In this article you will read Sam Bankman-Fried, the CEO of FTX, answering a handful of very interesting questions about the cryptocurrency space and the FTX project.
To understand the value of a universal currency, such as Bitcoin, we must realize how inconvenient and ridiculous our current financial and economic processes truly are. For example, it is obvious that if we were to redesign the world from scratch we wouldn’t have as many currencies. How many countries have changed their money or adopted another country’s one? Keeping such a multitude of currencies makes absolutely no sense.
Today’s daily transactions are another case study for the value of cryptos. While most people believe that swiping their credit card is an easy gesture, the underlying process for credit transactions is incredibly complicated, tedious and extensive.
But the best example I can provide to convince you of the value of cryptos is with wire transfers. We all know wire transfers are a pain: they take hours to clear, cost a lot of money and need two days to arrive. Furthermore, most banks don’t provide customers with an easy way to send them; and when they do, they charge a 3% fee!
Now let’s compare. On the one hand, you have all these currencies that are hardly exchangeable and that are supported by ancient, burdensome processes. On the other hand, you have something new, multinational, easy to move and instantaneous. Cryptocurrencies have the potential to solve the bottlenecks of current payment methods.
FTX was the first in the industry to release “Leveraged Tokens.” What are “Leveraged Tokens” and what advantages do they provide?
Our “Leveraged Tokens” are ERC20 Tokens that represents a leverage position from FTX futures. As their value is tied to a crypto position, users can instantly utilize them or redeem them at their fair value without dealing with collateral. Since they are also listed on other platforms, you don’t need to have an FTX account to get access to FTX’s liquidity. As such, they are particularly interesting to retail traders who can now take on leveraged positions on spot exchanges without passing by margin and futures exchanges.
You recently launched the “US 2020 Election Market,” a series of futures contracts which allow investors to trade on the outcome of the American election. Practically speaking, how does this product work?
We made this product as straight forward as possible. Traders can choose from 6 contracts, each belonging to a candidate, which expire to 1$ if he or she wins the elections, and 0$ otherwise. To give you an example, the price of each TRUMP CONTRACT is equal to the probability that he wins reelection. So if you think there’s a 50% chance of Trump winning, then TRUMP should trade at $0.50. He is currently trading at 0.63$, so if you think the odds are at 80%, buy now because it will pay out in expectations! If you think the odds are at 40%, it’s a good moment to sell.
Currently, what is your favorite Election 2020 contract and why?
While I am not a political expert, I believe that markets are a little slow to react to long-term trends, and too over-reacty to weird, short-term events. If you look at the massive searches that Buttigieg, Bloomberg and Bernie abruptly got, it’d leave you wondering… I would bet against some of those sudden moves.
Since its foundation in 2018, FTX has donated over $7 million to charity. Why is it important for FTX to have a social cause?
If your goal with your money is to buy cars, then your 5th car really isn’t as valuable as your first one. If your goal is donating, the 5th malaria vaccine is as good as the first. When you think socially, the scope of problems to address is endless. This fuels us into taking a bolder path.
What objectives would you like to have achieved within 10 years?
From a corporate perspective, our three year road map is to become the number one crypto exchange in the world. Within 10 years, our aim is to transform into a global financial hub dealing with a multitude of financial products, both crypto and non-crypto. From a personal point of view, my goal is to do as much as I can to have a positive impact on the world.
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