The Crypto Crash Was An Acid Test and Crypto Passed With Flying Colours
As prices plummeted last week and billions of dollars were wiped off the cryptocurrency market, the new technology unlocking crypto’s true potential stood its ground in its first true test.
This tumultuous period showed us what the crypto markets are made of, as centralized exchange after centralized exchange fell offline under the volume of trading (not including Xcoins, which remained online for the duration), the decentralized crypto to crypto exchanges that are revolutionizing the space remained online.
Decentralized platforms survived while centralized platforms failed
Investors brought out their debit cards in droves last week to buy the dip as the cryptocurrency market shed billions of dollars as millions panic sold their holdings. Many were unable to however, after many of the world’s largest exchanges fell offline under the pressure.
Decentralized protocols like Uniswap enjoyed much of the action. In a tweet by Uniswap founder Hayden Adams, the automated market maker (AMM) saw trades above $6 billion. Other DeFi protocols were not left out.
Crypto lending protocol Compound, which allows users to borrow fully collateralized loans, again operated without crashing. Fellow lending platform Aave recorded a trading volume of $2.39 billion in a single day.
This happened despite the large volume of trades and the related pressure of trading during peak periods.
Reflecting on GameStop
Another example of traditional finance cracking under pressure as in last week’s crypto crash is the GameStop saga.
Fueled by amateur traders and online investors, the GameStop mania was impossible to miss for investors. Not just for the value, but for what it revealed.
The GameStop saga showed just how rigged the financial system is against the average man on the street. Following the mega run from $18 to almost $400, many small-time investors were prevented from cashing in on their trades on popular brokerage platform Robinhood.
The move reversed the stock’s upward trajectory, leaving many to spawn conspiracy theories on the impact of the influence of hedge funds over trading apps like Robinhood.
The beauty of decentralized protocols is that this type of intervention by a broker is impossible, and while centralized brokers cracked under pressure last week, the decentralized crypto market didn’t just remain free from outside intervention, it remained free from downtime.
It all goes to show that cryptocurrency is not only for investors with deep pockets, protecting the wealth of the high and mighty. Instead, it triumphed for every single investor who held their ground, big and small alike.
The system worked as designed
Skeptics might point to the high gas fees incurred by crypto users who traded on decentralized platforms like Uniswap. Those fees are expensive right now, but they won’t be forever. Numerous scaling solutions are already in the works and we should see these fees plummet soon. If anything, the higher fees proved that the system worked as intended, allowing the network to compensate for the explosion of activity and remain online unlike the largest centralized operations.
It might just be time for the new to replace the old. The Gamestop saga is not a novel tale, but it just points out what we have known for quite some time. The present financial system is created for the rich and powerful and can be abused by them to benefit them and only them. But, cryptocurrencies were created for the people. Not a select few. Anyone can access them and profit from the opportunities they offer.
With last week’s event, crypto has sent a message to the financial system. Where traditional financial systems fail, crypto succeeds.
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