Visible Capital

Crypto makes the world more visible. This makes many people uncomfortable.

Crypto makes the world more visible. This makes many people uncomfortable.

“All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses, his real conditions of life, and his relations with his kind.” — The Communist Manifesto

Karl Marx was often wrong, and his errors had a disastrous effect on humanity. But he was a great writer and an astute reader of the human condition. He managed to see connections and outcomes that were invisible to most people. Now, these connections and outcomes are becoming visible to all.

One quirk of crypto markets is that they’re both private and incredibly transparent. Most token issuers are exempt — de facto or de jure —  from reporting requirements that apply to public equity markets. At the same time, transactions in most tokens occur on a public ledger that can be tracked and analyzed by anyone. In that sense, crypto markets are more transparent than public markets because they don’t just expose everything investors report; they expose everything investors do.

This transparency makes certain things very visible. Crypto markets are rife with insider trading. They have service providers that front-run their own customers. They are rife with “wash trading” — where people act as both buyers and sellers of the same item in order to create the appearance of a market transaction. And they are highly concentrated, with most of the information, money, and power held by a minority of participants.

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