Opinion: SBF and FTX peddled a crypto cheat that makes scammer Bernie Madoff look like an amateur

[ad_1]

Cryptocurrencies were meant to offer a new virtual alternative to the current, mundane corrupt system, in which a few dozen bureaucrats in boardrooms around the world, central bankers, manipulate the price of the most important commodity in all of currency. by controlling interest rates.

The collapse of FTX and the subsequent bankruptcies have revealed that what may have started as a heartfelt libertarian idea to resist the endless money printing and debt creation in our financial system has been hijacked by what seems to be an immutable flaw in the human condition. : our greed and our desire to get rich quickly.

“The cryptocurrency world has turned into an even more corrupt and indebted system than the one it was trying to replace. ”

The cryptocurrency world has turned into an even more corrupt and indebted system than the one it was trying to replace. Theft by thousands of cryptocurrency and NFT creators has made Wall Street, which society loves to hate, look like a bunch of nuns, as the crypto gang stole money from the public in the midst of day.

With each stock market bubble, we are reminded that there is nothing new under the sun. The most recent iteration has been helped to swell by technology and social media, which have only accelerated the rise and widened the reach of its authors.

Unknown 30-year-old Sam Bankman-Fried (SBF) passes off Bernie Madoff, the disgraced money manager who perpetrated the biggest Ponzi scheme of all time, as an amateur. What took Madoff decades, SBF accomplished in just a few years.

By accepting that zeros and ones stored in a decentralized database can constitute currency, our society has normalized something that has no intrinsic value, as crypto has no cash flow and limited utility. Yes, the words we use do matter, and just because something is limited in quantity doesn’t automatically mean it has value and doesn’t automatically make it a medium of exchange for goods and of services (i.e. a currency) or a valuable work of art (referring to NFT here).

Crypto was touted as a decentralized and popular alternative to the centralized and over-regulated government-run system that was up to its ears in endless quantitative easing and money printing. Although the crypto ledger (the database) is decentralized, unless you store the digital key that unlocks your digital treasure on a USB stick and risk losing it, you will have to rely on exchanges and unregulated digital wallets that are expensive to use. , and turned out to be a major weakness.

Looking through the ruins of the crypto meltdown, you will notice that the crypto tulip market is nothing more than a giant, unregulated, leveraged casino whose real purpose is not to improve the world or provide the technology of the future, but to enrich its creators and offer degenerate gamers another exciting way to speculate and jump on a get-rich-quick opportunity disguised as an investment. This is the whole reason for the existence of the crypto world.

Leverage drove both speculation and prices higher. Conversely, it is now driving down prices and destroying trust in a system that was built on the quicksand of hope and greed. It’s fracturing the story that was the only thing the Crypto Tulips had going for them.

“The decline of crypto will reduce the demand for microchips that have been used to produce crypto trash, as well as the demand for digital advertising that has been used to spread lies. ”

Unfortunately, many ordinary people were fascinated by the prospect of getting rich quick and, predictably, lost their life savings. Some venture capitalists will lose other people’s money and their own reputation. The decline of crypto will reduce the demand for microchips that have been used to produce crypto trash, as well as the demand for digital advertising that has been used to spread lies. There will be other second and third order effects that will become evident in hindsight. The FTX collapse may have been a Lehman moment for the crypto universe, but it is unlikely to have a significant impact on our financial system. It will spill into the real world, but only on the fringes.

Ironically, even though I am critical of the current flawed system, crypto has been a fascinating experiment that has clearly shown that letting the financial system operate in complete anarchy with no safeguards, regulation or fear of the law brings out the worst in us. and results in indiscriminate thefts and total chaos.

Vitaliy Katsenelson is CEO and Chief Investment Officer of Investment Management Associates. He is the author of Soul in the Game The Art of a Meaningful Life.

Here are links to more Katsenelson views on the inflation landscape (read, listen) and how to invest in times of inflation (read, listen).

[ad_2]