By George Ward
Contrary to investors’ and regulators’ beliefs, crypto firms claim that crypto technology is not a failure. Also, the firms aim at building investors’ trust in crypto again by creating relevant products with long-term use.
Cryptocurrency Firms Aim To Recreate Trust In Crypto Industry
The recent fall of Terra network, Three Arrows Capital, and FTX caused so much damage to investors’ confidence in 2022. Hence, these high-profile crypto failures meant investors and financial regulators lost trust in crypto.
They also shared a common notion that crypto technology is a failure. However, many virtual asset service providers expressed their beliefs that crypto tech has not failed.
In December 2022, Dan Morehead, an American crypto Hedge fund’s chief operating officer, addressed investors in the company’s shareholders’ letter. In his letter, he claimed the fall of FTX and other platforms did not define the success of blockchain technology.
He added that BTC and many altcoins have been thriving without issues for years, proving the technology is not a failure as regulators projected it. Morehead pointed out that many crypto firms are releasing thousands of projects to rebuild investors’ broken trust in crypto tech.
In another interview, Paul Brody, a famous blockchain expert, explained the role of regulations and public auditions in developing trust in the crypto industry. He narrated that the crypto industry has evolved beyond the era where app codes are considered regulations.
Brody said there would be more transparency in the crypto space if developers welcomed regulators’ inspection and external audits of their projects. He added that there should be standard guidelines on how crypto firms declare their data.
Just like Brody pointed out, many crypto firms have imbibed the culture of data reporting and auditing. For instance, Jordan Kruger, the CEO of Vesper Finance, a Web3 firm, stated that her firm had undergone about 50 external audits since its launch in 2021.
Kruger added that the DeFi sector suffered the largest scam and theft cases in 2022, which could have been avoided by conducting regular audits. However, while auditing and reporting data is vital, protecting user information is even more essential.
Commenting on the importance of security, Sandy Carter said her firm, Unstoppable Domains, enables domain users to filter the data they share. Also, Chris Castig, a top official at Console.xyz — a Web3 chat platform — stated that his company uses the Ethereum Name Services (ENS) to protect users’ identity and privacy.
Hence, instead of representing users with their original usernames or passwords, the platform enables them to use a decentralized identity. He added that this helps to build users’ trust in the blockchain system.
Would Crypto Maintain Its Trustless Nature
No doubt, regular audits, transparent security measures, and data reporting can progress the crypto technology. However, with these measures, the crypto technology would lose its trustless nature, according to Brody.
Brody urged crypto players to aim for decentralization and regulation instead of trustless crypto. He explained further that decentralization would eradicate intermediaries, gatekeepers, or monopolists from the crypto space.
Meanwhile, regulations would protect user funds and ensure they make the proper choice when doing business with any firm. Brody believes that with these two elements, users would fully benefit from the great potential and opportunities that crypto technology offers.