Focusing on Principles

Earlier this month FTX came to light as what appears to be one of the largest financial crimes in history. Hundreds of companies and funds will be forced to shut their doors. Hundreds of thousands of users have been severely damaged financially. Politicians and regulators will use the failure as an example. It will take time for the industry to regain the trust it had begun to accrue.

But, this was not a failure of crypto. This was a failure of us as a community to hold a centralized company accountable. For all the suffering that SBF, FTX, and Alameda cast onto the market, this incident serves as a reminder of the principles that make crypto powerful. It’s our responsibility to build upon the core principles of crypto and hold companies and protocols accountable.

Four years ago I nearly left the industry after a grueling bear market led me to doubt the short-term future of crypto. The sentiment in late 2019 was similar to right now. It’s hard to be optimistic but it’s important to remember why we’re here and why this industry isn’t going anywhere.

Don’t trust, verify

During easy times, we tend to let our guard down and become complacent. We offload responsibility to others because it’s easier. But a core tenet from the early days of Bitcoin is, “don’t trust, verify” because cryptography enables this verification. To minimize trust in FTX, and all exchanges for that matter, we need to demand that reserves match liabilities. FTX wouldn’t have been able to secretly lend out customer reserves if we had a closer eye on the public addresses that were supposed to contain customer assets.

Not your keys, not your coins

Despite current challenges with user experience, decentralized finance provides users the ability to retain control over their assets. DeFi is the path forward to avoid trusting bad actors. Lend, borrow, and exchange using protocols whose code is open and verifiable. Keep control of your collateral and monitor the collateral status of all protocols you use. Decentralized finance feels scary but is safe. Centralized finance feels safe but is scary. Regulation can’t prevent fraud but verifiable code can. We’re closer to widespread adoption than most realize. Consider how amazing it is that Uniswap, an exchange with no operators, has facilitated over $1 trillion of value in its first few years of existence.

Separation of money and state

Bitcoin was invented in the wake of the global financial crisis as a way to bring control of money into the hands of the people. The separation of money and state will be looked back upon with similar importance as the separation of church and state (h/t Erik Voorhees). Bitcoin’s raison d’etre is even stronger today with $300 trillion of global debt than it was in 2008.


The web gave everyone in the world, no matter the age, socioeconomic status, or geography, the ability to access information; no need to ask for permission. Crypto gives everyone in the world the ability to access and coordinate capital. Combining equal access to information with equal access to capital markets will lead to the next boom in innovation. Crypto is a neutral technology that enables a global meritocracy.

Open protocols

Crypto protocols are open by default, removing platform risk and enabling modular innovation. DeFi is a prime example where countless applications are built leveraging Uniswap or AAVE. This further extends to social media - crypto networks can allow users to own their social graphs rather than relying on the likes of Facebook and Twitter.

As the price has plummeted, we need to find pride in crypto’s core principles and the future they enable. Crypto is not going away. Traders have lost hope. Tourists have moved on to new grifts. Skeptics have proclaimed the death of the industry. Weak Bitcoin miners have gone bankrupt while strong miners have grown stronger. Everyone that could be broken, has been. There is nobody left to sell and no margin left to liquidate. The risk/reward has not been this attractive in four years. Right now it pays to be an optimist among pessimists.