The world is changing more rapidly than we can imagine. I can’t say enough. Honestly, COVID-19 has accelerated this change. It has crystallized the megatrends that are already shaping our lives. New technologies are already transforming our way of life as a megatrend. As the increasing importance and weight of technology in our lives with the virus combines with the issues of the day; He began to raise a series of new issues that we had never thought about before, in fact.
Today I have two similar events in my mind, both of which are related to the fintech field. Just about talking about new issues caused by technology making our lives easier. The first is from November 2020. The issue of “China stopping the Ant Group public offering”. The second is from the newer ones, from January 2021. The “short squeeze” incident in the stocks of videogames and gadgets vendor Gamestop. Well, the Gamestop and Ant Group incidents are like two halves of an apple. Same as each other. Why is that?
I think these two events set an example for the new problems caused by the increasing importance and weight of technology in our lives due to the virus. At a time when analyzes and books on the sociology-psychology of the “machine-human interaction” began to take hold, let me refer to the public policy consequences of the two events for similar reasons. Let me explain.
What happens when Reddit turns to the Clubhouse?
We are now approaching the end of February. What it means? It has been a year since the virus has upset the way we are used to organizing our lives. “My dear, it ends in a quarter, I guess…” an incident that we have looked at has been going on for four quarters. Remote work, teaching, sports, shopping became normal. The importance of electronic commerce in our lives and the volume of transactions started to increase at an incredible rate. Ten years of progress has been made in one year in terms of digitalization and technological change.
Let me start right here with the technology that makes everything easier. We’ve always seen the mass impact of technology as a facilitator in the Capitol raid in America, the operation in Gamestop stocks and, from a different perspective, the Ant Group case. New technologies have created new risks as a tool that forces the public regulation framework that we are used to each time and enables the masses to organize and mobilize rapidly. Now, to be honest, the question above remained in my mind: What else will happen as Reddit turns towards the Clubhouse? Who knows.
Reddit is a news and discussion site that has been active since 2005. Honestly, it is always very useful for learning the truth of a job. It brings people together and sort of tells those who know it to those who don’t. The principle is the same, with Wikipedia, the encyclopedia of the End Times. Without an editorial board and the “experts” determined by them, everyone writes what they know, asking each other questions. He tells and he tells.
Clubhouse is much newer. It started operating in April 2020. It is essentially a discussion platform that operates on an invitation-based basis. It is a discussion environment where everyone explains the subject they find themselves in the room they have opened. It is actually a great environment for deliberative democracy. It’s kind of a conversational one on Reddit. Those who know are telling, you listen and ask questions if you want. There was a typing chat on Reddit. You meet with mutual connoisseurs by talking directly now. It is important to hear the timbre of the voice.
The possibilities it opens up, of course, is awesome. In December 2020, the number of users was 600 thousand and its value was around 100 million dollars. Now, while the number of users has increased to 2 million, its value has reached 1 billion dollars according to those who know. For this very reason, if you ask me, it is a candidate to be one of the social media platforms that public regulators should carefully follow, especially in financial markets. I’m not even counting the security units. But as I said, it is very suitable for those who want to hold negotiated discussion meetings, for example municipalities.
What is better than Zoom, I guess, is that it offers an incredible opportunity for everyone to open a discussion on any subject they want and to attract customers by posting this discussion. Ideal for direct democracy. It is important for the subject I want to come to, that I take note of these without forgetting the freedom of expression debates on social media.
What do Ant Group and Gamestop events have in common?
Now let me move on to the new trouble of Reddit, Clubhouse, and new technology-based platforms like Alibaba or Amazon in this new era. Let me first remind you of the Ant Group incident. Ant Group, which carries out the financial transactions of China’s giant e-commerce platform Alibaba, stopped its IPO last November. Nowadays, the same central bank said that if Ant Group becomes a financial holding company defined in the legislation, it can give this permission and the public offering process is kind of on the agenda again. Why is that?
With the increasing transaction volume of electronic commerce, the money accumulated in the individual and commercial deposit accounts opened at Ant Group started to increase incredibly. Thus, Ant Group, which was initially established on the edge of the regulated financial system, to establish consumer confidence by making payments after the delivery of goods and to make use of the excess amount from daily shopping for a short time, became a giant that could cause problems in the Chinese financial system, and the Central Bank of China had to step in, in a way .
Otherwise, if you ask me, the incident “When Jack Ma criticized the authorities, the Disciplinary Committee of the Chinese Communist Party came into play.” It has nothing to do with the rumors. Of course, in China there is a Disciplinary Committee working under the Politburo to punish those who do wrong, those who turn to the trade of influence, to which Lenin explained its importance in the State and the Revolution. Its full name is the Central Commission for Discipline Inspection. In a way, it works like the party’s own justice ministry. Party members are investigated here, if a crime is detected, the incident is referred to normal law enforcement and justice units. But here’s the point, if you ask me.
Watch out, as the e-commerce platform grew, an area outside of financial controls emerged and began to rival traditional banks, I say. For now, let me just emphasize that the same may be the case here. Not because I know anything, but logically. The middle incident is the same. What is happening?
It is necessary to place the fintech solutions developed for the financing side of remote shopping, which has become widespread through new technologies, into the system more regularly. Pan Gongsheng, Vice President of the Bank of China, or the “People’s Bank of China”, who recently wrote an article for the British Financial Times newspaper, was telling exactly this issue on January 27, 2021. “What is important for public regulation is not what the company making the transaction is, but the nature and content of the transaction.” If you want the article that emphasizes the importance of the subject, read it. What?
Fintech may make our lives easier by speeding up and making many financial transactions cheaper, but fintech transactions do not fundamentally change the fact that finance is a risky business. It may be an e-commerce company, but if it turns to financial operations through fintech, it is inevitable that the field is subject to a series of risk control regulations required.
The battle of Gamestop and the fintech victory of lambs against wolves
Indeed, the “short squeeze in Gamestop stocks” incident we faced last month is a very similar situation. First, what is short squeeze? In order to make money in the stock market, you need to sell a stock when its price is high and buy it when its price is low.
But apart from that, it is possible to trade and make money even when you don’t have the stock. For example, it is possible to sell a stock that you expect to decrease in price at a high price when it is not in your portfolio, and buy and deliver it at a low price when the reckoning day comes. Sell at a high price today, buy at a low price tomorrow and write the difference in the earnings section. But in order to enter such transactions, you have to put aside a certain amount as collateral. If things do not go as expected, if the price rises instead of falling, it is possible to make a lot of loss from such transactions. Therefore, such transactions are usually the work of the wolves in the stock market, the opportunity to eat the lambs all.
This is where the incident in Gamestop stocks came out. The discussion that several big pro players were short-selling on Gamestop stocks has sprung out from Reddit’s WallStreetbets forum. When small investors entered this stock collectively to disrupt the game, its price started to rise, and when the short-selling buyers entered in order to replace the goods, the price increased even more. In the end, the value of the stock rose 200 percent in a short time.
The incident was hardly resolved. A few big players took a lot of damage. Finally, the Robinhood trading platform serving small investors stopped trading that feeling, but the markets were very shaken. Luckily, the little ones didn’t sink, but it could. After all, the lambs won the pitched battle this time, thanks to the forum on Reddit. Likewise, the incident showed everyone that finance is a risky event. The mass movement caused by new technologies this time put a few big players into trouble, but I guess it showed everyone how convenient such platforms are for all kinds of manipulation. This is exactly what makes me say if there was Clubhouse instead of Reddit. Because it is much more important to experience the event by feeling the sound of the other party’s voice.
In fact, of course, it is not possible to look at the loss of professionals in the Gamestop incident and not to say “oh”. Sure, but the incident could be more bloody, and small investors could suffer. Just as I said above, the acceleration and facilitation of the transactions, the change in the course of the transactions and those who make the transaction do not change the risky nature of the event and the serious regulation requirement.
The emergence of the Clubhouse, the conversational form of Reddit, which we already know, discussed different topics for a long time, will not make things easier and harder, especially in financial markets.
No, our people are already looking at digital transformation infrastructure as well as digital governance infrastructure when it comes to digital transformation. I also say that we should not be bystanders to the financial market effects of digital change.