«So let’s go build.» The head of the FTX exchange named three areas where cryptocurrencies win
Sam Bankman-Fried used simple examples to show in which common scenarios blockchain is more effective
The total capitalization of the digital asset market has lost about $2 trillion over the past year. The current crypto collapse has left many amateur investors disillusioned or abandoning virtual currencies altogether. However, this does not mean that cryptocurrencies have no consumer value.
Sam Bankman-Fried, head of the cryptocurrency exchange FTX, posted a large Twitter thread in which he reminded us that digital assets are not just an asset for speculation. He listed three uses for distributed ledger technology: quick payments, investments, and social media.
Quick international payments
Bankman-Fried explains with simple examples: embedded fees, expensive and slow international remittances, delays and red tape around bank transfers, especially for large amounts. According to the head of FTX, blockchain simplifies any of these processes, and most importantly, allows you to transfer money almost instantly, without the need for intermediaries.
To prove his point, Bankman-Fried immediately demonstrated how easy and cheap it is to make payments in cryptocurrency. To do so, he created two different wallets and initiated a transfer between them, which took about 15 seconds with a negligible transaction fee.
15) So then I went to send $50 from Bob to Alice.I clicked 'send' at 8:19:33 am.By 8:19:45, when I tabbed over to Alice, the $50 had already landed.The fee I paid was $0.0002: around 2% of a penny. https://t.co/1ihtkcxtAa— SBF (@SBF_FTX) July 16, 2022
Blockchain allows anyone to create a cryptocurrency wallet and use it to send and receive tokens, including stablecoins, Bankman-Fried explained. Such payments are processed in seconds, cost pennies and are completed in less than a minute, he summed up.
Investments with no intermediaries
Further, the CEO of FTX also claims that the speed and ease of token transfers can be applied to the stock market, creating a more optimal and less risky structure for the industry. When buying securities, traditional markets typically require going through multiple banks, stockbrokers and other intermediaries. Settlement risk and the possibility of something going wrong can exist at any point in the process.
Bankman-Fried counts 11 instances in the path of an investor's money to actually buying an asset on an exchange like NASDAQ. When shares of Gametop or AMC rose phenomenally in value in 2021, a line of billions of dollars from eager investors collapsed the infrastructure of several brokers, who were forced to partially shut down.
24) And eventually that risk got too big for the brokers, which had to partially shut down.How does crypto help this?Well, first of all, with a full stack product, settlement is way simpler.Here's what it takes to buy and settle on https://t.co/vXBiGdy8ze: pic.twitter.com/XT48KKVK4l— SBF (@SBF_FTX) July 16, 2022
Bankman-Fried says cryptocurrencies are ideal for avoiding such a scenario. Crypto exchanges operate on an all-in-one basis, with both cryptocurrencies and tokenized securities traded on FTX and other platforms. The whole process is faster, easier, and transfers are made with tiny fees.
The last area that Bankman-Fried thinks blockchain can improve is social media. He writes that existing platforms for virtual communication are interoperable and run by a small group of “pseudo-monopolies.” That said, if blockchain-based social media is used, messages from different platforms could be instantly found in a public registry, says Bankman-Fried. This would lead to more “diversity of opinions” and “real competition,” he said.
This isn't the first time the head of FTX has suggested using blockchain to improve social networks. In April, Bankman-Fried criticized the moderation policies of social networks. He said that people in leadership positions should not decide what to censor. Bankman-Fried said that creating a system in which media platforms could get basic data from a single source would help solve the problem of censorship and optimize the user experience.
Summarizing the possibilities of cryptocurrencies and distributed ledger technology, the head of FTX wrote:
“I could see blockchain having a large impact on payments, remittances, market structure, and social media. And this list isn’t exhaustive; there are tons of areas blockchain can innovate in. I haven’t really touched at all on DeFi [decentralized finance], or web3 gaming.”
At the end of the thread, there was some reflection. “How many of these areas has crypto revolutionized so far? I think the answer is “not really any of them.” It’s starting to impact some, but not in a widespread way yet,” Bankman-Fried wrote as he concluded his series of tweets.
According to him, “there needs to be regulatory clarity,” as well as work on technology and products, and, of course, attracting new users through network effects. The latter is probably more difficult amid crypto winter and a falling market. “So let's go build” is the appeal the FTX head concludes the thought with.
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