bad. You’re just someone who’s dedicated to the cause.
Celebrities, social media, and not wanting to experience FOMO have played a huge part in bringing crypto to what it is today – but also applies to other industries as well.
The prospect of building a better internet for the future, while also being part of a new revolution in financial technology is worth hyping up for, and is what most people in crypto are excited about.
This sort of vision is worth investing in crypto for, rather than just jumping into it solely because of trends, fads, and hype.
It just so happens that investment decisions alongside short-lived hype, for quick returns, often can lead to disaster, and you definitely know better than this. Spread the word.
“Okay, so about FTX…”
Expanding on the idea of hype, let’s talk a bit about Sam Bankman-Fried, the founder of the fallen crypto exchange, and its hedge fund sister company, Alameda Research.
To put it bluntly, the guy built up a pretty good reputation for himself, and used the celebrity status for it to his advantage – for better or for worse.
SBF framed himself as “ethical”, practising “effective altruism”, while being charitable to non-profits, advertising opportunities, and political parties.
SBF became a sensation, a guy who seemingly could do it all, and became an icon for people who aspired to make it big in the emerging financial market.
SBF can be all of these things, but he wasn’t actually dealing with crypto, or even followed its beliefs in the first place.
When the previously-valued-at-$32-billion exchange was found out that it was at the centre of a web of misuse of customer funds, it was quickly debunked that FTX wasn’t really crypto, or decentralised finance (DeFi).
But also don’t let mainstream media tell you otherwise that SBF abused the funds of a bunch of innocent people, while he’s currently being offered glossy interview opportunities, and seemingly a ton of investor sympathy.
Unlike what usually goes in DeFi, FTX held custody of its users’ funds. It was a centralised exchange (CEX), not a decentralised exchange (DEX).
Many DeFi platforms are based on code where the developers and leaders cannot own or use user funds, and therefore cannot abuse them. SBF however ran FTX in a way that abused its own terms of service.
“Demystify DeFi for me”
Last but not least, let’s talk about DeFi.
Unfortunately for DeFi, mainstream media and politicians were quick to assume that FTX and DeFi were all lumped into the same crypto category. But let’s change that, shall we?
DeFi is an open financial system where transactions can conveniently happen all the time, all over the world. It’s a popular alternative to traditional forms of finance because processing speeds are much quicker, and don’t come with a bunch of extra invisible fees.
DeFi is also popular because users can access funds for goods and services directly, and technology is constantly being developed to fulfil all sorts of consumer needs.
On a true DeFi protocol, efforts to corrupt like with FTX would be difficult, or maybe even impossible to happen. As DeFi protocols don’t selectively discriminate between users, with no middle-men in facilitating transactions, the probability of having funds abused by a DeFi provider is near zero.
This is because DeFi systems are running on code, and this code should be available for everyone to see in order to catch any funny business going on in the background (in case you’re wondering, in FTX’s case, they’ve hid and obfuscated their methods of funds abuse).
True DeFi protocols also let users self-custody their accounts thus minimising the risk of having a wallet abused by someone else.
It’s a lot of work to explain an emerging market, not to mention one that’s been getting a lot of bad rep as of recently. Take a few deep breaths, keep your cool, and do your thing with elegance.
But of course, don’t be afraid to jump ship if things get too complicated or heated, repeating the sacred mantra “Do Your Own Research” to whoever is barraging you with questions, with the intent to just to be annoying.
Everyone in crypto is doing their own research in crypto, and they’re better off (and smarter) for doing so.