Crypto’s collapse does little to shake the faith of some believers in the blockchain

Crypto is in the midst of its worst experience ever. Blockchain proponents don’t necessarily sweat it.

Bitcoin price is still close to $20,000, which is a drop of nearly 70% from its all-time high in November. Cryptocurrency exchange Coinbase Dismissed – Temporarily released 18% of its workforce or 1,110 workers. Celsius Network, one of the largest cryptocurrency lenders, suspended withdrawals and transfers last week.

Several industry experts have warned that the developments are signs of “encryption winterBut some advocates of blockchain — the distributed computing technology that powers cryptocurrencies, non-fungible tokens, or NFTs, smart contracts and more — believe there is an upside to the decline.

“I am more bullish about cryptocurrencies than ever,” said Jason Janowitz, co-founder of Blockworks, a financial media company.

Janowitz compared the cryptocurrency crash to the tech bubble of the early 2000s.

“This is the period we are in now; we are eliminating greed and exuberance from the marketplace,” he wrote in an email.

Once a limited and relatively precarious cornerstone of the tech world, blockchain-based technologies have become the focus of global attention thanks to the seemingly overnight fortunes of early investors in some cryptocurrencies, and more recently the digital art connected to NFTs, which also use blockchain technology. . The boom coincided with an increase in financial and technical analysts warning that markets looked increasingly unsustainable.

And even some in the blockchain community argued that the boom-and-bust cycle of cryptocurrencies was a false signal, diverting the public from the fundamental technological benefit of decentralized computing.

Brian Brooks, CEO of Bitfury Group, a Bitcoin mining company that has been around since 2011, He told CNN He sees the recent collapse of cryptocurrencies as a necessary part of pushing blockchain technology forward.

“Forest management is the analogy I have in mind,” said Brooks, who was the Trump administration’s acting currency monitor. “At some point, the bushes have to burn out so that the taller trees have room to grow.”

Many blockchain advocates point to some inconsistency when it comes to the broader crypto boom: what is supposed to be a decentralized technology has become somewhat centralized.

The blockchain works by involving a network of computers in each competition in such a way that it is almost impossible for a single entity to control the system. But for people who use major cryptocurrency exchanges, there is not much difference from the central bank that holds the person’s assets.

Cliff Messidor, CEO of Blockchain, an educational platform, said Celsius is not decentralized even though it deals with decentralized cryptocurrencies.

NFT New York City
An attendee dressed as Doc Brown from the “Back to the Future” movie series cheers in NFT.NYC.Julius Konstantin Mutal/NBC News

“What happened with Celsius will not affect the future of bitcoin,” she said.

Mesidor added that it is a concern when a company like Celsius gets attention and struggles but does not represent the blockchain community.

“As you innovate, you will run into problems,” she said. “There are models that don’t work, and that’s what we’re seeing with these companies.”

More important than current price points, Messidor said, is confidence that decentralizing markets creates opportunities for financial inclusion and for resolving economic inequality. She said that the blockchain, which can be accessed by anyone, is a game-changer for minorities.

Marc Nadal, founder of ERA, an innovation lab focused on building open source Internet applications, said that blockchain may not be as decentralized as one might think.

Nadal said that blockchains, which still require approval from others on the chain, are just “slow public counting machines.” Nadal said that there are personal technologies that allow data to be shared without the need for the consensus of others, as in the case of blockchain.

However, many blockchain advocates seem to be inclined to collapse, letting the market take its course and assuring that blockchain technology has a bright future.

Even on the threshold of the crypto winter, there is a positive side, said Marta Belcher, president and chair of the Filecoin Foundation, an organization that funds development projects that seek to strengthen the decentralized network.

Belcher said she believes cryptocurrency is here to stay and that it is the foundation for a better internet — “an alternative to Big Tech that puts people in control of their own data, protects user privacy and security, and permanently preserves the most important human information.”

revision (June 23, 2022, 6:20 PM ET): An earlier version of this article misspelled the first name of the Bitfury Group CEO. It’s Brian Brooks, not Brian.