• And thus spoke the fool... “We have to regulate crypto“

  • The crypto world has no shortage of spectacular fraud cases.

    Most recently there was sociopath Scam Bankman-Fraud‘s FTX operation that caused billions of dollars of damage to both institutions and retail investors.

    We had the $4 billion ponzi scam OneCoin that added the face of "cryptoqueen" Ruja Ignatova to the FBI‘s ten most wanted list.

    Or take crypto fund 3 Arrows Capital. It once had assets in excess of $10 billion (rumored as high as $18 billion).

    The owners misrepresented its balance sheet to overleverage themselves and take out billions in loans using the same collateral multiple times for different loans.

    When the market turned bearish, it was the reckless institutional lenders
    that got screwed to the tune of billions of dollars.

    The totally obvious Bitconnect pyramid scheme was another big one. The muppets were taken to the cleaners for $2 billion.

    And this meme has forever been burned into the neocortex of millions of people.

    The list goes on.

    In response to that, you‘ll often hear comments, even from crypto people, that go something like this:

    “We need more regulation to protect regular people.“

    “Those idealistic crypto-believers need to grow up. Sensible reulation is good and inevitable.“

    Here is the reality: No amount of regulation can prevent fraud.

    In fact, regulation is based on a state monopoly of power. This is not only unethical but it enables a more hidden kind of fraud. Instituionalized fraud that is a drag on society and prevents progress.

    It happens through regulatory capture, more commonly known as the revolving door between regulatory agencies and big instiutions. It‘s using government coercion to hinder competition and prevent the free market from flourishing.

    In the digital realm and in particular in the financial system, only computer code based on decentralized networks can guarantee fair and ethical market operations.

    Code makes this kind of corruption impossible. You can‘t sweet talk a smart contract. You can‘t hide your liabilities on a blockchain.

    The rules are being enforced autonomously.

    Perfect rule of law without corrupt middle men.

    The free market will expose you to the consequences of your actions.

    Free markets are adversarial environments, not a land of milk and honey.

    There‘s no guarantee that there won‘t be shysters offering products that lead to negative outcomes. Free markets also don‘t prevent outright scams. In fact, you can always count on them being around.

    A free market means anyone can offer anything. And anyone else is free to accept or decline. It‘s your own decision, your own responsibility. And just like in heavily regulated legacy markets, there are plenty of bad investments around.

    The very poorly designed mechanics of the Terra Luna token is a good example. I wasn‘t a fraud, it was just stupid to risk your capital on something designed to end in a death spiral.

    Plenty of people voluntarily participated and suffered the consequences when the thing imploded.

    Smart contracts prevent fraud that is enabled by opaque operations, where you have to trust someone. Where you‘re unable to verify the true state of things.

    Blockchains operate in a transparent manner with guaranteed outcomes.

    Plus, you retain your sovereignty at all times. You don‘t need to depend on middle men that might or might not do as they say.

    There is no centralized operator that acts like a black box where you don‘t know what‘s happening (like with BlockFi, Nexo, and many others).

    It‘s a futile endeavour to try to prevent stupidity through regulation.

    You can‘t regulate stupidity out of existence. It‘s very much part of the fabric of space-time in this universe.

    The Blockchain Ecosystem offers a world of equal opportunities. It‘s decentralized and distributed.

    This has two crucial implications:

    1. It cannot be regulated. Cry me a river.
    2. Given enough time, it‘s rise to dominance over the old, corrupt
       system based on regulations is inevitable.

    Therefore, the sooner you start accumulating carefully selected cryptos, the richer you will get.

    The sooner people truly become adults and take responsibility for their own actions without looking to outside authorities, the sooner we‘ll become unshackled from the past.

    Once this happens, reality on this planet will change.

    We‘ll live in a world of abundance.

    A world full of growth, creativity, rapid progress and endless opportunities.

    And we‘ll enter the Second Renaissance.

    The Blockchain Ecosystem is our vehicle to get there.

    It could also be your vehicle to multiply your net worth over the next two years.

    To sovereignty and serenity,

    Marco Wutzer