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Why the economy is so hard to predict? Or should I ask why the market is so hard to predict? Some believe they are unpredictable, few believe they are predictable.
Let’s explore.
Table of Content
Divine vs. Science
Deductive Reasoning vs. Inductive Reasoning
Astrology
Social Science
Economy vs. Stock Market
Why Stock Market is Rigged
Design a Tokenomic
Domination is a Short-Term Gain
Tokenomic = Perfect Competition
In Conclusion
Divine vs. Science
Before science, there was a period when people went to school to study divine science. Astrology was one of the subjects you had to study. And supposed after you graduated from the school, you knew everything. Talking about knowledge is power! However, astrology quickly got kicked out of the science community because of its falsifiability. It got categorized into pseudoscience.
Deductive Reasoning vs. Inductive Reasoning
Deductive reasoning commonly applies in scientific research, a top-down approach from a general idea toward specific conclusions.
Inductive reasoning is commonly a bottom-up approach to explaining nature and to concluding a general theory.
Astrology
The distinction between science and non-science is the criterion of falsifiability. It is the ability to test the correctness of results that follow exactly the process twice or more. Astrology, on the other hand, can not be tested with the same result followed by the same process. Every astrologist has their own way of interpreting the result in many different ways. Astrology and many alike are using inductive reasoning to make the conclusion.
Social Science
The coolest part of social science is that it is technically not a science but it named itself as a branch of science. The subject is using a scientific method and trying to approve something is a scientific theory until it fails. By not mean I diminished the significance of social science, but it plays a blurred line between science and the divine. Or using inductive reasoning through deductive reasoning tools. Social science is a soft science compared to a hard science like physics or mathematics. Social science has an open-ended question rather than a hard science to predict only one future.
Economy vs. Stock Market
The economy is under social science but the stock market is not. And the stock market is apart from the economy. Economy theory only works when no one was able to approve it does not work. Because the economy constantly changes through social behaviors that heavily influence individual decision-making processes. Of course, social media rigs that theory since they influence everyone’s behavior nowadays. Am I right?!
Why Stock Market is Rigged
The stock market trades shares of companies. In theory, companies will be influenced by the economy. But it does not work that way in reality. There are 3 indicators to show the stock market is rigged: a few domination roles, the advantage of knowledge, and the advantage of technology.
A few domination roles can influence the market greatly and they drive the market toward their benefits.
Few people knew what happened to the market before everyone and they drove the market for their benefit.
Few people know the technology that can trade faster than average traders when they can get in before the market rises and get out before the market crashes.
A stock market is a pseudoscience place where traders are astrologists to offer their way to interpret the market. But few influential companies impact market trading daily.
Design a Tokenomic
Why do I get you a punch of useless lectures about the previous topics? Because I want to show how to design a tokenomic rather than design a token trading market.
Often, people design tokenomic through a trading market with potentially dominates the market with their holding of tokens they created which is the opposite of how tokenomic is supposed to work.
Domination is a Short-Term Gain
If someone dominates the market, they likely influence the market to their own benefit. The market will quickly lose momentum and turn into static which eventually loses steam. Domination means a monopoly. There will be a deadweight loss that gains from no one which brings less efficiency in the market than perfect competition.
Tokenomic = Perfect Competition
Conditions of perfect competition are:
- Many buyers and sellers
- They all have the same information to buy and sell
- No one can influence the market price
- They all have free entry and exit into and out of the market or no barriers to entry
Conditions of cryptomarket right now:
- Many buyers and sellers
- No one can potentially influence the market price due to the theory of a 51% attack
- No barriers to entry into the crypto market
The only thing we need to do is to bring symmetrical information to everyone.
What tokenomic should focus on is how to deliver such information to the general public rather than manipulating the supply and demand of the token itself!
In Conclusion
Design a tokenomic is to bring a symmetrical information system to everyone. How to do it? You may want to follow me in the next article about the solution of how to encounter asymmetrical information.
Hint: the solution came from military combat.
Follow me here
Photo by Lisheng Chang on Unsplash
Disclosure: The article was written by a delusional author who is possibly a nut job without any questions whatsoever about expertise in the subject matter. You should not believe any words this author wrote or you may experience similar symptoms or even possibly become a nut job.
Resource
https://en.wikipedia.org/wiki/Astrology_and_science
https://www.scribbr.com/methodology/inductive-deductive-reasoning/
https://www.youtube.com/watch?v=6pUFPdavABA
https://en.wikipedia.org/wiki/Monopoly#Monopoly_and_efficiency
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