Vitalik Buterin gives crypto lessons after FTX crash
Rebeca Moen Nov 21, 2022 01:49
Vitalik Buterin says collapse of FTX contains lessons for the entire crypto ecosystem. He said exchanges should create "cryptographic proofs that show that the funds they hold on-chain are enough to cover their liabilities". The problems for FTX are understood to have stemmed from the exchange's use of customer deposits for other purposes.
Following the failure of FTX, Ethereum's co-founder, Vitalik Buterin, has shared his reflections on one of the cryptocurrency industry's most major "black swan" occurrences, as well as some positives that have sprung from it. Buterin has made his voice heard after the collapse of the FTX exchange.
During an interview on November 20, Buterin gave an interview to Bloomberg in which he emphasised his idea that the collapse of FTX may serve as a learning moment for the remainder of the cryptocurrency industry.
He conceded that the basic solidity of distributed ledgers and the technology that powers the bitcoin asset market have not been put into question. He was referring to the fact that the market has not been subject to any regulatory scrutiny.
Buterin also referred to the collapse of the FTX exchange as a "big tragedy," but he said that it supports the stance that many people within the Ethereum community have in reference to centralization. This was his explanation for why the failure of the exchange was significant.
He went on to clarify that one of the foundations of this philosophy is to put greater confidence in open and transparent code than in humans. He said that this is one of the ways that this philosophy may be used.
Buterin put out a guide on how to run a "secure CEX" over the weekend. The guide shows that the company is in the process of filing for bankruptcy.
Most people agree that the main reason FTX is in the situation it is in now is that it used money deposited by customers for things other than what the exchange had planned.
After receiving a large number of withdrawal requests all at once earlier this month, the exchange quickly realised that it was unable to meet the demand for withdrawals with the liquidity that it had available. This discovery was made after the exchange received a large number of withdrawal requests all at once.
The only other significant player in the business to have lately spoken out against the impact of FTX is Vitalik Buterin, although he is not alone in doing so.
On November 17, the CEO of Binance, Changpeng Zhao, stated that while regulation is necessary, it is more important for industry players to lead by example than it is for regulators to regulate the industry. He made this statement in response to a question about whether or not regulation is necessary.
