The founder of Cardano predicts the collapse of the global economy. But what will happen to cryptocurrencies then?
Cardano founder Charles Hoskinson tweeted a very pessimistic outlook for the future. According to him, the world is falling into the trap of hyperinflation and governments that will simply endlessly print new money. Unfortunately, cryptocurrencies, in a certain sense, have become very dependent on the global financial system. What will happen to them? Here is the response of the entrepreneur and developer.
Note that Charles Hoskinson comments on what is happening in the niche of coins not for the first time. At the beginning of this week, he confirmed that the cryptocurrency industry has moved into the so-called bear market, that is, a protracted collapse. In this regard, it is most likely not worth waiting for incredible profitability from any coins: now there are simply no conditions for this. With the latest opinion of the developer can be found at the link.
What will happen to the world and cryptocurrencies
Hoskinson's main thought on the current situation is as follows.
The global economy is unhealthy.
The ongoing collapse of the crypto market, during which its capitalization decreased by tens of percent, made a clear distinction between institutional - that is, professional - and ordinary investors. As Hoskinson noted, the latter still hope to use crypto as a means of “escape from the dishonest global financial system.” The expert continues.
Institutionals keep getting rid of crypto in their portfolios. Most of them perceive cryptocurrencies as a high-risk asset with huge profitability. This has always been the danger of bringing Wall Street into the crypto market.
In other words, Charles is hinting at the willingness of large investors to get rid of their own cryptocurrency assets due to what is happening in the market. Accordingly, in the future, this is unlikely to improve the situation with coins.
Because of their financial strategies and runaway inflation, the bankers and venture capitalists have “already chosen their fate.” According to Hoskinson, they are "playing musical chairs" with a world economy that will collapse. The current system allegedly cannot support itself. Cryptocurrencies could be part of the economic solution, Charles said, but cautioned against the possible rush to market for projects that may not be “the best investment vehicle.”
The essence of cryptocurrencies is to restore the trust, reliability and stability of the global monetary system.
According to Decrypt sources , Hoskinson hinted at the recent collapse of the UST algorithmic stablecoin project , which “dragged the associated cryptocurrency LUNA with it to the bottom . ” This event caused a real stir: on Twitter, some crypto enthusiasts even began to compare the collapse of LUNA with the closure of the infamous Mt.Gox crypto exchange. However, the industry has experienced very difficult times before, so it will cope with the new challenge quite well.
See also: The creator of Cardano announced the beginning of a new “crypto winter”. Is it really?
Unfortunately, the cryptosphere in particular has many local problems. One of them is cybercrime. According to the analytical platform Chainalysis, since the beginning of 2022 alone, hackers and scammers have already managed to steal more than $1.7 billion in crypto. At the same time, 97 percent of the stolen funds fell on DeFi protocols, that is, products from the field of decentralized finance. Since January, investors have been shocked by two very large-scale hacker attacks at once - the hacking of the Ronin protocol and the attack on the Wormhole bridge. The first case brought 622 million dollars in losses, the second - 320 million dollars.
This is a continuation of a trend that Chainalysis noted back in 2021 as attacks on DeFi protocols began to rise throughout the year. In 2022, 69 percent of funds from crypto wallets associated with criminal activity passed through DeFi protocols. Recall that in 2021 this figure was fixed at 19 percent. Here is how Chainalysis experts commented on the situation.
One reason for this is that DeFi protocols allow users to exchange one type of cryptocurrency for another, making it harder to track the movement of funds. But unlike centralized services, there is no need to go through procedures for verifying the client's identity, which only attracts attackers.
In this regard, the governments of the countries of the world are trying to intervene in the situation. For example, last week the US Treasury Department added to the sanctions list the Bender.io cryptomixer used by North Korean hackers Lazarus Group. At least $21 million of the $622 million stolen in the Ronin hack has already been processed through Bender, according to the Treasury Department.
We think the creator's version of Cardano doesn't sound so bad. Still, he admits that digital assets are able to save the day - obviously, at least due to the fact that the rate of issuance and the maximum supply of many projects like Bitcoin is limited. Well, if we talk about Ethereum, Avalanche and BNB, then they burn commissions for conducting transactions, which, among other things, can turn the asset into a deflationary one.
So there is a chance that coins will indeed become a lifeline in an economy where money is being printed in incredible quantities. So it makes sense to get to know them.
Look for even more interesting things in our crypto chat of millionaires. There we discuss many other news related to blockchain and decentralization.
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