The digital asset space had an absolutely terrible year in 2022, fraught with crypto prices crashing and exchanges collapsing. And when it seemed like the year would end without any other mishaps, the world could only watch in shock as the FTX crypto empire crumbled right before their eyes.
Capping off the year with such a dreadful event understandably made most crypto forecasts for 2023 grim. Regulators and law enforcement officials were not able to prevent these fraudulent crypto incidents that grossed over $2 trillion in losses in 2022. And as expected, the crackdown on crypto fraud tops the list of many 2023 blockchain predictions.
Regulators and law enforcement agents are gearing up to salvage whatever reputation and influence they have within the crypto space, and numerous predictions mention that they will most likely make an example of digital asset exchange Binance, one of the top crypto firms in the world.
Binance is the subject of an ongoing United States Department of Justice (DOJ) investigation for charges of unlicensed money transmission, money laundering and violating criminal sanctions. Although Binance managed–so far– to keep having the DOJ from formally charging it and its executives, many are speculating that 2023 is the year that they will finally be charged.
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Philanthropist billionaire and gambling industry pioneer Calvin Ayre, who is also the founder of crypto media outlet CoinGeek, and former Chief of Securities and Exchange Commission (SEC) Office of Internet Enforcement John Reed Stark agree that Binance will collapse this year if they do not overcome this DOJ investigation, among other things.
“For 2023, there are just simply too many red flags surrounding Binance and Binance is too much of a black box to believe that a collapse will not occur at some point, mirroring the same fate as Terra, FTX, BlockFi, Celsius and so many others,” Stark wrote in his crypto predictions.
Stark also believes 2023 will be the end of his participation within the crypto space given his uber pessimistic predictions, which includes Tether imploding and “blockchain [remaining] a glorified append-only, limited-writer spreadsheet with no useful, real world applications.” But Ayre disagrees, especially when it comes to blockchain’s future.
“Stark is right in his belief that a regulatory tsunami is about to crash over crypto, but he’s so focused on the ‘layer 1’ fraud that he misses the far more damaging ‘layer 2’ fraud perpetrated by the mainstream payment companies and the Silicon Valley tech-bros who support them. Only when this fraud is exposed and mitigated will the true promise of the Bitcoin white paper be realized,” Ayre countered in his article on 2023 blockchain predictions.
Layer 1 fraud is the one that is costing users and investors trillions of dollars, while layer 2 fraud hampers the technological foundation of all crypto, which is blockchain. According to Ayre, Web2 giants, which includes the credit card duopoly, have been standing in the way of scaling blockchain to protect their way of making money. This is because blockchain scalability provides utility to both small and big businesses across different industries.
With data block sizes and transaction throughput that can be increased to meet market demands, high network efficiency that eliminates latency and crashes, and fees that can hardly be felt—as opposed to the expensive and volatile transaction fees of popular blockchains like Ethereum—a scalable blockchain is something that Web2 giants may not be able to compete with.
Ayre is optimistic that once regulators and law enforcement agencies start to delve into layer 2 fraud, they will discover the long con these global firms have been perpetrating. And once they have been dealt with, people will be able to fully appreciate the real utility and value of a scalable blockchain.
Like Ayre, Forbes also ended its predictions in an optimistic tone. “Out of every market collapse, however, there are opportunities to build a better, more sustainable, and more transparent market.” And while 2022 has been anything but good for the crypto and blockchain spaces, there is a huge opportunity to reconstruct the deficient crypto system this year.