The cryptocurrency market has lost more than $1.6 trillion since November, causing colossal losses for investors holding digital currencies.
The euphoria of the cryptocurrency market in 2021 had made millionaires of many young investors and founders of the most ambitious projects in the crypto sphere.
Last November, when bitcoin and ether, the two most popular digital currencies, reached all-time highs, a significant number of these innovators had even become billionaires.
In most cases they were under 40, but a striking thing was that some were not even 30. They symbolized the new capitalists, a new generation of ultrawealthy people promising a democratization of finance.
A bit more than six months later, two back-to-back crashes, one in January and one ongoing, have swept away many of the gains — and much of the euphoria.
The fortunes of the builders of the crypto sphere have also declined sharply. This is the case of Vitalik Buterin, 28, nicknamed by Time magazine “The Prince of Crypto”.
Buterin is co-founder of the very popular blockchain Ethereum. This platform enables developers to create decentralized finance, or DeFi, apps, nonfungible tokens and other products.
in November the Russia-born Canadian computer programmer held in a digital wallet crypto assets valued at around $1.5 billion. These assets were mainly ether, a native token of the Ethereum blockchain.
Ether touched a record $4,878.26 on Nov 10, according to data firm CoinGecko. Since then the cryptocurrency has fallen 57%. Ether is currently trading around $2,076.
“(btw btw I’m not a billionaire anymore),” Buterin tweeted on May 20.
The message was met with much mockery from social network users. Some commentators took the opportunity to accuse Ethereum of scam.
“But you sold the top and dumped eth on users head!!!” one user commented.
“Lol he didn’t sell on anybody chief, I don’t think you know about the Crypto Market cycles, cos if you did, you would know the this phase the market is in is an already anticipated part of the crypto cycle,” another user responded. “So do yourself the favour of learning more, not point fingers wrongly.”
Another user disagreed: “If he did then he’d still be a billionaire. Where’s ur intellectual ability,” the user said.
Other Crypto Billionaires Are Affected
The fall in cryptocurrency prices for some days has been generating debate about the industry as a whole. That’s because digital currencies are certainly affected by fears of recession, but also by widely reported scandals including the collapse of the stablecoin UST, or TerraUSD, and its sister token, Luna.
Investors lost more than $55 billion in this disaster, a stark reminder that the industry is still young and above all that investors must do proper due diligence before investing in cryptocurrencies. Indeed, investors have discovered that some projects could turn into sandcastles in record time.
This is not the case with Ethereum, Buterin says, defending the crypto.
“(Note to trolls: no, ethereum was not a mistake,” Buterin wrote on May 19 amid the market rout. “Sorry, my viewpoints that PoS > PoW, reaching functionality escape velocity is important, and not-just-currency apps are good are unchanged).”
PoS stands for proof-of-stake. PoW, or proof-of-work, refers to a blockchain network’s consensus algorithm, which validates a cryptocurrency transaction by enabling people to compete to add new blocks.
The algorithm typically increases each computer’s electricity usage according to the complexity of these computer puzzles, as virtual miners compete to be the first to complete these challenges.
Proof-of-stake differs in that participants don’t need a lot of computing power to secure the blockchain.
Besides Buterin, other crypto billionaires have lost hugely in the market rout. For example, Changpeng Zhao, 44, founder of crypto exchange Binance, has seen his net wealth drop by $80.9 billion since January, according to the Bloomberg Billionaires Index. His fortune is currently estimated at $14.9 billion.
Sam Bankman-Fried, 30, founding CEO of the FTX.com platform, is now worth $11.3 billion, down $4.97 billion from January.