A Brief History of Bitcoin and Banking (Part 3)
…continued from Part 2.
Money is the Salve that Soothes all Doubts
Many years ago, the CEO of a bank I used to work for was asked a question by my boss’ boss’ boss about how the firm would survive all these seemingly disastrous events and risks facing them that year.
He simply remarked that nobody would care after they got rich from their bonus in a few weeks.
And so goes with crypto during its most remarkable ascent yet. No longer did the main topics of discussion within a bank focus on blockchain for backoffice, crypto tokens used for terrorism financing, the cringe-worthy stories of the dark web, or hacked BTC and ETH being used to bypass sanctions on rogue states looking to build nuclear weapons.
Everyone is getting rich — who cares. So now come in the Shark Tank guys, Hollywood comedians, F1 sponsorships, Washington DC super PAC donations and also, why not throw in a super model and the greatest quarter back of all time into the mix.
People were getting Billions rich before they turned 30. Who cares about blockchain back office software now? What board members, middle management executives, or investors want to ask hard questions during the greatest capitalism party of all time? Nobody. Fortune favors the complicit brave.
Then FTX happens. I obviously don’t have to rehash this story as it’s so well covered. I’ll only remark that here, history repeats itself yet again with another debacle that will put the industry’s relationship with banks back by years.
Any diligent observer who understood the space would have known to look at banking first. A cursory examination of FTX’s banking structure would have easily prevented a lot of the investment checks being written right before their collapse.
If you’re an exchange operator, having the banking system turn against the industry should be the main thing keeping you up at night. The articles I cited in Part 1 have every right to be alarmist with its implications to the crypto ecosystem.
In banking‘s relationship with crypto, it’s always two fast steps forward by the crypto ecosystem, one excruciatingly slow, cautious step forward by the TradFi banking system.
Unfortunately, one step back in crypto is always promptly followed by two fast steps back in TradFi banking.
So let’s watch carefully where we step.
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