The founders of MetaMask have stated that cryptocurrencies are not the future of finance. Why is this so?
MetaMask cryptocurrency co-founders Aaron Davies and Dan Finlay in a recent interview shared some interesting insights into the collapse of the crypto market. In doing so, they made a rather ambiguous statement – it turns out that in its current form, the digital asset industry can never become the “future of finance” due to numerous problems. The mass bankruptcy of major cryptocurrency companies is a clear proof of that. Here’s more on what’s going on.
What will happen to the cryptocurrency industry?
The bankrupt cryptocurrency broker Voyager and the Celsius platform belong to the field of centralised finance, or CeFi – a combination of some features of decentralised finance projects with centralisation aspects. In theory, CeFi takes the best of both worlds, offering its users high returns paired with convenience and reliability.
MetaMask co-founders Aaron Davies and Dan Finlay
In practice, however, Voyager and Celsius ended up in bankruptcy, which Finlay believes was due to poor management of client funds. He added that these projects call themselves DeFi-platforms, but in reality “operate like shadow banks”, employing high-risk strategies with user funds. This is not a transparent activity. Here’s his quote.
Many of the collapses of cryptocurrencies that occurred during this market cycle were due to platforms claiming to be decentralised finance, but actually operating as shadow banks with huge leverage.
MetaMask
The crypto crisis has led to another unfortunate phenomenon – a serious drop in trading volumes in the market. According to CryptoSlate sources, the figure has fallen to its lowest in 18 months. Since the beginning of May alone, volumes in spot and derivatives trades have plummeted by around 15 percent. At the same time, major crypto exchanges are already feeling the effects of lower trading volumes on their business metrics.
Coinbase, for example, has dropped out of the top 10 exchanges in terms of volume and is now only ranked fourteenth. Its average market share among the top 30 crypto exchanges is now 2.9 percent, well down from 5.3 percent in the first quarter and 3.6 percent in the second quarter of this year.
Trading volumes on Coinbase over the past 24 hours
Coinbase's trading volumes over the past 30 days are behind rivals OKX, FTX and ByBit. However, it is still the dominant trading platform for crypto-assets in the US. Crypto exchanges are also introducing new strategies to attract people to trade. One example is Binance, which has abolished commissions for spot trading Bitcoin.
This week, the cryptocurrency community asked another question. It’s about Bitcoin potentially outperforming Etherium in terms of market capitalisation, which is being referred to as flipping. This has never happened before in the history of the crypto market, but fans of ETH are waiting for it. Given the interest in the topic, journalists at news outlet Cointelegraph have posted a poll on their Twitter page asking when exactly ETH could overtake BTC – and if it will happen at all.
What will happen to Etherium?
When asked about flipping, many left just negative or affirmative answers. Particularly worth highlighting is a quote by a username called Western Chad.
Bitcoin is now a dinosaur with no real application. As long as there are scalability solutions like Polygon in Etherium, there is a high probability of flip-flopping in the near future.
There are also quotes from Bitcoin-maximalists who believe solely in the raison d’être of Bitcoin. One of them is a user under the pseudonym Muhammad Jamal Ali.
This is impossible, Bitcoin is the king of the crypto market and always will be.
Another prediction from a user nicknamed CryptoDreamer sounds like this.
In terms of market capitalisation, Etherium will definitely beat Bitcoin, in terms of price, it won’t. When? I think flip-flopping will happen within this decade.
Bitcoin and Etherium performance comparison
The event is unlikely to happen in the next few years. However, the successful transition of Etherium to Proof-of-Stake, which is tentatively scheduled for mid-September 2022, will surely help the project gain popularity points among investors.
A strong argument for Bitcoin is that the main cryptocurrency is already fully legal in at least one country in the world, El Salvador. By the way, the day before the crypto exchange Bitfinex made a donation of 36 BTC and 600 thousand USDT to small businesses in that country to support economic development.
The funds will be distributed in the socially disadvantaged communities of Ilopango, Soyapango and Apopa, where banditry and extortion of small business owners is most prevalent. The donations, which will be channeled through the recipients’ Bitcoin wallets, including the government’s Chivo wallet, will support environmentally friendly business initiatives that employ local workers.
In addition to funding donations, Bitfinex’s parent company, iFinex Inc, is working directly with the government of El Salvador to create a new regulatory framework for digital assets and securities.
We believe that as the blockchain industry develops, it will gain momentum and digital assets will prove increasingly popular. They may not replace fiat for the foreseeable future, but that will not stop them from becoming more and more common for payments and those very international transfers. So the current stage of market decline should not cause investors to stop believing in crypto - its potential is still enormous.
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