Toast to the new Roaring 20s: I wish you good fortune in the wars to come!
by Kevin Wong
Roller Coaster 2020
2020 has been an incredibly eventful year, and we’re not even a quarter way through. Bitcoin turning optimism into pessimism in the course of a week, hostile takeovers on Steem, the oil market taking a hit due to price wars, and the center of our attention, the rampage of the Covid-19 virus. All this, in the span of less than 3 months.
Naturally you are reading this for cryptocurrency updates and not to be reminded of the darkness looming over the globe. But, we should take heed of the root of cryptocurrencies and the events that spurred the development of Bitcoin.
Bitcoin was created immediately after the 2007-2008 financial crisis that rocked the world and sent the worldwide economy tumbling down. Bitcoin was created as a substitute to financial institutions that are seen to be led by crooks and thieves. Bitcoin might have a different purpose now, (or the same purpose, depending on who you ask) but its fundamentals such as decentralization, privacy, and security are still for the most part, the same. But can Bitcoin provide a safe haven against the current global economic downturn? Probably not. Not yet anyway, as we can see from the past week.
If we are honest with ourselves, Bitcoin has not gained popularity with the general public. Most people are not able to stomach the amount of risk that Bitcoin presents. Some avid crypto fanatics might scream “1 sat = 1 sat”, but let’s face it, the general public will not be able to understand such statements. Your regular investors are looking for a simple way to park their money, see 6% to 10% growth annually (in USD, I might add), and retire. I use the word investor because the general public views cryptocurrency as an investment, not as a means for financial transaction/payment option etc. “But what about this/that project” you may ask, and to that I will say, let the result do the talking, not the whitepaper.
Now, I am about to contradict my paragraph before this. Not a very smart move, I know, but let me just set up the context before I shoot myself in the foot.
I am a Malaysian, and I come from the tropical island of Borneo. Malaysia relies heavily on the oil and gas industry, and my home state, Sabah, relies on the tourism industry. Well, the country’s oil and gas industry was hit hard by the price wars, the tourism industry is in its death throes thanks to Covid-19, and the economic situation is further worsened by the political instability introduced by our backdoor government. Is cryptocurrency a good investment for a Malaysian? Possibly.
Cryptocurrencies, specifically Bitcoin, has been known to have slight premiums in places rife with political and economic instability. Better still, Bitcoin can potentially serve as a hedge against the declining value of the local currency, if the local situation worsens. Am I a prophet that I should know these things? I don’t. Is the situation in Malaysia that bad yet? It is not that bad yet, but it could potentially be a lot worse. All I can say is, do not invest more than you are willing to lose.
dPoS (delegated proof of stake) once again shows us that people would give away their right to vote, if it conveniences them. Which is just like the real world. If you missed out on what has transpired, google “justin sun steem vote”. Yet again we see how human nature can cause a system designed for convenience to be used as a mechanism in a power grab ploy, just like in the Malaysian government. Justin Sun enlisted the help of exchanges to vote himself into power, using tokens that are stored on the exchanges by users that are not interested/not educated on the governing aspects of the token. After much public outcry by the community members, Binance has seemingly retracted their initial support for Justin and urged the Steem community to settle their differences before more damage is done.
But what I am here to analyze/critique is not Justin himself. For all his flaws, his takeover was technically legitimate. Perhaps the dPoS mechanism itself is flawed. Unfortunately the centralization of power (be it via mining, staking) seems to be an inevitability for every single currency available.
Maybe this is just to show that human nature will always prevail against a system, no matter how amazing the design of the system is. We will always find a way to attain more money and more power, at the expense of others. We are like moths attracted to the flame, hellbent on self destruction.
Is there a perfect system? I doubt it. According to Plato, democracy is only one stage away from tyranny. Maybe democracy itself is flawed. Maybe we need to start looking elsewhere.
It looks like it is going to be a rough 1-2 years ahead. Let us hope that a vaccine can be developed for Covid-19 and the economy will stabilize. For the developers, keep on building and for the investors/traders, I wish you good fortune in the wars to come.
Disclaimer – Nothing in the article should be taken as financial advice. Do your own research and due diligence. Do not invest more than you are willing to lose.