On the (Eventuall) Irrelevance of SBF
Sam Bankman-Fried’s recent conviction inspired many front page stories, most of which read like obituaries. Not just of his time as a free man but also the broader dreams of crypto. It all makes me laugh because none of this will matter in the long run. The afroed and acronymed psychopath will be forgotten long before he gets out of jail. Anyone who disagrees should take a moment to reflect on the importance of Bernie Ebbers to the modern internet.
If you’ve never heard of him then you are in good company, none of my students knew anything about him or his company either.
Bernard John Ebbers was the founder and CEO of Worldcom, once one of the largest telecommunication companies in the world and a contributor to the physical infrastructure of the internet, until it collapsed due to an accounting scandal — still the largest in US history. Far more value was destroyed by Worldcom than FTX, and Ebbers was sentenced to 25 years in prison.
So what does this story have to do with the modern internet? Virtually nothing. A network of computers that transmit packets of data was always going to be a thing. The soap opera of who did what when during its awkward adolescent years is now just a footnote in history. The same is true for most other tech revolutions, despite their own bubbles, frauds, and charismatic psychopaths. The only question that mattered in the long run was whether the proposed solution did something useful.
The money management industry is ten times bigger today than it was when a different Bernie went down in flames. The railroad bubbles of the 1800s didn’t invalidate the idea of trains and Ken Lay didn’t make us turn off the lights. Mortgage-backed securities are still an important thing, even if Lehman isn’t. You probably live off of electronic payments, but have never heard of Wirecard.
And yet:
Wall Street Journal: Sam Bankman-Fried Verdict Reflects Crypto’s Broken Dreams
Financial Times: Downfall of a crypto billionaire: the conviction of Sam Bankman-Fried
New York Times: Wild Ride and Dizzying Crash for Reluctant King of Crypto
Plenty of people never bought SBF’s schtick. “Kings” are anathema to a technology meant to break up intermediaries and disseminate power. He wasn’t reluctant about anything and the only people who found him credible were suckers and skeptics. Now they pile on, either to deflect from their poor judgment or to push a corporatist agenda.
The rest of us are too busy building or actually using the tech to care. Did we think he was perpetuating a massive fraud? No. But we didn’t dwell much on an impolite asshole who didn’t believe in DeFi, either.
Crypto still has a lot of challenges to overcome. SBFs conviction won’t address any of them. I’m glad the justice system worked and that his victims get some closure, but the length of his sentence will not tell us anything about the complexities of decentralized governance. It won’t help Bitcoin’s economic security after the next halving or tell us what to do about Lido’s concentration in Ethereum staking. It won’t make smart contracts safer or accelerate the tokenization of assets.
Solving these challenges will go a long way to helping make crypto an important part of the future. Nobody will care about SBF if we succeed.
