Learn from FTX and stop making speculative investments.

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People are attracted to FTX by speculative investment. Hopefully, after seeing the results, you’ll start looking for value-based ideas.

Another crypto exchange failure that is more than simple is highlighted by the failure of FTX. It serves as a reminder that the industry must embrace maturity and value. Here is a breakdown of values.

The second largest cryptocurrency exchange globally was FTX. Now, under the guise of false decentralization, the maddened money spent on modern, centralized business models has become a death knell.

As the great investor Warren Buffet said, you can only find out who is swimming naked after the tide has gone out. It seems there were some nudists in this most recent round. But of course this has happened before. Not really, really. At the start of the longest financial market bull run in history, Bitcoin BTC, now priced at $17,098. In the best of circumstances, the industry that spawned it practically exploded. But all good things come to an end. Regulators eager to regulate and deteriorating macroeconomic conditions have created an uneasy combination for the cryptocurrency industry.

Washington, D.C.’s FTX debacle is a mystery.

Meanwhile, conservative and value-based investing continues in traditional markets. Simple logic explains why: when interest rates were so low, money was free. Not now. The astronomical rise of Uber, Airbnb, and Doordash was possible because money-generating enterprises were free and undervalued. But today, promises are not enough. Investors need proof of value before committing their increasingly expensive capital.

With the collapse of FTX, value-based investing will be possible for the first time in crypto markets. Tokenomics was a fraud; See FTX Token FTT $1.31 for proof. And economics, no matter how much we ignore the lesson during economic growth. There is both supply and demand. Markets work in equilibrium. If they don’t, markets don’t work.

We now understand that centralization in cryptocurrency markets is ineffective. For-profit artists are more likely to exploit people who are unfamiliar with complex technologies. The result? Those who thought there was a pot of gold at the end of the crypto rainbow have their illusions shattered. But the fragmentation of value shines a glimmer of hope amid the rubble.

What is the cause of value division?

According to industry terminology, crypto is currently experiencing a “hard fork”. After the FTX dust settles, those who are still standing can continue to bet their distance in hopes of finding a “big fool” or look for value that will rally and be delivered to consumers. Some will continue on the final course. Poor habits persist. But when investors want more, they disappear. Web3 initiatives that provide real value by returning to traditional business will temporarily gain popularity, and those that succeed will reap huge rewards. The end is fast approaching for those who are only offering the old boosters of the past.

Working in a new style

In the division of value, there are two principles to be considered. The first describes cryptocurrencies as a form of financial asset, while the second describes blockchain as a technology support system.

The lack of a valid model for pricing protocols makes it difficult to evaluate cryptocurrencies as a financial asset class. This is to be expected in a young business. Initially, there were no standards by which to judge these networks. Re-engineered for developed markets. Since then, crypto has changed. Now that we have a basic understanding of many decentralized finance (DeFi) protocols, we can classify networks.

Bitcoin is a slow but reliable widely distributed proof-of-work chain. Both the number of wallets with Bitcoin and their connection to the network are shown. The value sent through the lightning network can be calculated in the second transaction layer.

Proof of Stake is Ethereum. Although it is more centralized than Bitcoin, it is the lifeblood of DeFi. Total value-locked calculations are a technology introduced by DeFi to assess value. Developing advanced financial metrics outside of traditional institutions is very interesting, although they have certain limitations. Apparently, traditional finance agrees, which explains the increasing regulatory emphasis.

The bottom line is that trading Bitcoin or Ether in 2016 felt the same. Now that these networks are more distinct, we have a variety of data-driven metrics to evaluate them. As it grows, cryptocurrency is becoming a proven asset class.

Development of functions

Activities or goods and services provided by Blockchain are non-monetary assets of Web3.

Consider the ZK (Zero Knowledge) assertion. A prospective homeowner wants to demonstrate to a real estate agent that they have the necessary funds without revealing the details of their account. You can use ZK to pay for this service. They do not trade or own any property; Instead, you’re just paying for a service that protects them from anonymity.

There are many new data management initiatives that offer services such as indexing tools, cloud storage, and search and indexing. Thanks to their decentralized infrastructure, they are relatively affordable compared to their centralized competitors.

The loss of FTX is neither specific nor conclusive. The system is being strained by downward pressures from macroeconomic forces. But when all is said and done, FTX enters the cryptocurrency narrative as a ring of growth, serving as proof that the fire has passed and left solid systems that increase value. Blockchain ecosystems will be forced to choose one of two directions in value sharing: either continue to rely on hype cycles for speculative profits, or develop models that demonstrate real user value.

Blockchain-based technologies are finally maturing, like personal computers in hobbyists’ garages to workplaces and pockets.

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