The collapse of FTX has caused a significant decline in bitcoin price (BTC), but this in no way means that BTC can be destroyed by failing cryptocurrency firms, he claims Bitcoin Proponent Samson Mow.
The FTX contagion wave is still playing out in the cryptocurrency industry and it is likely to face more similar crashes in the near future, Mow said in an interview with Cointelegraph.
According to the executive, FTX may be part of the infection The Collapse of the Terra Ecosystemwhich caused a domino effect in the industry, including major crypto lenders like Celsius and Voyager.
“There will continue to be more things like this happening in the crypto space because all these projects are worthless houses of cards,” predicted Mow. He added that FTX’s failure was “easy to see coming” because of FTX’s relationship with Alameda.
“As a general rule of thumb, if a company prints a token out of thin air and either sells it to retail or relies on it as an asset, you should expect it to eventually collapse,” JAN3 CEO said.
Mow also argued that the industry’s efforts to demonstrate credibility—inc Exchanges are increasingly releasing confirmation of reserves — don’t mean much unless they show commitment. “Any system that can be gamed will be gamed,” he declared, referring to players who faked their reserves by shuffling funds between themselves just before proof was presented.
“Then you have to factor in the fiat side – which would require an audit, but even that might not be helpful because FTX also had an auditor,” he noted.
As the FTX contagion continues to spread across the industry, worst-case scenarios can be expected for some of the world’s biggest crypto firms. Addressing the question of whether Bitcoin would survive a hypothetical event where crypto giants like Tether or Binance collapse, Mow expressed his belief that Bitcoin is designed to defeat any problem, stating:
“Bitcoin will overcome any problem simply because of its design and the irrefutable need for sound money in human civilization. The failure of any giant would only be a temporary setback, just as the impact of Mount Gox is no longer relevant.”
Despite likely setting the crypto industry back a few years, the FTX collapse has done “wonders” for the Bitcoin industry in terms of growing adoption custom escrow and hardware wallets, Mow emphasized. “Unfortunately, most people cannot learn from the mistakes of others, only from their own suffering,” he added.
The exec also hinted that bitcoin newcomers are likely to make the same mistakes in the future, despite the industry showing the biggest vulnerabilities of centralized exchanges during Bitcoin’s very first crash in 2011. He stated:
“Then things settle down over the next few years and the newbies make the same mistakes in five or six years and lose their funds. Rinse and repeat.”
Former Director of Strategy at Blockstream, Mow is a major Bitcoin advocate and founder of game development company Pixelmatic. He is also the CEO of JAN3, a bitcoin technology firm focused on promoting bitcoin and accelerating hyperbitcoinization. In April 2022, the company signed an agreement with the government of El Salvador and President Nayib Bukele to help the country develop digital infrastructure and establish a Bitcoin City.