Big Topic. Big Ideas.
Crypto Gordon Freeman has been doing a lot of studying and thinking the past several weeks. I've studied global economies for a long time, and many years back imagined the emphasis on parallel economies would eventually lead to a market, much like the traditional stock markets, but representing some form of complementary currencies. At that time, I was aware of Bitcoin, but I did not see Bitcoin as "that" thing that would eventually challenge entire market. After 2017, I became convinced it would. In addition, I became interested in the potential for embracing the ideas of a free-market of innovation, freedom, privacy and earnings that might not be possible if the traditional bank sector started squeezing it's way in.
Here we are in 2021, and despite some of the most turbulent times in modern history, we see an amazing outpouring of excitement, one huge crypto announcement after the next, and alt coins getting pumped more than iron in a room full of Chuck Norris- lol.
I'm always one to become cautious when I see an over-abundance of optimism in a given market. Since crypto is a constantly-manipulated-asset class, one has to realize that there will always be shills and pump groups capable of dramatically pushing the direction forward, and when the peaks are extreme, they will utilize the timing as such to grossly over-inflate a coin's value in the immediate short term when the volume is low enough to move prices swiftly.
All of these things lead me to the point that I see 2021 as the time where the traditional sector realizes it is time to shift their narrative against Bitcoin and the wild, zany idea of people putting 'real' money into thin-air magical unicorn dreams and rainbows, shifting instead to the 'we're responding to demand' direction, offering only their wealthiest clients access to crypto exposure.
My optimism is driven less by the hype and the constant reports on CryptoTwitter about how much 'x' coin just mooned, and much more by the fact that the traditional markets sense real stability troubles and are finding clever ways to quietly shift heavily into crypto. This means that Bitcoin, Ether and Litecoin will be exploited for the confidence held up by our communities, and by the miner networks already in place. There is little chance for big bank to risk assets in smaller coins, no matter their credentials. So, the fact that ETH hovers so closely around Bitcoin's movement, and often now, it can gather enough volume to drive Bitcoin price as well, and the fact that Bitcoin and Litecoin both have a fixed maximum cap on supply means that the more big money coming to these coins, the more likely this will in fact drive price sooner than later.
So, with all of this optimism, I am less concerned about the short term of the top 3 coins, and more interested in facing, thus fixing the problems that have concerned me the most; that is, forward-thinking and future-proofing.
I believe with all of the unquestionable genius in the crypto field, so much of it is based around design, computation, security, networks, voting, staking and speculation, very little is being intelligently discussed about protecting these assets from big, unfair, manipulative moves from governments and their affiliated lobby groups. There is zero question that CBDC's will have a dramatic impact on crypto, and it is only an issue of how the global politics play out, as to whether crypto can exist peacefully and prosperously side by side. First, we simply must have digitized national fiat, because if for no other reason, China would be able to easily manipulate markets and destabilize the wealth of the entire rest of the world, and it would not take long. Much like the Cold War in nukes, we are looking at a race against time to flex fiscal muscles in the European Union and U.S. among others, to prove we can stand strong against innovative national money. Forget about whether it is actually good to have such a thing... I personally do not look forward to a new way to be surveiled... do you? But, balance is everything in economics, and nothing good ever comes from the CCP feeling they have an edge of any kind in dominance. It is bad for other Asian countries and the freedom of their citizens, and it is bad for foreign trade.
So, when we see a big push for KYC/AML from global governance, we in the crypto field need to interpret that as the portals to access. We need to think in terms of access from the front and rear of the transaction. Sure, if you have Bitcoin and can get it to your private wallet, then you have a certain measure of future-proofing built-in, as long as Bitcoin provides a future means to access funds and use them in a meaningful way. I firmly believe that in the future usefulness of the VALUE of our crypto, it needs to serve the real world purposes we need currency for. I'm not necessarily saying that you need to be able to order groceries and pay your mortgage with your Bitcoins, but you do at least need to be able to convert those values to and from fiat or some form of fiat-access-point. There are lending programs already that allow a person to use their crypto assets to leverage borrowing, meaning that they can use the declining fiat to cover living or business costs, while leaving their crypto in place to continue the HODL earnings. This is in fact a risk, but if the governments don't blow it up, it is a good temporary move.
I will probably write more and more about the issues surrounding KYC because I believe these issues are the largest to overcome. A person is most likely only going to interact with crypto through a fiat purchase and sell. Most crypto will flow from a person's bank account to a conversion, trades stakes or investments, and eventually profits taken and sent back to their banks. In truth, there is zero privacy in this trade-off. Sure, we got to enjoy being in crypto, but if there is zero anonymity in 'cashing out' so to speak, we need brilliant solutions for that stage of things.
To be clear, this is not a discussion about whether a true cryptonian 'should' cash out of crypto, but rather specifically dealing with ways that a person can legitimately avoid exposing privacy if they wish to exercise their right to utilize that crypto in any form they wish. Right now, I do not see any convincing resolutions to solve this problem. Some might say that it is not an issue as long as there is crypto, eventually the whole world will be able to use crypto instead of fiat. Again, this is not that argument. The issue stands, that if there is a push for KYC, and there is, then regulation is going to put more pressure on tech companies to expose the loopholes of privacy.
Again, this is about to become its own blog post, but imagine if you will, that people are saying that no one can prevent people from using DEX's with private wallets, and privacy is here to stay. If you don't want exposure and KYC, then don't use CEX. I get it. And, let's say that by choosing the last remaining beacons of privacy by registering businesses in countries that still allow anonymity, the DEX presence can remain on the internet, and they prove resistant to government pleas to only operate with full KYC, the argument is that anyone can use a VPN and trade anonymously. My argument, is that governments can easily apply pressure to Google to remove the ability to run metamask on Chrome. Governments could make it the responsibility of tech companies not to allow user access to platforms loaded in their browsers. OS could be forced to comply with not allowing software to be run that does not comply with KYC rules. It is not the technology that concerns me. I know anonymity can, and in fact is, programmed in on multiple levels where desired. Compliance is the key to the issues we must resolve. With computers having built-in ID's, internet addresses having computer-centric IP's, and the future of money being designed to track and manipulate users, crypto becomes an incredibly important tool for freedom, but only if we can be guarantee access to our own funds.
What do you think is the solution to future proof crypto from the over-reach of policy and regulation? How can individuals find ways to keep crypto a part of the future markets in a free and unregulated fashion that promotes their future-proof qualities?
There are tech geniuses already thinking about the need to plan for ways to protect crypto from quantum computing and the ability to crack codes. I believe that before we have reached that point, it will be a much more important issue to solve the manner in which people can safely, quickly, and privately get to and from their crypto from fiat entrance and exit points, while promoting a safe, legal, responsible freedom-loving market.
And on that note, a very Crypto Gordon Freeman... out.