“All Animals Are Equal, But Some Animals Are More Equal Than Others“
Many will recognize the title as being a well-known line from George Orwell’s “Animal Farm.” A British writer, Orwell wrote his satire on Communist Russia as it developed under Joseph Stalin. The animals of Manor Farm have overthrown their human masters and have adopted “The Seven Commandments of Animalism,” the most important being: All animals are equal. However, the animals are betrayed by their leaders, the pigs, and their revolutionary commandments are rewritten and compressed into one: All animals are equal, but some animals are more equal than others.
Indeed, this is a story arc not limited to Stalin’s Russia; All communist regimes have followed this.
I was prompted to write this piece after reading @ScottAWolfe thread on how Bitcoin’s Proof of Work narrative has been repeatedly maligned in the mainstream media. If you have not yet seen this, please take a look and give him a follow; It’s well worth a read:
Scott has uncovered a topic near and dear to my heart as it relates not just to the topic of Bitcoin’s Proof of Work, but to many major topics that get discussed these days. One could very easily replace the topic of Proof of Work with any of the polarizing narratives espoused by the media as “truth.”
How To Be More Equal
1 – For starters the majority of people do not possess critical thinking skills. They do not question the reasoning behind why someone has taken a particular position on a topic (in this case, Bitcoin Proof of Work). The simplest question to ask is, “What is the incentive this person has to present this statement as factual?” Work backwards from there.
2 – Unfortunately, far too many people calling themselves journalists (much less the investigative type) are actually engaged in the activity of gathering and presenting truthful information. No fact checking, no source checking, and a willingness to quote third and fourth-hand information in an effort to spin a narrative that entices the reader to engage (click / expand / forward / comment). In a prior life, I spent time with a large media outlet where we spent a lot of effort determining how best to elicit a dopamine response from the reader of specific headlines. Hardly a recipe for sticking to the facts; More like sensationalism.
3 –The reality is that it is quite easy craft a narrative today that fits your own incentives; In this case, successfully move into or out of a specific asset, (especially one so thinly traded as Bitcoin). Here is how to do so:
When a bank such as Goldman, JPM, or even a reasonable sized hedge fund wishes to take a meaningful position in an asset, they first want to push the price down. How? By paying analysts, ‘journalists’ and PR firms to plant a narrative that gets people to sell their positions (or slow down their purchasing).
If this seems far-fetched, the reader need only to look at examples such as what stock analysts do when making buy / sell recommendations, juxtaposed with what the active fund managers at the very same firms have done for decades.
Bloomberg, Reuters, Moody’s, S&P, Zacks, Morningstar (there are hundreds)… All of these news and analysis firms have for-profit divisions that allow a hedge funds, large family offices, and investment houses to request analysis on a particular security or asset class. The requesting entity is then allowed to feed specific information in an effort to reach the desired outcome (in this case, Bitcoin Proof of Work is bad for the environment).
Now, add in multiple firms looking to accomplish the same task (in this case, take a meaningfully sized position in Bitcoin)? That is a lot in “reporting” going on that says how bad proof of work is, and “Bitcoin will boil the oceans.”
Going back to my point one above, the average reader of that says in their mind, “Hedge funds, banks and money managers wouldn’t do that, it’s illegal or not fair!” Yes, this may or may not be true. However, that is only if they get caught. Most people appreciate that rules are not enforced evenly across the board. Add in a good lobbying firm and a bevy of highly paid lawyers with the ability to, among other things, quickly create separate entities so as to “follow the letter of the law, but not the spirit of the law?”
Narratives are insanely easy to create, bringing the market to your preferred entry price range.
So, what doesn’t “smell right” is the business-as-usual being observed by good critical thinkers. For the most part, Bitcoin tends to attract people given to this ability.
For a powerful subset of the world, it’s just how things are. When you have $10 million liquid to throw at a little problem like “I need to buy $100 million of Bitcoin and not move the market while doing so,” the quaint idea of markets being driven by simple supply and demand go away.
Put differently; When you are “more equal than others,” the world takes on a different hue.