Crypto’s Crash

From the Curator’s Desk

Greetings friends:

I’ve seen it called the fastest wipeout of wealth in history – Sam Bankman-Fried, founder of crypto exchange FTX, was once worth $26 billion; that’s now down to nothing after a matter of days. Yes, zero. Much of that wealth was fuzzy to begin with – one article called his digital assets “ illiquid, of speculative value, and just plain weird” – but that sudden crash actually came after one of “the fastest accumulations of self-made wealth in history”. Quick money into your pocket is quick to leave, it seems.

All that virtually created wealth is in the dust,  but with some very real world effects. Bankman-Fried had chosen to headquarter his company in The Bahamas; the Caribbean island nation had welcomed him with open arms, hoping to diversify its economy with the crypto boom at the heart of its economic strategy. 

“Crypto was going to be our way out,” said Stefen Deleveaux of the Caribbean Blockchain Alliance, quoted in this article in the FT. Now, that strategy is defunct, which reminds me of the failed promise of Africa’s ‘smart cities’, starting with Kenya’s still sleepy Konza. It should get African countries rethinking too – cryptocurrencies have become popular in African and other developing countries, with significant proportions of the population in Kenya (8.5%), South Africa (7.1%) and Nigeria’s (6.3%) using these digital currencies. In June, the Central African Republic even adopted bitcoin as a legal tender; and one man in Kenya became momentarily famous some years ago for paying his wife-to-be’s mahari with bitcoin.

The crash is reflective of Bankman-Fried’s extraordinary hubris but also of cryptocurrencies downward trend in general – bitcoin is down 66% in US dollar terms this year. Still, crypto may continue to be important for African investors and users, who typically buy, sell and hold crypto not for speculation, but to hedge against inflation, as a clever way to access scarce dollars or to move currencies across borders, in a continent where cross-border transactions are some of the most expensive in the world.

Africa, then, might become crypto’s saviour. What we can be sure of is there’s a Netflix tell-all documentary in the works.

In the meantime, here’s:

  • What We’re Reading: ‘Gangnam Style’ Brought K-Pop to the World, but Haunted Its Creator, in The New York Times. We all remember the smash hit from 2012, with its goofy dance and earworm melody. But the artist behind the song, Psy, has spent a decade trying and failing to replicate the phenomenon.
  • What We’re Watching: The FIFA World Cup, obviously.
  • What We’re Listening To: Just Sleep: Bedtime Stories for Adults. Yes, seriously. If you toss and turn endlessly before bed, this reading of old-timey novels will get you to drift off… and I bet you will never remember how the stories end. 

As always, 

Christine Mungai

Curator | Baraza Media Lab

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