Vitalik Buterin provides suggestions for the crypto ecosystem amid FTX Collapse

Ethereum co-founder Vitalik Buterin has finally spoken out in the wake of the FTX collapse, sharing his thoughts and some positives from one of crypto’s most major black swan events.

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Vitalik

In November. 20 Bloomberg interview, Vitalik Buterin stated that the FTX collapse contains lessons for the whole crypto ecosystem.

He accepted that the underlying stability of dispersed ledger and the technology powering the crypto asset economy has not come into inquiry. The problem in this example and several before it has been people, not technology.

Buterin also marked the FTX collapse as a huge tragedy but added that it reaffirms the position of many in the Ethereum community regarding centralization:

That said, many in the Ethereum community also notice the situation as a validation of things they believed in all along centralized anything is by default suspect.

He added that this ethos contains trusting in open and transparent code above humans. On the weekend, Buterin publicized a guide to having a “safe CEX” with proof of insolvency.

He also said that instead of depending exclusively on fiat methods such as government licenses, auditors, corporate governance, and background investigations of people running exchanges, the exchanges could develop cryptographic proofs that show that the funds they hold on-chain are enough to cover their liabilities to their users.

The difficulties for FTX are understood to have originated from the exchange’s use of customer deposits for other intents. After a large inflow of withdrawal proposals came to the exchange earlier this month, it found itself incapable to meet withdrawal demand with its existing liquidity. 

Also read: Ethereum founder Vitalik Buterin says he knew the bull market would end…

Vitalik is not the only industry leader who is speaking about the FTX collapse. On Nov. 17, Binance CEO Changpeng Zhao stated that while regulation is necessary, it is more crucial for industry players to lead by example.

During the Indonesia Fintech Summit 2022, Zhao conveyed the entire FTX saga is probably to set back the crypto industry by a few years, and will likely see regulators analyze the industry much, much harder, which is likely a good thing, to be honest.


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