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>Crypto industry sees shake-up after key figures exit: Here's what happened
The cryptocurrency industry saw a bit of a shake-up over the past few days, with some key personalities heading for the exit. The development comes amid a heightened debate over the benefits and risks of cryptocurrencies.A few days ago, Dogecoin Co-founder Jackson Palmer announced that he would leave the industry. Palmer described the industry as a cartel of people who are using cryptocurrency to enrich themselves while ignoring the problems it presents.“After years of studying it, I believe that cryptocurrency is an inherently right-wing, hyper-capitalistic technology built primarily to amplify the wealth of its proponents through a combination of tax avoidance, diminished regulatory oversight, and artificially enforced scarcity,” Palmer said.Palmer and other founders of Dogecoin started the cryptocurrency as a joke in 2013. Its logo contains the picture of the Japanese Shiba Inu dog, which was a popular meme on Reddit and other Internet forums a decade ago.But a rapid rise in the price of all cryptocurrencies over the past few years, including that of Dogecoin, meant many investors began to take the asset class seriously.Supporters of Bitcoin and other cryptocurrencies are often passionate young investors who are only financially and emotionally invested in its fate. Any criticism of cryptocurrencies can be met with harsh rebuke, often online trolling.In a similar development, Ethereum Co-founder Anthony Di Lorio announced he would quit the cryptocurrency industry. Di Lorio, who is credited with financing the creation of the second-largest cryptocurrency after Bitcoin, said his decision to leave has to do with the “risk profile” of cryptocurrencies.“I don’t feel necessarily safe in this space. If I was focused on larger problems, I think I’d be safer,” Di Lorio said.While the industry saw the exit of high-profile figures, its most visible backer -- maverick industrialist Elon Musk of Tesla -- tried to make amends in his blow-hot-blow-cold relationship with cryptocurrencies.Earlier this year, Tesla announced and later reversed its stance that it would accept payments in Bitcoin (see chart below). The rollback caused Bitcoin to give up all its gain it had notched up after the announcement. This made Musk the target of supporters of the cryptocurrency.But a few days ago, Musk tweeted that his toddler son X Æ A-12 is hodling – ‘holding’ in crypto parlance – “his doge like a champ”. Musk further added that he “literally never said the word 'sell' even once”.
How investors should approach cryptocurrenciesThe volatility in the price of cryptocurrency means that the asset class is speculative in nature. This means that investors' allocation to cryptocurrencies should be commensurate to their risk appetite and conviction in the investment thesis. For those who lack understanding, exposure to cryptocurrencies should be in line with sound risk management principles, such as percentage of capital at risk.
July 22, 2021
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December 19, 2023
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