Cryptocurrency should offer a new virtual alternative to the current "corrupt" system, in which dozens of bureaucrats in conference rooms (central banks) around the world manipulate the price of the most important commodity, money, through majority quotas. rates
The collapse and subsequent bankruptcy of FTX revealed that what began as a libertarian idea to combat the endless money printing and debt creation of our financial system has been hijacked by an irreversible flaw. . The human condition: our greed and desire to get rich quick.
The cryptocurrency world has become a more corrupt and even more exploited system than what it is trying to represent.
The cryptocurrency world has become a more corrupt and even more exploited system than what it is trying to represent. The theft of thousands of cryptocurrency and NFT creators has turned Wall Street into a shrine that society hates so much that cryptocurrency gangs steal money from the public in broad daylight.
With every market bubble, we are reminded that there is nothing new under the sun. The latest iteration is fueled by technology and social media, which has only accelerated its rise and expanded the reach of its creators.
Thirty-year-old Sam Bankman-Fried (SBF) gives an amateur look to Bernie Madoff, the shameless money manager who ran the biggest Ponzi scheme of all time. What Madoff needed decades, SBF achieved in a few years.
By accepting that zeros and stored in a decentralized database can form currency, our society has normalized something that has no intrinsic value, as cryptocurrencies have no cash flow and limited utility. Yes, the words we use, and precisely because they are limited to a certain number, do not automatically become valuable and become a medium of exchange for goods and services (that is, currency) or high-value works of art (referring here to NFTs).
Cryptocurrencies are envisioned as the fundamental decentralized alternative to centralized and over-regulated government systems mired in quantitative easing and endless money printing. Although the cryptographic registry (database) is decentralized, unless you store the digital keys that unlock your digital treasure on a USB stick and risk losing them, you have to rely on unregulated digital exchanges and digital wallets, which are expensive. to use, and it was a big inconvenience.
When you look at the ruins of the cryptocurrency crash, you will see that the cryptocurrency tulip market is nothing more than a large, unregulated, leveraged casino whose real purpose is not to improve the world or provide the technology of tomorrow, but to enrich itself. degenerate creators and provide players with speculative and other exciting ways to take advantage of get-rich-quick opportunities masquerading as investments. This is the whole reason for the existence of the cryptocurrency world.
Leverage has driven speculation and prices. Instead, it is now driving down prices and eroding confidence in a system built on quicksand of hope and greed. The only thing crypto tulips have to offer is breaking history.
A decline in cryptocurrencies will reduce the demand for microchips used to create crypto junk, as well as the demand for digital advertising used to spread lies.
Unfortunately, many ordinary people are lured by the get-rich-quick prospect and of course lose their life savings. Some venture capitalists will lose other people's money and their reputation. A decline in cryptocurrencies will reduce the demand for microchips used to create crypto junk, as well as the demand for digital advertising used to spread lies. There will be other second and third order effects that will be seen in hindsight. The FTX crash may have been a "Lehman moment" for the cryptocurrency world, but it may not have had much of an impact on our financial system. That would extend to the real world, but only slightly.
Ironically, while I criticize the current flawed system, cryptocurrency is a fascinating experiment that makes it clear that allowing the financial system to operate in complete anarchy, without protection, regulation or fear of the law, is the worst thing between us and the bottom line. in powerless robbery and total chaos.
Vitaly Katsenelson is the CEO and Chief Investment Officer of Investment Management Associates. He is the author of Soul in the Game - The Art of a Meaningful Life .
Here's Katsenelson's thoughts on the inflation landscape (read, listen) and how to invest in times of inflation (read, listen). For more information on Katsenelson's investments, visit ContrarianEdge.com or listen to his podcast on Investor.FM .