Bitcoin and blockchain. Financial education or why volatility is volatile

Lets clarify some understanding, for example, you bought some paypal, that is, you put in a real money into this payment system. At the same time, you see a number on your paypal wallet that is equivalent to the transferred amount, is everything fair? Well…, almost. The fact is that the owner of the platform (in this case, the paypal platform) can draw any number on your account. It’s like the balance of your cell phone. You replenished your balance, transferred money to the operator. And he displayed the required number in the billing system. But this is just a number, billing does not contain your money, your money immediately goes in another direction, and billing is a convention, completely determined by the operator, who can install both unlimited and per-second payment.

As for payment systems, some use them only to transfer funds from point A to point B, start and immediately withdraw or to make a payment. But if you just started and left a certain amount in your account and just keep it. You have created a situation in which the payment system can use your funds at its own discretion, and even if you suddenly demand some kind of transaction or withdrawal of funds, it in turn can be performed at the expense of another user whose funds are not moving.)

Blockchain in this sense has made a revolution. He made it impossible to use “your numbers” without your knowledge. If the numbers are stored in the blockchain, then the funds located in each address belong ONLY to the one who owns the private keys. The numbers that you see in the open blockchain are real numbers that cannot be drawn.

It is important to understand that all centralized exchanges do NOT contain this openness at all. All modern centralized exchanges are a classic bank, a classic payment system, a classic mobile operator, which draw only a number on your balance sheet. And your funds IMMEDIATELY go in the right direction. In the direction necessary only for the owner of the platform.

Many wonder why the new revolutionary, decentralized blockchain technology has not eliminated deceit and manipulation. The answer is simple — people do NOT use the advantages of blockchain and decentralization. People still believe that the exchange rate they see at auctions in centralized platforms is the real exchange rate.

For example, it is completely absurd to give funds for staking (interest deposit) and at the same time expect an increase in the value of this asset. Because the more people put the asset on staking, the more opportunities for the manipulation of the asset’s rate appear for the new owners of the asset. With this manipulation, of course, both growth and fall are possible, but this will not happen in your favor. The same with centralized exchanges, the more people keep their asset there, the more you give the owners of this exchange the opportunity to manipulate the rate of this asset.

Defi are just financial market instruments that have become available to everyone without intermediaries. But it’s still the same financial market. Which even sounds absurd “financial” market, the market must be the products. And in the financial market, everything that you give in loans will be directed against you. Everything you store on centralized exchanges will be sent for manipulation. Everything that you stake is all an opportunity for shortists (who doesn’t know what a short is a short position in trading, the bottom line is that a shortist trades only what he borrows, and where does he borrow from? Right you , with those who keep their funds where it is impossible to control them, and with those who put funds in staking.

What to do ? Understand, correctly explain to yourself what you see. In order for the advantages of blockchain and decentralization to become the property of people, it is necessary to think in a decentralized way. Defi made a revolution only in the fact that she removed intermediaries. But it’s all the same financial market with all its problems. The main one is a complete isolation from something real. Landing (borrowing) does not go to the real world, landing does not go to lending to production, creating a new one. Landing goes to the manipulation of the exchange rate.

The short answer to the question of what to do is to avoid storing and placing your funds to where you cannot control them, where only the appearance is created, where there are just a number of your funds, where there is no blockchain and private keys that only you control. Do not store assets on centralized exchanges, withdraw them immediately after the trade.