Monday, November 10, 2025

A theory of Dynamic Imaging through, the Self-Concept of Maintenance.

 

We may have gotten the reinforcements game wrong, atleast in the context of Self-Concept of Maintenance.

According to the theory of Self-Concept Maintenance explained through “The Dishonesty of Honest People: A Theory of Self-Concept Maintenance” states that when people are torn between the temptation to benefit from cheating and the benefits of maintaining a positive view of themselves, they solve the dilemma by finding a balance between these two motivating forces such that they can engage to some level in dishonest behaviour without updating their self-concept, now this balance is found by the rational evaluation of this perspective, where people are honest or dishonest only to the extent that the planned trade-off favours a particular action (Hechter 1990; Lewicki 1984). In addition to being central to economic theory, this external cost–benefit view plays an important role in the theory of crime and punishment, which forms the basis for most policy measures aimed at preventing dishonesty and guides punishments against those who exhibit dishonest behavior. Now this theory of Dynamic Imaging through the Self-Concept of Maintenance explores the possibility for a bias in decision making of an individual which can be born out of his Self-Discrepency. The basic premise of self-discrepancy theory is that it is the relations between and among different types of self-beliefs or self-state representations that produce emotional vulnerabilities rather than the particular content or nature of the actual self or of any other individual self-belief. (E. Tory Higgins, Self-Discrepancy Theory: What Patterns of Self-Beliefs Cause People to Suffer?) People don’t like to think of themselves as honest, just for the sake of it. Nobody would like to even think of themselves as honest if they are completely taken into confidence of confidentiality. This white paper explores how people behave dishonestly enough not just to profit but to bridge the gap of widening Self-Discrepency, but honestly enough to delude themselves of their own integrity, in different social circles, upholding the principles that defined their Self- Concept. According to Rogers (1959), we want to feel, experience, and behave in ways consistent with our self-image and which reflect what we aim to be like, our ideal self. 

When the root cause behind honesty of an individual is dependent upon a Self-Concept that remains consistent with his/her self-image which in it’s entirety is cross dependent on the social circles he/she is interacting in, proves the dynamic characteristic of imaging. As every act has a motive, honesty or (dis)honesty also has one, but is not limited to profit. Because the Self-Concept of Maintenance can only be reasoned through the constant effort of the man to bridge the gap of Self-Discrepencies. As an Individual who is likely to perform very differently, in a social-circle he feels is dispensable, or like the actions of somebody who knows would die the next month. This clearly proves that the act of honesty or (dis)honesty is a function of dynamic imaging. Which is influenced by a great deal of self-discrepencies.

The economic implications of this theory can take shape when perhaps the largest contribution to dishonesty comes from employee theft and fraud, which has been estimated at $600 billion a year in the United States alone—an amount almost twice the market capitalization of General Electric (Association of Certified Fraud Examiners 2006) can be diminished, not by the central idea of crime and punishment or by negative and positive reinforcements but by focusing on the awareness of the invalidation to self-discrepency and by reducing feeling of an individual to bridge the gap to maintain self-imaging. To begin with, this could start with acceptance, recognition of failure and to be okay with underperformance, because these are the seeds that further grow to become trees of mismatched imaging.

Saturday, August 30, 2025

Rakesh Gangwal and family slowly exit Indigo Airlines

 


When the headline of 501 million dollar worth of share sale going through as a block deal hit the news, I got thinking about when do the promoters really exit their own businesses?

Well there can be a lot of reasons as to why a promoter would want to have their exit, money crunch, to buy an extravagantly luxurious asset, or interestingly to invest into a business which they believe would reap them more profits than from an empire they have set up on their own.

Personally as a retail investor none of this would get me thinking, except for when he exits to invest into another business, because why would I bank on a business when the very person who made it thinks otherwise.

But analytically thinking does it really make sense to evaluate my options putting myself and Rakesh on the same pedestal? Nope it makes absolutely no sense, because we are talking about two investors with a huge difference in risk appetite. Like Warren Buffet said, play the game in such a way, that if the most unexpected things were to occur, you are around to play the next day. So the relocation of the funds might just work well for Rakesh if things go around his way, but it is not advisable for a small retail investor like me to do the same.

This brought me to a partial eureka moment, I began following the investments of the top 50 richest people on earth through Forbes, and it felt like I got cheated, because firstly these people have their money in everything, like hundreds of totally unrelated sectors, and secondly these rich people among themselves seem to have employed my little secret sauce from a long time, because the overlap in the areas they put their money in has a seriously skewed overlap.

So my atom lost energy and fell back to it’s shell, but I realised one thing Charlie kept saying, nobody knows how the market is going to tomorrow, and it is the assumptions and the delusional theories which help make patient, long term players create real value.

So if you are a market participant, banking on a specific business, I ask you to look into your ‘why’ and if your not fooling yourself, trust that you’d do well in time. (Because hope is a good thing Red-- Andy)


Oh and if you are wondering what Mr Rakesh is doing with his money from Interglobe Aviation ltd (Which is nothing but Indigo airlines) follow The Chinkerpoo Family Trust , their latest investment was Zetwork. Be on the look out!


Thursday, July 31, 2025

Stablecoins and Tokenization in India

 

A Dynamic Landscape

The financial world is undergoing a significant transformation, with traditional finance intersecting with crypto technology. Stablecoins, designed to maintain a stable value by being pegged to fiat currencies or commodities, are emerging as potential tools for value transfer, settlement, and liquidity management. Parallel to this, tokenization, particularly of stocks, presents a vast market opportunity with global accessibility and fractional ownership. However, India is navigating this evolution with caution and its own strategic initiatives.

Tokenization: The Dawn of a Parallel Market?

The evolution of finance, where traditional systems meet crypto technology, compels us to consider the implications of owning a stock-token. Traditionally, a company is viewed as a single entity, with shareholders owning parts of it, trading on specific exchanges at fixed timings. With the advent of crypto, we might soon see a single share unit tokenized, allowing its token holders to own fractions, traded anytime, anywhere, with anyone. This paradigm shift could usher in a parallel market altogether, offering unparalleled flexibility. Imagine owning a part of any share listed globally and trading it at any time from anywhere, all managed from your crypto-wallet.

Currently, India's Depositories Act and SEBI LODR regulations do not permit fractional ownership of a share in its traditional form. This regulatory gap is precisely what a Bengaluru-based startup like Xaults is exploring. While Xaults primarily focuses on deep-tier supply chain financing and programmable CBDC solutions, their work in leveraging DLT and smart contracts hints at the broader potential for tokenization to innovate financial instruments. The prospect of multiple individuals jointly owning a fraction of a high-value share, like Asian Paints or Nvidia , and trading it around the clock, while enjoying economic benefits like dividends with minimal paperwork, forex charges, and regulatory red tape (excluding voting rights, which remain legally tied to shareholders), is truly transformative.

However, trading tokens through decentralized blockchain frameworks, which can be anonymous and remove the need for a traditional broker, introduces complexities. While this could mean a few hold physical shares and thousands hold tokens, potentially making token markets influential due to their lower barriers and extended trading hours, significant challenges remain for brokers. Price discovery, liquidity, and settlement are still major question marks for tokenized stocks, especially given their 24/7 trading potential, including weekends. This could lead to wide spreads and synthetic pricing during off-market hours, exposing investors to substantial manipulation risks.

Despite these hurdles, the global picture is evolving rapidly. Regulators and brokers are actively examining tokenized stock markets and equity offerings, with many establishing sandboxes for trading and settling tokenized financial instruments. As Robinhood CEO Vladimir Tenev suggests, tokenization can bring impact and real value by injecting liquidity into private markets and offering retail investors exposure to groundbreaking innovations often overlooked by traditional investors.

Remittances: A Stablecoin Solution?

India remains the world's largest remittance market, having received a record $135.46 billion in FY2024-25 according to RBI data, with $129.4 billion in 2024 alone. Despite these massive inflows, the cost of transferring money from overseas remains high, estimated at $3.72–$8.68 billion annually in fees and charges.

Can stablecoins revolutionize this? They offer the potential to make remittances 3-4% cheaper, with transaction charges being nearly negligible. This is because stablecoins bypass numerous traditional intermediaries and their associated fees (brokerage, exchange, depository, compliance) with only minimal network fees. However, a significant hurdle in India is that stablecoins are currently classified and taxed as cryptocurrencies, hindering their widespread adoption for remittances. While stablecoins offer a clear cost advantage, the fundamental role of banks in converting crypto to fiat (USD to INR, for instance) ensures their continued relevance. Cross-border payments are inherently susceptible to exchange rate fluctuations, directly impacting transaction value and business cash flow. This underscores the importance of SDG 10.C, which targets reducing remittance transaction costs to less than 3% by 2030. The global average, however, stood at 6.65% in Q2 2024.

Why Stablecoins Face Resistance in India

The Indian government, particularly the Reserve Bank of India (RBI), views stablecoins with significant apprehension, considering them a potential "existential threat" to policy sovereignty. This stems from two primary concerns, firstly displacement of the Rupee where If large stablecoins pegged to foreign currencies were to dominate, they could potentially replace the Indian Rupee in the local economy, undermining monetary control. Secondly decentralized threat to CBDCs where stablecoins issued by private entities operate on decentralized blockchains, accessible to anyone with an internet connection, bypassing traditional banking systems. This stands in stark contrast to central bank digital currencies (CBDCs), like India's Digital Rupee, which are limited to specific networks and controlled by the central bank, thus posing a direct competitive threat.

Project Nexus: India's Strategic Answer

Despite the skepticism towards private stablecoins, India is actively forging its own path to facilitate cross-border transactions and reduce remittance costs. This is exemplified by Project Nexus, an initiative by the BIS Innovation Hub. India, along with Malaysia, the Philippines, Singapore, and Thailand, are founding members, with Indonesia joining as a special observer.

Project Nexus is designed to standardize the interlinking of Instant Payment Systems (IPS) globally. Instead of needing custom connections for each new country, a payment system operator can make a single connection to the Nexus platform, instantly reaching all other countries on the network. This multilateral approach could significantly accelerate the growth of instant cross-border payments, allowing transactions to settle within 60 seconds in most cases.

With Project Nexus advancing (its Phase 3 report was published in July 2024, outlining a path to "real-life" implementation), the UPI-RuPay-Nexus triad is poised to transform cross-border payments for India. Imagine sending a UPI payment to someone in Singapore, settled via the Bank for International Settlements (BIS), and credited to the receiver's domestic account in seconds.

Whether Project Nexus will truly make a significant dent in cross-border transaction costs and become a universally accepted platform for global settlement is a question that will unfold as it takes shape in the near future. Until then, whether stablecoins are a lasting innovation or merely a passing trend, only time will tell.