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We are heading into the debt crisis and crypto can help

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The global financial crisis and its aftermath have had a major impact on digital-first startups. Global finance is entering a great debt reset. More debts are created faster than any nation-made credit. How can this sustain growth in the future?

The stunning success of Facebook, Google, and other smartphone platforms has driven startups to abandon traditional marketing and digital platforms in favor of their respective digital-first businesses in the late 90s. Money is no longer tight for early-stage digital companies, which means they need to scale up their product and service offerings quickly. They also need to have access to capital sources that are cheap but reliable. That’s why crypto is so great. It can help drive startups back into business after the Great Financial Crisis, enabling them to continue operating without fear of being left with nothing left to do – or with access to capital that is cheap but reliable. However, multiple financial crises wipe out more capital than ever.

Why global debts are so high?

One of the main reasons digital startups are able to scale up quickly is due to the relatively cheap funding available at early stage. Back in 2014, when Facebook was just starting its business, it received stock options in exchange for development funding of $100,000. So while some early stage ventures may have received up to $1 million, most startups would only ever expect to get a few hundred thousand dollars. This funding is typically distributed in stages, with the early investor giving the majority of the funding to the generalists, who can then invest their own money and profit from the company. Then unicorns are all over the place with billions of dollars poured. People borrowed money to chase more money without even thinking about sustainable growth. Uber is one of the examples that too big to fail, which costs billions per year without any profits for more than five years. In the last decade, money has become too cheap to burn up and too easy to borrow.

How crypto can help

Some cryptocurrencies like Bitcoin have no issuers. Therefore, it forces investors to spend equal money to acquire crypto. It discourages borrowing more money to chase too few. As a result, it can substantially reduce debts. Also, the reward of holding crypto can be unlimited for investors. Since cryptocurrencies are made up of mostly private information, it’s easier for businesses to track and trace money directly back to its owner. This kind of data is known as traceability and is essential for law enforcement and financial regulation. If startups issue their own crypto, they will bear with huge risks of managing their own finance without jeopardizing their future and reputation. It is a good way to keep their reputation in check while minimizing the risks of debts in the entire economy.

Benefits of digital capital

Digital capital is the money that goes into building and developing businesses. The growth of digital businesses is sparked by the need for new ways of communicating and financing. For example, ecommerce websites use online banking to pay for products and set up online purchases. Apps for financial services use digital signing to increase transparency, reduce paperwork and improve customer satisfaction.

The idea of digital capital is more lean compared to physical capital. It benefits to the environment and helps business to grow rather than faking their growth through property valuation organically. 

The financial crisis and its aftermath: lessons for startups

As the global financial crisis has revealed, many startups are still struggling to deal with the consequences of their decision to go public. As a result, many cannot scale up their business operations quickly enough to avoid going into debt or being left with nothing left to do. Most of the money going into startups during the crisis was likely to startups that were already successful. With so little money to go around, most of the startups would have made do with more limited resources. Investor money can be a great source of financing for early stage startups, but it’s also a great opportunity to start your own business and make a significant gain. By providing access to capital that is cheap but reliable, and by leveraging the expertise of nimble early stage startups, you can access a new source of financing that can help you scale up your business and expand your reach.

Using crypto for investment can be a good way during a financial crisis. Crypto is cheap during the downturn of the market and it offers great upside potential to help startups to grow in the future and keep the debt lower without being influenced by the interest rate. It is the way of future startup finance.

Key takeaway

The financial crisis and its aftermath have shown us that technology platforms can be just as important for startups to scale up their business operations quickly enough to avoid being too early to market. Launching a new digital service or product requires a lot of upfront capital. You need access to capital that is cheap but reliable. You need flexibility to scale up your business operations quickly enough to avoid being too early to market. And you need the flexibility to bring in outside investment once you’ve developed a product or service that’s ready for the market. Digital capital can help you scale up your business operations quickly and easily. But you need access to cheap but reliable capital that allows you to scale up your business operations quickly. Cryptocurrencies can be the future to help finance startups. They give startup upside growth of the fund in the future while allowing the company to grow in the short term. You can get there through the link that leads to the investment that you need, and you can also get there through the links that take you to companies that will provide capital and financial products to help you scale up your business operations quickly.

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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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