(Rich Galen | Mullings) – Here’s everything I know about cryptocurrency:
Which is the same amount that I know about NFTs. And don’t even get me started about blockchain.
When I first heard about cryptocurrency I thought: “This is going to make a few people very rich but a lot more people are going to lose WAY more money.”
I was right.
This kid, Sam Bankman-Fried, was in his 20s when he convinced thousands of people to participate in his cryptocurrency …
Assume, for your convenience and mine, that every time I name another investment vehicle beyond stashing greenbacks under my mattress it is followed by the words: “which I also don’t understand.”
… in his cryptocurrency exchange, FTX, which is shorthand for “Futures Exchange.”
Through the magic of crypto, Sam Bankman-Fried made $32 Billion disappear. Vanished. Like David Copperfield and the Statue of Liberty.
This sounds like it should be a world record in losses, but it is not. The crooks at Enron made off with about $74 billion. When Lehman Brothers declared bankruptcy, leading to the collapse of the entire banking system, the firm owed $619 billion.
Bernie Madoff, one of the best-known purveyors of a Ponzi scheme (behind Charles Ponzi his own self) made off (yeah, I know what I typed) with about $65 billion – twice what Bankman-Fried’s company has lost.
Getting back to Sam Bankman-Fried (whose name is commonly abbreviated SBF because real reporters don’t want to have to search for the hyphen key every time they need to type his name) was a master of marketing.
Looking at him, he seems like the prototype of the kid who has moved back in with his parents at their home in Queens and spends his days in the basement Googling ‘Money Making Schemes” over and over hoping for a different result.
He finally came across “Start a Crypto Currency Exchange in Your Spare Time” just ahead of the “X-Ray Specs” ad (which were also a fraud, I can tell you from sad experience, having wasted 25¢ and a stamped self-addressed envelope when I was seven).
One of SBF’s schemes was to convince Major League Baseball for FTX to be the “Official Cryptocurrency Exchange brand of MLB,” Umpires wore “FTX” patches on their uniforms. Some organization like Nike will swoop in (did it again) and claim that uniform real estate before pitchers and catchers report in mid-February 2023.
SBF also struck a $135 million dollar deal for the naming rights to the Miami Heat NBA arena in … Miami. No word on how much duct tape it will take to cover up all the FTX signage.
I understand that a dollar is worth a dollar only because you and I agree on that value. That agreed value remains whether I actually plunk a dollar bill on the counter or run the bill through my debit or credit card.
That has been the case since the society known as the Lydians (in what is part of modern Turkey), first minted what we now call money.
According to Investopedia.com:
“The coins were made from electrum, a mixture of silver and gold that occurs naturally, and the coins were stamped with pictures that acted as denominations. In the streets of Sardis, in approximately 600 BCE, a clay jar might cost you two owls and a snake.”
Laugh if you must, but at least you could hold the owl and snake coins in your hands.
Try that with cryptocurrency.
See you next week.