Mon. Jan 21st, 2019

How Crypto Billionaires Fake it Until they make it

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Nov 28

 

Crypto Billionaire’s are stuck in the Devil’s La-la-land at the moment, thanks to the recent crypto market crash. 

Then again, most of the tokens are on the following pathway:

Create a Token -> Hold 1 Trillion Tokens -> Sell one token for $1 -> Token now has a $1 Trillion Market cap/ value -> The Token creator now control $999,999,999,999 worth of tokens.

This is obviously absurd.

The Opposite point of view:

The above listed scenario cannot be executed by only one person, however, if 1,000 individuals hold and collectively seed a supply to the market? What about 10 thousand people where there are specific rules about the % of tokens that can be sold each day. If each persons follow the rule religiously the number required falls dramatically — falling linearly in line with the % of total coins/ tokens owned by the “creator.”

Lets consider a different paradigm. 

Now you can be required to hold the tokens for years but only the initial investors control the supply while also having the added pro of holding as long as they want. One person’s greed can bring significant change but what if it happens with the rules in place? The given case transitions into market liquidity when there is no actual market liquidity. Frequency of transactions could be spoofed making it seem like the market is more fluid and rich than it actually is.

Or a higher number of transactions could be achieved by initiating trades where there is no real exchange of capital. This makes it more expensive to exchange whereby the market maker collects higher fees due to the influx of transactions.

Fake It Until You Make It:

Multiple Startups have used this method of faking it until they make it, a prime example would be Reddit. Achieving anonymity is a feat that is much easier on the Blockchain. “Making fake Social Media accounts” is one thing and then there is “multiple transactions between anonymous wallets on the Blockchain. Of course, the Blockchain places these transactions in a legitimate ledger but that is not the factor which affects market price. The sellers selling Crypto to themselves are.”

The easiest route to growth for any crypto is faking it until the market establishes an intrinsic value and demand for the coin/ token. What follows then is commonly known as “insider trading” which allows 1 percent of the tokens to trickle down in the market while generating a value for 99 percent of tokens being held. The supply is held by an increasing number of wallets but isn’t sold to any outsiders. Outsiders are allowed to ‘mine’ the coin but are unable to purchase any of the initial supply.

Mining is the only route left to acquire these coins/ tokens while they maintain the facade that there is a pool of capital to be mined. The reality is that the coins mined are the only ones which are recirculated and are the things which cause the prices to rise in the first place.

^^^

This is just an opinion as something that can occur or may not occur but the type of ownership of these assets make the possibilities much higher.  

Decentralization may promise a future which isn’t controlled by corporate greed or intermediaries but it brings its own problems. Namely without transparency to see who is behind the trades or even an ability to know the trade is between two separate entities, the water becomes incredibly murky.

The system will reward honest actors with anonymity and free them from any government/ central oppression they may be facing, but this opens up a whole new world for the bad actors to influence implementation according to their views and aspects.

The problem is you can’t have one without the other.

This gets us to a very simple question:

How many people does it take to achieve what is mentioned above? 

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