Cryptocurrencies: Mixing technology and debt together can never be called wise because when technology works, its valuation is very high. However, when technology moves towards the next step, then the cases of loan default are also likely to increase. FTX, Elon Musk and SoftBank are learning this lesson. Yes – we are talking about breaking the illusion of cryptocurrency.
Look at the example of Twitter where there is room to lose money
For example, you look at Twitter, which became a profitable company in the year 2019, but now it seems to be stuck in debt payments of one billion dollars. Wall Street can’t ignore Twitter’s debt at this point, which could be as high as 60 cents on the dollar. Even without losing money, Twitter’s new owner and CEO Elon Musk has told employees that the question of ‘bankruptcy’ is not out of the question. Although he has benefited from selling high value shares (even if showing a decline) of his own company Tesla. Elon Musk has said that Twitter will work on the principles of free-speech. Due to the decline of Twitter, its employees are running away from the advertiser. If Elon Musk defaults and walks away from Twitter, the company will be left with nothing but old code and useless items.
What we learned from the FTT exchange controversy
The name in the latest controversies in the field of technology is that of Sam Bankman-Fyde, whose story of the collapse of the FTX exchange was very much discussed. Certainly, these companies continued to use the assets of the customers in an illegal manner in a wrong way. If the money is withdrawn, it is as if the bank has full support. Although the biggest crime of this company was that they withdrew money in front of their own FTT token, the company did not get any benefit from it.
The Collective Illusion Of Crypto Is Starting To Break Down
The collective illusion of crypto has started to break with this. The trading on FTX was so granular that it was able to fix any price but it was not forever. FTX and Alameda started taking loans against tokens whose prices they could set and manipulate themselves. When the trade, which was an illusion in every way, came in its true form, the company’s employees, vendors, all those who themselves used to get salary and payment in FTT token, were surprised. When this spell broke, the market cap of $10 billion has come down to $40 million.
FTT debt-ridden investors
You can’t fool someone forever even if you are crypto-savvy, and reality eventually backfires. It’s only too late to poke a pin in the bubble of illusion. Binance CEO Changpeng Zhao started selling as soon as CoinDesk leaked Alameda’s balance sheet, which was full of FTT tokens. In just 48 hours, the price of FTT has come down from $22 per coin to $3 per coin. When darkness fell, Alameda and FTT were in debt of $8 billion to $15 billion. Now that the company has very little money left for repayment, it will take many years to decide who will get what.
Learn from other crypto platforms
Looking at other crypto platforms, payments ranging from 4% to 8% are being received on Binance and Crypto.com, but only 0.01% interest is being received. But how can one pay interest on crypto? It is wrong to think about this kind of business.
Genesis Global Capital Creates Lending Platform To Facilitate Cryptocurrency Borrowing But Against Whom? Is it just against the air claims..Firms like Gemini set up by Winklevoss Twins were giving 8% interest rate so that the customers could get the yield. But this is a good question that why would yield on crypto? Crypto experts worked on the fact that if it goes up, money will be made, but did not pay any attention to what would happen to people’s money when it goes down. Tremendous lending was done considering crypto as a hot favorite destination. However, the cycle continued until someone was caught with a 90 per cent lower price and everyone else was left with defaulted loans. Now it is being said that perhaps this was the only way through which the confusion over crypto could end.