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  • Writer's pictureMartin Schmalzried

Crypto-collapse: beyond the “I told you so”

There it is again, another crypto-crash, and obviously, since crypto has grown tremendously since the last one, the scandals and bankruptcies are even more spectacular. Let us not forget that crypto basically started with a scandal: the Mt. Gox saga.

What annoys me, is all the noise surrounding any happenings in crypto, be it the hype in the highs, and the FUD in the lows. Is there no one out there with a nuanced opinion that pierces through the rollercoaster of the “I told you so” or the “you’ll see, BTC forever”?

I guess I’ll have to do it myself. The following is an analysis I guarantee you’ll hear/read nowhere else. Buckle your seatbelts because you’re in for a ride.

Up until now, I have always hesitated to share my deepest points of view, self-censoring to present a shiny and polished superficial analysis, on par with what most people argue about, whipping out rational arguments and facts, so as not to scare anyone off. But it’s a tiring exercise, and this time, I won’t hold back.

It has been a few years now that I no longer see unfolding events as being due to chance, as humanity advancing blindly into the future. I have settled for a worldview in which our outside reality is but a more complex fractal of events we have all lived through, a repetition of a deeper truth that can be found in each and every human (if you don’t know what a fractal is, I suggest you research it thoroughly).

Whether you take a branch from a tree, or a tree itself, the pattern of leaves on a branch is the same as the pattern of branches on a tree, corresponding to a mathematical logic known as a fractal. A fractal can get more and more complex to the point that once you see a tree, you wouldn’t mistake it for a branch. But it nevertheless responds to the same basic principle, just at such a high level of complexity that the pattern seemingly forms something distinct. The micro and the macro, tied up together by the same fractal patterns or logic.

I look at humanity in much the same way: fractals applied to three levels of reality and experience.

1) The gestation in our mother’s womb (the only experience common to all humans);

2) Being raised by adult humans (in most cases, our father and mother);

3) Forming groups and tribes as humans and creating a symbolic “parent” which is but a fractal projection of our two previous experiences.

Let’s start with a parallel between the second and third level, to see how these patterns correspond to each other:

In other words, what is happening to crypto is nothing unusual or unexpected. A bunch of young adults can experience all kinds of “problems” which can grow in intensity, going from overflowing garbage cans (Mt. Gox) to setting their apartment on fire (FTX)… All part of a learning process, which will hopefully bear fruit and help humanity as a collective, to evolve further and learn to use crypto more responsibly, or in other words, to learn to self-govern and claim their independence from governments (daddy and mommy) more responsibly. No need to mention all the intricacies of the current FTX scandal, the ties between Sam Bankman-Fried and the SEC… There are a myriad of drama that play out in the lives of young adults, as they experience moving out of their parents’ home: being exploited by a landlord, betrayed by a roommate (that’s for you, CZ)… But the underlying logic remains the same. See the pattern through the noise.

As Carl Jung so rightfully said: “In all chaos there is a cosmos, in all disorder a secret order.”

From my perspective, humanity, as a collective, has simply unconsciously recreated the same pattern at a macro level, as what each human has experienced growing up at the micro level. Humanity, understood as a global collective evolving organism, has created on the outside, a symbolic version or representation of a “parent”, which mirrors the way a child perceives his own parents growing up: an baby human tribe’s relationship to a mystical reality and spirits of nature, a child society’s relationship to a one and only anthropomorphised God and Kings of divine right, a teenager citizenry’s relationship to desacralized elected governments and institutions, and now, we are simply experiencing the next “logical” step in this fractal pattern: our first attempts at claiming our independence from mommy and daddy, with varying degrees of success.

At the level of a foetus, the pattern is much simpler. So long as a baby is in the womb, all maternal resources flow via the placenta: a centralized organ which serves as the mediator between the mother’s resources and the baby. Upon birth, the cutting of the umbilical cord is the moment where a baby claims it’s “independence” from his/her mother’s resources and has to learn to access his own source of energy (oxygen via his lungs).

To a growing child, parents are, in a way, a new kind of “placenta”, as they also act as a centralized intermediary between the world’s resources and the child: whenever a child wants a toy, food or clothing, all of these things go through his/her parents. And once a young adult moves out of his parents’ home, it is like cutting the umbilical cord all over again, just at a higher level of complexity, following this unbreakable fractal pattern.

To a growing society or rather, to humanity as a global collective organism, governments and other centralized institutions (private banks, big energy companies etc) are also a form of “placenta” as they unconsciously play the role of centralized intermediaries between the Earth’s resources and the citizens: whenever you want to buy a house or build something on a piece of land, you have to obtain a bunch of permits, fill in all kinds of paperwork, pay your taxes etc. But once a society moves beyond the need for governments or banks, and starts adopting self-governance tools, it is again like cutting the umbilical cord, at an even higher level of complexity, so complex that it may seem completely unrelated to the initial source of such a pattern: the way all of us developed inside our mothers’ womb. All of us have already experienced the most radical energy transition: when our umbilical cord was cut, and when we separated from our parents’ financial resources when we left their home. Of course, ideally, such transitions should be smooth and progressive. A mother still feeds her baby in other ways, albeit more “sustainable” (breast milk for instance) and parents still help out their young adult children but no longer have to wipe their children’s asses.

Understanding the pattern may help us break away from the current sterile debates going on about crypto and understand that there is something much deeper at play. By doing so, we may be able to experience this transition in a serene and conscious way as opposed to tripping over ourselves and advancing blindly, while unconsciously executing a plan which is hardcoded inside each and every one of us.

But then again, I’m pretty sure many people will think I’m crazy, and prefer to stick to their favourite role: the “I told you so” nay-sayers or the “I’ll show you, just you wait and see” Bitcoin maximalists. In the end, if you’ve truly understood this article, then you’ll realize that me, writing this article, is actually pointless. It’s like pointing out that the grass is green or that the sun is round. It will change nothing to what unfolds. It simply states that whatever is meant to happen will happen, because we can no more break our own fractal pattern than a tree can break from the fractal pattern of a branch. All of the experiences I mentioned above are like humanity’s DNA: a hardcoded story which invariably determines and shapes our evolution. Our only choice is whether we want to pointlessly waste energy by ignoring it and moving forward like a pinball in a flipper, or to consciously becoming aware of this pattern and going with the flow, which is short for advancing in a straight line without bumping ourselves all over the place like a pinball in a flipper.

Hope you enjoyed this trip down the rabbit hole.

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