It’s been interesting attending the Sam Bankman-Fried trial at the same time that the industry is gearing up to launch spot bitcoin ETFs.
Roughly a year ago, the collapse of FTX was the capstone to a brutal year for the crypto markets. It was like a nuclear bomb going off in the industry. General entrepreneurial activity as well as prices were depressed in the months after.
Laura Shin is the founder of crypto media company Unchained, a former Forbes senior editor and author of “The Cryptopians.” This is an excerpt from The Node newsletter, a daily roundup of the most pivotal crypto news on CoinDesk and beyond. You can subscribe to get the full newsletter here.
However, Sam Bankman-Fried was never a true crypto person. He told multiple interviewers that he was an effective altruist, whose main goal was to earn as much money as he could in order to give it away. (Now it seems, through this trial, at least the government alleges that his goal appears to have been slightly different: to take as much money as he could in order to invest it, wield influence and power, and buy real estate.)
He told both Forbes and Michael Lewis that the way in which he earned the money did not matter. He said that if he felt that he could make more money in a different industry, then he would do that, that he did not truly care about crypto.
Looking back, it seems he was what the industry calls “a mercenary.” As numerous decentralized projects have found over and over again, while it’s important to incentivize people to provide liquidity or other functions on DeFi protocols, they need to do so in a way that attracts people that have a long-term vision, not short-term takers — in short, missionaries over mercenaries.
It becomes evident when you look at the infamous Odd Lots interview he did, in which he talked about how he was in the business of Ponzi schemes. It also was starting to show shortly before the collapse of FTX, when the community realized that the crypto legislation he was promoting in Congress would have thrown DeFi under the bus.
While the launch of spot bitcoin exchange-trade funds isn’t necessarily the pinnacle of idealistic decentralized building, it does mark the adoption of bitcoin by a different class of investor: not the get-rich-quick-schemer who wants to make as much money as quickly as possible for other means, but long-term investors who plan to hold bitcoin as part of a broader investment mix.
While having bitcoin investment products with traditional, staid financial advisors and investment firms may seem less exciting then having a crypto company‘s name on a basketball stadium or a conference in the Bahamas featuring Tony Blair, Bill Clinton and Katy Perry, it leaves a more solid foundation for the future growth of the industry.
Once the industry gets the validation of spot bitcoin ETFs, may it no longer need validation from flashy gestures by those using crypto for their own ends.
Edited by Ben Schiller and Daniel Kuhn.