The stablecoins are coming. JP Morgan[1] Paypal[2] Cloudflare[3] and even Stripe[4] are getting into the stablecoin game. It looks like with the Trump administration Crypto is going mainstream. The prices are up bigly year over year and everyone is getting a crypto ETF. The rapture has arrived: TradeFi has come to buy your coins all the way to the moon and make you unimaginably rich. That’s the TradFi effect: trillions of dollars are burning a hole in their pocket and all you have to do now is relax and watch the number go up. You’ve won!
Of course not. This is the bullshit being sold to you. Your newfound ‘allies’ in traditional finance (TradFi) are nothing of the sort. Not only do they not care about crypto, they are actively hostile to everything crypto represents. They despise privacy and are eager to KYC the world. They are middlemen incarnate. They want to reduce your peer-to-peer distributed software network to a custodial ticker they can dump on your retirement account. They like to appear “anti-regulation” but in fact they love regulation - as long as it hurts their competitors more than them.
Do we so easily forget that these same companies – many run by the very same people – were directly involved with suppressing the crypto space not two years ago? They were responsible for implementing and executing Operation Chokepoint 2.0. They were the ones freezing your accounts when you tried to withdraw from your exchange and now they want to get in on the action? Like it’s all water under the bridge? Screw them, they can go back to their overregulated banking sector. Why are they even here?
Now that’s the question isn’t it? TradFi has but one holy grail: leverage. They want as much of it as possible. Crypto is only their most recent excuse, it was mortgages last time. Why? Isn’t leverage dangerous? For you and me, yes. Our size is not size. But for them? For the institutions that are too big to fail? Leverage is a one way bet, if they win they make money hand over fist, if (when) they lose? They get bailed out and dump the losses on the little guy. It’s pure upside for them and pure downside for us.
TradFi institutions are happy to put on a crypto mask and do a little jig about ‘decentralization’ or ‘trustlessness’ but it’s just a show. They no more care about those things than the ‘Diversity, Equity, Inclusion” or the “Environmental, Social, and Governance” masks they were wearing just moments ago.
Underneath the mask is something darker. Some call it “greed” but I don’t think that’s quite right – greed can have its upsides. Above all else, TradFi cares about power. They want to be the critical infrastructure that the world has to move through. The most central of middlemen. That will make them a lot of money, yes. But it will also mean that nothing can ever arise that challenges them. It is not enough for them to live like kings, they want the insurance that their reign will last forever. That’s why “capitalism” is just another mask they’re eager to wear. They despise competition, they just want to rule.
So when the winds shift, they will drop ‘crypto’ like an outdated fashion. As the old saying goes “this too shall pass” and when it does people will want revenge for the misdeeds of TradFi and crypto (footnote: the real crypto, not the TradFi bullshit) will be the scapegoat. That’s the actual TradFi effect. You thought the Biden administration was bad for crypto? You will yearn for their fairness when the next hammer comes.
It will be a hard time, but crypto – the decentralized software networks, not the meaningless custodial tickers – is made for hard times. When the bad times come those who were private will have the best chances, but those who tied themselves to TradFi will be the easy targets. The quiet and robust will survive, while those who failed to focus on robustness get swept away in the flood.
That’s why the base layer is important. That’s why being able to run a full node on consumer hardware is important. That’s why having people who care about technical robustness is important. We will have DeFi on our neighbourhood system that is strong enough to survive the winter. Because crypto winter is coming, even if it feels like summer now.
That’s why we’ve been building Causevest to be a robust, decentralized layer 1. That’s why we’re scaling with sidechains and not big L1 servers. That’s why the Causes and internal fund flows are so important. So that when the big bad wolf tries to blow the house down we will be standing, while those who built out of straw and sticks get scattered to the winds.
