The Blockchain’s Big Short

The movie “The Big Short” grossed a total of more than $134million, was nominated for 5 academy awards and enjoys an 88% rating on Rotten Tomatoes.

Not just a financial success, the movie has received critical acclaim worldwide and has been received as one of the all time great pieces of film making.

Aside from it’s exceptional production and directing, there is one other main factor that caused the movie to be such a success. The global public and particularly the American population, had seen the first hand results of the unscrupulous way that the financial industry was, and is still run. Finally able to see the level of conflicted interests, morally lacking behaviour and outright fraud, the public’s new and accurate perception of the financial industry, made for what was such a poignant film.

Since the global financial crisis of 2007/2008, which is still impacting on the world today, the public have been more discerning about how financial industries are run across the entire world. This behaviour has in part contributed to the mainstream awareness of emerging technologies such as cryptocurrencies and blockchain.

This convergence of public awareness and availability of such impressive technologies puts the world’s future into an unprecedented level of unknowing. While there is great uncertainty about how global markets will be run, there is also great excitement, because these technologies will bring massive positive change to business, and to the world. The only question that remains is how much change?

The most surprising aspect of the global financial crisis that The Big Short revealed, was the total lack of policy and industry changes after the major banks were bailed out by the United States government. These lack of changes were coupled with the total absence of punishment for the fraudulent activities that plunged the entire world into debt, poverty and uncertainty.

With the public now aware of the desperate need for change and their awareness of these new financial tools, the only speculation left is the question over exactly when and how these changes will occur.

This is where Spectre comes in.

Tipping the World on it’s Head

The description in Spectre’s whitepaper is as follows: “SPECTRE (short for Speculative Tokenized Trading Exchange) is the world’s first brokerless, financial trading platform with an embedded, decentralised liquidity pool.”

This sure does sound impressive, but what does it actually mean?

It means that there are not a handful of select individuals who feel no moral or ethical obligation and have no legal requirement to act in their client’s best interests.

The power of these markets are being moved away from an in-crowd of people controlling your money, and being distributed amongst everyone involved.

Basically it means that the system, is finally becoming fair and equitable.

A fair system. It’s not a new idea, but is finally one that looks possible.

Benefits to the Consumer

Before we look at how, let’s take a look at why. What does this offer to the consumer that the current system does not?

  • Less fees may not sound like a revolutionary prospect, until you realise the actual costs of fees.
    It is often suggested that it is not worth embarking on any form of trading strategy with less than $20,000 in start up capital, due to the sheer amount of fees involved. While discount online brokers offering fees of $15 might sound cost-effective, the fact is that they accrue to the point where the entire profits of the first $20,000 of your investment funds are being eaten away.
    Brokerages make money from fees, and their main strategy is to get you trading as frequently as possible.
    Their other method of profiting, is from the bid ask spread…
  • The brokerage is owned by the masses. What does this mean? The general gist of it is that by the tokenization, the traders are the ones who effectively own the brokerage and are benefiting by keeping the “percentage off the top” that the broker usually keeps when buying from or selling to you. It’s a bit like getting the wholesale price.
    The result is that you are saving money (by losing less) with every trade. When you consider just how erosive these price differences are coupled with fees, this results in achieving much higher profits.
    Fees and costs compound, so it’s imperative to avoid them.
  • The money is still yours. What a concept to think that you’re not allowed to be in control of your own money.
    If you went to the bank to start a new account and they told you that they would only let you withdraw money when it was convenient for them, it’s not hard to imagine what you would tell them to do.
    Many of us think of our trading accounts as being similar to a bank account that we can make trades from, yet we are given exceptionally little control over our own money. It’s not just SEC regulations and clearing times that restrict us in when we can access our own money, but it is a known fact that brokers and brokerages will try and dissuade you from making withdrawals or trades if it doesn’t serve their needs.
    They have a vested interest in your money staying in their account as long as possible, and it is simply ethically and morally unfair how many brokerages treat their customers.
    Unfair but totally legal.
    The way that Spectre addresses this problem is by the trades being placed directly from your wallet, without you having to fund an account held by the brokerage.
    To return to the banking analogy, it would be like being able to trade directly from your savings account. Furthermore, having a blockchain based wallet is like owning the bank where you hold an account. Now you can have complete trust that your money is being held only by you, and that you are able to act in your own best interests, without interference from a third party.

Who would have thought that it would be so exceptionally difficult to be able to manage your own money, in whichever fashion you choose.

This is a part of the general dissent felt by the masses ever since the global financial crisis and is one of the reasons why Spectre’s ability for mainstream adoption could not have been timed any better.

Disclaimer: Statements in this article do not represent the views or policies of anyone other than myself. The information on this site is provided for discussion purposes only, and are not investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities.