Crypto is a zero sum game, and the old Paul Graham essays and other tired VC dogmas really only work in positive sum games. FTX was founded by traders which is valuable when the ultimate purpose of the crypto industry is to separate uninformed people from their money.
The commentary isn’t necessary to see the insanity but here’s fastest way to get to the relevant content: https://youtu.be/C6nAxiym9oc
Edit: To clarify, though not sure how much a mitigation this is, yes SBF is describing much of the underlying activity he takes commission on as a Ponzi scheme. Sure, he’s not operating the Ponzi itself, just keeping it operational and profiting from its continued operation. Mea culpa.
The exchange itself doesn't need 1000s of people. Coinbase went on a hiring spree in 2021, but it didn't seem to have a clear strategy for all that headcount.
As an aside, for those who like names as destiny, SBF’s is epic
I.e. Bernie Madoff made off with their money
Nuke Goldstein of Celsius nuked depositors money
You get:
Scam-Bankman Fried
Or also Sam Bank-Man Fried (if they go bust)
This sort of naming thing is more common than you’d think in frauds anyway and if you are placing your money with someone who could chuckle to themselves “hehe I made-off with their money” it is a material risk
BTC-e was the closest thing to that, and the FBI shut them down outside of their jurisdiction (RU).
To this day they were the only exchange trying to make people whole after the seizure, everyone else just exit scammed or has had their funds tied up in an asset seizure (MT gox via the Japanese Government).
Strawman. He described DeFi yield farming as a ponzi scheme. [0] Not his own business.
Nice try though and thanks for playing.
[0] https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...
I actually wouldn't mind if mods here removed non-technical crypto discussions.
Imagine being this uninformed and wanting to seriously have a conversation about crypto and the underlying fundamentals. We get it, you hate crypto. Why even bother at this point?
> I think of myself as like a fairly cynical person. And that was so much more cynical than how I would've described farming. You're just like, well, I'm in the Ponzi business and it's pretty good.
In this era of cheap money it's been maddening to see how absurdly incompetent companies can be and still push forward with no consequences.
I've seen teams of people working on credit scoring with no understanding of expected default. They literally just throw data at XGBoost, and couldn't understand why they couldn't find a way to profit off a group of people with a 30% default rate when the upper bound of interest they could charge was 25%.
This pattern is repeated all over startup land (I've also never met a company that knew how to model churn correctly, this is an essential business metric and yet again people throw XGBoost at it), but cheap money means that doing anything is rewarded with more money so every idea seems like a good one.
Crypto companies will be the first to go, but hard times are coming for anyone working at a company that doesn't have a profit.
https://dailyhodl.com/2022/05/28/top-coinbase-executives-hav...
I get that he may be looking forward to spending his wealth, but I feel if he doesn't keep focused his company will decay and he'll get sucked up into celebrity BS.
https://markets.businessinsider.com/news/currencies/ftx-bloc...
This is Armstrong. It’s why he’s failing. Bankman-Fried recognises crypto for what it is. It’s not somewhere to do things to be proud of. It’s a place to make money while it lasts.
On Philanthropy maybe. He's pretty dedicated to the EA movement and has explicitly said he intends to give everything away.
If I was a VC firm, however, I would back anything SBF was doing. He's a genius when it comes to making money.
The point is they are Tether’s largest customer. They buy more Tether than anyone else.
Also, the fact that FTX has never called out Tether or at least pushed for a proper audit is indicative that they are more likely to be in the scam than merely buying from them because they believe to be solid.
I'm guessing FTX kept their head count low, so not impacted as hard as Coinbase is.
How come? The same network effects that work for social networks work here, as more people and businesses use crypto, it's value proposition raises quadratically.
For 2020 in Mexico alone from Bitso: "Frida Vargas, head of business sevelopment at Bitso, told CoinDesk the company processed about $1.2 billion in remittances between the U.S. to Mexico in 2020. “Our main users are remittance companies, who use crypto technology to improve and make the remittance sending and collecting process easier,” she said."[1]
In Argentina: "Cryptocurrency penetration was at 12% in Argentina, vs. 29% credit card penetration, indicating impressive crypto uptake in that country"[2]
"There is high interest in receiving crypto remittances in various LatAm markets, such as Peru (33%), Argentina (19%), Mexico (15%), and Brazil (8%)"[2]
There is also chainalysis[3] data for small transfers in LatAm showing 1.5M monthly transfers at a total value of 300M monthly volume. https://pbs.twimg.com/media/FPCfq-LWUAEctzT?format=jpg&name=...
[1] https://www.yahoo.com/video/mexican-remittances-continent-la... [2] https://americasmi.com/pdfs_landings/220211_The_cryptocurren... [3] Page 42: https://go.chainalysis.com/rs/503-FAP-074/images/Geography-o...
bahahaha. the story never changes but bitcoin is always the proletariat fighting against the powers that be. Don't worry, El Salvador is accepting it as legal tender!
It is advantageous to Bitcoin. US M2 money supply grew 8.04% in the past year [0], while Bitcoin's grew ~1.75% [1].
Yes, demand has its 80% ups and downs, but each crash was to a level higher than the previous.
Good currencies are not stores of value. They are means of exchange. And crypto is a horrible means of exchange.
It may have some use as a store of value (i.e. digital gold), but it's not clear to me why I would store my value in digital gold, which will require people to altruistically spend money on energy after 2040 or so when no more Bitcoins are generated for miners (in practice much earlier as each mined BTC gets increasingly expensive), to maintain the blockchain, as opposed to investing in real gold, which can literally sit under my mattress and not require a network of planet burning computers for it to not vanish.
The fact that they thought M2 and its equivalents across the world could rise faster than inflation in perpetuity is just silly in retrospect. They're the same thing in the long run. It was used to get around the lack of ability to enact fiscal policy and to make old people rich, and you bought it, hook line and sinker.
Computing prices have been going down in the past half-century. Yet it's full of computers around us now. And the biggest companies are computing-related. I wonder why.
I agree. But I genuinely believe "bagholders" will be better off compared to saving in their own national currency - provided they manage their risk correctly.
This is because national currencies keep inflating, so even a decreasing demand might maintain the same price, given the supply inflation difference.
Since the pandemic, BTC has acted like the S&P500 with 4x leverage, but no margin calls (loss limited to what you invested).
https://www.macrotrends.net/1333/historical-gold-prices-100-...
Cryptocurrencies do not produce anything and any actual transactions done using them (as opposed to speculative trading) are a rounding error even after more than a decade. There is no mechanism for them to be anything other than a complicated greater fool scam because ultimately the only way you can make money from them is if you can sell them to someone else for more money than you bought them for -- which is what a greater fool scam is.
Definitely worse than most national currencies outside of select countries.
But I think leverage is insane with the volatility of the cryptocurrency market.
So, the assertion that crypto as a whole is zero sum hinges on the assumption that for the vast majority of people, the utility of crypto comes from capital gains (buying and selling for a higher price), rather than, say, the utility of buying drugs or paying off ransomware.
You may say that, no, hypothetically you are a privacy-enthusiast and like monero as a hobby money, but in reality most rational actors on Monero as evading taxes and using DNMs.
(I would also argue that Monero is the only crypto that is more currency than any other crypto today bc of this, but it's not a selling point IMO)
A simple example: you go to a store and buy something with BTC. All good so far.
But the store owner can see on the public blockchain that the wallet you paid with contains a lot of Bitcoin, and that you were in fact a crypto multi-millionaire. And he and his buddies will now target you in a nightly visit where they'll torture you and your family until you give them your coins.
Or another example: you're the business owner but the customer pays with tainted bitcoins, coming from child trafficking. Now your Coinbase account will be frozen if you send the coins there, or you'll be unable to use them in other ways because they're tainted.
The ability to transact privately is for your personal safety and to be able to transact with other people without being branded a terrorist or pedophile and have to deal with those false accusations.
Again, your hypotheticals diverge from the reality.
People and businesses are not buying crypto to spend on things. They are buying it to trade it back and forth. No value is being created except for the fees exchanges can charge for processing transactions, which is a markup on the fees already charged by miners.
A large percentage of Americans were onboarded to investing via brokerages in the 70s-00s. Did that make day trading any less zero-sum than before?