Goldman Sachs, responsible for much of the American and global economy, is worth just $67 billion in market cap.
Snapchat, responsible for the time-wasting of penniless teenagers, is worth $33 billion in market cap.
Ethereum, responsible for literally giving you free money in flashloans if you know how to Solidity, is worth $25 billion.
And bitcoin, the first debt free money since Abraham Lincoln’s greenbacks, is worth about a tenth of Google, the advertising company.
We may be a bit biased but there’s something very wrong isn’t there with a company that makes $8.5 billion in profits every year, Goldman Sachs, being worth only twice as much as a company that loses a quarter of a billion every quarter, Snapchat.
Google makes quite a bit of profit, about $10 billion a quarter, but it is worth far more than the entire American banking system combined despite just four banks making $100 billion in profit a year.
While Google et al is everyone’s homepage, those same four banks control $200 trillion in derivatives.
Yet they are worth far less. JP Morgan for example which broke records in making $40 billion in profits last year, has a market cap of less than $300 billion to Google’s $1.6 trillion.
So what is going on in the old stuffy stock market? What is all this distortion now sufficiently overt for all to see?
The complete detachment between the stock market and the economy has become a meme recently as stocks are edging for a new all time high, while the economy is expected to contract between 10% to 20%.
We have been told that stocks are part of the real economy, that they are valued on real measures like profits, while ethereum is a ‘speculative’ asset based on ‘thin air.’
That lie is now available for all to provably see, but what is a lot more difficult to see is the facilitation of lies and fraud inherent in the system.
Not due to some systemic scheme or plot, but due to the limitations of the old system, the paper system and its digital equivalent of easily modifiable databases.
What is to constrain, for example, Goldman Sachs from saying there are one million stock shares in circulation when it is actually 10 million, or vice versa?
There are clearing houses, audits, and there’s Enron, Wirecard. Fake signatures, a charismatic guy, a nice dazzling and imposing dinner with say the SEC chair or whoever is in charge of overseeing whatever, and we have a fiction.
That this happens no one can deny. They rightly of course can deny that there is some orchestration, but they can not deny that there are faults and weaknesses in the system, and that such faults have been exploited, and that there is no way in actually preventing them because audits and the like can be fooled or circumvented.
Manipulation, shouts that guardian of the old system, Bloomberg, whenever it mentions bitcoin or ethereum. While its younger cousin, the Motley Fool, says with glee today and as if in a chorus to forget about bitcoin and go stocks.
Yet can anyone realistically deny that the stock market is the most manipulated market on earth, and not just in regards to price setting, but also in regards to the fundamental matters of just how many stocks are out there.
Naked short selling, the scourge of Elon Musk, is literally the ‘selling’ of stocks that don’t even exist.
That’s the very, very surface. Practically no one has the actual stocks, except for brokers which usually are banks, like Goldman Sachs.
Who is to say how many of these stocks Sachs is double selling, triple selling, or even selling to 10 people the same stock unit?
The auditors of course, like the Triple A agencies. Or SEC’s chair, who is practically employed by them. The 18th century Congressmen maybe, who are probably old enough to not remember what they had for dinner, while the younger ones are busy caring about what color you wear. And, even if they were all angels, there can still be a charming devil to fool them all.
The New System
Because ethereum in particular but also bitcoin is still very new, it takes time to even begin appreciating the fundamental differences between the old paper system and the new crypto system.
So far in many ways the debate has generally been at a very high level and because of some of the early rhetorics, at a social level as well.
The old media for example has done a very good job at smearing the new invention by covering only negative events with some commentators seething at their mouth in anger at the gal of smart young men doing things in modern ways.
Sneering remains the dominant attitude at the very grey halls, although no where near all of them because they are ultimately human systems, and there are plenty of smart humans who can see.
See that there’s a very big difference between a broker stating he has 1000 stocks, and an auditor confirming it, and between an inanimate factual ledger indisputably and incorruptibly stating the same.
See that there’s a very big difference between just these two people vouching, the broker and the auditor, and between the whole world vouching because they can all access the ethereum public blockchain and verify the claims for themselves.
The difference so being a very fundamental one. Subjectivity in the old system, objectivity in the new one. Witchcraft in the old system, Plato’s out there universe in ours.
The sneering is too strong however, for now, for respectable companies or entrepreneurs to see that when it comes to going public, and honestly so, the blockchain is better.
Is better because you can prove without doubt there are one million shares and no more, and prove it not just to the public, but to yourself as the banker won’t be able to potentially lie to you and tell you he has issued one million shares when in fact he may have issued 10 million.
A small difference to those who do not work in the plumbings, but there in the trenches, indisputable factual truth often makes a very big difference.
For ultimately it is about power, and the distribution of power. Who has say on the economic performance, and potential, and the evaluation of a company and the entrepreneur that leads it?
The old system unduly gives too much of that say and thus power to unproductive actors. The new system gives it to the rightful creators of value.
Thus it is not quite stocks vs cryptos, it is more the old system vs the new system, and the managing of the gradual transition to what undoubtedly all do or will think is better for objectivity always trumps subjectivity.