For the past decades, we have been talking about globalization through the lenses of multinational corporations, the only entities having the financial capacity to develop a global network. Internet gave access to unfiltered information to the public and quickly became a platform to develop the creative scene without frontiers. Local businesses and individuals finally got an exposure to the global market and could reach anyone around the world.
Still, Internet remains a layer on top of a very conservative banking system. The definition of money and its circulation are ruled by government and licensed institutions (central banks and other trusted private companies). Blockchains through crypto currencies are disrupting this global economy because they replace this concentration of actors by a decentralized.
Centralization of power is the main problem. It always have been. Human beings tends to have narrow minded decisions, due to misinformation and prioritization of own interests. Corporations are exacerbating this inefficient and unfair use of power by having mainly financial objectives.
Since the 2008 crisis, the public is blaming the banks of manipulating financial markets and not protecting their clients the social fiber of the economy. In brief, speculating is bad, banks are too greedy. In response, governments and regulators have strengthen their requirements and monitoring to limit the activity of the banks and their impact on the “real” economy.
If we look now at the blockchain revolution and its cryptocurrencies, we can easily criticize the actors from the same bad behaviors. Speculation is the main driver and most of us are in it for the money (it’s funny how no one cares about at daily 5-10% performance on an ICO). Very little are educating themselves on the technology and the problems that developers face and solve.
Price manipulation is so common (the infamous “Pump & Dump” or false information on Twitter that remains unpunished) that it’s actually reaching to a point where we should envy market regulations, as there is none for Bitcoin and its alternatives. The result is that where we believe there is certainty in how the Bitcoin technology will change the economy and in the rise of its price, there is actually uncertainty as the price level is set based on emotions and short term capital gains. Decentralization doesn’t have only a positive side, controls are sometime here for the common good.
Many of the traditional financial system detractors praise Bitcoin for its freedom, stating that it will end financial crisis and set the basis of a better world thanks to a trustless no-frontier organization. I don’t think we are there yet and I doubt that we will be anytime soon. The common Joe who’s putting his 100USD monthly savings in the market believes he can gamble like pro-traders do. But professional don’t gamble, companies don’t play the roulette, they own the casino. I fear that we will see more people burned with cryptocurrencies than with the subprimes.
Simply because freedom has a price and comes with responsibility, one has to be prepared for it. And it doesn’t happen overnight.
In conclusion, what’s best? Centralization or decentralization? Regulation or deregulation? Freemarket or fairmarket?
Or more importantly, are we, the people, ready to take the responsibility of our actions and not delegate them to others (i.e. trust)?