The Black Box Exploded
Last week, I kicked off the first of five (and counting) articles about FTX and Sam Bankman-Fried by emphasizing that I didn't want to write about FTX and Sam Bankman-Fried.
In my opinion, crypto, Web3 and decentralized finance aren't appropriate for consideration by serious investors and thereby aren't worth my time or yours. That opinion is informed by first-hand experience. The events of the past week spoke loudly to the notion that institutional investors should avoid crypto and DeFi like t
Matt Levine was pretty thorough today. You have been concise with your opinion and have tried to keep this out of your writing. Your foot work to understand this and come back out of it and tell the tale was somewhat noble. You have every right to say “I told you so”
Pyramid scheme dressed in the emperors new clothes
Who brings this to film first? HBO or Netflix?
Oh, you haven’t heard? … https://gizmodo.com/ftx-michael-lewis-movie-rights-bitcoin-price-ether-sbf-1849778463
You told us so
I should’ve gone into the Serum thing over the weekend. The problem is that everybody cares but nobody cares. Like, everybody says they want the details, but what I learned earlier this year is that unlike traditional finance, people don’t even try to understand DeFi when you put the specifics out there. People want to read the story, scoff and then laugh at the implosion, which is fun, but it takes forever to walk through this stuff point by point, and nobody has any frame of reference. So, you know, you start talking about Serum, and then you have to tell people what Serum is, and then once you say “Serum is this” they say “Well what’s that?” and then it’s just this endless ordeal. But not going through it leaves you at risk of pointing out the obvious (in this case the disparity between the carrying value of Serum on FTX’s balance sheet and the market cap), but not pointing out the real story, which in this case is that FTX’s holdings were multiple times the size of the entire market and, even more importantly, gifted to itself. But then (to reiterate) you spend all this time walking through that and what do you get back if you’re me? Blank stares. Anyway, I’ll be glad when this casino is shuttered for good.
Yes. By and large that’s me. But I got the gist of your text and steered clear. If I don’t understand the business model (my stupidity sometimes) I don’t invest. No matter the “upside” proposition. Keep writing H. I am a faithful reader and have helped others join your readership.
“Anyway, I’ll be glad when this casino is shuttered for good.”
Oh, but think of all of the profits the best & brightest will be losing! First ESG, now FinTech & Defi are crumbling. Now these money trains are getting derailed. Food delivery and scooter rentals are so last decade. What is left for our friends in VC and private equity to profit from?
Just wait until they hear about this cool new idea called the metaverse
This is really key: https://twitter.com/heisenbergrpt/status/1592271933285888000
“I did not like him, so I intubated him”. I, too, hang on your every word, but sometimes I get distracted by the shiny beach glass.
I’m pretty sure that Helen Keller could see it more clearly than I can.
All the more reason, in my view, for the US govt to not go down the whack-a-mole-rabbit- hole-of-Alice-in-Quicksand of trying to write and enforce regulations for crypto. It’s too much of a mess to legitimize with a regulatory scheme.
It seems like what is more likely to be developed are e-currencies, backed by various governments.
China has banned cryptocurrencyies, but is working on the e-CNY to keep watch/control over everyone’s transactions and also to stop transfers of wealth outside of China.
I personally keep a stash of paper USD’s hidden- not sure I’d want to be told by elected/appointed officials to put everything in e-USDs.
Don’t lose faith in the fiat currency!
Back in the late 70s I wrote to my congressman and asked one question “How can the money supply be increased without somebody getting something for nothing?” I got pages of answers that simply served to obfuscate the real answer ie. you can’t. I work in cryptography and security. I understand the math behind crypto. The only value that I have found in cryptocurrencies is the Greater Fool Theory of Finance. Otherwise there is nothing there. It definitely does not conform to any definition of currency that I am aware of. There is nothing there except for some numbers that comply with an arbitrary set of mathematical characteristics.
The Dutch bought Tulips and raised the prices to astronomical levels, but ultimately, there was nothing there. Did some people get rich during that craze, sure. But that didn’t create value where there was none. Cryptocurrencies only value comes from the people who believe that they can sell them later to someone else for more than they paid for them. That’s it. All the sophistry on the planet won’t change that.
One can spend a lifetime as a scholar of Christian, Jewish, Islamic, Sanskrit, etc writings. But one does not need to read any of those writings to be an informed non-believer of the underlying religions.
Fine piece, but it would help if you didn’t confuse DeFi with a centralized exchange like FTX.
I’m not confusing it at all. Apparently you missed this part:
And also this part:
SBF put the utility token of a decentralized protocol he created on the balance sheet of his centralized exchange, and it was the most valuable asset he had left when he went bankrupt, only it wasn’t actually valuable.
What would “help” is if SBF didn’t “confuse” (where that means he wasn’t confused at all, he did it deliberately) the two.
Read a little closer next time, maybe.
I just want to get to the part where we find out how much SBF and his ??GF??/Alameda CEO squirreled away in a Swiss gold vault!