The contraction across crypto has refocused attention away from those betting on the future to those building it, CoinDesk Chief Insights Columnist DavidZMorris writes. Crypto2023, presented by Bitstamp
. But early investors in Facebook or Uber certainly don’t care: They’ve already cashed in. This love ‘em and leave ‘em financial philandering becomes even more insidious when tokens are involved, because VCs can dump their bags on the public pretty much whenever they want.So from Silicon Valley to Wall Street, a long-term grift is being exposed. The continued rise in U.S. interest rates will peel away more strips of overcapitalized fat until, in many cases, there’s nothing left.
To be clear, I’m not calling for a purge of either venture capital or hedge fund-style speculation. There are good-faith funders in the space who are genuinely interested in building big new businesses over the course of years, not just grabbing the money and running. The crypto industry has for years relied on small-time traders to provide liquidity and rigor, and they will always have a seat at the table.
Unfortunately, the good funders and hard-nosed traders have been overshadowed by con artists we mistook for business people. Even more to the point, the 2020-2021 bull market distorted the natural order of things by making the finance bros the stars of the show instead of the supporting players they are meant to be. They built castles in the sky, funneling the life savings of naïve retail speculators into tokens from fundamentally flawed projects and collecting fat fees for the effort.
This exemplifies the tragic curse of the financier as a species: If you only understand numbers but not where they come from, you don’t understand anything at all. And so, thoroughly spooked by crypto, institutions and hedge funds will take their ball and go home for much of 2023. Amateur day traders hoping to make life-changing money off the efforts of others will, hopefully, decide to do something more productive with their energies . There will be less money to go around for developers: teams will have to go lean, and many projects will evaporate.But again, in the big picture, this is largely for the best.
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