What On Earth Happened To Crypto?

Probabilities, how Lebanon uses crypto, a weird paradox and more.

#1 What In The World Happened In Crypto?

The irony of the past week is that the article above (written on November 8) is already wildly out of date. So much has happened in the crypto space that it's truly been difficult to keep up with.

The bottom line: FTX, one of the most highly respected "centralized" cryptoasset exchanges became insolvent. After several days of drama that would make for a solid Hollywood thriller, it's become clear that Sam Bankman-Fried (the founder and CEO of FTX) was using client deposits to fund losses at his external proprietary trading company Alemada research. That's a bit of a mouthful so here it is in plain English: we found out this week that FTX was a literal Ponzi scheme.

The total amounts of money lost is still a little unclear but anywhere from $8-10 billion in customer funds were lost by FTX. Not quite Bernie Madoff levels but combined with industry collateral damage, this will put SBF right up there with the notorious financial villains.

There are many angles to view this story. In some ways, it reinforces the need for decentralized finance that doesn't require placing trust in others. But it also reinforces the real risks of total loss when investing in speculative assets. It's not a game, the industry is crammed full of corruption and grift, and real people lost life savings taking on more risk than they should have.

Over the next few weeks, we can expect the fallout from this insolvency to create contagion. Other institutions (as well as countless individuals) have already and will continue to become insolvent as a result of storing funds with FTX.

But we can also expect to see an interesting regulatory battle take place. Why interesting? Because of the of the amount of money donated by Sam Bankman-Fried to many government officials as well as his too close for comfort connections to the SEC Chair.

The bottom line: this story is action packed and every day seems to bring new levels of drama. If nothing else, it's a spectacle to watch. But the reality is that these events and those that follow over the coming weeks will impact the industry for years to come. And if you believe that crypto has an important role to play in securing self-sovereignty, this is a story you'll want to follow.

Final note: Adding in the thoughts of Arthur Hayes on this topic (although a few days old at this point). His perspective is always interesting.

#2 Trends Converge - The Quarter Time Job Comes Closer To Reality

"A wave of lay-offs in middle management has raised fears the US is heading towards a “white-collar recession”, according to economists and recruiters."

This emerging story of a white-collar recession is a precursor to the idea of the remote work, quarter time job. Remember, the flexibility of remote work lends itself to new contract style work arrangements. Contract work that doesn't compensate by hours worked but by project completion. Do X and get paid Y.

Recession Proof: The Quarter-Time Job - The Sovereign Individual Weekly

As the world enters a time of stagflation, the digital economy will continue to transform society by introducing the quarter-time job.

Watch this trend as white-collar jobs are eliminated because many of these workers have skills that lend themselves to asynchronous work. And while companies aggressively downsize their teams, it's likely that we see more of these workers adopting new remote work arrangements rather than opt for widely available blue-collar jobs.

ie: opting to earn several contract-based incomes as a means to earn a livable remote wage. And an opportunity for companies to cut a variety of costs like office expenses, healthcare costs, stock options, and other forms of comp in exchange for do X get paid Y work.

"Job cuts in the technology industry are accelerating, nearing levels seen in the early stages of the Covid-19 pandemic, as companies both large and small curtail ambitions and brace for tough times ahead."

The longer and deeper the recession is, the more likely we'll see some of these location-independent, middle management positions convert to quarter time roles.

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