Vitalik Buterin, co-founder of Ethereum, has shared his views and some positives from one of the cryptocurrency industry’s most significant events, the collapse of FTX. Buterin has spoken out in the aftermath of the FTX collapse.
Buterin expressed his view that the failure of FTX may serve as a learning for the whole of the cryptocurrency ecosystem in an interview with Bloomberg on November 20. He admitted that the fundamental steadiness of distributed ledgers and the technology that drives the cryptocurrency asset market have not been called into doubt. People, not technology, have been the source of the issue in this case as well as in numerous others that came before it.
Buterin also described the failure of the FTX exchange as a “major tragedy,” but he noted that it supports the stance that many people within the Ethereum community have with regard to centralization. He went on to say that one of the tenets of this philosophy is to place more faith in open and transparent code than in people. Buterin posted a guide to making a “secure CEX” along with proof that the company is broke over the weekend.
He suggested that rather than solely relying on “fiat methods” such as government licences, auditors, corporate governance, and background investigations of people running exchanges, the exchanges could instead create “cryptographic proofs that show that the funds they hold on chain are sufficient to cover their liabilities to their users.”
It is believed that the usage of client deposits for other purposes by the exchange was the root cause of the issues that FTX is now facing. The exchange found out earlier this month that it couldn’t meet the demand for withdrawals with the cash it had on hand. This was because a lot of withdrawal requests came in at once.
Vitalik Buterin is not the only prominent business figure who has recently spoken out against the consequences of FTX. Binance CEO Changpeng Zhao said on November 17 that although regulation is required, it is more important for industry participants to lead by example than it is for regulators to regulate the sector. During the Indonesia Fintech Summit 2022, Zhao said that the scandal surrounding FTX is likely to have pushed the cryptocurrency business back by “a few years.” He also predicted that authorities would likely analyse the industry “much, much harder,” which is probably a good thing, to be honest.
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