Falling like Fi-s

Another one bites the dust.
This time, it is BlockFi.

It seems that these crypto exchanges are far more inbred than they were believed to be, with each of them "orgying" up with each other in less than upstanding ways. By the time all the people who keep their coins on exchanges have lost their tokens, there aren't going to be many crypto holders left. I for one am making sure that mine is safely tucked away into hardware wallets.

What is interesting with this "consolidation" period is that once all is said and done, there is going to be a more "honest" accounting of major crypto holdings across the industry, which could mean that there is also a more accurate evaluation of tokens across the industry too. But at the end of the day, the game stays the same - not your keys, not your crypto.

One thing is for certain however, none of this is making crypto seem any more professional in the public eye, where there is essentially gross mismanagement and very much the same behaviors going on that plagues the traditional banking industry. The difference is of course, that it is far more visible in crypto and, the media are willing to report on it. It doesn't matter that the banking industry does similar with junk stocks, overinflating their holdings in what is essentially shitcoins, crypto is always going to be in the crosshairs.

Which is why you'd hope that these exchanges would hold themselves to a higher standard of operations, but that really is too much to ask. Expecting people to Act well is a losing game, which is why in crypto code is law is such an important concept, because those in the know, know that unless hardcoded, "best interest" doesn't matter, only selfinterest.

Especially in the disconnected social world in which we live today, the vast majority of people are going to act according to their needs, even if it is going to impact negatively on others. In areas where there is anonymity and pseudonymity, this is going to get even worse, and crypto is like financial Twitter, with literal point-scoring over others - even though those others are unseen.

The FTX debacle is a high-visibility look at what is actually going on in the financial markets, where there are those who are playing fast and loose with other people's value. High-confidence, low social moral, groups of individuals who would be right at home working at any of the largest banks on Wall Street, indulging in high-risk behaviors and debauchery, professionally and personally.

Perhaps finance has a type?

It is to be expected though, because we tend to repeat what we know and what we know is what has always been. So, while there is the potential for far better economic practices and financial management, the reality is more like the "end of the world as we know it" shows, where as soon as things start to settle, a new government is installed and society starts to again resemble what led to the end of the world in the first place.

We are conditioned.

We tend to fractal on our experience, replicating what we have learned through it rather than actually innovating away from it. We are on average, far less creative than we would like to believe ourselves to be and as such, we are going to run predictable patterns, and as we should know, predictable patterns can be utilized to generate value.

Be where the ball is going to be.

When there are behavioral patterns, it is easy enough to predict what masses of people are going to do and one of those things has obviously been, keep their tokens on exchanges. With all of that value "just sitting" there, the temptation is too great for these people not to use it for their own ends and as their confidence builds, they are going to reach further and then, overreach too far, no longer able to cover what they have "borrowed" from their customer base.

This has been an excellent exercise in why centralized exchanges are not the way to go, because once that value is available to a tiny group of decision-makers, it is going to be used and in crypto, there is essentially no recourse for those users. And in the traditional economy, the "recourse" is that they get bailed out by governments, which is essentially using community money to pay off the losses of investors, spreading the risk to everyone, rather than those who actually took the risk.

Will we ever learn?

Unlikely.

I used to be an optimist, but over the years I have become far more pessimistic in our ability as a species to improve our behaviors, especially at scale. The world is changing in so many ways, but especially over the last decade, the social disconnection is spreading like a plague and over the last couple years, ramped up even faster. Economic challenge is a symptom of much larger issues in society, but improving economic activity can improve societal conditions. However, if keep repeating the mistakes of our past, the economic outcomes are going to be, exactly what we are getting now, amplified.

Even in hindsight, we are largely blinded.

Taraz [ Gen1: Hive ]