One of the most unique things about the explosion of crypto currencies and especially the trading of crypto in the last year is that it was so open to almost anyone, even if they only had a few extra dollars. I think it’s often missed how much of a unique situation and an outlier this is compared to other economic bull markets or even so called “bubbles”.
For example, the last “get rich” economic boom was the real estate bubble in the early 2000’s. This was obviously open to the public, but you still needed to be of some means in order to take part and benefit from it. You needed to have enough money to invest in real estate, which isn’t exactly a low threshold, especially for younger people. Most people in their 20s and early 30s can’t even afford a small house for themselves, let alone have enough money to start buying and flipping houses all around town.
And if we look at current economic trends, it doesn’t exactly look like opportunities for the average person are increasing. Instead we see the door closing on boom cycles that can allow people to break through economic ceilings. For example, the most successful startups of the last few years have been in the “gig economy”. This is where workers compete against each other in a way which forces wages down, while the centralized company running the operation, such as Task Rabbit, make money on every small transaction so they get rich while the workers fight each other over $2 gigs. So while the company does well, the workers knowingly or unknowingly are forcing their own wages down by competing against each other. So while these gig based opportunities like Task Rabbit may allow people to fill the gaps in their earnings and pay some bills, it is not a way to break out of their current economic situation in the long term.
And this is very telling. When the companies behind these gig based services are some of the most successful startups, it shows that opportunities for the average person are getting smaller. If that wasn’t the case, companies like Task Rabbit or Uber wouldn’t have an endless supply of people willing to work for $2 per task as contractors with virtually no labor rights. So what you are seeing are these “race to the bottom” style companies such as Task Rabbit taking over. These cannibalistic style industries are not going to lift people up, but instead keep them down while they concentrate wealth even further.
This is why crypto has been such a unique outlier. With very little regulation and very little barrier to entry, virtually anybody could scrape up some extra money and get on board with the crypto revolution at the ground floor. Sure, not everyone will make money, but everybody has a chance, and that’s what economic freedom is all about. It’s about equality of opportunity, not equality of outcome. And the last year, crypto has given everybody a fair chance to get in and invest, either trading day to day or just long term holding.
But this is why regulation can be such a double edged sword. While it may help mainstream adoption and do away with scams and manipulation. It also will make it harder for the average person to get involved as they did in 2017. For example, if exchanges want to have fiat pairs, they will need to verify people’s income and investments to comply with financial regulation, possibly even having minimums such as $25K deposits as is needed on other regulated trading platforms if you plan on actively trading. Regulation such as this will start to shut the door on lower income investors who want their shot at the crypto revolution.
This is why we all need to be vigilant about regulation and the evolution of crypto. Crypto was originally meant to be a populist movement, one that helps everyone and not just elite groups of individuals and institutions who guard the doors of opportunity. It is very possible that the economic revolution of crypto is a once in a lifetime opportunity. Not only that, it may very well be the last opportunity of its kind for the little guy to get ahead.