More crypto companies will fall into Ponzi bankruptcy, but cryptocurrency will remain an important tool of global currency exchange, a capitalist told Fox News.
“Basically, I think most things will fall apart,” said Joe Lonsdale, an investor and co-founder of the software company Palantir. The various crypto lenders, crypto tokens and other parts of the ecosystem are “Ponzi schemes, and they don’t mean anything.”
“That’s what you expect in any situation where things are out of control,” he added.
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In recent years, crypto projects have been “not based on revenue, not based on creating value in the economy, but based on the amount paid for it,” Lonsdale said.
FTX, a Bahamas-based crypto exchange, filed for Chapter 11 bankruptcy in early November after reportedly losing at least $1 billion.
Another major crypto company, BlockFi, also announced bankruptcy last week, following other crypto companies such as Celsius Network and Voyager Digital in the 11th phase.
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Some of the companies that declared bankruptcy were “very corrupt,” Lonsdale said, though he only named FTX. “Long term, there are good parts of crypto, but most of what we’ve seen in crypto over the last three, four, five years has been a speculative bubble driven by cheap money and driven by many of the schemes It’s a Ponzi.”
Despite recent turmoil in the cryptocurrency market, crypto-based technology will continue to develop more capabilities, Lonsdale said. Blockchain technology used in cryptocurrencies allows money to be transferred over the Internet without the use of traditional infrastructure or banks, providing a new and important way to move money around the world, Lonsdale said.
“It makes sense to have more decentralized power and something like Bitcoin,” he said. “Helped people get money from Russia, Venezuela, China.”
“It allows a lot more freedom for the financial system from a really bad government,” Lonsdale continued.
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Blockchain technology will continue to be an important part of the future, according to capitalists.
“This environment, in the long run, I think you’re going to have some of these things that are going to be useful to the world,” he said. “But that’s not all we’re seeing right now.”
To watch the full interview with Joe Lonsdale on the future of crypto, click here.