I was reading Fred Wilson‘s (of Union Square Ventures) most recent blog post about FTX and felt it was valuable enough to share my summary here:
•The recent FTX incident has called into question the reliability of many crypto exchanges, and has left people wondering how such a large exchange could fail so quickly.
• While Web3 has a lot of potential, its built-in financial system can be both an advantage and disadvantage.
• Many of the well-known meltdowns in web3 have been centralized companies operating trading, lending, and speculating businesses that are largely unregulated. These companies give web3 a bad name.
• In contrast, regulated web3 businesses like Coinbase have weathered these storms. Coinbase provides important services that have allowed the web3 ecosystem to grow and thrive.
• The most important software innovation of the last decade is the emergence of open-source software and decentralized protocols that are the foundation of web3. These protocols have survived recent market volatility.
• Eventually, as improvements are made to blockchains’ performance, scalability, and privacy, more users will feel comfortable self custodying their assets in software they control. When this happens, large centralized companies will have to compete for access to our data. Software development will be more open – source and composable. And large financial institutions like banks an brokerage firms will no longer control our assets.
Fred’s full article is at https://avc.com/2022/11/taking-a-long-term-view-of-web3/