The failure of FTX and Sam Bankman-Fried will leave deep scars
economist.com
economist.com
The fact that SBF has in the past publicly described running a Ponzi and not really recognized it as one indicates it may even be possible that the FTX guys didn’t even understand they were running a scam.
But just because they did not realize they were doing so does not make the scam they were running any less of one.
It's like if "Theranos' scam will leave deep scars in USD".
That said there’s any number of debates you could have:
Was FTX a deliberate ponzi?
Was FTX a ponzi but they were too naive to understand that?
Was it a ponzi within a ponzi? (I.e. has all of crypto been a single giant ponzi with nested levels all along?)
Regardless of what anyone thinks, you only get confirmation either way after the fact.
It'll either:
1) Stagnate. You'll need to wait a really long time for answer.
2) Crash or trend to zero. This would mean momentum is exhausted and money is leaving the table - it's always been a Ponzi in this case.
3) Continue until it finds a utility or it genuinely becomes a store of value. I doubt this outcome very much (I actually think it's impossible due to inherent features of bitcoin), but what do I know? I'm just one person on the internet. Not a Ponzi in this case.
I think they were just… extremely incompetent.
Their balance sheet with „semi liquid“ (whatever that means!) assets and trying to apply arithmetic operations on an excel cell called „Hidden, poorly internally labeled ‘fiat@’ account“ pretty much reflects this.
Malice is, “I knew how businesses are supposed to be run, but I accidentally on purpose chose to run my business in a way where nobody could exercise oversight, and while nobody was exercising oversight, I engaged in a pattern of trades and deals that enriched me at the expense of people who trusted me.”
SBF is a grown-ass adult. He knows that when people trust you with their money, you have a moral obligation to handle it competently, or hire people who know how to handle it competently.
He and his backers know how to run a business such that the shenanigans he actually pulled would get flagged. He chose not to do so, and his backers chose to look the other way. And then he coïncidentally used the lack of oversight or standard controls to steal billions of dollars from his customers.
Believe whatever you like, but don’t expect the rest of the world to nod along in agreement.
Let’s say I make a car. Cars are supposed to have brakes, lights, airbags, crumple zones, and so on, I don’t do any of that, manage to sell my cars for much less than my competition, and I get rich. Then thousands of people who buy my cars are injured or killed.
Alice argues that this is incompetence on my part. Bob says it’s malice, because I went out of my way not to hire anyone who knows anything about making cars or safety or regulations, and my entire business model is doing things those people would have flagged.
Chuck then says, “You know that thousands of people die every year in cars that have all those safety features.” What point is Chuck making? That if even one person dies in a car with safety features, they can be safely ignored by an entrepreneur who doesn’t want to deal with building them into cars?
I’m honestly bewildered. Yes, malfeasance sometimes happens when there are controls in place. People falsify reports, or game derivatives to make risky trades that would normally be flagged. But having no controls at all is not justified by the existence of rogue employees.
I’m tempted to claim you’re supporting my argument. Nick Leeson was convicted of crimes and went to jail. I suggest that FTX’s “rogue trader” was SBF himself, the person responsible for choosing not to have any controls over the business.
If you are arguing that FTX is to be treated like Barings Bank, I suggest you’re arguing that SBF was malicious, and ought to do jail time.
I definitely think SBF should do jail-time. The read I got from his Twitter interview, after the fact, was that he went into this with the goal of personal riches and glory and ultimately failed, not that he went in with the intention of making people poorer. Do you agree there's a difference? In short, I think:
Incompetence + Selfishness != Malice
If the bar is "primarily intending to hurt other people", then I would agree this wouldn't qualify. If the bar is "primarily intending to enrich oneself, knowing that enrichment comes exclusively from hurting other people", we hit that one.
That's not incompetence. I know what I call it, and it starts with "alleged".
SBF is the son of two Stanford law professors, graduated from MIT, and worked four years at Jane Street.
It seems like the limit of credulity to think he was an unwitting dufus that just accidentally ran one of the biggest ponzis in history.
- Patrick Boyle's review of the latest on court filings in the bankruptcy proceedings (with some snarky commentary removed):
Official exchange rate: 1 USD = 162 Peso
Real world one: 1 USD = 300 Peso
There of course might be price fluctuations, but this is exactly the reason why stablecoins are used and not BTC / ETH.
From you mention of the real, I assume you're talking about Brazil. I don't know anything about the current situation in Brazil, so I'll talk about Argentina and Venezuela instead. Maybe in Brazil you can just use the banking system and not have to worry about Bitcoin.
TransferWise doesn't work here in Argentina. They have no locations, so you have to use an ATM, which gives you less than half of the money because it only gives out monopoly-money pesos, using the falsified "official" exchange rate.
Western Union does cost about US$15, and uses the real exchange rate instead of the official one, but no Western Union location has US$1000 on hand. (The minimum wage, which is what most employees get paid, just got raised to $50000 a month in Argentine monopoly money, which is US$160.) You might be able to do it with five transactions of US$200. So figure somewhere around US$75, or more if you include the potential that WU employees will rob your house or attract attention from the tax authorities.
Bitcoin transaction fees are commonly under US$1, especially if you don't need the transaction to go through in the next half-hour, but if you want to convert the Bitcoin into local monopoly money by going to a money changer, you can expect to pay about a 1%-2% spread. So probably about US$20. If you can do a peer-to-peer transaction instead of going to a money changer, you don't have to pay the spread.
In Venezuela I don't think WU, TransferWise, or the banking system is an option, so it's not really a question of how much it costs without Bitcoin but what your chances of success are at all.
IOW are your savings due to breaking, or loopholing laws?
<<is still flailing around for legitimacy.
Here we disagree. The governments are seizing it, regulating it, trying to copy it for its own purposes. It already is legitimate simply because it is has people using it.
BTC’s intrinsic value is zero.
That utility is still there if a store takes multiple crypto currencies since only bitcoin has the throughput of a 28.8 dial up modem (1.16 KB/s). Ethereum has much more throughput but still has high fees. Anything else (litecoin, bitcoin cash, doge coin, monero etc.) will still give this utility, which is arguably the least impactful thing about crypto currency.
The shame is that it is all such a mess it almost doesn't matter. People won't stop leaving their balances in exchanges or putting it in ponzi schemes, or terrible 'smart contracts' or anything else.
People in general seem to want lottery tickets much more than they want a usable peer to peer electronic currency.
People have been doing that for hundreds of years. It's still done regularly today. Writing a check is creating your own money. Issuing a coupon is creating your own money. Creating a credit card is issuing your own money. It goes on...
You might be able to say the things you listed are IOUs, but they aren't ledgers, they won't scale and they can't be used without a central authority.
There have been a few examples of people creating a centralized currency before bitcoin though. One was liberty dollars which was a single company that printed bills and claimed they could all be exchanged for gold (which was probably true, they went down from the US taking legal action and not any kind of default).
There absolutely are ledgers behind both loyalty programs and barter networks and in the case of Airline loyalty programs, are literally planet-scale.
The only significant “innovation” is the inherently ecologically destructive PoW-based decentralisation.
Yes.
>Can they be exchanged for cash
Normally not directly because then the programs have to handle AML/CTF obligations, but almost always Dollar-denominated gift cards.
> or bought?
Yes.
Here's yet another example: American Express Travelers Cheques https://www.americanexpress.com/us/travel/travelers-cheques/
S&H Green Stamps: https://en.wikipedia.org/wiki/S%26H_Green_Stamps
Local Currencies: https://en.wikipedia.org/wiki/List_of_community_currencies_i...
An individual can create their own money, too. You can write a check on any piece of paper (it doesn't have to be bank paper) and give it to anyone who'll accept it. The bank will honor it. A thief stole money from me that way - the bank accepted his check.
An IOU is money. It is not legal tender, though, which is perhaps what you're thinking about.
Assuming the sender/recipient's countries don't outlaw it or regulate it into parity with traditional banking.
And only really uniquely useful if the sender/recipient doesn't already use the hawala system.
This raises an obvious question, though: Why would countries NOT regulate it like traditional banking?
Notice how customs declarations say "more than $10'000 in money or financial instruments". Countries don't care about money specifically, they care about transfer of monetary instruments.
Which means of course they care about BTC for international transfers. Maybe the laws are up to date, and maybe they're not, but it's perfectly clear that the intention of the laws is to include BTC, and it seems extremely likely that eventually they will be harmonized.
So, uh, it just works?
Edit: to answer your question, NFTs expressed in traditional speak would be this: An exclusive transferable license to claim that you are the current holder of a string of bytes loosely associated with a work of art. No copyright is assigned to you, and you get no other rights either, such as rights to duplicate, re-license, or create derivative works.
As far as trading silly gifs that you "own", well...yes, it's asinine. But not really any moreso than how much money kids these days are pumping into Fortnite skins and similar nonsense.
Absolutely not. The source of truth for real estate is the local government's land registry.
The NFT blockchain can never be the source of truth, since ownership can change due to court action, bankruptcy, eminent domain, or whatever.
You cannot have someone refuse to give up their passwords, and just give up "ok, I guess you own this real estate or car forever, then".
No. The police will come arrest you if you squat. The government will not care that you have the private key to an NFT of the house.
Blockchain solutions inherently cannot be the source of truth. Which means they'll drift away from the truth. Which means they become pointless.