This is the final post in the series that deals with what money is, where it comes from, who holds it and how it works.
Today I am looking at how institutional money is fighting the rising threat of crypto "money".
If have not read the previous posts then please do so. Otherwise you may find yourself very lost. If you have a full understanding of the history and nature of fiat money, the problems of centralised money and the solutions offered by crypto, then go ahead and jump straight in. If not, then you can catch up here:
Made by 
Weapons of the WAR ON CRYPTO
I'm not going to recap again. Blah blah blah, lots of very rich people control the money supply and hence have all the power and wealth blah.
So why a war?
If you had all the power and money, and some little upstart appeared and threatened to take everything away from you, what would you do?
Fiat and crypto are not going to coexist peacefully. One of two things will happen:
The adoption of crypto will render fiat currencies obsolete and eventually kill them; OR
Fiat holders will kill crypto before it can take off.
For the rich and powerful, option 1 is not an option. That leaves only option 2: WAR.
This post is about how such a war is fought.
PERSONAL NOTE: I know I have not done one of those "Introduce yourself" posts, and I don't intend to. But the time has come to tell you this much about me: I'm not a professional trader, banker, finance guru, crypto expert or anything of the sort. I'm an autodidactic crypto nut with a completely different day job. For once that job is useful to me when writing a post. For crypto I'm an amateur, but for warfare I'm a pro.
Weapons (to kill crypto)
Some of this is speculation. It's not to say it does happen, but I would be very surprised if it didn't. It's what I would do if I was in their position.
FUD
Fear, uncertainty and doubt are powerful manipulators. A scared/uncertain/doubtful investor doesn't invest. By "spreading FUD" through the media, the rich fiat holders discourage people from buying crypto. This causes a market drop and it becomes a self-fulfilling prophecy.
Crashing markets
By accumulating some crypto and then dumping it all at once, the rich can cause panic and a major sell-off (market crash). It's expensive, but it's a good long-term investment.
Pump and dump
The rich can slowly bleed you dry by beating you at your own game. Using their vast wealth, they can buy and then dump and then buy again and then dump again to your disadvantage. They would always lead the market and initiate the sell offs and buying. Due to the large volumes that they trade, they affect the market. Every time you lose money on a pump and dump, they make it.
Market manipulation
By buying into crypto and placing huge buy and or sell walls, they can manipulate crypto prices to their own advantage. This sounds a bit risky, because it means buying a lot of crypto themselves, but as we will see later, this is not a bad thing for them.
Bitcoin bashing
Related to FUD, but more specific and longer-term. Jamie Dimon is a prime example of a Bitcoin basher, Buffett is one too. They continually slate Bitcoin (or crypto in general or whatever) to discredit it and make it appear to be a passing fad.
Creating distrust in the market
By a combination of pumping and dumping, market manipulation, FUD and Bitcoin bashing, they make the market very volatile and unattractive to investors. It's basically super-FUD with a long-term goal.
Using ties to government and big business
By using their own companies or other aligned large corporations, they can attack crypto in a variety of ways. Recent crypto advertising blanket ban announcements on major internet platforms like Google and Facebook could be seen in this way. Furthermore, by utilising "campaign donations" and other similar legal or illegal bribery, oh-so-honest politicians can be bought and used to speak against, vote against, regulate against crypto.
The war so far
I believe that it is now obvious that crypto won't be stopped. Coming back to the start of this post, it means that:
- The rich know that their fiat will be beaten and overtaken by crypto; and
- They will have realised that they are fighting a losing battle: crypto is going to survive and thrive.
But you don't become rich and powerful by being stupid and ignoring the writing on the wall. If I were to find myself in the position where I knew that my fiat assets would give way to crypto ones, then I would do everything in my power to get as much good crypto as possible! I believe that they have already done this by:
Weapons (to gather as much crypto as possible)
Saying one thing and doing the opposite
If I were in Dimon's shoes, I would bash Bitcoin publicly while secretly buying it up whenever it drops. My FUD would keep market prices low, and I would take full advantage of that - being careful not to buy too fast and drive up price.
Making laws that prevent Joe Soap and his friends from acquiring crypto
The American "accredited investor" laws are a good example of this. Not specific to crypto, but they work extremely well. What do they say in essence? "You must be rich in order to participate in opportunities to make you rich." Supposedly these laws "protect" the poor from making reckless investments. Great - so now they can spend that money on booze, gambling and drugs instead. Great move guys... Most Americans are excluded from almost all ICOs (Initial Coin Offerings - the launches of new crypto coins).
Note: I'm not saying this specific law was made to prevent crypto, just that laws like it can be.
In the United States, to be considered an accredited investor, one must have a net worth of at least $1,000,000, excluding the value of one's primary residence, or have income at least $200,000 each year for the last two years (or $300,000 combined income if married) and have the expectation to make the same amount this year.
From https://en.wikipedia.org/wiki/Accredited_investor#United_States
A major buy of an existing crypto entity
Major crypto exchange Poloniex was bought out by Circle for $400 Mil. Circle was funded by venture capital. Over a third of that venture capital came from Goldman Sachs alone.
There are other examples, and I believe that this will become increasingly prevalent.
Blatant buying into crypto.
Both Soros and the Rothschilds have recently admitted to wanting to move into crypto/ already having moved into crypto. Like thieves in the night, the rich should all already have sneaked in. It would certainly explain why prices are low and the market is so oversold. Why hide it any more? There is nothing we can do about it now, so they may as well admit it. Oh wait, if they admit it then people will gain confidence and buy back into the market. Institutional money will also follow these market leaders. Their investments will sky-rocket. Okay, I see their point.
A bittersweet victory?
What I am saying is that crypto is winning the war against fiat. No matter what comes its way, it will not only survive, but thrive, and probably kill fiat in the process.
This is somewhat soured by the fact that the rich and powerful are already in crypto, possibly quite deeply.
It is also obvious why crypto is now being taxed and is coming under scrutiny. With the big role players already in crypto, it is now safe to legitimise it through regulation. That means that governments can claim their taxes on your virtual assets and continue to make money off you.
In denial
I am guessing that there will be those rich people who remain in denial. Old investors who are rich enough not to care if they miss the crypto train or who simply do not see how it can even conquer their fiat. If I was Buffett right now I probably wouldn't bother with crypto. I would focus on enjoying what I had, what's the point of him investing more money for another 20 years or so? But any younger rich people or rich families who ignore crypto will most certainly suffer. If they genuinely believe that this is just another craze and that their fiat will remain as it is, then they are gravely mistaken. Those people will be badly bruised and beaten by the crypto revolution.
That concludes the "Money" series. I hope it has been insightful and that you have enjoyed it. Please fell free to comment, it helps me make my blogs better.
The future is bright, the future is crypto. If you aren't already in it, then what are you waiting for? Buy now, next week may already be too late...
Yours in crypto,
Bit Brain
DISCLAIMER:
I am neither a financial advisor nor a professional trader/investor. This is not financial advice, investment advice or trading advice. Unless otherwise stated, all my posts are my opinion and nothing more. Crypto is highly volatile and you can easily lose everything in crypto. You invest at your own risk! Information I post may be erroneous or construed as being misleading. I will not be held responsible for anything which is incorrect, missing, out-of-date or fabricated. Any information you use is done so at your own risk. Always Do Your Own Research (DYOR) and realise that you and you alone are responsible for your crypto portfolio and whatever happens to it.