5 Essential Actions The Crypto World Needs To Take To Improve Its Reputation In 2023
While many of the challenges crypto faced in 2022 were compounded by global economic headwinds related to high rates of inflation and the fallout from Russia’s war in Ukraine, many other projects crumbled in due to a serious lack of foresight on the part of their owners.
Following the bull racing fury of 2021, the reputation of crypto has been marred by scams, Ponzi schemes, and a lack of sufficient investor protection. However, as prices improve and new optimism hits the market in 2023, here are five essential actions that must be taken to ensure that crypto learns from the mistakes of the past.
1. Smarter regulation
One of the most important lessons from 2022 is that there must be a synergy between decentralization and regulation that protects investors.
The highly publicized collapse from a major exchange, FTX, was a damaging event for investors and the crypto ecosystem. As rumors swelled around the stock market falling into trouble, FTX struggled to find cash to cope with the masses of investor withdrawals.
In the days that followed, FTX alleged that it was hacked by someone using “on-chain impersonation” to steal $500 million worth of crypto assets from wallets.
The fall of FTX wasn’t the only high-profile collapse in 2022, with other projects like LUNA, Celsius, and BlockFi all causing investors to lose their wealth and confidence in the market.
With this in mind, if cryptocurrency is to become mainstream, the landscape needs to be regulated more effectively. While decentralization is a fundamental tenet of cryptocurrency and close to the hearts of the industry’s biggest investors, regulatory measures need to evolve to protect the interests of all users if reaching large audiences is serious. audience.
2. Learn from the mistakes of the last bull market
2023 has started with a new wave of optimism in the cryptocurrency market. The rallies pushed both bitcoin and many altcoins higher, and many were hoping to see price rallies similar to 2021.
As we can see on CoinMarketCap chart above, investor optimism in 2021 has seen the total cryptocurrency market capitalization reach nearly $3 trillion. Although there is a long way to go before this level is emulated again, it is essential that more is done to ensure that investors are not exposed to the mistakes of the last bull market.
Towards the end of the 2021 bull market, investors were increasingly looking for new assets to buy into in the hope that they could experience exponential growth. It was this rush for new assets to buy that saw the rise of the coins even like Dogecoin and Shiba Inu are gaining popularity.
While buying an asset without a feature isn’t a bad decision, investors are dependent on the meme, gaining momentum as a source of income.
Away from the meme coins, we have also seen several small cap Ponzi schemes and rug draws. For example, owners create a cryptocurrency while holding a large volume of the asset, allowing them to fraudulently “pump and dump” its price before letting other investors hold worthless crypto when they sell. their participation.
As we look to leave the crypto winter behind us and usher in a new era of optimism, there needs to be a more comprehensive verification process for new assets entering major exchanges.
3. Improve the investor experience
Another major downside of the industry relates to the investors’ experience when buying, converting, and selling crypto. For hardened enthusiasts, trading pairs and executing withdrawals through third parties may be second nature, but these processes can discourage new adopters.
The next bull run will be built on a wave of mainstream adoption. Today, cryptocurrency is everywhere, sponsoring major events and marketing directly to millions of individuals.
Data from Chainalysis shows that while crypto marketing is as pervasive as ever, adoption rates have plummeted in 2022, suggesting lingering barriers to adoption. To make crypto as accessible as possible, investors’ experience on exchanges must be transparent and reassuring.
To welcome more investors in 2023, exchanges must offer new learning resources to help build the confidence of adopters.
4. Continue the push towards carbon neutrality
Environmental issues are more important than ever, and rightly so. After Elon Musk (allegedly) caused Bitcoin to crash in 2021 following tweets expressing concern over the cryptocurrency’s carbon footprint, the issue of cryptocurrency mining has rarely gone away.
Today, we see BTC and ETH making efforts to reduce their respective carbon footprints, and these initiatives need to expand across the ecosystem.
As sustainability continues to emerge as a pressing concern across a variety of industries, the focus will be more than ever on the carbon footprint of crypto in 2023. proof of work Crypto mining is essential, but projects must show their environmental commitment to gain investor confidence.
5. Influencers need to take more responsibility
Some of the biggest losses in crypto have come from inexperienced investors who blindly follow ads posted by influencers. There are countless examples of celebrities and social media influencers promoting assets in thinly veiled advertisements, which only spread distrust among newcomers to the market.
Many cryptocurrency projects use social media to build influencer advocacy in hopes that new investors will buy into their assets. In some cases, influencers paid by these cryptocurrency projects have no idea of the protocol and blindly relay ads with the thinly veiled hashtag #ad as a warning. There is little difference between these poorly thought out “ads” and active crypto shilling.
However, the content seen by the influencer’s followers can be misleading and sensationalized to the point that a #ad hashtag is insufficient. With this in mind, influencers should undertake crypto ad campaigns with a greater level of accountability to their followers. Otherwise, they risk impacting the financial health of their community and the credibility of the cryptocurrency industry as a whole.
Crypto must learn from the past
As we enter a new year for the cryptocurrency ecosystem, it becomes more relevant than ever for the industry to learn from the lessons of the past. While asset prices have been on a steady upward trend lately, its reputation among potential adopters could hamper its progress through 2023.
Learning from the downsides of the past, we can be reasonably optimistic about a bright year ahead for the cryptocurrency landscape, but only if we see a greater level of accountability, sustainability measures, and sufficient regulation.
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