The NFT and PFP collecting community has been livelier than most, with fashion collectors especially estranged, says Tobi Ajala, founder of digital agency Techtee, who has worked with Gucci, Givenchy, La Perla and Nike. “Although a portion of the NFT and PFP collector community obtains assets to resell for profit, within luxury fashion and culture, that turnover rate is substantially lower, in part due to loyalty and proximity to the fashion brands that provide the purchase of these collectibles”.

Still, less industry money is also likely to be poured into Web3 startups, and startups that had their treasuries in FTX now have to raise funds again from investors, says crypto expert Sophie Wiberg Holm, co-founder of Dam Finance and adviser to Gwyneth Paltrow and Reese Witherspoon. “You’re not talking about rich investors becoming less wealthy,” she says. “The company made a big push in emerging economies, saying, ‘Buy cryptocurrency and hold it on FTX.’ Those funds are now gone. Those are the people it hurts, and we’re only starting to see the effects of this.”

Holm adds that the “risk appetite” of big brands or celebrities could be another victim of the chaos. “FTX partnered with big names of celebrities making cryptocurrency and NFTs trendy as digital art became trendy and more valuable,” says Saswata Basu, blockchain expert and founder and CEO of the network. decentralized storage 0Chain. Football quarterback Tom Brady, who invested in FTX and starred in a 2021 ad campaign for the platform, deleted FTX-related tweets from his Twitter account.

More education, regulations and infrastructure

There’s a common saying among Web3 natives: “Not your keys, not your crypto,” referring to the personal key code that people use to maintain decentralized custody of their own crypto wallets. FTX is a centralized exchange, which means that people have trusted it to hold their cryptocurrencies and not all transactions are public. As the public takedown of FTX progresses, it could usher in more awareness and education about these principles, and more guardrails that help and retard progress.

While the impact would take a toll on the perception of cryptocurrencies, Basu says, this also “underlies the benefit of custodial wallets and not trusting centralized entities that don’t disclose what they do with your money or how many reserves they have.”

If FTX were a decentralized exchange versus a centralized exchange, potentially fraudulent behavior could have been seen immediately, because people can see all transactions in real time, says Sfermion’s Steinwold. That’s why he and other experts call for a stricter Web3 approach. “Interestingly, FTX was a centralized company dealing with cryptocurrency and if the company itself was more ‘crypto-like’… [meaning] decentralized, this would not have been possible,” he says. Artist Kim notes that this illustrates why the industry could benefit from stronger decentralization, an open metaverse, and strong community engagement to help people regain confidence in the future of Web3.