Everything is fine?

These are a few thoughts I have had in mind for a long time. Hope you enjoy it and start your own reflection process.

"Bitcoin is dead" was a famous expression that came up during every bear market since the very beginning. So far it has been proven to be wrong over and over again. Since institutions took over it got replaced by a new phrase "Bitcoin is here to stay". Bitcoin - not only measured against fiat coins - has a future and so do many other projects. The question we need to ask: Is it the future we want(ed)?

The (r)evolution is dead!

We came a long way since the first Bitcoin block was issued on January 3rd 2009. But we are back to square one. Not only did we lose track of what cryptocurrency is all about. We also came full circle on fractional reserve (crypto) banking, on future markets settled in USD (the tail wagging the dog) and massive surveillance on-chain and through KYC/CEX.

So who is to blame? Me, you and everybody else... So we all? Yes.

Bitcoin was created in a way that used human greed as a game theoretic driver. It made use of something that is in our "DNA" and often seen as a destructive force in a constructive way. We can not eradicate what is within us, but we can transform it into something useful.

Greed will show up in many different ways in many different places - some of them unexpected. What we need to realize: There will always be manipulators and criminals that want to get rich at our expense. Nobody is going to stop them, but you - yourself. To make it more complicated they come in various costumes e.g. government agencies, pump and dumpers, regulated and unregulated cryptobanks (CEX), outright scammers and many more.

Degradation over time and lost idealism

What was this all about in the beginning?

In a time without exchanges and with neglectable perceived value... Why did it catch on and why did people give up their life to work on early Bitcoin and a little later Monero and Ethereum?

We want what others have. Massive crypto gains (vs perceived great risk at that time) have not been hidden from the masses for long. Rather the opposite. Lambo culture entered the psyche of the masses. The masses always choose the easy road (UX) but still expect massive gains. The way they try to get there is by compliance. And if it doesn't work out as intended their mental exit strategy is: complaints. Complicity, compliance & complaints are the holy trinity of the modern societal structure. On top are those who know how to exploit this.

Mass psychology is a bitch. To set you free you need to look at the subconscious conditioning of the masses. Manny people just want to follow - exposing ones own thought process can be dangerous. But the problem is those who just follow don't know about the reasons, the ideas and the ideals that made something like early Bitcoin work in the first place. Unfortunately that makes them an easy target for manipulators who say what they want to hear. If you want gains you need to question yourself. You need to question what everyone else thinks around you: How exactly was one able to "get" Bitcoin early on? What thinking process lead to an investment of time, energy and money?

Let's take a closer look at fractional reserve crypto (banking)

The standard process for 95% of today's "cryptoinvestors" is that they go through an "anal probe", send around 20 face pics as well as their passport and plenty of more data to a centralized exchange (honeypot for both government and hackers), in order to buy some well propagandized and hyped scoin. Storing this *scoin on a paper or hardware wallet is to expensive (in time, effort and money). So they just keep it there. After all. CEX are safe. Aren't they? In the end, you do what everybody else does. How can that be wrong? And sad but true, it's the best (and likely only) practice you ever heard of.

There you have it. This is where we took the wrong turn.

• Me as an oldtimer, for that I couldn't make it more clear to all of the newcomers be they friends and family or strangers over the internet how important taking care of your own finances is - in general and even more so in the cryptoworld.

• The exchanges because they gave into the temptation of going fractional reserved.

• And you for not spending the time to learn about all that and become self-responsible.

The world faces harsh times, because people gave and still give up their self-sovereignty, their responsibility and have bigger confidence in corporate entities and third parties with special interests than in themselves!

The knowledge, wisdom and insights of the early adopters (and early misfits in a failing society) seems to be lost between wanna get rich kiddies (in fiat, DeFi or stablecoin terms) and outright gamblers. I mean don't get me wrong. If you are in a bad position in life and want only the best for your family and yourself "crypto" could work out for you IF YOU UNDERSTOOD what problems it can potentially solve for you. But if you are not taking the time to learn about its fundamentals it is more likely you get fleeced in one way or another. So stay away from it as far as possible. It is probably not for you (yet).

Crypto (hidden) currencies (certain money qualities like fungibility) are here to be managed and controlled by you. And by you alone. In some cases that may involve your friends, family and community.

Is that the revolution everybody is talking about?

We created a decentralized system for your personal as well as global finance. For your freedom. Your rights. Isn't that amazing. Unfortunately that decentralized layer gets more and more co-opted and surveilled by centralized players. And many of the newcomers put their trust in those entities simply because they don't know any better or are to lazy and comfy to really transform their habits. Trust that is not warranted. Trust that is abused. We re-created the system of fractional reserve banking. We re-created middleman and third parties. Something went wrong. The message of the early days got lost.

"Crypto" is still in the speculative phase. And the speculation was always about a new monetary standard that enriches the lives of the many by simply being a better money, not by necessarily making everybody rich in funny money terms.

A bankruptcy declaration: Virtual coins & paper claims

Now, when I am talking about bankruptcy I am not talking about exchanges that create virtual coins on their internal ledgers. I talk about the ecosystem and all the small and big investors who made this possible in the first place. It is them who leave their hard earned money (stored time, energy and resource value) on centralized exchanges expecting them to keep them safe. However this makes CEX a huge target for hackers (see the scandals over the years) and regulators. Those exchanges simply did what all business do - they become banks. They maximized their profits by lending out your coins, re-investing them in more risky markets, trade against you as their customer and create more virtual coins out of thin air as they like. The only thing needed for that to work is managing the in- and outflows (deposits and withdrawals) of real coins, which is a rather easy task.

I do think that at least some of them (looking at you Binance) will get caught in their games of creating virtual coins, but some won't. And the more those entities get regulated or get systemically relevant to state actors, they even could get backing from the government for their fractional reserve scheme just like too big too fail banks did.

Where's the revolution?

We can now have derivatives on fractionally reserved CEX (cryptobanks), based on unbacked Tether, based on fractionally reserved USD.

And even if we talk about actual crypto currencies in its original meaning (hidden and fungible) like Monero which would immensely benefit privacy-wise if they were not held or bought on a KYC/CEX it still means we can have derivatives on fractionally reserved CEX (cryptobanks).

Now there is nothing wrong with derivatives and virtual (none-existent) coins in the first place. It's just that assumptions of price development and representation as assumed (a famous Bitcoin meme: limited supply) are broken. There are currently around 18M coins in circulation for both Monero as well as Bitcoin. The Monero community concluded after collecting circumstantial evidence for a couple of years that a bare minimum of another 18M paperXMR exist on CEX internal ledgers.

Natural evolution(?) in banking in the 19th century lead to the same outcome. Modern banking works with fractional reserve as THE standard. The thing is, some banks are too big too fail. And so they get bailed out by governments if necessary (another branch of the bankers and financiers empire). In other words they print more to meet liabilities at the expense of everybody. If we are talking about cryptobanks the same mechanism doesn't work for BTC and XMR. However there are Tether and other stablecoins that can be printed and are used in a similar way to manipulate and distort market and price signals.

Those exchanges that do fractional reserve have a competitive advantage over those who don't at least until most customers want delivery of their real coins. The advent of mainstream crypto brokers like RobinHood and PayPal made it obvious to many old exchanges that most people are not interested in real coins. They are just speculating on the fiat value. The option to "withdraw" is simply not needed for said customers and as history shows (so far) exchanges won't be held accountable if withdrawals are not available for days, weeks and in some cases even years as it happened with OKX, Binance, Huobi, KuCoin, Coinex and many more.

Everybody wins?

One has to conclude that most investors are either not aware of how the (crypto)markets are rigged against them or they agree with it.

From a liquidity perspective it is much more easy to buy 100k virtual coins than 100k real (cryptographically verifiable) coins. The liquidity is just not there to buy 100k real coins at the same price. Which means normal market forces would lead to a price rise. But that is not the case anymore.

And that's mainly a problem for you and me and other retail investors as the financial sector is well aware of this and also has the necessary tools and knowledge to manipulate markets in their favor gaining a constant high yield income from doing exactly that. The normal guys can look at their crypto portfolio held on a CEX and hope for the best.

The old days are long gone, where everything revolved around the idea of how to create circular economies by on-boarding merchants and spend this exciting new self-owned self-created money (that has actual value - something that was almost unbelievable at that time!). No one wants to use cryptocurrencies today. Everybody waits for prices to go up (which means they are waiting for others to buy in). And of course It's much more comfortable to buy the coins on a CEX (where one can sell them with one click) and keep those virtual coins safely stored with the third party custodian you trust.

What now? But can we not have nice things?

Getting back to the roots means to make a decision. It's on the users (alone) if they want to have their cryptocurrencies safe-guarded by centralized third parties that are easily hackable, regulated and profit oriented (even if it means acting against the best interests of their own customers) and on top of that report all your gains and losses to the government and sell your financial data to global corporates and extortionists.

If you do not want to be self-responsible, please reconsider your investment. The market makers (the old guys who have figured out markets long before you even were thinking about putting some money into crypto) profit from this asymmetrical market. Do you?

Take care. Know what works for you. And only then invest in what works for you. And more important start spending cryptocurrencies in real life. ask your merchant if they accept cryptocurrencies as if your life depended on it. Because In a CBDC world it does!

Crypto as it was meant to be is the (r)evolution of money. It's better money for everybody!

The saying: * Not your keys, not your coins - is condensed crypto wisdom.

I would like to add. Not your coins, not your gains.

We can't have nice things until everybody takes this to heart.

This rant got longer than expected. I hope you enjoyed it.