What the FTX failure means for Bitcoin, and why it may be the best thing to happen in 2022 as well as the catalyst for the next bull market.
This is an opinion editorial by Aleks Svetski, author of “The UnCommunist Manifesto,” founder of The Bitcoin Times and Host of the “Wake Up Podcast with Svetski.”
“The Bitcoin Maximalists were right, again. Damn them. Damn them to hell. This entire thing is their fault!”
Many a time, especially since 2020, I’ve heard variations of the following from people all across the “crypto” space:
“Look: a billion-dollar company isn’t going to collapse overnight. That’s impossible. They’re sponsoring an entire stadium for God’s sake — and you think their business model is to run off with your $2,000 worth of crypto? Don’t be so stupid. It’s safe enough to leave your bitcoin on there. Self custody is too complicated anyway. If we want mass adoption, custodians are important.”
These people’s faith in VC-backed institutions is blinder than the most fundamentalist of religious zealots, only far-worse placed.
And these people behind these institutions are glorified and revered in the media as eNtRePrEnEuRs, while their opinions lead people directly to the slaughterhouse. Case in point with Mr. Wonderful below:
This proves much of what I discussed in my satirical article from October. You know we’re in late-stage fiat when the “smartest in the room” these days are about as dumb as the rest of the lemmings marching into the lava.
They’re so used to easy money via their obfuscated proximity to the money printer, that they have no idea why something like Bitcoin exists, why it’s important, or why it is different. They cannot see beyond the paradigm which has brought them success to date, and as such they are utterly unqualified to comment on something as paradigmatically different as Bitcoin.
Toxic!!!
When Bitcoin Maximalists turn warnings into memes, e.g., “not your keys, not your coins,” or proclaim the importance of “sound money,” e.g., “Bitcoin fixes this,” they are ignored as if they’re a group of a) zealots, or b) boring and outdated.
“Toxic” is the blanket response given by the Mr. Wonderfuls, BitBoys and Vitaliks of the world.
Well…. here we are again.
The reality of all Ponzi schemes is that they fall much quicker than they rise — and when their rise has been stellar, their fall is that much more meteoric. From Mt. Gox to BitConnect to Luna to BlockFi to Celsius to Voyager and now, to FTX.
They are all the same, and they are no different to every other cryptocurrency company on the market. Yes, I use the word “company” specifically because all of these so-called “projects” are just that; companies no different to FTX, just playing pretend with numbers conjured up out of code. And yes, that includes Ethereum, Cardano, Hex, Solana, Chainlink and every single other cryptocurrency, NFT or DeFi stupidity out there.
Only Bitcoin is different. Only Bitcoin lacks (and I say this as a positive attribute) “leadership” and a head of the snake to chop off or pressure. Only Bitcoin has an immaculate conception. Only Bitcoin had an organic, market-driven emergence. Only Bitcoin is fixed. Only Bitcoin is finite. Only Bitcoin matters.
Bitcoin Maximalists who warned you of all of the above have also been warning you about all of the shitcoins as well. The time will come for each of those to either explode, implode or fizzle out of existence.
The only question is: What will it take for you to heed those warnings?
The Signs Were There, Not Only The Warnings
FTX was always fishy. I met its founder, Sam Bankman-Friend, or SBF, on a yacht during Bitcoin 2021 in Miami. It was a private, little sailing trip we went on with about 50 or 60 other people.
I had no idea who he was, other than some really unhealthy looking dude with a distended gut and a bad hairdo. We exchanged a few awkward words and I proceeded to go speak to the waitresses while he remained in a corner eating hors d'oeuvres.
One of the people on the boat told me that he ran a company called “FTX,” to which I responded, “What the hell is that? Another shitcoin?” His response was, “No, it’s one of the fastest-growing exchanges in the world.”
I was intrigued, so I asked SBF a little about it, to which he responded that he had run a crypto hedge fund beforehand, was very successful and put that money into building an exchange.
At that point, I was running a Bitcoin-only app known as Amber, back in Australia, and I remember thinking to myself, “Goddammit, these shitcoiners are literally printing money by feeding gambling addictions — and here I am trying to help people stack sats sensibly. What a clown world…”
Anyway, I never heard or thought more about him after that, until I saw his “Home Cooking With Beyond Meat” tweets. The sickly physique made instant sense to me, and so did the shitcoinery.
Physiognomy matters, and while that may trigger some of you, the fact of the matter is that how you look is largely determined by your behavior, and your behavior is a manifestation of your values.
Sure, there are some things you cannot change, but by and large, you build and mold yourself into a reflection of what you value most — alas, I will save this talking point for a future article on why Bitcoin is aesthetic.
For now, suffice it to say that poor physiognomy was a warning sign. Fake meat leads to fake business (and a whole lot more fakeness in between, which I won’t mention here as people may get triggered).
What’s On The Horizon?
What will the future “I told you so” article be about?
Probably the collapse of Ponzi-like craptocurrencies whose raisons d'etre are “pumpamentals,” or Ethereum as it becomes “panopticoin” and merges with governments who aspire to issue central bank digital currencies (CBDCs).
NFTs already seem to be dead. DeFi is in DeepShit, but maybe that has another round.
Whatever it is, it’s going to be painful for the myriad idiots who are following people like this:
I mean, you couldn’t make up such poetic irony if you tried, saying things like:
- “CeFi failed” (while being sponsored by Nexo)
- “We build cool shit and people use it for bad reasons”
- “Is it a problem with the social layer?”
Much like Marxists, hosts like this, along with those behind failures like FTX have a very, very poor understanding of human nature. They think that if you just “build cool shit,” the world will become a better place, and that you could one day “fix the social layer” by turning everything into some transhuman smart contract.
They fail to realize that constraints are not just important, but necessary. Especially with respect to the language of value (i.e., money). That’s actually the answer to points two and three above.
What they see as “flaws” in Bitcoin are precisely its primary set of assets. Bitcoin is superior because idiots like SBF, Vitalik Buterin, Roger Ver, Richard Heart and the rest of the charlatans can do nothing to influence it.
Children like this, with no life experience and no understanding of psychology, traditionally had zero influence. It’s no surprise that in a clown world, their voices carry weight.
Imagine what they’re going to do when Ethereum falls apart, and their hero, Vitalik, becomes the next SBF. I don’t think they’re ready for it.
The Silver Lining
So what does it all mean? What do we do with all this?
Well… there is a silver lining, always.
Some have said this FTX debacle, hot on the heels of similar fates for Luna and Three Arrows Capital has “set the industry back by years.”
I agree only insofar as the price of bitcoin may be affected in the short term. Otherwise, I have to wholeheartedly disagree.
If anything, I think this entire event has brought some reality to the so-called “industry,” and shown everyone what it really was on the inside; one big hot air balloon.
The Bitcoin industry, while perhaps inflated by the excessive interest in “crypto,” is now closer to where it should’ve been at this point in its evolution. A lot of the dumb ideas, like NFTs and “tokens on Lightning” will probably dissolve and disappear, while capital allocation toward Bitcoin will re-normalize.
Much of the phantom wealth in all of the mind-numbingly stupid shitcoinery so rampant these last few years should evaporate, and real capital will look for real innovation and business models in and around Bitcoin.
Bitcoin will have moved from institutions, crypto companies, VCs, shitcoiners and weak hands, into the cold storage wallets of Bitcoiners and long-term HODLers. A new price floor will develop and the next phase of growth will commence.
This is a net good. All of it.
In that sense, SBF, Do Kwon and Su Zhu are the saviors we never asked for, but that humanity at large deserved. We’re in a clown world, so why not have saviors with a clown complex accidentally wipe themselves and their dumbass fiat industry away with them?
I mean, just look at the FTX ventures portfolio. To know that all of this junk is up shit creek without a paddle brings me levels of joy I’ve not felt since Bitcoin broke the prior all-time high in 2021:
While groups of 20,000 people spend the next few weeks on Twitter Spaces in disbelief, wondering “how this could’ve happened,” a small number of newly-minted Bitcoin Maximalists will have been born, a large number of the recent minimalists will have had their positions validated and the veterans… well, we’ll sit back and continue to tell you so.
Some of us in more eloquent ways, others in more colorful ways. And next time around, we’ll probably be ignored again, but it’s OK. At least we get free entertainment:
This is a guest post by Aleks Svetski, author “The UnCommunist Manifesto” and founder of The Bitcoin Times. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.