You don't go fixing things that are not broken and when it comes to our financial systems, most people agree that it is broken, but what exactly is wrong with it?
Socialized losses and privatized gains.
I once wrote an article on why traditional governments aren't fit to regulate crypto and why no one should have the power to regulate something they don't directly have a tie that can cost them something or drive gains home.
This is something that we lack altogether in traditional finance.
We talk a hell lot about inflation because we understand that it doesn't affect everyone across the board the same and that the benefits of its existence is set aside for a few.
This is what socialized losses and privatized gains look like.
When bad things happen, the public pays the costs, majorly through taxes and growing costs of living.
On the other hand, the benefits of the system are set aside for a few pockets. Of course, these benefits are in no way openly paid incentives, so they will call it a speculation but we all get to understand the fraud at some point.
The solution: decentralized and open governance
Most people look at crypto and they can only imagine some new type of asset they can throw money at and hope to cash out some massive gains.
The problem with this is that it generally means cashing back into the very same financial systems the crypto assets were meant to pull people away from.
This proves a lack of understanding by many on what crypto is all about and why they should be an active push to ensure that capital moves from individuals to businesses and back without leaving the blockchain layer.
But we are not here to talk about keeping liquidity from flowing out, we are here to talk about why decentralized and open governance through each unique crypto asset matters.
Take a proof of stake blockchain for instance and imagine that the dollar was a native token to said blockchain and governance was based on holding a dollar stake, how would that change things?
Two things would likely take place:
The first is that excessive money printing would stop because the majority of dollar holders would vote against it.
Or
The second is that excessive money printing would continue but gains would be socialized.
In whichever case, the financial layer would move from putting costs on some people (the masses) and benefitting the smaller circles.
Now it might be tempting to suggest that the big banks would control a lot of dollar stake and would just go right ahead to do what they like as of today, but that would be a flawed assessment because a bank isn't worth shit without the public.
The stake they hold is someone else's and if for some reason, a few individuals control a large stake and try to leverage on that, then they simply risk being perceived as a bad actor and that can be an incentive for the disagreeing majority to make decisions that could hurt the value of the stakes of these few individuals.
Besides, a financial layer where losses and gains are both socialized means that every bad decision stakeholders move to back will directly cost them a fortune, something that we lack with our traditional global financial systems.
The system can only be fixed if governance of what facilitates trades that enables the world function wasn't placed in the hands of a few with a lot to gain rather than lose from making evil decisions.