More Crypto Companies Will Fall Ponzi Bankruptcybut cryptocurrency will remain a crucial tool for exchange funds globally, a venture capitalist told Fox News.
“Overall, I think most things will crash,” said Joe Lonsdale, investor and co-founder of software company Palantir. Various crypto lenders, crypto tokens, and other parts of the ecosystem were “a Ponzi scheme, and it made no sense.”
“That’s what you would expect in any situation where you have things that are unregulated,” he added.
WATCH PALANTIR CO-FOUNDER PREDICT THE FUTURE OF CRYPTO EXCHANGES:
Over the past few years, crypto projects have been “valued not on the basis of cash flow, or value creation in the economy, but on the basis of what people would pay for it,” a said Lonsdale.
FTX, a Bahamas-based crypto exchange, filed for chapter 11 bankruptcy early November after losing at least $1 billion.
Another big crypto company, BlockFi, has also announced its bankruptcy last week, follow other crypto companies like Celsius Network and Voyager Digital in Chapter 11 proceedings.
Some companies that have filed for bankruptcy “have had a lot of corruption,” Lonsdale said, though he only named FTX. “Long term there’s a good chunk of crypto, but most of what we’ve seen in crypto over the last three, four, five years was a speculative bubble fueled by cheap money and driven by many of these Ponzi schemes.”
Despite recent unrest in cryptocurrency markets, crypto-based technologies will continue to develop more capabilities, according to Lonsdale. Blockchain technology used in cryptocurrencies allows funds to be transferred online without using traditional government or banking infrastructure, providing a new and important way to transfer money globally, Lonsdale said.
“It makes sense to have more decentralized power and that something like Bitcoin exists,” he said. “It helped people get money outside of Russiaout of Venezuela, out of China.”
“It allows more freedom for the financial system from governments that do really bad things,” Lonsdale continued.
blockchain technology will always be an important part of the future, the venture capitalist said.
“This ecosystem, in the long run, I think some of these things will come across as useful to the world,” he said. “But that’s not all we’re seeing right now.”
To watch Joe Lonsdale’s full interview on the future of crypto, click here.