This Can Cause Crypto to Go to Zero and Nobody Is Talking About It

Are we purposefully avoiding the elephant in the room?

Wasn’t it weird timing when Binance’s CEO Changpeng Zhao questioned FTX’s financial health, got their clients to move funds out, and then acted as if he was going to buy the company?

And then, you see this at the end of the year:

“Binance’s market share of bitcoin trading volume rose to 92% by the end of 2022” (Coindesk)

If any major project held 92% of all their coin, people would go crazy.

But for some reason, when Binance has the monopoly on Bitcoin, no one bats an eye.

Is it just spreading FUD?

Think about it. What happens if Binance goes down?

Last year we had so many crypto companies going bankrupt: Celsius, Voyager Digital, 3AC, FTX, BlockFi, and so many other disappointments.

This cascading effect would be nothing compared to Binance’s fall.

Do you think Binance is too big to fail?

That’s what we thought of FTX and look what happened.

CZ later went on to say:

“For most people, for 99% of people today, asking them to hold crypto on their own, they will end up losing it” (Twitter Space discussion on the 14th of December)

Just a couple of hours earlier he told his staff they were in for a bumpy ride.

And you know why he said that?

To avoid more funds being taken off of his exchange after withdrawals in just a week in December reached around $3.6 billion.

When the entire mantra of crypto is “not your keys, not your coins”, here comes the largest exchange in the world to say otherwise.

An exchange should be a place to transact, not a place to store your crypto.

Do you know what happens to all the money in these institutions when they collapse? Gone.

Sadly, Binance is the crypto market today.

The stats speak for themselves.

Think about it this way.

If one country had 92% of the bitcoin mining rigs, would you say the blockchain is secure? Then, one day, some policy changes, and only 8% of the capacity is left.

Bitcoin will be worth $300 in a second.

And no, people will not be as eager to layer in as they are now.

We need regulations

In 2021 crypto scammers stole more than $14 billion in cryptocurrency, a 79% rise from the previous year.

Chainalysis hasn’t released its 2022 report yet, but with all the crazy things that happened, we might expect it to be even higher.

There’s nowhere to go when these illicit activities impact customers. We’re all left in despair. In another article, I wrote about investing in crypto insurance as a way to make people feel safer in the space and increase adoption.

Why can’t we have similar insurance policies as traditional markets already have? We should be able to create something similar to:

  • FDIC in the US
  • FSCS in the UK
  • FDGE in Spain

And so on.

Binance is our banking system

Binance has 66.7% of the market share today.

There’s no close second.

There’s a tiny little Coinbase in second place gasping for air with just 8.2%. This isn’t right. This is not what the crypto space was intended to be.

If Binance goes down, crypto goes down.

Or at least, it will take a ridiculous amount of time to recover from that blow.

Just getting people’s trust in crypto again will be painfully slow.

The takeaway

Instead of taking down the major player, let’s go towards a more balanced market share distribution to restore the industry’s health.

If any limb in our body gets too little blood, it starts to fail. The same happens in crypto. It’s not sustainable to have just one exchange sucking all the funds while everyone else is left with the crumbs.

We need regulations and we need competition.

Otherwise, we’ll become just like the current financial system we fought against so fiercely.

Source : bsc.medium

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