• Tue. Aug 2nd, 2022

Crypto market crash raises many questions about digital currency

ByHazel R. Lang

Jun 30, 2022

At the BIS Innovation Hub, similar CBDC interoperability projects are underway. At the ECB Central Banks Forum, Skingsley remarked that CBDC interoperability may not be easy to achieve. CBDCs are the result of each country’s national monetary system and they may not be ready to interact seamlessly with each other. Some countries may not play well given their concerns and reservations. Thus, CBDC interoperability can be a complex and multi-layered experience.

Looking at the RBI reserves against stablecoins and cryptocurrencies, it does not appear that the Indian CBDC is allowed to interact with them. This will affect its interoperability with other CBDCs that may interact with these assets.

Yifan says blockchain rose to prominence with Bitcoin, but its scope and definition have since expanded.

Thus, there are several dimensions to blockchain technology and one of them is cryptocurrencies that have become a store of value that is immune to inflation and governments’ fancy fiscal and monetary policies. But the big crypto story is currently experiencing a sharp correction.

A cyclical downturn in the market is considered good because it removes overvaluation and hype for the market. Following the latest stock market crash, several top coins and companies fell flat. The collapse of the Terra Luna ecosystem, the fourth-largest cryptocurrency before its crash, highlights the risk of algorithmic stablecoins over fiat-backed ones.

Similarly, the fall of crypto lending platform Celsius Network hints at overexposure to one particular asset, Terra Luna in this case.

The calm after a sell-off in recent months has rendered many exchanges insolvent.

The whole phenomenon can be understood with the example of two leading crypto exchanges – Coinbase and FTX. In its rush to expand rapidly, Coinbase increased its workforce to over 5,000 while FTX ran its business with just 300 employees.

Now, with most crypto firms downsizing and going bankrupt, FTX plans to increase the number of employees to 400. It is also spotting stressed assets for buyouts.

This explains the current turmoil in the cryptocurrency market.

(API Service)

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