Tag Archives: coming of age

How free is the free market?

Do you sometimes feel that we humans complicated our world too much for our own good?

As an early career professional, I have been thinking about different types of investments for my personal finance. In the times that we are in, Cryptocurrency does come into one’s purview, especially when you have so many social media influencers pitching it and you yourself understand very little of the complex economics.

Anyhow, today’s rant is based off of a series of YouTube videos I’ve been watching on Cryptocurrency to understand why is Bitcoin so expensive.

To the extent that I have understood, the so called “FREE MARKET” comes to play. It’s basic supply and demand, they say. If someone is willing to pay 10 million dollars for something they deem of that value, who’s to say it isn’t? If there’s someone willing to pay, do we even need a regulator to exist?

I’ll give an example closer home. I’ve lived in Bangalore for years to know how expensive security deposit for renting a flat can be. It’s a norm which has stood its time, at least until Covid, because there’s always demand for renting in Bangalore and there are people who can pay that amount. So the owners can charge what they want. However, not everyone can pay.

For cryptocurrency, you could say it’s okay – no one is forcing you to buy one, so why do you care if it’s expensive? Very true. But when it comes to renting, it does affect me. So it does so for many other people.

The comparison here, between renting and cryptocurrencies, hold valid because at the end of the day, it is the free market that’s allowing this to be. For prices to be jacked up because few players can afford to buy and sell and rest everyone can be forced out of that little, private game.

And I know this isn’t new. For the longest time, this is how human society has operated. It makes you question, how do things get their value? How valuable is water, air to you? How valuable is an iPhone? Especially for crypto, if there’s no underlying value (and when I say that, I mean not many governments today has accepted it as currency – so how is it that it’s getting its value?), then how can it be so expensive today?

Anyhow, it is perhaps on me to do a lot more reading to figure that out myself. But the larger question is, can there be a different world where prices can be controlled for the benefit of the majority and not selected few? If so, would the forces in power today allow that? As humanity, what should our goal be? To thrive as powerful families in a few hundreds or let the majority thrive? Maybe there’s merit to capitalism – maybe, billions of humans are indeed a strain on Earth’s resources, so there needs to be elimination of few in natural, social, economic or political ways. But as I say that, I also know that we can’t know of sure what is right and what is wrong. What is a strain and what isn’t. At any point of time, we are doing the best that we can, but our worldviews are always narrow.