Triangle-area crypto believers keep faith despite industry’s crashes and controversies
Sam Masten still believes his future career lies in crypto, even if the past year has given him reasons to reconsider.
A 21-year-old engineering student, Masten cofounded the first blockchain club at North Carolina State University and is currently interning at Blockchain Center Raleigh, a local hub for those engaged with the emerging, if now more beleaguered, digital technology.
Masten’s conviction in crypto hasn’t wavered amid a recent wave of negative headlines — the plunging prices of Bitcoin and Ethereum, scores of smaller coins all but disappearing, and the November bankruptcies of the cryptocurrency exchange FTX and lending firm BlockFi. Despite this current gloom, he trusts the utility of the blockchain, the virtual ledgers underpinning cryptocurrencies.
“The underlying technology is the real revolutionary thing here,” he said. “It’s not the price of Ethereum that stands for everything that’s going on. It’s the actual blockchains themselves and what they empower people to do. It could be used in supply chain. It could be used in science.”
Still, Masten and others within the Triangle’s robust network of crypto entrepreneurs, engineers and artists recognize enthusiasm for the technology has diminished alongside the value of the coins. Since hitting all-time highs last year, the prices of Bitcoin and Ethereum, by far the two largest cryptocurrencies, have decreased more than 70%.
Many of the companies Masten has been applying to for spring and summer internships have implemented hiring freezes.
Matto, a Durham-based artist who creates and collects non-fungible tokens, or NFTs, said his sales have slowed. “Smaller artists suffer most in a bear market,” he said. “They’re the ones that are pouring themselves into their work, trying to find a niche or an audience, only to have the rest of the market do poorly and cause hesitation in buyers.”
When cryptocurrency prices were peaking, biweekly crypto meetups at the downtown Durham coworking space American Underground regularly attracted around 100 people. But attendance has withered to less than a dozen said Ryan Bethencourt, a Durham entrepreneur who in May launched the cryptocurrency investment fund Layer One Ventures.
“We’re probably going to see a bit of a pause to be honest, because now we’re in a deep bear market in the crypto space,” he said. “But for those who’ve been following the crypto space for a long time, it’s very cyclical, and it has really large boom and bust periods.”
Similar to how the once-routine crashes of the traditional stock market prompted greater governmental oversight, many economic leaders, including U.S. Treasury Secretary Janet Yellen this week, are calling for regulation of crypto markets. Since Bitcoin was founded in 2008 and Ethereum in 2015, there has been little to no regulation of these or other coins.
Bethencourt noted the decimation of the currency Terra LUNA (currently selling at $.000163 after exceeding $110 in April) has particularly impacted some in the area who had been working with that coin. South Korean prosecutors are currently investigating the coin’s cofounder for possible fraud.
The high-profile scandal surrounding Sam Bankman-Fried’s FTX exchange, which reportedly lost at least $1 billion in clients’ money, has cast a pall over the entire industry. Yet Bethencourt asserted that Bankman-Fried’s reportedly dubious (if not potentially criminal) actions shouldn’t cloud the work people are doing locally.
He said Layer One has raised $3 million this year, which it’s given to a dozen companies that work with cryptocurrencies, NFTs or Web3, a broad term that describes the decentralized blockchain ecosystem.
Compared to some other markets that look at crypto as a commodity, the Triangle has a particular focus on crypto applications, according to Bethencourt. Local startups include Lolli, Kaleido and even Cary’s Epic Games, the creator of Fortnite, which released its first Web3 game on its Epic Games Store earlier this year.
“Over and over again, I get surprised by the quality of builders that are here in the Triangle,” Bethencourt said. “It’s like nerds working weekends, messing around with stuff. The nerds are here. The nerds are in the Triangle.”
There’s a sense among crypto disciples that the crash has whittled out those looking to make a quick buck.
“A lot of people went chasing waterfalls,” said Stephen Clausnitzer, a Chapel Hill resident and CEO of the non-crypto biomedical company Forever Labs. Clausnitzer was an early investor in Ethereum and used some of his profits from the coin to invest in the NFT marketplace OpenSea.
In crypto slang, people use the acronyms FUD (fear, uncertainty and doubt) and HODL, a typo for “hold” that now stands for “hold on for dear life,” to describe the volatile nature of their industry. There’s always a certain degree of FUD swirling around various coins, but true believers preach the virtues of HODL.
Clausnitzer is one of these believers, even as Ethereum’s price has rollercoastered down to around $1,300 an ether, from a high above $4,700.
“I’ve held, and I refuse to sell,” he said. “I believe so strongly.”
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work.
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