Wall Street Is Cooked

The bankers are scared and for good reason.

Wall Street, as we know it, is going to topple over. The monopoly that it has is coming to an end. This is going to really change how people operate and grow their wealth.

When I refer to Wall Street, I am specifically talking about the financial services industry. This is where we pay people to "manage our money". The problem with this industry is that it is a complete rip off.

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Crypto-economics is establishing a totally new economic system. It is not one that is tied to Wall Street and the banks. It is operating completely separate, mostly out of their reach. This is very upsetting to them for obvious reasons.

The issue with monopolies is they are easy to destroy once the initial barrier is penetrated. Often, their defense comes from size and protection in the form of regulation (governments). There is no finer example of this than Wall Street and the banking sector.

Since the introduction of cryptocurrency, the banks hold on the monetary system was broken. Certainly, we see the balance remain tilted, heavily, in their favor. That is starting to change and the ramifications are astounding.

This morning I wrote a post about Binance's foray into crypto-lending. This is something that was available on Steem for a number of years. Yet, now, one of the largest exchanges in the world is getting involved.

I like to use @spinvest as an example of what is taking place. To me, it epitomizes why Wall Street is going to experience a crash landing.

Before getting to that, I think it imperative we understand the lesson from the Internet. We saw a number of industries go through this and the outcome was always the same.

What happens when the Internet comes knocking at your door, as an industry, is two-fold.

1. Most incumbent businesses are destroyed
2. Abundance is created

This was true for the purveyors of information (newspapers/magazines), music (record companies), video (Blockbuster), and communication (long-distance service).

All these industries saw companies devastated while profits went out the window. Also, if you look at each area, we have an abundance of those services today for a fraction (to no cost) compared to what it was years ago.

The introduction of Bitcoin brought the Internet to Wall Street's doorstep.

Sure, we could make the case that Fintech was happening for decades and Wall Street embraced that. I acknowledge that as being true and it only helped to create more powerful entities. Companies were able to do away with personnel since a great part of the process was automated. This helped their bottom line, making them stronger.

However, they still were in control. To start, people were not able to escape because they were using banker money, aka fiat. Hence, no matter what you were doing, central banks were still in control.

Secondly, there was a monopoly, through regulation, on the ability to offer out and get involved in different opportunities. The government regulators, who are just the hands for the banks, made sure that anyone outside the system did not get involved. This helped to keep the monopoly in play.

That is no longer the case.

Think back a couple years ago. What was taking going on? The banker playbook was being run. Bitcoin had a target on it. Since it was not something they could control, it was blasted in the media. The FUD campaign was designed to make people leery of it. This was coupled by the fact that the henchman, i.e. regulators, went after as many businesses as they could that were associated with the development of that industry.

Even today, in the United States, the IRS is instilling fear by sending out letters about the ramifications of not declaring all one's crypto earnings. How come they are not sending out reminders to do that about other assets they deem to be "securities"?

The true barometer came a couple months ago when Facebook released its intentions with the Libra. Oh boy, did you see the bankers jump at that? No longer was Bitcoin the one with the target on its chest. There is another elephant in the room which is worse.

Regulators all over the world are looking at Libra. There are calls for banning it. This is a monopoly killer if there ever was one. Facebook has over 2B accounts. Even if half are fake, that still touches over 1B people. Those people will use the Libra if it suddenly starts appearing in their wallets.

So now, the regulators are going to spend much of the next year investigating and fighting Libra. What is funny is that it is a complete waste of time. Trying to protect what is standing by using the established system will fail. Notice how well it worked for the record companies.

Even if the push back against Libra is successful, there are two issues. While they are messing around with this, other coins are being developed. Technology does not stop progressing ahead. What are they going to do with Apple Coin? Google Coin? General Motors coin? They might end up hitting them all with one broad stroke but that is difficult.

Regardless of that, there is a bigger problem. Each day, the decentralized networks grow bigger and stronger. Development keeps taking place which offers users more choices. With that, the number of wallets keeps increasing. At the same time, those wallets are being filled with more cryptocurrency, removing the need for Wall Street.

As the portion of people's wealth grows outside the legacy banking system, their options expand. This means that the scales, over time will tip.

Let us use @spinvest to illustrate the point.

Presently, there is roughly 30K SP held by that investment club. Now, certainly, using something that has a value of about $6,000 is not exactly going to topple Wall Street.

However, it does show what is taking place.

Here is $6,000 that is completely separate from the bankers. They have nothing to do with it at any level. The fund is not priced in a fiat currency meaning it is immune to central bank manipulation (I used the price in Dollar for the purpose of this article). Instead, the unit of measure is STEEM.

The money that is pool is used to invest in options that are also outside of Wall Street. Most investment clubs are put together yet still are under the firm grasp of the bankers. People will pool some money then buy a series of stocks, bonds, or other investment products sold by Wall Street. Simply put, there was no escaping the monopoly.

Until now.

SPInvest illustrates what is going to take place over the next few years. The entry of Binance into this takes it to another level. When people are taking a portion of their money, or their wealth is growing separate from Wall Street control, the path is obvious.

Wall Street simply will not be able to compete. Companies are going to fall just like they did in the newspaper, magazine, and record industries.

A hundred or so people pooling together some STEEM will not take down Wall Street. One project is not going to do it.

What will make a dent is when there are millions of people involved in hundreds of thousands of projects just like this. As DAOs are formed, they will offer opportunities for people to do exactly what SPInvest is doing. Funds can be created on decentralized exchanges offering people the opportunity to get involved with what they desire.

There is another point to all of this. Notice what is missing in the example of SPInvest. Where are the commissions and fees? They do not exist.

Wall Street makes a ton of money by changing people to manage their money. Take a fund that charges 2%. This means Wall Street gets 2% whether the fund makes or loses money. This is a good deal for them. To make matters worse, you need to get a growth rate of 4% just to get the same amount of money as they do. In other words, you don't start making money until you get above the 2%.

I guess this would be a decent scenario if Wall Street repeatedly gave outstanding returns. However, considering that most studies show the overwhelming percentage of money managers cannot beat the return on the S&P, it speaks to how little is given for their fees.

Most all of this is eliminated. The business model of a DAO is a completely different animal. Hence, when going up against an organization that is designed to maximize profit, the winner is clear. We are going to see this take place in many industries, not just financial. It is why I think we will see a ton of disruption to a lot of the top companies.

I must state this is not going to be an overnight process. As we know, people still read newspapers. It takes time for people to change their habits. This is often tied to demographics. However, each day, we see a shift taking place. With each new wallet, more crypto is being distributed.

Right now, we are adding to this side of the scale by the spoonful. In a year, we will be using a shovel. Give it half a decade and it will be a backhoe.

Wall Street is as defenseless as the newspapers and record companies were. Obviously, there will be some that adapt and survive. Most, however, will end up being swallowed up.

This is what happens when the Internet come knocking on your door.

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