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How Crypto Billionaires Fake it Until They Become it — The Power of Manipulation in Cryptopia

“Market cap” is terrible signal in crypto: — I could create a token — Hold 1 trillion tokens for myself — Sell 1 token for $1 — Token now has $1 trillion market cap — And I have $999,999,999,999 of tokens This is obviously absurd.

Whats interesting about this is the Opposite point of View

An interesting intellectual construct to consider

How many people does it take to achieve what is mentioned above? One person couldn’t, but 1,000 individuals HODL’ing and collectively seeding a supply to market? What about 10 thousand people where there are specific rules about the % of tokens that can be sold each day. If each person followed the rule religgiously the number required falls astronomically — falling linearly in line with the % of total coins the ‘conductor’ owns.

Altering the paradigm

It might require that you hold these tokens for years but the initial participants control the supply and can hold for as long as is neccesary. One persons greed could send the house of cards tumbling but with rules in places and a single point of control? That is why the requirement for something like this to occur would be the appearance of liquidity in a market, but the reality would unveil the liquidity is entirely false. Frequency of transcations could be spoofed making it seem like the market is more fluid and rich than it actually is.

Or a higher number of transcations could be achieved by iniating trades where there is no real exchange of capital. This makes it more expensive to exchange whereby the market maker collects higher fees due to the influx of transactions.

Faking it until you become it

Innumerable startups have grown on the principle of faking it before they became it — Reddit are perhaps the most obvious example of this. As easy as this was for Reddit to achieve annonymised transactions on a blockchain make this exponential easier. Fake accounts on a social platform is one thing. But exchanges between innumerable anonymous wallets is another. The blockchain records the transactions as legitimate — because they are — but the market isn’t controlling the price. The sellers trading Crypto to themselves are.

The easiest route to Growth for any Crypto is faking it until their is an intrinsic demand for coin, then perpetrating what amounts to insider trading to ensure the price rises, at which point you allow 1% of the held token to trickle into the market while the price is rising

All that required then, is 1,000 HODL’ers — or more accurately the perception of that many people

While artificially increasing the number of individuals doing the same. The supply is held by an increasing number of wallets but isn’t sold to any outsiders. Outsiders are allowed to ‘mine’ the coin but are unable to purchase any of the initial supply.

Mining becomes the only route to acquiring these assets while it maintains the facade that there is a pool of capital that they can acquire. The reality is that the coins mined are the only ones which are recirculated and are the things which cause the price to rise.

This is just a possible scenario, it is reasonable to expect it is what is occuring with a significant number of alternative coins traded. The murky nature of ownership of these assets makes it all possible.

Decentralisation may promise a future which isn’t controlled by corporate greed or intermediaries but it brings its own problems. Namely without transparency to see who is behind the trades — or even an ability to know the trade is between two separate entities — the water becomes incredibly murky.

The system may reward honest actors with anonymity which protects them from government oppression but it raises the very real rist of bad actors artificially manipulating the price.

The problem is you can’t have one without the other.

Which bring me back to the original question

How many people does it take to achieve what is mentioned above?

The answer is complex and difficult. The reality is that it doesn’t ever need to be more than one person. There only has to be a perception that there are thousands of individuals placing value in the currency.

One person can make the whole world believe their story

They can use Pseudonyms and Aliases to make it seem like there are thousands of users. They can flood chat rooms spreading and preaching the MEME of HODL, but the reality is that anonymity means you’ll never know the answer to the question of how many people are needed.

That is the gamble of Cryptocurrency

That is the reason for the wild fluctuations

And that is why no matter how much you are in profit — the house could all come tumbling down.