Vitalik Buterin, a co-founder of Ethereum said that the failure of FTX demonstrates once again that the fault resides with people and not with technology.
Vitalik Buterin, the co-founder of Ethereum has commented on one of the cryptocurrency industry’s most significant black swan incidents, the collapse of the FTX exchange.
Buterin said in an interview with Bloomberg on November 20 that the collapse of FTX includes lessons for the broader cryptocurrency industry.
He agreed that the fundamental stability of distributed ledger and the technology that powers the crypto asset system has not been called into doubt. People, not technology, have been the source of the issue in this case, as well as in a number of other similar situations.
Buterin also described the collapse of FTX as a “major tragedy,” but he said that it supports the opinion of many in the Ethereum community about centralization.
“However, many in the Ethereum community saw the scenario as confirmation of what they’ve always believed: that anything centralized is by necessity suspect.”
He said that this approach entails placing more faith in open and transparent code than in individuals. Buterin published a guide to establishing a “secure CEX” with evidence of bankruptcy over the weekend.
Instead of relying solely on “fiat methods” such as government licenses, auditors, corporate governance, and background checks of exchange operators, he suggested that exchanges could create “cryptographic proofs that the funds they hold on-chain are sufficient to cover their liabilities to their users.”
It is believed that the troubles at FTX came from the exchange’s usage of user money for other reasons. As a result of a massive surge of withdrawal requests earlier this month, the exchange was unable to satisfy withdrawal demand with its existing liquidity.
Also Read: Lawyers Said FTX Withdrawals Can Take Years Or Decades
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