Cryptocurrency: The last line of defense for the free market

Most people's stereotype of crony capitalism is a bunch of rich old men smoking cigars in their rooms, looking at their watches, and counting the money they squeezed from ordinary people. In fact, the essence of crony capitalism is the government abusing its monopoly to determine the winners and losers in the market.

Some people compare crony capitalism to fascist corporate control. Large corporations and alliances are usually well-funded and can buy whatever they want, such as government subsidies or more favorable regulatory measures, which can give them a monopoly advantage over small businesses. Therefore, the government must pay attention to small businesses and the economic benefits they bring. Without a fair competitive environment, a large number of small businesses are likely to decline.

Cryptocurrency can effectively solve the phenomenon of crony capitalism and promote the revival of the free market.

Crony capitalism breaks the natural laws of business and indulges in autocracy. This behavior leads to small businesses being gradually replaced by companies that are more expensive than they actually are. Reducing the operating costs of small businesses can enhance industry competitiveness and ultimately promote innovation. If a company's innovation pace cannot keep up with the pace of development of the entire industry, it will fall behind and even be eliminated.

Raising the minimum wage may sound good for everyone, but it actually discourages small businesses and benefits big corporations, which can easily absorb excess capital to automate processes or hire overseas. The government's vague economic policies force employers to increase the number of unskilled workers, greatly reducing employment. This is essentially a supply and demand issue.

Mandatory minimum wage adjustments can also discourage entrepreneurship; in Ontario, Canada, for example, the minimum wage was raised by 2.4% and 11.9% from 1997 to 2004. Wages are rising, but this policy has had an unexpected counter-effect, creating more low-income people instead of lifting people out of poverty, and more people are now on the poverty line. However, the spell of raising the minimum wage is far from over. Some say the government has gone crazy, repeating the same policy over and over again, expecting different results. This statement is very appropriate.

Compared to paying a skilled worker $10 per hour, hiring two “entry-level” employees at $5 per hour will yield much greater benefits. In addition, the two employees will have twice the work experience and skills.

If there were no minimum wage, most people would be very successful in their careers and young people would have more job opportunities. The minimum wage is actually a deception because when the wage standard increases, the expenses on food, housing, water and electricity will also increase, thus leading to inflation.

Any country that sets a minimum wage is inadvertently adopting a fascist model of labor management. At the same time, they are also setting a threshold for young people who need to gain experience to work.

History has proven that when governments over-regulate businesses, they are doomed to fail. The Soviet Union collapsed because the government thought it could control the economy but ignored basic market principles. The obsession with centralization was the final blow that led to their downfall.

The principle of freedom of contract refers to the fact that individuals or companies can enter into contracts without being controlled by the government. The principle of freedom of contract can be protected by a decentralized blockchain platform, where smart contracts can automatically execute the contract content under the premise that all terms are effective.

In 1897, Allgaier v. Louisiana, the U.S. Supreme Court first declared that state law violated the principle of freedom of contract. The court ruled that Louisiana violated the due process clause when it punished a company for marine insurance. Cryptocurrency makes it impossible for the government to freeze or seize funds. In other words, people are free to create contracts, including work agreements that are not controlled by the minimum wage standard. The minimum wage standard violates the spirit of freedom of contract, and the terms of the contract should be set by the contracting party, not the government.

What can cryptocurrencies do? Government policies have little impact on the price of cryptocurrencies. China often breaks out the news that the government intends to restrict Bitcoin, but it still cannot stop the problem of capital outflow. Cryptocurrencies continue to crush fiat currencies, and the government can do nothing about it except political propaganda.

A group of talented people from all over the world have created financial networks. These networks have the three major monetary elements of medium of exchange, store of value, and unit of account. These networks are not controlled by governments and do not belong to any company or individual. Each network implements an autonomous management model and determines its own development policies, leaving no place for crony capitalism to hide.

Governments that try to ban cryptocurrencies will no longer be able to profit from this emerging industry. In addition, the integration of cryptocurrencies into the local economy can increase consumers' purchasing power for local goods and services. Governments should pay attention to cryptocurrencies and establish a win-win relationship, as this may be the only chance to restore the purchasing power of fiat currencies and promote local economic development.