As the Los Angeles Rams beat the Cincinnati Bengals in the championship game of the National Football League last February, an unlikely set of players made a splash off the field, in living rooms across the United States.
On one of American television’s biggest nights, with 99 million viewers, the Super Bowl broadcast was punctuated by a series of cryptocurrency advertisements. Social media buzzed with talk of how digital tokens had come of age as they grabbed primetime slots previously dominated by mainstream giants like Coca-Cola and General Motors.
One of the advertisements that night had comedian Larry David playing a Luddite dismissing humankind’s biggest inventions – from the wheel to Edison’s lightbulb to, the commercial suggests, the FTX cryptocurrency exchange. Told that the platform is a “safe and easy way to get into crypto”, David’s character says: “Ehhh, I don’t think so – and I’m never wrong about this stuff.”
That advertisement hasn’t aged well.
With multiple big crypto firms collapsing in recent months, the sector that promised an alternative to the traditional global financial model now faces existential questions. In May last year, the TerraUSD and Luna coins crashed, losing almost all of their value overnight and wiping out $45bn from the crypto market in a day. Singapore-based crypto hedge fund Three Arrows Capital abruptly shut down. Crypto lenders Voyager Digital and Celsius Network – which had both loaned money to Three Arrows Capital – soon filed for bankruptcy.
And in November, FTX – the popular crypto trading platform in the Super Bowl advertisement – imploded. Its founder Sam Bankman-Fried was arrested in the Bahamas in December and has been charged with fraud. Bitcoin, the world’s best-known cryptocurrency, is today worth only a third of what it was at its peak in October 2021.
The FTX commercial with David ends with the tagline, “Don’t be like Larry.” Today, many of the 420 million people estimated to have invested in crypto might well be wishing they had been more like Larry.
So is crypto about to go extinct?
The short answer: As a concept, cryptocurrencies will probably survive, experts told Al Jazeera. But the sector will likely face increased regulation and an extended period of uncertainty. Many firms and currencies will perish. To stay alive, companies will face one challenge above all else: winning back customer trust.
An advertisement for Bitcoin on a street in Hong Kong, on February 17, 2022 [Kin Cheung/AP Photo]
Crypto ‘ice age’
Cryptocurrency trading platforms have traditionally drawn in customers with the promise of quick returns on investment. The offer: Park money in so-called crypto wallets – which are meant to function in a manner similar to savings bank accounts – and earn high interest rates, sometimes in double digits. For those who are distrustful of traditional finance, the opportunity …….
