More cryptocurrency companies will fall into Ponzi-style bankruptcy, but cryptocurrencies will remain an important tool for exchange funds around the world, a venture capitalist told Fox News.
“Overall, I think most things are going to crash,” said Joe Lonsdale, an investor and co-founder of software company Palantir. Various crypto lenders, crypto tokens, and other parts of the ecosystem are “Ponzi schemes, pointless.”
“In any case, if you have unregulated stuff, that’s what you expect,” he added.
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Over the past few years, crypto projects have been valued “not based on cash flow, not based on creating value in the economy, but based on what people are willing to pay for it,” Lonsdale said.
FTX, a cryptocurrency exchange based in the Bahamas, File for Chapter 11 Bankruptcy At least $1 billion was reportedly lost in early November.
Another large crypto firm, BlockFi, also declared bankruptcy last week. Follow other cryptocurrency companies like Celsius Network and Voyager Digital into the Chapter 11 process.
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Lonsdale said there was “a lot of corruption” in some of the companies that declared bankruptcy, though he only mentioned FTX. “Crypto has a big part to it in the long run, 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 a lot of Ponzi schemes.”
Despite the recent turmoil cryptocurrency market, according to Lonsdale, the encryption-based technology will continue to develop more features. Blockchain technology used in cryptocurrencies allows money to be moved online without the use of traditional government or banking infrastructure, enabling a new and important way to move money around the world, Lonsdale said.
“Having more decentralized power and having something like bitcoin does make sense,” he said. “It helps people move money out of Russia, Venezuela and China.”
“It allows misbehaving governments to provide more freedom to the financial system,” Lonsdale continued.
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The venture capitalist said that blockchain technology will remain an important part of the future.
“This ecosystem, in the long run, I think you’re going to have something that emerges that is useful to the world,” he said. “But that’s not all we’re seeing now.”
To watch the full interview with Joe Lonsdale on the future of cryptocurrencies, click here.