Earlier this week, Elon Musk made history when he posted his full support behind Bitcoin (BTC) during a Clubhouse stream. Discussing Bitcoin and the GameStop debacle with Robinhood CEO Vlad Tenev, Musk said, “I’m late to the party, but I’m a bit of a Bitcoin advocate.” This came a few days after Musk changed his Twitter profile, adding “Bitcoin” to his bio.
Interestingly, Musk’s public endorsement of Bitcoin comes at a time when old financial markets have been openly caught defrauding their own customers, and the Robinhood app is central to this fraud. Indeed, the richest man in the world told the world that he believes Bitcoin is on the cusp of mass adoption amid a background of criminal stock market behavior.
The GameStop saga
For those unfamiliar with these events, the GameStop saga is a “David and Goliath” story that began with a community of online traders on the r / Wallstreetbets subreddit pulling down hedge funds – bringing in billions of dollars in institutional short orders. A short order is a type of order that allows investors to take advantage of the downfall of a company.
After retail investors realized that GameStop hedge funds were shorting 150% of their total public shares – that is, more shares than existed – a group of 2 million (now 8 million) Redditors found out that by buying the shares and Not to sell, hedge funds that shorted GameStop would lose billions. And so it was. The loss was on January 29 added up $ 19.75 billion as the news spread through the power of the Internet.
However, once retail investors started to win, the far-reaching tentacles of centralized companies could completely halt the game, freezing trading on major exchanges and trading infrastructure, allowing hedge funds to reposition without losing everything.
Decentralization and the ‘American dream’
Indeed, one of the greatest fictions of our time is the story of free markets. This concept epitomizes the ‘American dream’, where anyone who chooses to follow their dreams can do so (with significant personal risk). This includes the opportunity to be rewarded (or punished) for having a stake in the financial game, which should operate under strict rules.
Whether it’s high-frequency trading, synthetic derivatives, infinite money printing or a combination of all three, the stock market rewards a handful of insiders who play and play the system according to a different set of rules than everyone else.
It is important to realize that the problem is not the game itself – free markets are the most efficient way of transferring value when done correctly. The problem is that rules only apply when institutional players win, otherwise they can be broken, suspended and revised with minimal impact on those with friends in high places.
This brought many Redditors to the point that, knowing the market had been manipulated, they didn’t care about losing money, provided hedge funds lose billions. It began in retaliation against those responsible for the 2008 financial crisis and the misery that brought many through it.
This one Reddit post paints a good picture of the motivations that inspired millions of people to partner up against crooked financial conglomerates. Of course, other drivers – such as profit motives – no doubt played a role as the market fed on its own self-reinforcing mechanisms. Either way, the true colors of the system are now visible to all.
And while old financial media have tried to steer the story in a certain direction, the truth is that this story is apolitical and shows that ordinary ordinary people should not win. Regardless of intent, the stock market is shown to be a means of entrenching and exacerbating poverty in a faked game that only benefits those already rich.
The beginning of a journey
However, the journey doesn’t end here – because there’s a parallel system that’s not controlled by Wall Street or central bankers, and it’s growing right now. With a market cap of more than $ 1 trillion, cryptocurrencies are fast becoming the new frontier for financial markets that lack loyalty.
Besides being a new technology that is democratizing markets, there is now a crystal clear reason for investors to get out of the old system and into the new.
Bitcoin started this revolution 11 years ago, and it doesn’t stop there. An entirely new financial ecosystem is being built from scratch on Ethereum, creating a wealth of decentralized financial products with different trade-offs and use cases.
Last year this time, capital in DeFi products hit the $ 1 billion milestone. Today is that figure is approaching $ 30 billion, according to DeFi Pulse.
With this backdrop, the future of financial markets seems closer than ever before.
This article does not contain investment advice or recommendations. Every investment and trade move carries risks, and readers should do their own research when making a decision.
The views, thoughts and opinions expressed here are the sole ones of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Christopher Attard is a journalist turned cryptocurrency writer and analyst. After years of working in both the blockchain events industry and traditional finance, he now covers Bitcoin extensively in a semi-weekly newsletter. Christopher also works with several small and medium businesses in the space as a writer and content strategy consultant.