More Crypto Firms Are Going Down Ponzi scheme style bankruptcybut cryptocurrency will continue to be a crucial tool for exchanging funds globally, a venture capitalist told Fox News.
“In general, I think most things are going to crash,” said Joe Lonsdale, an 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 didn’t make any sense.”
“This is what you would expect in any situation where you have things that are not regulated,” he added.
WATCH THE CO-FOUNDER OF PALANTIR PREDICT THE FUTURE OF CRYPTOCURRENCY EXCHANGES:
In recent years, crypto projects have been “valued not based on cash flows, not based on value creation in the economy, but based on what people would pay for them,” Lonsdale said.
FTX, a Bahamas-based crypto exchange, filed for Chapter 11 bankruptcy in early November after losing at least a billion dollars.
Another big crypto company, BlockFi, too announced its bankruptcy last week, following other crypto companies like Celsius Network and Voyager Digital in Chapter 11 proceedings.
Some companies that filed for bankruptcy “have had a lot of corruption,” Lonsdale said, though he only named FTX. “Long term, there’s a fair bit of crypto, but most of what we saw in crypto in the last three, four, five years was a speculative bubble fueled by cheap money and a lot of these Ponzi schemes.”
Despite the recent turmoil in cryptocurrency markets, cryptography-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 banking or government infrastructure, enabling an important new way to move money globally, Lonsdale said.
“It makes sense to have more decentralized power and have something like Bitcoin exist,” he said. “He has helped people get money out of Russiaout of Venezuela, out of China.”
“It allows more kind of freedom for the financial system from really bad acting governments,” Lonsdale continued.
Blockchain technology it will continue to be an important part of the future, the venture capitalist said.
“This ecosystem, in the long term, I think will make some of these things emerge as useful to the world,” he said. “But that’s not all we’re looking at right now.”
For the full interview with Joe Lonsdale on the future of cryptocurrency, click here.