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Crypto Research

Modern Economic Nonsense — Time to reinvent cryptocurrencies

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Cryptocurrencies have been popular but also problematic. Banks and other financial institutions have been reticent to engage with them, while the general public has not grasped their underlying value proposition. They need to be reinvented from the ground up to solve these issues. We can start with three essentials: tech, adoption, and trust. It’s true that technology plays a central role in cryptocurrency adoption. But only if it’s applied in ways that are user-friendly and make sense for people who don’t understand it yet. With digital currencies gaining more traction each day, now is the time to reimagine them in order for them to reach mass adoption. These are three important considerations when thinking of how to reinvent cryptocurrencies. Let’s explore what they mean and why doing so is necessary for their future success.

Tech reimagining

Cryptocurrencies have proven to be an invaluable way of transferring value. It’s an efficient way to send money online, and it has a decentralized infrastructure that makes it hard to disrupt. But above all, it’s a way of using “crypto” that can boost security, transparency and trust. And yet, what we’ve seen is how central banks, retailers and other financial institutions have failed to adopt it. This has led to the phenomenon of “crypto fatigue” among the general public. The bare truth is that most people are still not accustomed to the concept of digital currencies. It’s time to reimagine the way that transactions work, and there are plenty of ways that can happen.

Adoption reimagining

There is a widespread misconception that cryptocurrencies are only meant as investments. While they can certainly be used as such, they can also be a way to transfer value and make everyday purchases. Every financial institution is looking for ways to make transactions safer, faster and more efficient. This can happen with cryptocurrencies. One big challenge is convincing the general public that they can use them for daily purchases, such as groceries or dining out. People need to see that cryptocurrencies are more than just investments. However, this isn’t an insurmountable obstacle. Simply using a cryptocurrency as an intermediary in daily transactions can help to gain people’s trust. If a cryptocurrency addresses one of the issues with how we currently use money — like the long transaction time — then it would be even more convincing. And the best part is, this solves the adoption challenge for both businesses and customers, as the latter don’t need to learn a new system.

Trust reimagining

Let’s face it: digital currencies have had a rocky journey so far. From regulatory uncertainty to hacking and scams, they’ve been surrounded by uncertainty. And yet, that’s also what has made them so exciting. It’s what’s spurred them to grow and attract an ever-increasing number of participants. But the fact remains that cryptocurrencies have often flown in the face of trust. And this is what has held them back. The more that people in everyday life use digital currencies, the less likely they are to be victim of fraud. People need to see that they can trust these services, just like they can trust financial institutions. One way to reimagine trust is by boosting user experience. For example, in centralized services, you may have to wait for a long time for your transaction to go through. With cryptocurrencies, however, it’s instant. This means that you don’t have to sit in a queue and wait for your money to be transferred. It also means that you can do business online without having to wait in an offline queue. This also means that cryptocurrencies can be more seamless than traditional methods. Take, for example, the current headache of traveling and payments. You may have cards that aren’t accepted, or the transaction cost too much. Cryptocurrencies can be a solution. You can load your virtual currency wallet with money before your trip and pay for any purchases without hassle.

Conclusion

The future of cryptocurrencies is bright. They are a safe and efficient way for people to transfer money all around the world. But to reach mass adoption, it’s crucial that they are reimagined from the ground up. This can happen in many ways, from boosting user experience to developing new use cases and reimagining what it means to trust in these systems.

Reminder: I am not your financial advisor. 

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Crypto Research

The Future of Machine War II

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In late 2021, I wrote an article about A.I. vs. Blockchain. I realized it was closer than I expected.

https://medium.com/@xuanling11/artificial-intelligence-vs-blockchain-the-future-of-machine-war-b685d208ba20?sk=874af90c7acbe857fa004c0ebe0d5e28

Web2 is leading a future of technological centralism. 

The way we see the world in ancient is what we saw became what we believed. Later, the enlightenment process helped humans realize what they had seen was disguised by the nature principle. Once we tested our assumption and received accurate results, we thought we had mastered the nature principles. Yet, we did not make the world better than we thought we could. 

We are living in a world in which companies know more than you than yourself. Companies can likely tell you what you should believe without letting you know. 

The secret weapon that companies like Google invented is A.I. or Artificial Intelligence. 

If A.I. can think like a person, it can easily replace you! Since companies got all your data, you freely offer them by using their free services, and they can replace you one day without you realizing it. 

Without all conspiracy theories behind what Google may or will secretly develop, A.I. reaching consciousness is … impossible.

If it does, Google has successfully made a human – dumb!

The most advanced A.I. – Tesla Autopilot Program cannot distinguish objects between humans and other moving objects during driving.  

Using technology makes people dumber than they think because it takes away your consciousness – the ability to think uniquely!

Blockchain is the future of decentralization.

We need a peer-to-peer system to regain consciousness and break the chain from Web2. 

It gives individuals the power to rethink information.

Think about today’s media; all information is filtered to offer readers without any surprise. News is data that Web2 selected specifically for you to read. 

We need a decentralized system so that you can receive unfiltered information and gives you a surprise that sparks ideas of imagination.  

Web2 is afraid of the blockchain because they are too big to fail. 

 They mimic the blockchain by creating a centralized node system – social media network. 

It is a net growing outward through a single point. Only the problem is that connection is facilitated by technology. And the biggest failure is such technology has a single point of failure problem. 

And they cannot escape the law of economics – the law of diminishing. So we will see Web2 grow slower due to the law of diminishing that they require more data with few increments of advancement through A.I. without any breakthrough because A.I. is a deterministic system that works with a lack of randomness. 

In Web2, they assumed everyone was stupid, and they offered solutions to everyone.

In Web3, everyone is good and should anticipate solving a problem together.

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Crypto Research

Financial sanction to mixers

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Have you heard about financial sanctions from the US on virtual currency? At least, I have not yet. But the US Department of Treasury has issued sanctions on two crypto services: Blender.io and Tornado Cash.

To clarify, the US sanctions on tools but not target specific entities or groups of people.

So why bother to sanction something that the government probably won’t be able to sanction in the first place?

What is a mixer?

A cryptocurrency mixer, sometimes referred to as a tumbler, is a tool for money laundering. The sole purpose of the invention is to make transactions untraceable.

How to mix?

Even crypto is pseudo-anonymous, but it is traceable through your wallet address. A mixer is a black box service to filter your traceable wallet address into the untraceable wallet address.

How to wash your money clean in the traditional way?

https://dimensiongrc.com/the-stages-of-money-laundering/

The assumption is you will not get caught at each stage, and then you place your dirty money in a bank through companies and use the funds to purchase legal goods like houses or luxury goods.

There are mature regulations and rules to stop you from putting your dirty money into banks.

Digtial money landury

https://www.eurospider.com/en/know-how/compliance/211-what-is-a-cryptocurrency-mixer

A Crypto mixer or tumbler is a service to pool dirty digital currency in their favor and redistribute it into designated wallet addresses or addresses randomly generated. 

It is a challenge to stop transactions because there is no entry point for law enforcement to stop at each stage. 

https://home.treasury.gov/news/press-releases/jy0768

Ultimate Mixer

Tornado Cash is the king of the mixer. Unfortunately, there is just no way to trace transactions anymore. It is a smart contract with zk-SNARKs (zero-knowledge proofs) that does not require revealing a wallet address during transactions and ghostly distributed funds without leaving any traces.

This tool is the ultimate weapon that the government has to shut down, or there is no way to prevent transactions.

In Conclusion

Let’s change the future – legally. 

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Crypto Research

Why there is not crypto banking exist

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We have always heard about cryptocurrencies, crypto exchange, banking, and trading platforms, but we do not really grasp the idea of crypto banking. Crypto banking is a contradicted idea. If crypto is to replace banks and give users full control of digital money, why do you put your crypto into the bank? The new research paper argued that there are risks for banks to adopt crypto, but they did it anyway.

Banks want crypto

Cryptocurrency has a rough road at the beginning and continues to experience a bumpy road ahead. The institutional investors were watching its performance. In early 2017, institutional investors had opportunities to adopt crypto, but they found out the return of the investments was less than traditional financial assets. Regulations were not a concern for some individual institutional owners, but banks were conservative at the time. As a result, some investors adopted it in early 2018 than banks did. Then suddenly, the crypto market took off in 2020, leaving many banks to regret their decision in 2017. Many banks set up their digital investment group to rush into the market and increase prices. Of course, many of their investment positions are instead of shadow positions. It is unclear how much they have been invested in and what vehicles they took to invest in cryptos.

Crypto Exchange

Crypto exchange is a bank-like platform for crypto. Banks offered a place to purchase fiat currency. Crypto exchange did the same duty as traditional banks did. Since there was a gap between the crypto and banks, the crypto exchange took responsibility and offered crypto services. The crypto exchange took off after 2020, and they left banks in the dust. Then, crypto winter came in early 2022, and banks again hesitated to enter the crypto and started denouncing crypto usage, particularly in the Defi area. But interestingly, they tried to find ways to get into crypto without being directly exposed to cryptocurrencies—hint: through hedge funds.

How much banks exposure to crypto

We do not know how much banks have been exposed to crypto. We learned that the big Wall Street players were exposed to the services of the digital asset through State Street of their $41.7 trillion assets. Some have been exposed due to Luna’s collapse and 3AC bankruptcy. But again, no specific dollar amount was provided. 

Survivors

Since the crypto winter, institutional investors have been cautious about crypto exposure. However, crypto exchanges are the winner again. They are exposed to crypto and take risks more than banks do. As a result, they likely will weather the uncertainty. Furthermore, there is no need for crypto banking to handle your crypto assets since many such services will not survive long in the crypto environment. 

Crypto is resilience

Despite its fluctuating price and unsecured assets, crypto is resilient to phase out any bad business ideas and bad actors in the economy who wants to or try to dominate the market but who transfers risks to users to believe they are the one who should take responsibility for their carelessness. Unfortunately, those business models will not survive long.

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