You have to live under a rock not to have heard of the ill winds that have blown into the crypto world. In May 2022, the Terra Luna crypto empire crashed. Down with it went $40 billion worth of investor capital.
This event so shook the cryptocurrency world that a resultant bear market caused a $1 trillion loss in market capitalization.
Bitcoin plunged from its November 2021 high of $60,741 to an unstable $20,000 in early November.
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Then came the FTX exchange saga on November 7th, 2022. On this fateful day, the exchange’s FTT token crashed from a high of $22 to $1. The cumulative sum lost by FTT token holders two days following the crash was about $2 billion.
The resultant fallout triggered another crypto sell-off in the larger market, pushing BTC to the $16,000 range. Bitcoin last sold at this low-price range in November 2020.
So, are these signs that it is time to bury that Bitcoin Lambo dream? Not at all. While cryptocurrencies are highly speculative assets, a few have an established use case and will stand the test.
Dangers of centralization
Cryptocurrencies share many similarities to gaming currencies, such as WoW Tokens. But, the major difference between Blizzard Entertainment’s WoW Tokens and the best-performing crypto assets is their governance structure.
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Blizzard generates and controls the WoW token to enlarge its profit margin. However, the Wow community has, in many instances, rallied against the token. Many gamers say it symbolizes the decay of one of the world’s most beloved MMOs.
Part of the reason the gamer community despises the WoW token is that it is an offensive cash grab by the game maker. Blizzard retails its Wow token at $20, then skims $5 off for no good reason.
The game maker does take into account player sentiments in its decisions. However, another criticism of the Wow token is that it legitimizes Real Money Trading (RMT).
Many WoW Classic gamers would rather build their accounts as they did in the good old days. Rapid account boosting undermines the social legitimacy of gameplay. A pay-to-win ecosystem cheapens the actual currency of the game and time people spend earning it.
Blizzard says it introduced the WoW token to kill off the “gold farms,” which they consider a menace. These farms mint and sell gold for cash in a black market that burns many gamers’ fingers due to rampant scamming.
Unlike legitimate, in-game asset trading platforms such as Eldorado, the black market encourages scammers and hackers who take advantage of the illegitimacy of their services. In contrast, Eldorado functions as an intermediary between farmers and account holders. It offers all parties 100% trading protection.
The Eldorado.gg TradeShield protects your WoW WotLK Gold trade, reserving your payment until you receive your currency purchases in your account.
Unfortunately, third-party in-game asset markets democratize the sale of in-game assets threatening game makers’ revenue streams. For this reason, Blizzard sells WoW tokens despite lots of community criticism.
Decentralization is security
Like the WoW token, FTT and LUNA tokens have a central governance structure. The Sam Bankman-Fried empire oversees the functions of FTT, while the Do Kwon-led Terra Alliance governs LUNA. In crypto terms, these cryptocurrencies have a single point of failure (SPOF).
Flaws such as human error can bring their entire systems to a halt. To illustrate this point, FTT and LUNA cryptocurrencies crashed due to avoidable human errors.
In contrast, communities govern robust crypto coins like ETH and BTC. These communities also secure these cryptocurrency networks and have their voices heard on governance matters.
A decentralized governance structure does away with central governance, human greed, and other SPOF risks. Decentralization is the true measure of safe cryptocurrencies. To avoid FTT and LUNA-like heartbreak, avoid over-hyped tokens by investing in decentralization.
