The crypto revolution is failing

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Wall Street, the Federal Reserve and the Silicon Valley financial arm cannot believe their luck. The cryptocurrency movement, the very rebellion that tried to overcome their hegemony, provided them with the technology to become even more dominant.

When Bitcoin, the very first cryptocurrency, was launched in 2008, it was hoped that its Blockchain technology, which records transactions and cannot be hacked, would spark a digital revolution. If a transaction could be done safely without the need for an established bank, it would mark, we were promised, the end of corporate capitalism and the dawn of a new era of decentralization.

A little over a decade later, however, Blockchain has become the center of the new-age banking system of financial elites. Indeed, behind the scenes, they are betting heavily on crypto.

Using its own cryptocurrency, the world’s largest bank JPMorgan made its first ‘interbank crypto exchange’ with fellow Wall Street titan Goldman Sachs. They completed the JPMCoin transaction, JPMorgans’ version of a digital dollar, using its new blockchain system. And with more than a dozen institutions now listed, trading over $ 1 billion a day, a digital financial revolution is underway.

Ordinary citizens, however, will not be one of them. When it was first conceived, major crypto advocates insisted that we had entered a new era of financial autonomy: all you needed to defeat crony capitalism was a wallet. Bitcoin and an Internet connection.

But in reality, the crypto rebellion failed to free us, nor to achieve anything else that its founder Satoshi Nakamoto envisioned. Rather than producing a more open, more liberating, and more financially free society, the crypto movement has enabled not only another cabal of corrupt financiers, but a hidden cartel of criminals, Wall Street rejects, and what U.S. Senator Liz Warren has described as obscure super-coders. .

Its prominent members continue to plague the world, sidestepping laws, regulations and ethics to amass multibillion-dollar fortunes. Not a single country seems to want to host crypto-billionaire CZ and his company Binance, the world’s largest cryptocurrency exchange. Meanwhile, Brock Pierce, the billionaire co-creator of cryptocurrency Tether, is currently using his wealth to engage in crypto colonialism in Puerto Rico, where dozens of entrepreneurs hope to build a new city that doesn’t use only virtual money.

A cryptocurrency mining farm in Norilsk, Russia (Andrey Rudakov / Bloomberg via Getty Images)

Sensing that this rising elite is getting a free pass, the structures of global financial power have responded with a regulatory hailstorm. And as it intensified, the more controversial outlets tried to meet the demands of regulators.

Binance has tried to appear more credible by examining the potential route of the IPO and bringing in regulators, while BlockFi, a cryptocurrency lender that meets all of the Securities and Exchange Commissions criteria for a system. Ponzi scheme, had to obey securities laws to continue operating in the United States, with five states of New Jersey, Alabama, Texas, Vermont and Kentucky hitting the fintech company with either a cease-fire (requests to stop suspected illegal activities) or justification notices (proof that it is not a scam).

As for the famous Tether bosses, they recently appeared on CNBC, trying to convince everyone that their currency has an individual holder for every Tether in circulation, they claim to have $ 1 in their reserves to back it up (although still won’t do this). not to an audit of their reserves).

Since the U.S. government has severely cracked down on any entity that does not play ball, some of the crypto elite have started to question whether true decentralization is an illusion. Indeed, they begin to realize that it is much easier to build and keep a fortune when they participate in the official system and play by the rules.

This is the same achievement Peter Thiel had in 1999. At the time, his original vision for PayPal was to create a truly anonymous money transfer system free from state influence and control. It will be nearly impossible for corrupt governments to steal their people’s wealth through their old ways, he said, before quickly turning back and climbing the ranks of Silicon Valley.

Fast forward to today, and the crypto elite mimicked Thiels’ change in leadership. Rather than just throw in the towel and admit the game is over, they abandoned their cyber-libertarian roots and merged with their nemesis: the financial behemoths of Wall Street, the Federal Reserve, and Silicon Valley.

It’s easy to see why this would sound appealing; a number of crypto elites are already reaping the rewards of their rapprochement with the establishment. Jeremy Allaires Encourages the company behind the huge unaudited cryptocurrency USDChas in partnership with the payment giants of Silicon Valley, Mastercard and Visa. Meanwhile, Brian Armstrong, CEO of cryptocurrency exchange Coinbase, revealed in atweetin May that he has held meetings in Washington with senior state officials, including Congresswoman Nancy Pelosi and the Federal Reserve Chairman Jay Powell.

All of this raises a particular question: Why is the big Federal Reserve boss Bitcoins supposed to be the archenemy collaborating in undisclosed meetings with the CEO of the chief crypto cashier? In Bitcoin Gospel, it’s heresy.

The answer lies in what I suspect to be the true intentions of the crypto elites: namely, that they were never really there for the freedoms Bitcoin could offer, but more for the untold riches it promised. Now that they’ve succeeded, it’s all about preservation of wealth, and in the age of bailout capitalism, getting too big to fail is the ultimate protection. This is why getting into the good books of Wall Street and the Federal Reserve seems to be the top priority of crypto billionaires. If a crisis arises and they threaten to bring down the financial order of existing power structures, guess what? They are on the front lines for a taxpayer funded bailout.

Right now, it seems inconceivable that financial elites would bail out the crypto market. But as the bubble expands and becomes tied to Wall Street through its investments, the likelihood increases.

Take Tether, for example. In addition to its market capitalization of $ 63 billion, half of its reserves are now backed by real-world debt securities issued by companies on Wall Street. Given that this is a modern, savage bank, which issues its own currency and has not provided any proof of the existence of its assets, it is unlikely that we will ever know how much debt Tether has. But if it reveals that Tethers’ value is, in fact, a scam, Wall Street could potentially suffer losses amounting to more than a slight haircut.

In that case, don’t be surprised when the Federal Reserve comes to its rescue. It’s easy to forget that Wall Street cannot be distinguished from the Federal Reserve; the financial elites know that if something goes wrong, Federal Reserve Chairman Jerome Powell will be there to step in and bail them out at any cost.

And if the next crypto crash threatens to bring their system down, if wild banks like Tether grow too big to fail, our current financial power structures will do everything in their power to ensure that the status quo is maintained. Two elite classes will become one, with the less desirable parts of the crypto world and possibly the taxpayer’s purse becoming collateral damage.

What happens next is everyone’s guess. But with people like Goldman Sachs combining their strengths with such unsavory figures in the crypto elite, it’s not impossible to imagine them wreaking havoc around the world: charging clients obscene crypto fees. and bet against their own Bitcoin products to earn even more money. The rest of us, meanwhile, will be watching from afar, knowing we were powerless to stop or escape a new era of financial repression.

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