Dot.com bubbles and the biggest of the too big to fails

Do you think the governments thought they would lose the game of intelligence gathering? Well, perhaps they haven't, since they leverage the collectors, but I wonder if a half century ago they would have predicted that the largest data collectors would be global corporations that have no real product. Do you think that at the birth of the modern internet, people predicted that the biggest money spinner would be the companies that sold nothing?

I don't remember it all well, but back in the days of the dot.com bubble, it was the "e-commerce" sites that looked to be the future money spinners, with the focus being on individual site experiences - like specialty stores. What eventuated was more like malls though, platforms that gathered all the retailers together, like Amazon does.

What tends to happen though is that while all the big players in a burgeoning industry tend to think that they know the future, it doesn't always work out as planned, with investors wearing the costs. Crypto and blockchain is a new industry, but I wonder if it is a bit different in some respects, because while it is new, it is playing a very old game - economics.

So far, we have seen Bitcoin (as the best known crypto) be ridiculed for years by the finance industry that it is entering into, an industry that is assumed is too big to fail, since it is a macro industry that touches all, an umbrella that covers and interfaces with all other industries. The idea of Bitcoin surviving, let alone being successful enough to warrant investment consideration was laughable not very long ago - and is still being treated as a joke by many, although, more and more with a nervous laugh trailing close behind.

If history has taught us anything it is, nothing is too big to fail. Every empire, nation and company will eventually fall, but we as a community will endure, until we don't. Crypto is like Google, a trendy little search engine that does nothing more than help connect buyer to seller - until it did it so well that there was little option that could compete with the market penetration it had.

While most of us understand the dangers of the centralized power Google, Facebook, Amazon, Apple and Microsoft hold and exercise, people are starting to learn that crypto is different because of the ownership factor, the decentralized nature of the operations and governance. Does this change the future?

If we think about economics as we have known it in regards to the financial systems, all of the governments, companies and investment firms that back them all are counting on the economy as we know it surviving and will obviously do what they can to ensure it. However, if we take the everything fails approach, it means that eventually it has to come to an end, but being what it is as the pervading umbrella, there has to be a replacement for it, with whatever replacing it absorbing the value and potentially generating what it cannot.

The system in play at the moment can make a small handful of "users" extremely wealthy, but the other extreme is that to do so, it will inevitably make a far greater percentage of users increasingly poor. This doesn't mean the poor have necessarily worse conditions than earlier at a practical level, but relative to the rich, the gap grows ever larger. At some point, the entire system becomes untenable as there is no more to squeeze from the bottom and the top retracts.

However, due to the practical nature of economy, we are more likely to see some kind of "revolution" before that inevitability comes to fruition, which means that there will be a forced retraction driven by mass migration away from the suffering. The migration of the masses will be to increasingly move their wealth out of the traditional economy that is restricting them and onto the blockchains where they are owners themselves, not just users. With demand driving supply, the supply will have to also make a move onto the blockchains to chase their customers, which starves the traditional economic pathways of activity and volume.

Investment companies want to make value, so at some point they will have to make a forced decision - do they keep investing into the companies on the old system, or do they follow the where the customers of those companies are moving by investing into blockchain and crypto facilitators? The more they umm and aah about it, the higher the losses on one side, the lower the gains on the other - decisions, decisions.

Back to the dot.com "collapse"

Of course, the era didn’t end disastrously for everyone. Between September 1999 and July 2000, insiders at dot-com companies cashed out to the tune of $43 billion, twice the rate they’d sold at during 1997 and 1998. In the month before the Nasdaq peaked, insiders were selling 23 times as many shares as they bought.

So, who ended up holding the bag? Average investors. Over the course of the year 2000, as the stock market began its meltdown, individual investors continued to pour $260 billion into US equity funds. This was up from the $150 billion invested in the market in 1998 and $176 billion invested in 1999. Everyday people were the most aggressive investors in the dot-com bubble at the very moment the bubble was at its height — and at the moment the smart money was getting out. By 2002, 100 million individual investors had lost $5 trillion in the stock market. A Vanguard study showed that by the end of 2002, 70 percent of 401(k)s had lost at least one-fifth of their value; 45 percent had lost more than one-fifth. source

This was the real ecommerce.

Massive wealth transfer.

The crypto market is a tiny speck in the world of finance. Fucking tiny. There is an enormous amount of money out there which is held by people wanting to "make bank" and they will do it at any cost. But, maybe they are walking into an investment trap as the bubbles they like to inflate, pop and then walk away from have a little more visibility involved, some traceability and some transparency. Plus, it isn't localized to a nation, it isn't owned and operated by a government, it isn't controlled by a company.

Too big to fail is the case when it comes to centralized systems - but decentralized systems are robust and perhaps at times, even antifragile. A nation can fall, but the cities continue on, an empire collapse, but the citizens live, a company fail, but the employees move on. Humans, even in a community are always somewhat decentralized and as such, are better able to fork with conditions and adapt to a new way of life. Centralized entities can't and the bigger they get, the less mobile they become, whereas a decentralized organism becomes more mobile the larger it becomes.

For me, it is interesting to think about what could happen, but there is no guarantee anything will happen. What I am quite certain about though is that all of these engineered economic events that continually bleed the bottom to feed the top will eventually cause a catastrophic collapse as the foundation they rely on crumbles. The current economy is narrowing the selections by reducing the ability to participate to the point where the entire thing is a single point of failure - and it will.

Taraz [ Gen1: Hive ]