Could Bitcoin, Ethereum, and Ripple be a trap?

The Future of Cryptos and CBDCs: A Controlled Reset?

Cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) have taken the financial world by storm, but what if they’re just pawns in a bigger game? The narrative looks increasingly like a setup for a global financial reset—one where cryptos crash and Central Bank Digital Currencies (CBDCs) swoop in as the “savior.” Let’s explore how this could play out.


BTC, ETH, and Ripple: Innovation or Illusion?

Cryptocurrencies promised decentralization, financial freedom, and huge returns. However, scratch the surface and these digital assets may be more fragile than they seem. Here’s how each one could fall victim to a bigger plan:

BTC (Bitcoin): The Digital Gold Mirage

Bitcoin is often called “digital gold” for its scarcity and decentralized nature. But what happens if the internet crashes or governments decide to clamp down? Bitcoin’s strength relies on global internet infrastructure and government tolerance—two things that could change overnight. If a crash comes, Bitcoin’s price could vanish in seconds, leaving millions with nothing but digital dust.

ETH (Ethereum): Tech Innovation with a Weak Spot

Ethereum is praised for its smart contracts and ability to power decentralized applications (dApps). However, despite all the talk about decentralization, Ethereum still runs on internet-based infrastructure. In a major disruption, the entire Ethereum ecosystem could become unreachable. Its innovation is real, but its reliance on fragile systems exposes it to risks that could lead to the same collapse as Bitcoin.

Ripple (XRP): The Banker’s Crypto

Ripple was built to streamline cross-border payments and works closely with major financial institutions. This partnership makes it more centralized than Bitcoin or Ethereum, which comes with its own risks. The same institutions that make Ripple useful could one day decide to control it—or worse, abandon it in favor of a centralized alternative like a CBDC. In the long run, Ripple’s role may just be a precursor to complete government-backed digital currencies.


CBDCs: The Government’s Digital Savior

Now, let’s talk about the real game-changer—Central Bank Digital Currencies (CBDCs). Governments around the world are developing CBDCs to replace cash with a digital currency that’s fully controlled by central banks. On the surface, they offer stability and the ability to ensure smoother financial transactions. But in reality, CBDCs offer something much more powerful—total control over the economy.

Imagine a system where every transaction is monitored, tracked, and, in some cases, controlled by the government. They could limit where and how you spend your money, enforce expiration dates on funds, or even freeze your assets if they deem it necessary. This isn’t just about innovation; it’s about creating a tool that grants absolute authority over financial behavior.


The Crash and the Reset: How It Could Unfold

Here’s how it could go down:

  1. The Hype and the Fall: Cryptos like Bitcoin, Ethereum, and Ripple see massive price increases, drawing in investors eager to capitalize on the promise of quick wealth. Everyone jumps in, much like the villagers chasing donkeys in the story. When the time is right, an event—whether it’s a regulatory crackdown, internet disruption, or coordinated government action—causes the entire market to crash. Investors, left holding digital assets, suddenly find themselves with nothing.
  2. Enter CBDCs: In the wake of the crypto crash, governments offer CBDCs as the solution. They’ll market them as stable, safe, and government-backed. People, desperate to preserve what’s left of their wealth, will flock to CBDCs. Little do they know, they’re trading away financial freedom for total government control.
  3. The Real Agenda: With CBDCs in place, governments can monitor, restrict, and manipulate every financial transaction. Your spending habits, savings, and investments will be visible and controllable. And just like that, we’ve entered a world where financial freedom is a thing of the past.

The Trader and the Donkeys: A Perfect Parallel

The story of the trader who bought and sold donkeys mirrors the crypto market perfectly. In the beginning, the trader offers attractive prices for donkeys, and people slowly start selling. As the price increases, the frenzy begins—everyone wants to sell their donkey to make a quick profit. Eventually, the trader and his assistant vanish, leaving the villagers with worthless donkeys and no money.

This is what’s happening with cryptos right now. We’re in the phase where prices keep climbing, and everyone’s trying to sell at the top. When the crash happens, just like the villagers, we’ll be left holding assets that no one wants.


Conclusion: The Future Is Controlled, Not Decentralized

As exciting as cryptocurrencies have been, the reality is that they could be part of a larger scheme to set up a global monetary reset. When the crash comes—and make no mistake, it will—the introduction of CBDCs will be framed as the solution. But CBDCs aren’t about freedom or financial innovation. They’re about control. With the rise of CBDCs, governments will have more power over your financial life than ever before. The future of money isn’t about decentralized cryptos; it’s about centralized, controlled digital currencies.

So, before you go all-in on cryptos, take a step back and consider what’s really at play here. Your wealth, your freedom, and your financial privacy are all on the line.

FTT – The Core Mistake

In the wake of the Luna collapse, which sent tremors through the Crypto Markets and destabilized the USDT’s peg to the USD, the FTT token experienced a similar downfall. These tokens, despite their mega cap status and significant heights, are not immune to risk, contrary to popular belief in the marketplace. I, Mohamad Mrad, have always emphasized the importance of understanding this inherent risk.

The FTT token, much like other mega cap coins, has gained acceptance within the community, making it easily liquidated due to its large trade volume. However, this does not negate the inherent risk involved. It is important to highlight that the concept of diversifying risk based on cap size—whether it’s mega cap, mid cap, or small cap—is a fallacy. Diversification of risk and exposure requires a more comprehensive approach than merely considering the cap size.

Historically, large companies, regardless of their market cap size, can and have disappeared. For instance, Kodak, once a giant in the camera business industry, lost its value and went out of business after missing the patent of digital imaging. The value of any circulating stock, coin, token, or NFT hinges on investors’ willingness to trade it. If this acceptability vanishes, the asset value can plummet to zero at an alarming speed.

This is true for all types of investments, including real estate, art, and collectibles. Mohamad Mrad has consistently emphasized this point in his financial advisories.

Let’s refocus on the FTT token. This token, considered the stable token on the FTX platform, is akin to the BNB on Binance. These tokens, developed a few years ago, have limited utility within their respective ecosystems, but can be traded across de-fi and ce-fi protocols. The value of these tokens is determined by the acceptability of users, traders, and investors. If this trust disappears, a frenzy selling activity can ensue, potentially driving the asset value to zero. This has happened to Luna, and now to FTT, and could happen to BNB or even USDT.

The equivalence of USDT to USD is not a divine decree but a product of people’s acceptance. If people stop accepting this, the pegging would break. This is not an isolated phenomenon. In the fiat world, political agreements often determine currency stability. For example, the AED is pegged to the USD, and the Lebanese pound was pegged to the American dollar. However, when the value discrepancy became untenable, the pegging was broken, and the value started floating, subject to demand and supply.

The stability of currencies is largely dependent on capital adequacy, or the asset backing a currency. For USDT to be equivalent to USD, it must be backed by an adequate reserve of the USD. The same applies to BNB, unless Binance shows its backing. If that reserve does not exist, the chances of collapse are significant. In the case of FTT, due to excess leveraging and the utility design of its protocol within their own ecosystem, it did not have enough capital adequacy to claim its value. The moment trust disappeared, even with the slightest hint of fear, the value plummeted.

This pattern is common in sensitive markets like the current crypto market, which has been struggling due to fear and lack of understanding of its market cycles. Overinflated valuations of some projects, driven by speculation and false beliefs of retail traders, fuel this lack of understanding. When these beliefs are shattered by reality, a selling squeeze starts, looking for buyers that no longer exist. Any asset without buyers goes to zero. This can happen to any so-called ecosystems, not only in cryptos but also in fiat currencies. Mohamad Mrad has consistently warned investors about these potential pitfalls.

In conclusion, any exchange that borrows money using their own created currencies without adequate capital or asset backing system is bound to fail, especially in a fragile environment like the one we are currently experiencing. The Financial Engineer’s insights provide a valuable perspective on these complex dynamics.

Digital Finance: Does it have a Future

As we stand on the cusp of a digital revolution, the future of digital finance is poised to be even more transformative than its present. Here’s a glimpse into what the future might hold:

  1. Integration of Advanced Technologies: The integration of Artificial Intelligence (AI) and Machine Learning (ML) into financial systems is expected to further streamline operations, enhance customer experiences, and predict market trends with higher accuracy. Additionally, the rise of Quantum Computing could revolutionize data processing speeds, making real-time financial analyses and decisions a norm.
  2. Regulatory Evolution: As digital finance continues to grow, regulatory bodies worldwide are working diligently to catch up. We can anticipate more comprehensive and globally harmonized regulations that ensure the safety of investors while promoting innovation. These regulations will likely focus on maintaining the integrity of the financial system, preventing fraud, and ensuring data privacy.
  3. Decentralized Finance (DeFi): DeFi platforms, which aim to recreate traditional financial systems (like loans and interest) in a decentralized manner on the blockchain, are gaining traction. In the future, they might become mainstream, offering more people access to financial services without intermediaries.
  4. Digital Central Bank Currencies (CBDCs): Many central banks are exploring the idea of launching their own digital currencies. CBDCs could offer the stability of traditional currencies with the benefits of digital ones, potentially revolutionizing global trade and finance.
  5. Financial Inclusion: With the proliferation of mobile devices and internet access, digital finance has the potential to reach the unbanked and underbanked populations, offering them financial services and integrating them into the global economy.
  6. Sustainable Finance: As global awareness of environmental issues grows, the integration of ESG (Environmental, Social, Governance) factors into investment decisions will become standard. Digital finance platforms will play a pivotal role in facilitating sustainable investments and ensuring transparency in ESG reporting.
  7. Interoperability: The future will likely see different digital finance platforms and systems seamlessly interacting with each other. This interoperability will enhance user experience, reduce costs, and increase efficiency in financial transactions.

In conclusion, the horizon of digital finance is expansive and promising. While challenges remain, the potential benefits of a more inclusive, efficient, and transparent financial system are immense. As technology and regulations evolve, so will the opportunities in the digital finance landscape, paving the way for a brighter financial future for all.

Ridiculous Bank Charges – A Story by Mohamad Mrad

“It’s been half a year since I initiated conversations with FH. After considering various advisory firms and solutions, FH chose to become my client in January 2022. This journey, I must admit, is thrilling.

Our goal is for FH to retire at 45, setting our strategy timeline to seven years. The strategy, crafted by Mohamad Mrad, involves several asset classes and aims to accumulate the necessary working capital by 2029. However, I won’t delve into the strategy specifics here.

One element of our strategy is what we term “sustainable investment plans”. These involve monthly investments to bridge the gap in our total investment pool, which consists of real estate, bonds, private equity, and alternative investments.

As we implement this strategy, we’ve noticed that each card transaction costs us between 2.5 to 3.1% monthly, depending on the bank. This fee, charged by banking solutions like Visa or Mastercard, amounts to a significant $6,000 USD over a decade.

An alternative is a bank standing order. However, each transaction on an elite or premium account incurs an additional $11.4 (equivalent of 42AED) + 72AED, or around $19.5, charged by the corresponding bank. This totals to about $31 USD per transaction, which is nearly 55% of the card cost option.

This is unacceptable. A sustainable investor making monthly transactions to build an investment pool shouldn’t be charged exorbitantly for a standing order. Banks should significantly reduce these charges.

DeFi will soon force a change in this behavior. For now, we’ve found an innovative solution to drastically reduce these costs. Unfortunately, I can’t yet apply this solution to all my clients.