Cryptocurrencies have become the most popular and traded among millions of users in the world, and their trading has made many people rich. In a report published by the American “Bloomberg” website, the author Zick Fu said Sam Bankman Fried, a 30-year-old cryptocurrency billionaire, will be the first billionaire to give up his fortune.
Five years ago, Bankman Fried worked for a charity that promoted “effective altruism”, where he used scientific reasoning to figure out how to best benefit most people, leading him to discover that the right path was to make a lot of money to make a donation. According to the Bloomberg Millionaire Index, Bankman Fried is currently one of the richest people in the world, with a fortune of more than $ 20 billion.
Despite his large fortune, Bankman still maintains his simple life philosophy, and keeps enough money to maintain a comfortable life, which is estimated at 1% of his profits. But he plans to give away every dollar, or bitcoin.
Bankman Fried is to some extent the richest person who came from the Effective Altruism movement, but should someone who wants to save the world first accumulate as much money and power as possible, or will follow-up spoil them along the way?
Bankman lives like a simple college student. He drives a Toyota Corolla, lives in an apartment with 10 other people, and although he does not like to save time, he does not see much value in buying goods or money. to spend.
Bankman’s peers describe him as a strange kind of capitalist monk, one says he worked so hard in the early days that he rarely showered, another says he did not have time for relationships, and considers sleep an unnecessary luxury.
The author says that the cryptocurrency industry may seem like a strange option to good business owners, as it facilitates endless fraud, but Bankman does not see it that way, as he says that the “FTX” platform – which his co-founder and CEO is. – manages a market integrity where users buy and sell bitcoin, ether and other cryptocurrencies, check customers’ backgrounds, buy carbon credits to offset their emissions, and are more efficient than the mainstream financial system.
Bankman was influenced by Princeton University utilitarian philosopher and professor Peter Singer to donate large sums of money, and although he was not sure what to do, he turned Singer’s ideas into a movement called “effective. altruism “, which made him. and his assistants seek to use accounts Some say the goals do not justify the means and that Wall Street entrenches inequality and undermines the benefit that donations can bring, while others say the movement portrays the rich as champions and fails to address the root causes of poverty.
And in 2017, when the price of bitcoin rose 10 times more than its usual price and investors lost about $ 5 billion in hundreds of “initial currency offers”, Bankman, like many on Wall Street, did not understand cryptocurrency. but which caught his eye. was a page on CoinMarketCap.com displaying prices of stock exchanges around the world.
Although proponents of cryptocurrency have talked about this decentralized financial revolution, most of the activity is based on private exchanges to suit buyers and sellers, where people who want to buy bitcoin, ether, dollars or euros send it to the stock exchange for a while, withdraw it then, and here Bankman notes that Some cryptocurrencies were not sold at the same price on all exchanges, which was the kind of arbitrage opportunity to buy and sell high that he learned at Jane Street to exploit, but he built complex. mathematical models for trades aimed at making money from small price differences, despite The differences in cryptocurrency exchanges were hundreds of times greater.
Some transactions were impossible to execute as capital controls prevented traders from sending cash home, and in theory anyone could earn 10% a day by buying bitcoin on a US stock exchange and sending it to a Japanese stock exchange to sell it at that rate, for a while. In just over 4 months, $ 10,000 could become $ 1 billion.
After founding his company, Alameda Research, US banks considered cryptocurrencies to be so shallow that some did not allow him to open an account, prompting him to open a branch in Japan, but bank executives always questioned raised his overpayments abroad, which made him. has a big problem sending money.
In 2018, Bankman went to a Bitcoin conference in Macau, where he met some of the other big players in the market and decided to stay in the middle of the action and tell his colleagues on Slack that he not going back to Berkeley. Eventually, many joined him in Hong Kong, which has more permissive regulations than the United States.
By 2019, Alameda had provided hundreds of thousands of dollars in profit a day, enough to save a life every hour if Bankman Fried chose to donate the money to the appropriate charities. Instead, he and his colleagues decided to partially reinvest their profits in building their own crypto exchange. Markets were in tatters, often collapsing when prices fell or rising, and some charged fees from Alameda Group to compensate for their losses in Margelenings to clients, an unheard of practice on the New York Stock Exchange.
It took the Bankman team 4 months to write the basic code for a new exchange, FTX, which opened for business in May 2019 and caters to large traders.
The Effective Altruism Movement
Confirmation that he maintains a strict lifestyle, Bankman identifies with the beliefs of “effective altruism,” a social movement that uses reason to determine the most effective ways to benefit others, and valuesHe has so far donated between $ 50 million and $ 100 million to issues such as the fight against animal welfare, the fight against neglected tropical diseases and the mitigation of global warming.
Young technology entrepreneurs like Bankman Fried turned the Effective Altruism movement into a philanthropic force. More than 7,000 people pledged at least 10% of their profits through a group run by the Effective Altruism Center, where they donate to Dustin Moskovitz, one of the founders. of Facebook, pays hundreds of millions of dollars a year to charities that consider the movement effective, and Elon Musk, the founder of Tesla, hired a professional poker player who has become an influencer to advise him on giving.
The author concludes with what McCaskill, founder of the Effective Altruism movement, says that Bankman Fried was temporarily excited about the idea of buying coal mines, preventing emissions and keeping fuel on hand in case it was needed in a post- disaster. scenario, but decides it is not cost-effective. “We should expect epidemics to worsen over time due to the potential for laboratory leaks,” says Bankman-Fried. “There is an opportunity to destabilize the world if we do not prepare for it.”