First things first, I have to admit that I've struggled with this story's title. I appreciate and respect HackerNoon editors even more. I feel good and confident about writing an interesting story, but I take titles for granted.
Just before I start telling you this one, let me quickly share what happened to my previous story. I wrote one of the most positive stories about Bitcoin while fighting the most common prejudice with real-life examples. Unfortunately, I took the wrong turn with my title: Why Bitcoin is Not an "Ideal" Ransomware Currency.
I should've known better, so I thought about this story's title a bit harder and longer.
I almost repeated the same mistake because my first idea was: Forget About Crypto Winter, The Great Purge of Cryptocurrencies is Next. Catchy, but scary. Right? "The Purge" movie memes would come in handy, but that's not what I had in mind. I want to talk about - reduction.
So, I thought that decimation would be a more appropriate term to use. But here is the problem. I'm sure there are many fans of "The Purge" franchise here, but can I say the same for the Ancient Rome military history? More importantly, there are more than 19,000 cryptocurrencies in existence, so decimation would axe "only" one zero at the end of the previous number, which wouldn't be "enough."
When it comes to cryptocurrencies, I'm "pro-life" oriented. All cryptocurrencies deserve an equal chance. So, first come - first served, or survival of the fittest (biggest) cryptocurrencies doesn't feel right and fair to me at all.
Also, the concept of “Too big to fail” refers to an entity so important to a financial system that a government would not allow it to go bankrupt due to the seriousness of the economic repercussions. For example, "the 2008 Emergency Economic Stabilization Act provided bailout funds for Wall Street banks and U.S. automakers, the financial health of which were considered essential to the United States economy." Nope! Not my thing.
No matter how we feel and what we think about it, we are all well aware of the annual World Economic Forum in Davos, aren't we?
Well, this year, it was a bit different. Crypto different!
"The Promenade, a main strip where companies and governments take over shops and bars during the week of the forum, are dominated by crypto companies, nestled between major firms like Salesforce and Facebook-owner Meta."
“It’s a big step for the crypto industry, they were always anti-Davos,” one delegate told CNBC.
"On Sunday, Tether, the company behind the stablecoin USDT, set up a stand giving away free pizza on the Promenade for Bitcoin Pizza Day. On May 22, 2010, a programmer bought pizza using bitcoin and it is widely seen as the first transaction using cryptocurrency. The day is celebrated every year by the crypto community."
Another delegate remarked that crypto companies were “splashing the cash.”
That delegate is not a pizza fan, obviously. Moving on.
Is the "crypto farm" overcrowded? I don't want to go down that rabbit hole. Were there any rabbits in Orwell's "Animal Farm?" I don't remember. It's been a while.
I want to believe that we live in a crypto democracy. So, questions such as "do we really need them all" or "do they really have to be so many" seem out of place, to say the least.
"The recent bear market in cryptocurrency was welcomed by industry players as they said it is a chance to get rid of the bad actors and focus on building products. Many said they expect thousands of cryptocurrencies to collapse."
Good thing I'm not an "industry player," but just a humble two-time Noonies award winner. So, I won't decide which cryptocurrency lives or dies. There are a hundred times fewer fiat currencies in the world compared to cryptocurrencies. So what?! What's the big deal with these fiat currencies anyway?
"Fiat money is a government-issued currency that is not backed by a commodity such as gold. Fiat money gives central banks greater control over the economy because they can control how much money is printed. Most modern paper currencies, such as the U.S. dollar, are fiat currencies."
Ah, I see. Governments. Control. Printing. What could possibly go wrong?
So, which cryptocurrencies are Davos' favorites? Who is going to choose? Who has the right to choose? Shouldn't it be the market itself, not the big crypto boys, or the governments? Oh, I'm probably asking too much.
"You may have heard of stablecoins. They’re a type of cryptocurrency which are supposed to be pegged to a real-world asset. In practice, stablecoins like tether or USD Coin, which aim to mirror the U.S. dollar one-to-one, are backed by real assets such as currencies or bonds. They hold a reserve of these assets in order to maintain a dollar peg."
Yes, I have heard and learned a thing or two about stablecoins. But, where are you going with this CNBC?
"You may have also heard about the debacle surrounding a terraUSD or UST. This is a so-called algorithmic stablecoin. Instead of maintaining its peg by having a reserve of assets, it aims to mimic the U.S. dollar and maintain stability through a complex algorithm."
I can smell a bias here. Are you trying to put all the blame on these "complex algorithms?"
"The crypto industry tried to warn users to make sure they know the difference between an algorithmic stablecoin, like terraUSD, and others that are backed by assets. The terraUSD collapse “made it very clear to people that not all stablecoins are created equal,” said Jeremy Allaire, CEO of Circle, one of the companies behind the issuance of USDC. “And it’s helping people differentiate between a well-regulated, fully reserved, asset-backed dollar digital currency, like USDC, and something like that (terraUSD).”
I'd like to hear the other side of this crypto story. What do the algorithmic guys have to say about these "warnings?" But, guess what. It seems that Davos, media, and governments already picked the sides in this crypto civil war.
“We’re in a bear market. And I think that’s good. It’s good, because it’s going to clear the people who were there for the bad reasons,” said the Web3 Foundation’s Perez.
So, it's still the purge, just a controlled and selective one.
"In March, U.S. President Joe Biden signed an executive order calling on the government to examine the risks and benefits of cryptocurrencies. Still, there is no major cryptocurrency regulation in the U.S. and other major economies."
So, we have started with the 19K cryptocurrencies. I wonder how many are going to survive the crypto winter and the government's spring of regulation? The future of finance couldn't be brighter with the crypto caste system: "traditional" cryptocurrencies such as Bitcoin and Ethereum, "mirror" stablecoins, and "algorithmic" stablecoins. Have I left some cryptocurrency category out, unintentionally?
Blessed be the New Finance Fathers for letting us Purge and cleanse our cryptocurrencies. Blessed be America, a crypto nation reborn.