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Modern Economic Nonsense — The market is broadening rug pull everyone

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The global stock market has been going through challenging times in recent years, as supply and demand have dipped at different points. However, as is often the case with a volatile industry, this dip has led to opportunities that would not have arisen if the market had stayed at a steady level. The market’s diverse nature means that everyone can find opportunities. So how come the market is from hero to zero within 6 months? 

What are the current market trends?

In the first six months of 2022, the stock market was down by 20%. However, the crypto market is down about 70%. The fact that the market is down as fast has never happened in recent history. There is a growing need for non-merino wool, and this is likely to create opportunities for investors. However, the market trend is very negative due to very negative the market sentiment that goes near zero! 

The need for change is clear

Why people are so negative about the market trend. One of the reasons, thanks to social media, institutional investors create an illusion that everything is doomed, so they had accumulated money to buy the dip and make retail investors be fools of selling at the low is one of many reasons the sentiment is so low. If the economy is really that bad, the government should cut its spending to fight against the downturn. However, it is the opposite of what has happened. The government increases spending! 

Where does the money go

The market sold off, and it will continue this year. The money all goes to the government. That is why the government continues spending crazy while the rest of the market is going lower. Everyone just got a rugged pull from the government. Everyone got rugged pull this time, thanks to experts and economists.   

Diversification of investments is not working here

When everywhere is down, diversification is not a way to enter the market. The government’s rugged pull makes it worst. The crypto market goes down with this trend as well. However, the crypto market has whales that will turn the market around without influence from the government. Do not enter into the stock market when the government rugged pull everyone. It is a time for losing money rather than gaining. 

Tangible assets will become increasingly popular?

As the economy slows down, people begin to look for investments that can hold their value. This is why gold and silver have become so popular in past years. However, if you see the commodities market, everything is down. The only thing that is up is the dollar. The Fed is collecting debts from everyone who received their printed money in 2020. It is time to pay off your debts. Even the tangible assets are due on their debts. That is why we need the crypto on the check of the fiat currency. 

Conclusion

The market is broadening its rug pull from everywhere. This is a warning for everyone to rethink their savings. There is no way to escape the downtrend unless the crypto market fights back against the trend and creates its own path in the future. 

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Crypto Research

What if you regret your crypto transaction

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Defi hacking is a pandemic now. We lost $2.2B this year, which marked the worst year of the crypto losses despite the fact that we are at the bear market, in which the market capital has shrunk to $1 trillion.

There are a few solutions that can prevent hacking. One of them is creating reversible transactions on Ethereum.

Ah, it goes back to the debate on blockchain trilemma.

If you ever noticed the old debate on blockchain trilemma, you realize these three elements control how a perfect blockchain works: security, decentralization, and scalability.

https://www.ledger.com/academy/what-is-the-blockchain-trilemma

Lacking one of the three elements will make blockchain unusable.

The idea of decentralization is providing an option to give power to people by using computer governing and to reach a fair and square consensus.

The characteristics of decentralization include:

  • transparency
  • immutability
  • accessibility
  • trustless

The reversible transactions are challenging the decentralization assumption of the blockchain, which sparks debates on sacrificing decentralization to prevent hacking losses.

Is preventing theft more critical than permissionless immutability?

Of course, the proposal is just a suggestion of one possible solution, but I shared some of my ideas about such a proposal.

Utilitarianism

If we only focus on what will work for us, that reversible transactions feature is preferable and can prevent hacking from damaging the crypto project.

Defi hacking is a pandemic now. We lost $2.2B this year, which marked the worst year of the crypto losses despite the fact that we are at the bear market, in which the market capital has shrunk to $1 trillion.

There are a few solutions that can prevent hacking. One of them is creating reversible transactions on Ethereum.

Ah, it goes back to the debate on blockchain trilemma.

If you ever noticed the old debate on blockchain trilemma, you realize these three elements control how a perfect blockchain works: security, decentralization, and scalability.

https://www.ledger.com/academy/what-is-the-blockchain-trilemma

Lacking one of the three elements will make blockchain unusable.

The idea of decentralization is providing an option to give power to people by using computer governing and to reach a fair and square consensus.

The characteristics of decentralization include:

  • transparency
  • immutability
  • accessibility
  • trustless

The reversible transactions are challenging the decentralization assumption of the blockchain, which sparks debates on sacrificing decentralization to prevent hacking losses.

Is preventing theft more critical than permissionless immutability?

Of course, the proposal is just a suggestion of one possible solution, but I shared some of my ideas about such a proposal.

Utilitarianism

If we only focus on what will work for us, that reversible transactions feature is preferable and can prevent hacking from damaging the crypto project.

Liberalism

If we focus on individual freedom rather than preventing losses, we will not trade off from the immutability feature of blockchain to a centralized governing function to reverse transactions.

Virtue Ethics

Of course, stealing is universally wrong. But what if hackers stole funds to save local people from starvation? Then such stealing may not seem so wrong after all.

But if hackers stole funds to get themselves rich and purchased luxury goods, such action would be prevented.

Moral Absolutism

But if you believe stealing is universally wrong, no matter the circumstances, reversible transactions seem an excellent idea.

Moral Nihilism

We may go extreme that moral is no matter in crypto whatsoever, then implementing reversible transactions simply changes nothing.

Theory of Justice

If you think fairness is more important than utility, implementing reversible transactions is an excellent choice to ensure the ecosystem is fair.

Majority Rule

You may also not decide but ask consensus to vote on such changes and implement them upon the majority vote agree upon.

So which one would you like to choose from?

But no matter what you choose, I think crypto is more toward to Majority Rule that consensus will decide what moves forward with decisions everyone votes.

Of course, who controls the voting power is another debate in the crypto ecosystem—this question we will discuss the next time.

Support writer here or join Medium here

Photo by lucas clarysse on Unsplash

If we focus on individual freedom rather than preventing losses, we will not trade off from the immutability feature of blockchain to a centralized governing function to reverse transactions.

Virtue Ethics

Of course, stealing is universally wrong. But what if hackers stole funds to save local people from starvation? Then such stealing may not seem so wrong after all.

But if hackers stole funds to get themselves rich and purchased luxury goods, such action would be prevented.

Moral Absolutism

But if you believe stealing is universally wrong, no matter the circumstances, reversible transactions seem an excellent idea.

Moral Nihilism

We may go extreme that moral is no matter in crypto whatsoever, then implementing reversible transactions simply changes nothing.

Theory of Justice

If you think fairness is more important than utility, implementing reversible transactions is an excellent choice to ensure the ecosystem is fair.

Majority Rule

You may also not decide but ask consensus to vote on such changes and implement them upon the majority vote agree upon.

So which one would you like to choose from?

But no matter what you choose, I think crypto is more toward to Majority Rule that consensus will decide what moves forward with decisions everyone votes.

Of course, who controls the voting power is another debate in the crypto ecosystem—this question we will discuss the next time.

Support writer here or join Medium here

Photo by lucas clarysse on Unsplash

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Crypto Research

The core reason why Defi is not working

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Defi or decentralized finance is an alternative way to traditional finance. It sounds fancy, but it does not work in reality. Here is why:

Securitization

You cannot ignore the innovation of securitization that gives banks a further push on their asset management and expand their operation into more risky asset management in modern finance.

In the past, banks heavily relied on deposits from users, but with securitization, banks can turn illiquid assets into liquidated assets while raising more cash to make more loans.

In theory, a bigger pool with more loans can reduce default rates and make such financial instruments more secure.

In reality, it will trigger a chain reaction and melt down the entire finance in a second.

What makes security secure?

It is a way to make the default rate as accurate as possible, giving a higher security grade than the lower ones.

A lower grade of loan means a higher potential of default because there are not as straightforward as of default rate whoever originated can be calculated. 

There are many ways to calculate loan grading however, there are some factors, include:

  • The borrower’s credit history.
  • Quality of the collateral.
  • The likelihood of repayment of the principal and interest.
  • Cash flow of borrower that can sustain

Defi’s assumption

The loan grade is automatically low when you allow everyone to get loans from the smart contract without sharing financial background because there is no information about how likely the loan will be the default.

Also, the pool is open to all who can get in and out quickly, which makes it even harder to provide sustainable management of such loans.

Defi is very similar to subprime Morgage-backed securities.

The digital finance product is like a shell company with fake value stocks that attract investors to buy in with the high return rates and risk of defaulting at any time.

There is no innovation in preventing default rates but in speeding up cash flow transactions.

Defi only conveniences the money pooling process but has not improved the prevention of possible default and provided sustainable solutions for long-term gains. Instead, it just repackaged the bad loans and sold them for liquidity.

And even worse, Defi will have no mechanism to force investors to repay loans.

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Photo by Akinori UEMURA on Unsplash

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Crypto Research

When fiat currency is volatile

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Cryptocurrency may not promise you to become rich immediately, but it did foresee the worst scenario of the fiat currency – uncontrollable inflation that makes fiat currency unstable. 

We knew it would happen, but it just did not happen as quickly as we imagined dating back to 2008.

Inflation is climbing into the most dangerous zone in decades:

These types of inflation usually will never occur unless we were:

✅ at war

✅ at the trade war

✅ at the political turmoil

✅ at the economic crisis

✅ at the energy crisis

✅ at the challenge of new power

✅ at the currency transition

In the meanwhile, governments are doing a business-usual.

While the currency crisis intends to repeat itself, it will get worse,

Or maybe not…

Or maybe yes…

Okay, the point is, why is the currency in crisis mode?

It is unresponsible for massive spending that gets out of control from central banks.

Who is paying the bill after the math?

Do you want to guess it?

What is the bright side of the development of the currency crisis?

I have seen no light in the tunnel in the coming years, but it does not mean we are out of any solutions. I just have not yet seen anything.

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Photo by Breno Machado on Unsplash

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