Crypto Fixes TradFi Failings: Blockchain Brings Financial Stability
• Legacy media quickly blamed the collapse of FTX, Voyager, Celsius, and BlockFi on crypto as a whole.
• Now two traditional finance banks are insolvent and the contagion is impacting the crypto industry through Circle’s USDC.
• Despite this, blockchain technology has proven itself resilient to off-chain issues caused by legacy finance.
The Fall of TradFi Banks
Legacy media quickly reverted to tired and misguided accusations that all of crypto is a scam following the collapse of FTX, Voyager, Celsius, and BlockFi last year. Now two more traditional finance banks – Silvergate and Silicon Valley Bank – have become insolvent to the point of collapse and their contagion is being felt in the depeg of Circle’s USDC.
TradFi vs Crypto
Criminal activity, greed, poor risk management, novice business processes, hubris, and malicious acts were to blame for these failed companies – all of which occurred off-chain. Even with ‚Bitcoin is dead‘ mantra resurfacing 27 times in 2022 (down roughly 50% from the year before), none of these issues were caused by blockchain technology or any fault within crypto itself.
DeFi Working Where TradFi Failed
During FTX’s collapse it was clear to see DeFI loans connected to the contagion operated as intended while liquidations occurred without impacting underlying DeFI protocols themselves. This proves DeFi worked where TradFi failed due to governmental resistance against distributed ledger technology such as blockchain.
Tether Surviving Bank Runs
Tether has also shown resilience in surviving bank runs over the last 12 months while operating without fault; its blockchain record proving itself time and time again despite countless investors doubting Tether’s reserves. However Circle’s USDC may suffer a different fate due to its reliance on reserves outside of Tether’s control.
Blockchain Fixing Issues
In conclusion it’s clear that even with its flaws blockchain technology has proven itself resilient when compared with legacy financial markets negatively effecting crypto due to governmental resistance towards adopting distributed ledger technology such as blockchain