Opinions expressed are the author's. They do not represent Publish0x's views on crypto.

The 2008 financial is a manifestation of what happens when we overindulge. That bailout itself cost close to $500b and today, these effects still linger. We live in a world of irrationality marked by great exuberance that nearly killed our financial system. The same culture is still prevalent and present in the same actors who made a fortune paying themselves bonuses whilst jobs and lives are being wiped out because of the recent COVID crisis.

Dividends are being increased across the board from US banks to banks in other parts of the world, despite job cuts, business foreclosures. And this has led to a great distrust that is being exacerbated by the elite getting wealthier as a result of a global pandemic. Something is clearly wrong. But because it is the 200 ton King Kong gorilla in the room, fighting against is just impossible. One lever tweaked usually ends up escalating issues across the board.

One of the solutions to a world of distrust is a deliberate and gradual building of trust into our system once again. Trust allows us to maximise collaboration and for a symbiotic relationship to be possible. Thus far, the way our system exists is encourages the opposite. We have penalties, whistleblowing policies, rules that encourage distrust as each person watches out for his own.

With issues of distrust comes a lack of proper collaboration. Our forms of collaboration are very much extended to the level of trust. Think about it – let’s say you are a trader seeking to selling New Zealand cows to wholesalers in Asia. The reason why you prefer the transaction is made possible is because you have cows and you want money for them. The wholesalers want the cows and not the cash they think that they can sell those cows for more money. The cows represent more value than the cash they hold on hand.

The emphasis of the transaction and the relationship in and of itself, is money. Money. Money. Money. Money emerging as the most important thing. We have in that sense, sacrificed collaboration on the altar of arms-length transactions. However, we need to be mindful that no matter how it works, the competitive nature as opposed to the collaborative nature always generates lesser value.

Competition is essentially, a zero-sum. When we keep on having that me-mentality instead of an us-mentality, it will be difficult to progress and create greater economic value for all.  

ENTER CRYPTO

Let’s take a pause here and bring in the blockchain. Can it be called into play to serve a better financial system to the next generation?

Well, let’s look at the negative headlines thus far – scams and rug pulls.

Scams work because of ignorance. Cheats will hide behind every façade to wring those Ledger phrases out of you. Transfer 5 BTC to get 10 BTC back schemes? Well, they really do exist and people really do get tricked out of their cryptocurrencies. Will this stop? Of course not. Because inherently, there will be those have the propensity to cheat.

Rug pulls have occurred because of misplaced trust. Even Mark Cuban, being a sagacious billionaire, got rugged in the Iron Finance-Titan issue. How about pump and dump schemes? Well, we heard news about influencers using their following to buy into a token that already has them in the initial innings in buying low, and then pumping up the value of the token before dumping it.

These problems are all not very different from the primary fiat system. Pyramid schemes seen in the world we already live in without the advent of crypto. There will always be that cheater looking for the sucker.

Yes at some point, some level of regulation will likely arise. But it will be nearly impossible to regulate something so decentralised. China has taken a serious place to ban it because it can never control the nature of the already 100-ton gorilla in the room. Because the technology has become ubiquitous and evolved in so many ways, it will be very difficult to stop it. It will just evolve and show up in another form on another day.

CONCLUSION

So the short summary to the long answer it really this.

Crypto is not the end-all-be-all answer to the problems we see in our financial system.

The solution does not lie in the technology of blockchain as it is with dealing with the human nature. To reinstate trust, every one of us must come on board to do so. It cannot be a place where we get people to dot every ‘i’ and cross every ‘t’.It is not a rules-based place to begin with, because the heart of the issue, is the issue of the heart.

The human condition needs to be addressed to rebuild trust with one another. Something that has been broken for so long.

Crypto is just another form of trying to push in rules to keep people in check and not allow for out of norm behaviour to occur in transactions. Smart contracts serve a specific purpose but it cannot change the human condition. That is why those rules are all in place.

What is interesting, is that it gives us this place to reflect – because the reason why we need rules and more rules to govern the initial rules, all contained within the blockchain, is that we cannot trust ourselves to act in ways that nudge people to come together collaboratively. When we stake our altcoins, we do so not because it “builds” an ecosystem.

We do so because we were incentivised by the yields. Perhaps, this is the place where each of us has to reexamine ourselves and take a reset of our own human condition. Only then can the financial system truly experience a proper reset.

Yours, 

Chief Editor

BBA Market Perspectives

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