One of the leading names in the crypto world, and part of the exclusive “club” of billionaires, Sam Bankman-Fried is more than attentive to the blockchain universe. Since starting FTX in 2018, the company he is CEO of, Bankman-Fried has been at the forefront of discussions about cryptoassets and how to improve the ecosystem as a whole. Recently, he is gaining more and more ground in talks for the U.S. government to create regulations for the crypto market.
On SBF’s journey – including curious facts – you can find here, as well as news about FTX’s new investment rounds. But, for now, you can check out right here the opinions and forecasts SBF has for the industry:
SBF: NFT, gaming and cryptoassets
One of the sponsors of Riot Games’ League of Legends World Championship, SBF has a taste for gaming and eSports. While the repeated mantra is that games will popularize cryptoassets through Non-Fungible Tokens (NFTs), SBF thinks a little differently: NFTs will bring more players into games. Here is what he commented on in an interview with Scott Melker, published on January 4, 2020:
I think Axie [Infinity] is proof of how powerful this can be because it was from a lot of perspectives really coming from a place of weakness, not strength. Like it didn’t have adoption before getting involved with crypto to build off of.
I hope I’m not offending anyone by saying it’s [Axie Infinity] not like the most engaging game ever built if you take away the crypto aspect of it. It was sort of like CryptoKitties the video game. And so you start with that as a base… it’s not the most exciting place to start and you look at AXS market cap as of now is over $6 billion circulating. And I think it’s just like, that was version zero. And so I think, if anything, it’s just evidence that is super compelling.
Sam Bankman-Fried: Games vs. Payment gateway
Still, on the adoption of cryptoasset through games and NFTs, Sam Bankman-Fried added, speaking at the Bloomberg Financial Innovation Summit on November 5, 2021, that payment transactions cannot be left out of this equation:
I don’t want to confidently say that [the explosion of crypto] will happen because I think (mainstream adoption) could be through payment rails instead. There’s a few things that it could be. But I would put NFTs in that top category probability wise, along with a couple other things in terms of what brings a non-crypto native audience to crypto for something other than financial investing. I think, frankly, it’s really hard to make a really engaging video game. I don’t think I can do it. It would take a really long time to build up that expertise. So when you hear about top-tier gaming publisher looking to introduce crypto into their system, I’m pretty bullish on that
Dogecoin and the “Reddit” effect on the market, according to Sam Bankman-Fried
The move that pushed GameStop’s stocks up in early 2021 has been analyzed by SBF a few times over the past year. According to the executive, all the information exchanged in online forums that eventually led to the massive buying of the “meme stocks” was positive for the cryptoasset market. In addition, he further commented on how influencers work in the cryptoasset world, here in this BitcoinNews interview published on May 28, 2021:
Dogecoin was amazing for recruitment for crypto. It acquired an unlimited quantity of curiosity in crypto. It additionally acquired numerous disgust in crypto. It’s a double-edged sword. That got here at a price. I feel in Dogecoin’s case, it was price the price. I feel for another meme cash it wasn’t as a result of they solely actually had one edge. Most these cash aren’t getting anybody in, they’re simply pissing folks off, however a few of them are and a few of them are nice cash which might be making folks pleased.
I feel the larger factor is that this isn’t actually crypto issues, that is only a world factor. This taking place in numerous industries proper now. You have a look at what’s taking place within the inventory market like GameStop, I imply, that’s a cryptocurrency. It’s not referred to as one, I perceive technically, it’s an fairness, however like, come on. That’s a shit coin. All of us acknowledge it, proper? I don’t if it’s what the Pandemic did to all of us or if it’s what we’ve all the time secretly needed or if it’s what social media inevitably leads to.
This very specific storm is one which stretches throughout industries. It’s not even analogous. It’s not like each crypto and shares have their very own charismatic man who after they tweet, the factor goes up — it’s the identical man. It’s Elon Musk in each instances. It’s been a bizarre yr for everybody. I feel the large query is what’s subsequent yr like? Is that this the brand new regular or is that this what occurred when everyone seems to be bored, caught at dwelling, socially remoted? I feel that’s actually a chunk of what drove it.
Sam Bankman-Fried: regulation ahead
Sam has been optimistic about the regulation changes. So much so that in late 2021, Sam participated in an open hearing in the U.S. Congress to explain about cryptoassets and the needs of the market in terms of regulation. In addition, SBF was a major donor to Joe Biden’s campaign for the U.S. presidency and has been increasingly approaching politicians so that the regulation can happen. In an interview with Fox Business on January 18, 2020, he commented on which aspects he believed were more viable to be regulated:
We’ll have to wait and see, but I’m optimistic that over the next year or so we’ll see some really substantial progress in the global and US regulatory environment for cryptocurrencies. It’s going to be tough because people in the industry have been complaining about the relationship between industry and regulation for a long time. However, I think there is light at the end of the tunnel, and there will definitely be some straightforward rules that will allow cryptocurrencies to make strides as an asset class while still satisfying regulators.
Solana > Ethereum
Sam Bankman-Fried has talked a few times that the Solana network is better than Ethereum, pointing out that SOL can gain more scale than the ‘darling’ ETH. It is not uncommon to read reviews of Solana on his official Twitter page. For SBF, one of Solana’s biggest positives lies in its ability to trade in quantity. On May 28 of last year, SBF told Forkast News:
That means that when you’re looking at blockchain, you certainly better have a long-term roadmap to get somewhere in a million transactions per second plateau. And Solana is already building that. Maybe someone will do a second one at some point; that would be cool. It’s like we’re moving ahead with Solana; they’re the only one trying to be big.
Ethereum, in the other hand, they’re trying to be medium-sized. What does big mean? Take your pick on another blockchain and what’s their roadmap for transactions per second? When they say big, they mean a thousand. You mean getting to a thousand transactions a second, and that’s just not enough. That’s enough to run current DeFi. That’s what you can do with a thousand — current DeFi without incurring insane gas costs, you can’t do more than that. If you get up to a thousand, you can have one small to medium-sized company running on-chain, and that will take the entire blockchain, that’s what you get. Or you can have a bunch of tiny companies or a bunch of AMMs. You’re not going to have a billion-person consumer product, that’s going to overwhelm a thousand transactions per second immediately. When people say fast, they don’t think very hard about what number fast means. They say a thousand fast, but a thousand isn’t fast, a thousand is medium-slow. How many are trying to get actually fast, meaning hundreds of thousands, at least? It’s a pretty small list.
Sam Bankman-Fried and the best blockchains
In addition to Solana, SBF has some opinions on the best blockchain networks currently operating. On January 18 this year, he explained some of his views on Decrypt’s gm podcast:
Avalanche is a real chain, it’s a cool chain, the team knows their shit, and has been putting a ton of work into it. That’s not to say I know best and they don’t. They may be right, in the end, about what to prioritize.
Wrappers in general are probably going to keep growing over time. As you have a divergence between the chains that have the skill to handle the activity that’s being asked of them, versus the chains that the value lives on, you sort of have no choice but to dive deeper and deeper into wrapped assets.
Metaverse is right around the corner
The metaverse is still far from happening despite the hype, said Sam Bankman-Fried. On January 4 of this year, he spoke on Bloomberg that his expectations for 2022 were more on the institutional adoption of cryptoassets, followed by regulation of the sector coming from the U.S. government. Also, in that interview, he talked about how the metaverse is something for the near future:
I think the metaverse will still take a while, but there is a lot of room for growth. There are NFTs in video games, and there are billions of game users worldwide. I think we will see digital assets putting a foot in there, we see interest from big players in these markets in digital assets, and it is going to grow in the next few years. I think social media will start to have Web 3.0 interfaces, and I guess it will be a turbulent process. We don’t see any clear track from social media in that direction yet; even with the Facebook rebranding, I expect we will see a colling off of some pure NFT activities that we’ve seen recently unless we see big names and players entering the market. That’s something that I believe will happen from this year on and will be essential for the growth of Web 3.0 as a whole.
DeFi: the big challenges
Despite his belief in DeFi, SBF never fails to raise the potential hurdles for mass adoption of this system as a whole. On The Jax Jones & Martin Warner podcast on June 2, 2021, he talked about how infrastructure will be a necessary asset for DeFi adoption across all environments. And how, perhaps, it may become “locked-in” to only a few financial players:
The bottleneck is latency. The other big bottleneck here is the single points that lots of programs flow through. You can have, theoretically, 10 million transfers happening at once on the network. But if 10 million people all want to move the same token at once, from the same address, you can’t process those in parallel. They’re all drawing on the same resource.
Those have to go one by one. You’re limited by the computer’s clock speed. You can’t meaningfully have different computers processing those in parallel. They’re going to run into each other. The other fundamental constraint is, basically, that in the end no matter how big your decentralized network is, in terms of things which cannot be paralyzed, things which conflict in terms of what they spend, you can’t have more and think that can flow through one computer.
By the way, basically true for a centralized network as well. When we think about scaling FTX, that is the hard part. If we could just rent more boxes and scale up, it’ll just not be a problem. You’re like, “Why would we ever build a good system?” Like, “Yes, we’ll double our AWS bill. No big deal.” Right?
There are just fundamental constraints on it, but that leaves a lot of the world. HFT firms aren’t going to be trading with each other on DeFi. But Robinhood could be in DeFi. Robinhood’s traders, I mean, that’s a GUI that takes a second to use, right?
A 100th of a millisecond is not important on that scale. The low-engagement retail financial applications can absolutely happen in DeFi. Long-timescale applications, some borrowing-lending can happen in DeFi because you’re not constantly wiggling things in and out. Then obviously, you can think about what’s the advantage. For which things, you get a ton of value out of putting them in DeFi, which things do you not want flowing to your centralized systems.
I tend to think we don’t have great instincts on that question. People think they know the answer, but when you drill into it, you can make comfortably compelling arguments for a lot of things. “It’s going to be super contingent. We’ll see how things play out.” But for a ton of the world, and a ton of the world’s infrastructure, there’s actually, decently compelling arguments for why it might make sense to put it in DeFi. If it’s not super late, it’s sensitive.
Importance of marketing
FTX started in 2018 when bitcoin was already exploding, and the crypto market was already established. Yet, in a short time, the exchange became the second-largest globally. According to SBF, this was due to the company’s heavy investment in marketing, and how he behaved by trying to become a spokesperson for the theme on Twitter. In an interview with Cointelegraph Magazine on February 24, 2021, he talked about this challenge:
With FTX as a retail facing business the more customers the better. You can build the best product in the world but if no one knows about it it’s not worth anything
One of the hardest and most interesting pieces has been figuring out how to get users, and increasing awareness was a big part of that.
One of the most challenging and exciting parts was figuring out how to attract users, and raising awareness was a big part of that.
In an interview with Decrypt to Daniel Roberts, SBF said that sponsorship in sports is part of this big FTX quest for the name brand awareness, as the reporter told on his Twitter account:
just had a great chat with @SBF_FTX, asked him if he can tell for sure that all the sports sponsorships are boosting customer acquisition. He said he can't quite prove that, but anecdotally it has been huge for name brand awareness. "You can't just buy that with Facebook ads."
— Daniel Roberts (@readDanwrite) September 15, 2021
FTX’s biggest mistake
What is the biggest regret of one of the most prominent billionaires in the crypto world? The answer may take you by surprise. Check what he told Yahoo Finance on November 21, 2021:
The biggest mistake I made… is not getting involved sooner. I think that there’s a lot of opportunities in the space that did not gel to me until the last year. I think one of them is thinking about what the consumer financial experience would look like, what a comprehensive one could look like.
Goldman Sachs in the sights?
Finally, a little controversy that Sam Bankman-Fried talked about in a July 13, 2021 interview with Finnancial Times:
If we are the largest exchange, buying Goldman Sachs or the CME is not out of the question at all.