Revised from a variety of incarnations on the Internet:
How Cryptocurrency Works
Not long ago a Merchant found many stray monkeys living near a village that were disregarded and overlooked by the villagers.
One day the Merchant came into the village stating that he wanted to buy these stray monkeys.
He announced that he would buy the stray monkeys for $100 each.
The villagers thought that this man must be crazy. “How can somebody buy stray monkeys at $100 each? Why would he buy stray monkeys at $100 each?”
Still people caught some monkeys and sold them to the Merchant for $100 each.
This news spread like wildfire. More villagers caught monkeys and sold them to the Merchant.
After a few days, the Merchant announced that he would now buy monkeys for $200 each.
Now even the laziest villagers ran around to catch the remaining monkeys.
They sold the remaining monkeys at $200 each.
The Merchant then announced that he would buy monkeys for $500 each.
The villagers started to lose sleep.
They caught six or seven monkeys which was all that were left and got $500 each.
The villagers were awaiting anxiously for the next announcement.
Then the Merchant proclaimed that he is going on holiday for a week, but when he returned, he would buy monkeys at $1000 each.
He also said that in his absence his Employee would be in charge to take care of the monkeys he had purchased.
The Merchant went on holiday.
The villagers were frantic and very sad as there were no more monkeys left for them to sell at $1000 each as promised by the Merchant, but then the Merchant’s Employee publicized that he would secretly sell some monkeys at $700 each.
The news spread like wildfire as the Merchant had promised that upon his return monkeys would be purchased for $1000 each, producing a $300 profit for each monkey.
The next day the villagers queued up near the monkey cage.
The Employee sold all the monkeys at $700 each. The rich villagers bought monkeys in large numbers. The poor villagers borrowed money from money lenders and bought the rest of the monkeys.
The villagers took care of their monkeys and waited for the Merchant to return.
When the Merchant didn’t return, they searched for the Employee, but he could not be found either.
Eventually the villagers realized that they had been duped into buying the useless stray monkeys at $700 each and were now unable to sell them for any amount.
This Monkey Business is now known as cryptocurrency.
. . .
[See the e-commentary almost a half dozen years ago in “Bitcoin”, “Ethereum” . . . “Blockchain Technology” Say What? (July 3, 2017) and a few comments on blockchain five years ago at One World Currency? (January 8, 2018) (K “On a simple level, ‘cryptocurrencies’, etc. are digital and gold, etc. is analog. Blockchain technology underlying ‘cryptocurrencies’ is likely to be supplanted by a fast, fair, sustainable, scalable, guaranteed Byzantine fault tolerant consensus digital technology using gossip protocols and virtual votes such as Hashgraph. And Hashgraph is likely to be supplanted by even more advanced and sophisticated technologies.”) The analogy between “gold” and “analog” is weak because gold is real and can be held in one’s palm as they say, there is no counterparty risk.]
Bumper stickers of the week:
FOMO
HODL
Let’s celebrate one big happy extended family of transformational leaders and selfless visionaries serving the public interest and promoting the common weal in law, media, business, politics and academia:
SEC Chair Gary Gensler’s old boss at MIT was Glenn Ellison. His daughter Caroline Ellison is the CEO of FTX sister-company Alameda Research (and Sam Bankman-Fried’s lover at one time apparently).
The General Counsel of FTX used to be lead counsel to Gary Gensler when he was the CFTC Chair.
Sam Bankman-Fried’s mother was one of Hillary Clinton’s lawyers.
Gabe Bankman-Fried, brother to Sam (also a former Jane Street trader), is founder of “Guarding Against Pandemics”. He was a Legislative Correspondent for the U.S. House of Representatives and an advisor to large political donors in the Democratic Party.
Aunt Linda Fried is a WEF member on the Global Agenda Council on Aging.
The father, Joseph Bankman, is a Stanford professor who has lobbied on behalf of hedge fund managers before Congress (film at eleven).
Amy Wu, FTX Head of Ventures & Commercial, started with the Clinton Foundation years ago.
Nishad Singh, FTX Director of Engineering, has spent over 8 million dollars for Democratic candidates.
Mark Wetjen, Obama’s Commodity Futures Trading Commissioner, was the head of FTX Policy & Regulation.
Dan Friedberg, Chief Regulatory Officer of FTX, was previously a lawyer at Ultimate Bet (a site where they basically cheated against players).
Stuart Hoegner, General Counsel at Bitfinex/Tether, was previously Director of Compliance at Excapsa which was responsible for the Ultimate Bet Poker software.
e-commentary 