It's been a wild few weeks in the world of Web3, and in last week's TechCrunch Sessions: Crypto 2022, Tezos co-founder Kathleen Breitman offered her perspective on recent events, and the future of crypto.
Breitman appeared alongside Chainalysis CPO Pratima Arora and Ledger CEO Pascal Gauthier on November 17th to discuss the issue of security in the crypto industry, the fallout from the recent FTX meltdown, and what it will take for blockchain technology to achieve wider adoption. During the panel discussion, Breitman suggested that the FTX implosion is an opportunity to learn, noting that Tezos was never listed on FTX, and the exchange didn't participate in Baking on the Tezos blockchain. She also stressed the importance of 'disintermediation' in crypto, where power is placed in the hands of users, rather than centralized actors, and highlighted the need to improve both UX and scaleability in order for crypto to achieve greater mainstream adoption.
The full panel discussion will be available to watch online in a few days, but in the meantime, we've extracted some of Kathleen Breitman's comments below.
On the fallout from the recent FTX collapse:
Tezos was never listed on FTX, so we were left out of that particular party, but one of the curious things is that most exchanges that do list Tezos also participate in Baking, meaning validating the network by running a specialized piece of software. And often they do so by [acting as the custodian for] tokens themselves, and basically, people from the ecosystem participate in the exchange in order to delegate this right to them.
[...] That has an implication on the transparency, on the way you custody things. And I think it’s telling that FTX never participated in that, either on Tezos or on many other ecosystems either, that also use proof of stake and have this concept of exchange staking.
On the importance of decentralization and empowering users:
Obviously, cryptocurrencies are explicitly meant to disintermediate. That’s explicitly their purpose. And if you’re not designing something where users can be empowered in some form or another you’re not doing a good job of designing your protocol, you’re just shifting the onus from one centralized actor to another. [...] If you’re not shifting the balance of power away from one centralized entity to individuals, you’re not doing a good job as a designer of those systems.
On what it will take for crypto to become mainstream:
This industry has got the attention of mainstream tech companies, many of which are specialists at creating UX designs that are more intuitive, there’s a trillion-dollar company that does it best, Apple, and a bunch of other really great groups of engineers who are trying to […] fix the UX problem. And I think that’s a really encouraging sign. One of the good parts, if there are silver linings to these types of implosions and bear markets is that it does tend to get the tourists out, and some of the people who were glossing over the details for the sake of either raising money or doing something egregious and not thinking about the product. It tends to scare those folks away.
Looking forward - the importance of scaleability:
The first ten years of this industry has mostly been defined by speculation. And speculation is very useful for price discovery and a few other things, but just for the sake of itself is not necessarily the healthiest thing in the world. As cryptocurrencies have become more mainstream […] I think the major barrier that we’ve found, speaking from experience, is the scalability of the blockchain. We use centralized systems because they’re convenient, and the reason you don’t have everything loaded onto a blockchain is that often the blockchain can’t handle it.
There are a few big companies, notably Ubisoft, that use Tezos as a component of some of their solutions, and part of what we’ve learned from talking to those stakeholders is that the scalability of the blockchain is the limiting factor for why they wouldn’t use it for more extreme use cases. […] That’s part of the reason why for the next year, most of the engineering teams that I’m familiar with in the Tezos ecosystem are working on getting to a million transactions per second.