SBF: Didn't Understand Bitcoin When Founding Alameda

Original source: FTX

FTX founder Sam Bankman-Fried (SBF) was a guest last week on Point Forward". This interview is different from previous discussions on the market. Iguodala digs into some of SBF’s background and history. For example, SBF thought he would become a scholar when he was a child, and when he founded Alameda Research, it was only a small company of two people, and he didn’t understand Bitcoin at all.

Point Forward is a podcast with NBA Warriors star Andre Iguodala that spans sports, business, and technology topics. In addition to being a player, Andre Iguodala is also a well-known investor in Silicon Valley, specializing in investing in technology innovation. His most famous investment, video conferencing software Zoom, nearly doubled his net worth.

At the same time, Andre Iguodala is also a financial mentor for many NBA players. In addition to giving some investment and financial advice, he will also hold similar Players Technology Summit ) to help athletes better understand the investment potential of the technology industry.

Andre Iguodala mentioned at the beginning that cryptocurrency has always been an area of his attention, and he also converted part of his salary into Bitcoin earlier this year.

SBF who thought he would be a scholar when he was young

As we all know, SBF’s parents are Stanford A law professor at the university, which made Iguodala wonder if SBF's upbringing was different from other kids.

SBF said that his parents did not instill in him how to think when he was a child, but instead he would observe his parents and his colleagues on issues, including politics. There are business issues. When he grows up, SBF will start to check Wikipedia and blogs on these issues to explore his views on these things.

When asked if he felt any pressure, SBF said that his parents did not put any pressure on him, but instead he would put pressure on himself, thinking that since both parents As a law professor, I may become a lawyer or a professor in the future.

One thing is for sure, though, that parental values greatly influence SBF:

"They didn't tell me how to do things or how to think, but I started to get in touch with the thinking of legal people very early, such as how to think and how to interpret politics. But they will think about how to exert their greatest influence to Changing the world has deeply affected me, and I have always kept this in my heart.”

Why MIT?

Iguodala next asked SBF why it chose the Massachusetts Institute of Technology (MIT).

SBF laughed and said that he actually didn't know why he chose. In his subconscious, he may think that he will be a professor of physics or mathematics in the future, so he chose MIT, which does not really have any profound connotations.

But after entering MIT, he found the school spirit of MIT and the difference between the students around him and other universities.

Students from most top universities have strong ambitions, and MIT is a research university with technology in command, so naturally many students are nerds ( nerd), geek (geek), has a strong nerd culture and academic atmosphere, which is very different from other universities. And he had a great time at MIT with these people.

[Note]: The nerds and geeks here are not derogatory, they refer to scholars and intellectuals who are good at studying but not social.

Want my money? Still want my people?

The MIT period was also the time when SBF gradually formed the "effective altruism" thinking.

SBF said that in fact, many people have some effective altruistic thinking.

For example, when everyone chooses a career, there will be some "how my work can make people around me better"; Put it on the first element, and hope to exert your influence as much as possible.

“I started to explore effective altruism when I was a freshman, which made me start to think about the blueprint of my future life and what career to choose. I understand What I want is not to do good things by the way, but to make "making a difference to make the world a better place" the number one priority. "

If this concept is divided into "effective" (effective) and altruism (altruism), then MIT actually attaches great importance to the concept of "effective" , but altruism is an idea that belongs to a small group of people.

However, in the global community, many people are altruistic like him, so SBF actually began to explore the concept of altruism in the community outside the school .

By chance, SBF came into contact with 80,000 Hours, a non-profit organization that pursues effective altruism. In this organization, some seniors thought that maybe SBF should think about what to do Work to make the most money.

And he got the same answer from some charities.

“I asked a few charities if they wanted my time or my money and basically all I got was my money. I It is indeed possible to donate a lot of money, which is more practical than me helping them build an organization, after all, I am not born in an undergraduate department."

Unknown Bitcoin, but let’s make money first

After leaving Wall Street, SBF actually didn’t know the future direction, but he founded the Alameda Research Fund by himself. This period was around the beginning of 2017 , just in time for the first big explosion of cryptocurrency.

“Cryptocurrencies were first noticed by the general public in 2017 thanks to Bitcoin’s rise from $3,000 to $20,000. Everyone is paying attention to cryptocurrencies Almost all your friends are talking about cryptocurrencies. For myself, I see very strong signs that there will be a lot of demand in the field of encryption, the industry will change rapidly, there will be a lot of transaction volume, and at the same time , I guess this market may be very inefficient."

This is because there were no institutions to provide liquidity at that time, and there was no effective arbitrage mechanism, but it could For sure, there will be a lot of trading volume, a lot of price volatility, and for traders, this is a great opportunity.

However, he also admitted that he did not understand the technology or connotation of Bitcoin and blockchain at first.

“When I first started trading cryptocurrencies, they were just a bunch of numbers to me. I thought it was very simple, there would be price differences between trading platforms, This one could be $7,000, the other one could be $7,200, maybe 3% arbitrage.

I just thought there might be a profit.”

Did you realize that you want to lead the company after starting the company?

Currently it seems that FTX and Alameda Research have their own company culture, and the rapid rise of FTX also proves that SBF is a competent leader. Iguodala asked how SBF did this.

SBF responded that, in fact, he never thought of this situation at first.

"I founded Alameda just to trade, find opportunities, make good deals and make money, you know, so Alameda was really just a two-person company at the beginning That’s all.”

After entering the encryption field, SBF found that there are many opportunities here, but the transactions are quite complicated, so he needs to hire more people and use a larger team To implement, at this time he did not expect to lead everyone.

“At first I didn’t realize that I needed “leadership”, I just thought there would be a lot of opportunity in this field. But these jobs are complex, so I'm going to hire people to do these jobs, and I can answer their questions, give them advice, and help them get started. All of a sudden, I found that it was a bit more than an employment relationship, and I became more of a project leader. ”

But at this time, SBF still didn’t regard this as company management or team culture. He just thought it was the right thing to do together. Doing the right thing together is also his early leadership philosophy.

Iguodala added to SBF's claim. He believes that SBF has shown his thinking on the company's future core direction at this stage. This is actually what he learned during his career as an athlete. The philosophy and attitude of a team leader will affect the entire team.

SBF believes that it is important to help the team establish a company philosophy.

“It’s not like you’re going to write a document saying, Oh, this is where we’re going, but you do have a company philosophy. You have to It is very clear to tell everyone what is right, instead of complaining that it is the fault of the employees when mistakes happen, I have tried to tell them.”

< h4>Cryptocurrencies are great, but trading platforms suck

After starting to trade cryptocurrencies, SBF came to understand why cryptocurrencies are on the rise. He said that during the transaction, the problems encountered were not related to cryptocurrency transactions, but other matters, such as account opening and remittance.

Originally, when he was trading on Wall Street, he just pressed the buy and sell buttons. privilege.

Just like arbitrage on trading platforms in different countries, not everyone can do it. A large part of it depends on relationships and some kind of licensed industry.

Cryptocurrency is open to everyone, which is its fascinating place.

Although cryptocurrencies are fascinating, there is another problem: the trading platform is difficult to use.

“In 2018 and 2019, as long as the price fluctuated too much, the trading platform would go down because they couldn’t handle the sudden increase in trading volume. At that time There is almost no "compliance department" on the trading platform, and there is no communication with regulators. After using the trading platform, you will find that the trading platform is really an important infrastructure in the encryption field. Second, they are a terrible experience to use. ”

As with previous arbitrage, SBF saw an opportunity. For him, an industry has a transaction volume of billions and a network that can be used by people all over the world, but the trading platform is an important hub, and the execution effect and user experience are so bad, so there is FTX.

“This is actually the reason why I founded FTX. See if we can give the equivalent of traditional finance while taking into account the innovation and market structure of the encryption market. experience, including good operation and a clean interface, etc."

Cold winter in the capital market

Unsurprisingly, Iguodala asked about the current state of the crypto market.

SBF believes that this decline is caused by the reversal of monetary policy. Over the past few decades, the general environment has been in a state of easy money, which has caused many asset prices to continue to rise. Moreover, in the past, the central bank’s indicators for assessing inflation, such as CPI or PCE, could not fully reflect inflation.

This time the situation is due to the combination of many reasons, including the new crown epidemic, the Ukrainian-Russian war, and supply chain problems. Under the influence of multiple reasons, inflation will Out of control.

The Federal Reserve launched the largest interest rate hike in nearly 30 years to fight inflation, causing extreme panic in the financial market. So it’s not just the cryptocurrency market that’s in crash mode, the Nasdaq is down as much as 30% or more from its highs.

The market crash has further led to a large number of liquidation and liquidity risks in institutions such as Celsuis and Three Arrows Capital. SBF believes that Bitcoin’s drop from $25,000 to $20,000 was mainly caused by liquidations.

However, SBF also pointed out that the worst may be over. He believes that in the short term, the encryption market will be affected by the overall economy, and in the long run, it is whether the industry can continue to develop good products.

“So the next development of the encryption market depends on how the overall economy develops, such as inflation rates, interest rates, the Ukrainian-Russian War, etc. I think this is the encryption Short-term changes in the market. In the long run, of course, it depends on the development of the encryption industry and whether we have created good products. This is the most fundamental factor affecting the market.”

How to balance supervision and decentralization?

Before discussing regulation, SBF believes that the encryption industry can develop in two directions. One is self policing, and the other is that the community will start to structure education.

Self-regulation can provide users with a degree of transparency and self-regulation. Once crypto start-ups realize the need to provide self-regulation, people will believe it, which will greatly reduce the possibility of fraud; on the other hand, community education is also very important, and the two complement each other.

As for how regulators will respond, SBF has no answer. However, he believes that it is more possible to regulate the "front end", that is, those trading platforms or those platforms (interfaces) that sell encrypted products to ordinary investors, requiring them to be transparent in information, transactions, and investment users. Responsible.

However, SBF believes that it should be more open to the back-end operation method.

Taking modern international transfers as an example, he pointed out that the current supervision is more biased towards back-end supervision of transfers.

When transferring money, there may be three or four banks handling it. It takes a lot of time for these small banks to figure out who is transferring money and where to send money , however, these banks may also be confused about the situation, which makes small international remittances in addition to large transfers very inefficient.

Iguodala is happy with the SBF metaphor, which he likens to "sweet jazz" (a style of jazz).

Finally, Iguodala asked why FTX cooperates with many athletes or teams.

SBF said that many people may think that FTX wants to get more users, but this is not the reason for FTX to cooperate with athletes. user, then he will spend his money on Facebook or Google ads.

The reason why I chose the sports field is to build brand value.

He believes that sports are one of the few fields without borders. Cooperating with these athletes or teams can help the public quickly understand FTX and know the core purpose of FTX.

“Our biggest goal is to tell the public who FTX is, what kind of services we can provide, and at the same time increase the visibility of FTX in the industry. We have begun to target Focus on establishing a relationship network and the public's brand impression of FTX.

Thinking about it from this perspective, the sports field is one of the few industries with huge influence, which can help us deliver messages to the public.”

This article comes from a contribution , does not represent the opinion of Rhythm BlockBeats

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