A Dangerous Dynamic
This dynamic exists everywhere in the world of finance and business. Unfortunately, it is a real threat to succeeding in any aspect of life and not only Crypto and finance. Before I continue, I will say that a conflict of interest can exist and not be exploited. For instance, one of the largest industries in the world operates on a foundation of conflict of interest and that is the health industry. In other words, if you benefit, they cease to benefit. When you are no longer ill or being medicated, their revenue from you will cease. In the same way, when you are in need of constant medication and treatment their revenue stream continues to flow. As I said, just because it exists, does not necessarily imply that it will be exploited. Obviously, in industries that are less critical to human survival, it does become very easy for many to choose gain over ethics.
To be clear, I am simply highlighting where this dynamic exists and not making any assertions as to who may or may not be exploiting it. Being aware of this truth will help one process data and information with increased scrutiny and generally aid in making good decisions.
Many trading platforms, especially leverage-based platforms are directly positioned against the client. In other words, if you open a long position, the platform is short. If your trade is a success and you realize a profit, the platform realizes a loss. If you win, they lose and that dynamic cannot be changed. For this reason, I never consume analysis from any trading entity that offers signals and free insights. It is not in their best interest for me to succeed, so I am unable to trust their data. Provided, it may not be biased, I am not in a position to know that and therefore rather avoid it altogether. You are not going to see this dynamic on the spot market, as the platform is merely facilitating a transaction between two entities and is not actually exposed.
This might be important information for those new to trading and have perhaps not considered where their profits are actually coming from. This is why liquidation events will always occur, in any market! Without liquidation events, exchanges would remain on the wrong side of the market in a bull run and vice versa.
Being able to discern a conflict of interest will ultimately inspire sober judgment and assist in seeking out the best and most accurate data. This is just another prime example of why doing your own research is absolutely imperative. Machinations and conspiracies aside, unless you understand the dynamic behind the model, you will not be able to process the data and information accurately. Something that actually surprised me in recent days was the response of Crypto exchange CEOs discouraging users from holding funds on central exchanges. This would be the equivalent of banks discerning a potential threat and then advising account holders to remove their funds. I don’t think that will ever happen!
It seems as though there is still some integrity within the Crypto market, contrary to popular belief. There are some points that work in exchanges’ favor but the reality is that there is more to lose if clients choose to hold their own funds and alternatively utilize DEXs.
Leveling The Playing Field
This is why I enjoy the idea of the incentivized economy and earning Crypto on numerous platforms and opportunities. The upper hand is brought lower into a dynamic where everyone wins and not just a single party. People that partake in this incentivized structure earn Crypto, in some cases, those who refer them also earn Crypto. The platform experiences growth becomes stronger and also goes on to earn even more income. Everyone gets a piece of the pie. Therefore, everyone is united in a single goal, which is unlike many business models out there. As mentioned before, a good business model leaves the service provider and the customer happy.
Decentralization Is The Better Way
At the end of the day, the more we are able to purify decentralization, the more we will be able to benefit from a structure that is essentially fairer. In all reality, decentralization still has a way to go in terms of maturing and being perfected. This will however require time and further innovation. Sadly, one can already see how decentralization is being attacked and we can only hope that as Bitcoin survived numerous attacks, decentralization will be equally resilient. Thanks for the visit, see you on the flipside.