#NFTsWTF

“The Terra Luna ecosystem on a wild ride, stablecoin UST dipping as low as 60 cents last night when it was supposed to be pegged one to one to the US dollar. Luna, which is supposed to be minted to stabilise UST, has lost over 40 per cent of its value over the past 24 hours…” The Independent Terra Luna ecosystem…? UST stablecoin…? Minted to stabilise…? If that’s not making too much sense, let’s pause: for a quick guide to crypto. *** Cryptocurrencies are digital tokens. They are represented by code, rather than a physical coin, and their existence is recorded in a database that no one can edit; called a blockchain.  These crypto tokens can be “mined”, a process that adds a new token to circulation every time someone solves a complex maths problem set by the blockchain’s programming.  There are lots of different types of crypto and different types of blockchain too.  Some of them are “minted” by a company, and put into circulation in the crypto market, rather than mined by someone with a computer. But minting, mining and processing them always uses electrical energy.  And none of the tokens themselves are based on any actual value or economic activity; no commodities, no labour, no infrastructure. This can make the price extremely volatile, because the value is determined by confidence and confidence alone. ***  So, there are two schools of thought on cryptonomics.  One thinks it is the future of money; a borderless, free and ungoverned exchange of digital wealth, which will eventually take over from currencies like pounds and dollars, national governments and central banks.  The other pretty much thinks it’s an environmentally harmful scheme that defrauds people by selling them a fantasy marketing story. For every dollar someone claims to have made from crypto, someone else has put a dollar into the scheme after them. Which brings us back to the Terra Luna ecosystem. *** “It’s hard to believe that only a week ago, Luna was one of the top cryptocurrencies, with billions of dollars flowing into it. And all it took was one market downturn to turn this golden token into digital toilet paper.” Coffeezilla, YouTube Terra, or UST, and Luna were both crypto tokens. One of them, Terra, is an algorithmic stablecoin, intended to hold a fixed value of one dollar. In early May, they both collapsed, as previous buyers started to sell off their holdings.  As more Luna flooded the market from sellers, the price was driven down, and eventually collapsed.  It was a crisis of confidence. The bursting of a bubble. “I was at a small conference, and someone asked me about frontier currencies, emerging market currencies, and I was like BS with those things, you want a real frontier currency, you gotta buy Bitcoin.”Mike Novogratz, Bitcoin Magazine That’s Mike Novogratz speaking at a Bitcoin conference.  He’s a wrestling champion who lives in Robert de Niro’s old house in Manhattan.  He’s also the CEO of Galaxy Digital, a cryptocurrency investment firm, through which he claims to have made a quarter of a billion dollars in 2017. Mike Novogratz is an advocate of crytonomics. He loves Bitcoin. But he also loved Luna and Terra. He’s part of that first school of thought. Someone who wants crypto to be used more widely. Here he is talking to CNBC “…states saying they’ll take taxes, countries participating, sovereign wealth funds getting involved, pension funds getting involved, so we’re still early in this adoption cycle, so I’m much more optimistic than I was, you know, six seven weeks ago.” Mike Novogratz, CNBC Back in January, when Mike Novogratz tweeted an image of his new tattoo – a wolf howling at the moon under a Luna banner – one insightful follower replied;  “This will be so embarrassing in like 6 months”.  They were right.  *** “Novogratz, conspicuously quiet… He was so, he made me want to buy crypto Sue. Sue: Well, he is viewed as a King in the crypto, DeFi ecosystem as it were. And yes, he is relatively quiet right now. There hasn’t been a tweet from him since May 8th. He himself, a billionaire and a Wall Street veteran has described himself as the Forrest Gump of Bitcoin.”  Bloomberg Mike Novogratz went into hiding for a week when Luna and Terra collapsed. He later told investors he’d spent it “reflecting on the economy and macro markets”.  The failure of the crypto tokens had destroyed $40 billion of market value in a short space of time, and confidence in cryptonomics has taken a serious hit. Other major crypto tokens have been haemorrhaging value since. Ethereum has dropped by nearly half, Bitcoin by 38 per cent or so. Tether, the largest stablecoin – which is supposed to be pegged to the dollar like Terra was – also lost its one-to-one peg.  All of that means a lot of money has been lost, and when that happens people demand answers.  Mike Novogratz didn’t provide any, but said that Luna and Terra were “a big idea that failed”, whilst also insisting that the “crypto revolution is here to stay”. Failure is a familiar part of this so-called “revolution”.  And if it is here to stay, we better get used to the chaos and confusion of that failure.  Today’s story was written by Luke Gbedemah and mixed by Ella Hill