Photo by Melissa Walker Horn on Unsplash
When banks play double dipping
3 min read
The economy is in huge trouble, and the government has kept denying it.
There are no clear suggestions on how the government will tackle the lousy economy, but the stock market is having a vacation.
What has happened? We have no clue but to read between the lines about how the economy will reveal.
First thing first, the economy is not the stock market.
The stock market is not an indicator of how the economy will play out in the future but rather an indication of a handful of people who leveraged funds to try to gain profits for future growth.
You can treat the stock market as a centralized Ponzi Scheme.
Institutional investors are the one who "influence" the stock market and its directions which may or may not include economic data.
It means economic conditions can be considered or excluded from the stock market solely depending on the institutional investors' judgments.
That is a true reason why the stock market is unpredictable to you!
Similarly, cryptocurrency is a decentralized Ponzi Scheme.
The source of the volatility comes from the speculation about the future growth of such technology.
That is why the crypto market moves like the tech stocks, and the Fed decisions and institutional investors influence them.
There is a misconception about the crypto whales who can influence the crypto market, which is half true only if they own the 51% of the market share, which is likely impossible for Bitcoin or Ethereum.
Cryptocurrency is a Ponzi Scheme because institutional investors join with a handful of funds tagged into the market and integrate into the stock market.
After all, the stock market is 100 times larger than the crypto market.
And that is why big banks like JP Morgan can play double dipping on both sides and continue winning like a king.
How about the cryptocurrency of the future?
If you believe the future of the Proof of Stake, the real purpose of the PoS is to separate energy consumption out of the crypto participation.
Why may energy consumption jeopardize the crypto future?
Who controls the energy in the first place? Unfortunately, the answer is that only a few people own the energy source.
Therefore, mining activities will contribute to energy spending and make those who control energy sources more powerful.
PoS forces of separation from the energy-controlled influential people and make the running of the blockchain through more honest outcome and to detach from the traditional financial assets completely.
The downside of the PoS is the system will quickly form a new type of domination - the aristocracy of staking power.
The larger the stakes you own, the more power you have on the network.
At least we are experiencing a new type of digital economy system.
Support writer here or join Medium here.
Photo by Melissa Walker Horn
Note: Cross-references of this article have been created by the author and have been cross-referenced on multiple platforms here. Please reference the resources and credits here. Reach out to the authors if you have any questions.
Did you find this article valuable?
Support xuanling11 by becoming a sponsor. Any amount is appreciated!