Billions gone and hopes dashed: the FTX case has reignited passions around cryptocurrencies. In the face of attacks against the sector – Ponzi, scam… – the ardent defenders of crypto are seeking reassurance. Two arguments stand out. The first: FTX remains an outright fraud, sadly commonplace. “All the bad practices of Sam Bankman-Fried, his boss, have already been observed in traditional finance”, argues Simon Polrot, founder of the European Crypto Initiative (EuCI) organization. In an interview given to L’Express Pascal Gauthier, head of the French unicorn Ledger, compares “SBF” to the king of lies Christophe Rocancourt.
The second is a bit more subtle: FTX was a centralized, non-transparent player. An intermediary that Satoshi Nakamoto, the inventor of bitcoin, originally wanted to get rid of. Cryptocurrencies are assets registered on a decentralized blockchain (which relies on the validation of a multitude of users) and can be consulted by everyone. “The FTX scandal therefore absolutely does not call into question the value proposition of cryptoassets”, underlines Simon Polrot. Bitcoin is an example of this: its price ultimately suffered relatively little from the affair. “Its infrastructure has not changed one iota, it still works 7 days a week and 24 hours a day”, adds Adli Takkal-Bataille, author of the book “Bitcoin, the brain currency”. In summary: while the business is plunged into a harsh winter, the underlying technology (and its initial philosophy) holds the shock.
Exchanges, ogres of the sector
But, paradoxically, the majority of cryptocurrency exchanges remain dominated by centralized, unregulated platforms, some of which are managed in an opaque manner from tax havens. Binance, founded by Changpeng Zhao, alone accounts for 75% of the global market. Why ? On the one hand because these structures have become essential for converting between fiat currencies (euro, dollar, etc.) and cryptoassets, with low transaction costs. Easy to use, they then benefited from the market explosion during Covid-19 and the interest in speculating on these values, which were then growing very strongly. These companies quickly accumulated real little treasures. “Their means in terms of marketing and communication have become colossal”, breathes Adli Takkal-Bataille. The three letters FTX were plastered at the entrance to huge sports stadiums in the United States, and in advertisements carried by celebrities. Impossible, also, to miss among the sponsors of the last FIFA World Cup in Qatar the giant of the sector Crypto.com. Not to be outdone, Binance has secured the services of tiktoker-star Khaby Lame and legendary Cristiano Ronaldo over the past year.
FTX’s failure nonetheless revived the slogan “Not your keys, not your cryptos” on social media, with the promise that withdrawing its cryptocurrencies from these intermediaries would put the industry back on the right track. way. These funds can actually be stored in wallets (wallets) specialized, online (e.g. MetaMask) or physical (e.g. Ledger), to be exchanged peer-to-peer or to buy NFTs. Dozens of platforms like UniSwap, dYdX or MakerDao offer to take care of currency conversion, trading, loan solutions, always in a decentralized way. “Their creators can pass their hands, be imprisoned or die, it doesn’t change anything, all these protocols are resistant to censorship and will never stop working”, explains Brice Berdah, co-founder of the DeFi France community (finance decentralized). These options are increasingly appealing to a milieu in need of confidence, disappointed by those they believed to be white knights like Sam Bankman-Fried. “The intrinsic characteristics of DeFi, such as self-preservation, transparency and composability (Editor’s note: the possibility of grafting applications, software) are founding. The FTX scandal highlights these virtues while the Institutionalization of DeFi has only just begun”, notes the latest crypto report from KPMG France on the sector’s outlook for the year 2023. “It is crucial that users realize the importance of not being too dependent exchanges, comments Yorick de Mombynes, a senior civil servant specializing in the subject, who also observes a slow evolution of mentalities.If they become so, entrepreneurs and developers will meet their expectations, as is already beginning to be the case. .” The “true” promise of cryptos would therefore be at hand.
A balance to be found
At least, in appearance. Because platforms like dYdX or Uniswap, mentioned above, turn out to be very “complex”, not very suitable for the “general public”, recognizes Brice Berdah. They are by nature much more discreet about their activities. This does not explain all their delay. These platforms are also not free of security problems, hacks, which do not fully compensate for the crisis of confidence that centralized players may experience. In October 2022 alone, the research firm chain analysis estimated the amount of assets stolen from decentralized finance protocols at $718 million. And over the year, more than 3 billion in overall losses on the blockchain (90% of this amount being linked to DeFi). Upon arrival, according to KPMG, DeFi would not weigh more than 44 billion dollars of an ecosystem currently valued at 966 billion dollars.
As for wallets, despite the efforts of some companies to democratize them, such as Ledger, they are not the perfect solution to all crypto ills. “The user experience is not optimal and there are risks associated with self-custodial tokens. This makes achieving the decentralized dream much more complicated until this issue is addressed” , explains Simon Polrot from EuCI. Without a safe or customer service, losing the key to your wallet or forgetting your password means seeing your funds disappear forever. A final question arises: what is the point of keeping your cryptos on you if you cannot pay much with them and so few people exchange them, especially in countries where the majority of the population has bank accounts that respond very well? to these needs?
“Having control over your cryptos is very good, but you can also trust intermediaries who show assurances”, argues Nicolas Louvet, head of the crypto brokerage firm Coinhouse, which holds the PSAN registration (Provider Services on Digital Assets) in France. “A small part of our clients were exposed during the FTX crash, but 92% of them recovered all of their funds with interest”, he informs by way of example. [NDLR : depuis cet entretien, Coinhouse pourrait aussi être impacté par la chute de Genesis, consécutive à celle de FTX]. The presence of this type of player, coupled with more restrictive regulations, reassures companies in sectors such as luxury, hotels, or large retailers who are timidly dipping their feet into blockchain technologies. In their turbulent childhood, cryptos need to be held a little longer.