Bitcoin and everything else
Most people who know me closely know that I think Bitcoin is deeply fascinating, and that everyone should learn about it. And many people are confused by what went down with FTX and Sam Bankman-Fried. That's understandable. Main stream media reporting has been....woefully lacking.
Ok, this was farce, but it’s not too far off the mark. A lot of the coverage focused on his altruistic aims, desire to bring regulation to crypto, the car he [says] he drove, his professed veganism, or just his bizarre idiosyncrasies (playing League of Legends while on the phone, raising money from Sequoia, or staffing of an in-house doctor to proscribe amphetamines to employees). Bankman-Fried was interviewed by Andrew Sorkin (virtually) and received applause from the crowd in New York. He remains free and unhampered in his penthouse in the Bahamas. Contrast that with Madoff, who was in handcuffs within 24 hours of his ponzi being unveiled.
Here are some resources if you are curious and haven’t had time to read up on the debacle.
-?????????A collection of articles from the WSJ: https://www.wsj.com/articles/ftx-and-sam-bankman-fried-your-guide-to-the-crypto-crash-11669375609?mod=Searchresults_pos18&page=1
-?????????A good overall critique of what went down: https://www.coindesk.com/layer2/2022/11/30/ftxs-collapse-was-a-crime-not-an-accident/
The larger point I’d like to emphasize is not that the guy is a fraud who should be behind bars (he should), but this: Bitcoin is not crypto. The underlying tech may be similar in some regards but differ where it counts the most.
The whole point of Satoshi’s innovation was to create a peer-to-peer electronic cash that is secure, decentralized, and sound, without relying on a trusted third party. While that might sound simple enough, it never had been done before. And it will never be done again. Fidelity says it best in its paper Bitcoin First: “Bitcoin is fundamentally different from any other digital asset. No other digital asset is likely to improve upon bitcoin as a monetary good because bitcoin is the most (relative to other digital assets) secure, decentralized sound digital money and any “improvement” would necessarily involve tradeoffs.”
领英推荐
So why the multiplicity of cryptos? A lot of my friends have told me that they like Bitcoin, but that there are a lot of competitors and so they remain agnostic. ?I’ll be blunt. Most cryptos are affinity scams designed off the back of Bitcoin to make money for VCs using retail investors as exit liquidity. Think about it—most VCs have an investment holding period of 6-10 years. That’s 6-10 years to get a payout on the initial investment. What if a VC could get its money back in under 3 years, with a 28x return (or more)? Do you think money would flow into that? Just create a new “break-through” token, make outrageous claims about what it will do, pump up the price, get some celebrity endorsements, and then sell at the peak.
And what if these VCs could use their vast coffers to win favor in DC, and craft laws beneficial to the projects they funded? Wouldn’t they do that? So, what you saw with FTX is not just an isolated incident. It’s how crypto works.
So how is Bitcoin different? It’s not a coincidence that FTX had almost no real Bitcoin on its balance sheet. Bitcoin is verifiably scarce. Only 21 million will ever exist. VCs and their portfolio companies can’t just create Bitcoin with a few keystrokes, as was done with FTT, FTX’s token. But can’t someone just change the code? Well, yes, anyone can change the code since it’s open-source software. But even if you change the code, you’d need to convince a majority of the 100,000 plus users that run the software that your code is better. And since Bitcoin’s value prop is provable scarcity…good luck.
Here are 2 excellent articles on how Bitcoin is different than crypto if you are curious:
-?????????https://allenfarrington.medium.com/crypto-is-peak-silicon-valley-b599ac24ec95
I encourage you to read about Bitcoin. There are plenty of resources, and I have plenty of recommendations. Don’t hesitate to reach out.?
Mark Basola, CFA can you ELI5 how FTX was valued at $32 BN only 3 years after its founding?
Pro Golfer | Formerly @ Carrier (Automated Logic)
2 年This is a good article but I disagree with the statement that Bernie Madoff “was in handcuffs within 24 hours of his ponzi being unveiled.” According to the DPA entered into by JP Morgan, they admit to the following timeline: Early 90’s: “Because of its unique vantage point as the firm’s banker, had reason to be suspicious about Madoff.” 2007: Chief Risk Officer is told by a senior colleague that there is a “well-known cloud over the head of Madoff and that his returns are speculated to be part of a Ponzi scheme.” Next several months: “JPMorgan began to have increasing concerns about its exposure to Madoff.” Oct 2008: “London desk’s due diligence team circulated a negative memorandum describing continuing concerns about Madoff.” 10/29/08: “JPMorgan filed a report with regulators in the UK.” It “failed to do so in the US.” Aug-Dec 2008: “Meanwhile, the balance in the 703 Account that held the billions Madoff stole from his customers was being drained. Of those lost billions, the vast majority went to the very funds in which JPMorgan had built a position.” ($5.6B to $288M) 11/25/08: Ruth Madoff withdraws $5.5m from a Madoff-linked brokerage firm. 12/10/08: She withdraws another $10m. 12/11/08: Bernie Madoff arrested.
Owner at Simple Wealth Planning
2 年Out of desire to replicate that missed opportunity of "imagine if we bought and held BTC at $100," it's easy to want to chase the next "immaculate conception." Good luck with that. What if the answer (read: just focus on btc) is so simple and obvious that it's missed by the yuppy elite entirely!