Sam Bankman - Fried , the laminitis of hedging fund Alameda Research and crypto platform FTX , was a frequent guest on both mainstream financial news and more niche crypto podcasts . And while apprehend through his media appearances over the years , Gizmodo has stumble upon a very weird doctrine of analogy from SBF , as he was often be intimate , where the now - former billionaire explained that massive fraud at Enron would n’t have been possible if the company used the blockchain .
SBF seem on the “ Jax Jones and Martin Warner Show ” on YouTube back inJune of 2021was discussing the wonders of blockchain technology , and wanted to excuse how it could be used to make indisputable unsound affair could n’t happen . SBF asked one of the hosts to give him an example of a fellowship that had been in trouble . Amazingly , one of the legion suggested Enron as an example , a party name that seems perversely curious in hindsight . And SBF just rolled with it .
“ What were some of the self-aggrandizing shitshows that openhanded companies have blend in through … over the last twelvemonth ? Really negative incidents that really suffer their drug user base ? Like what are the first single that come to listen ? ” SBF ask in the YouTube video starting around the52:20 mark .
Screenshot: YouTube
“ Well , take Enron , ” one of the hosts suggests .
“ Yeah , okay , great , Enron , ” SBF say . “ Not a respectable situation . ”
“ I take that was a chip of a curveball , but I think they all enforce , ” the host say .
“ What happened with Enron ? Well , they wangle their leger , you know , what could you do ? Well , if you make books be on chain , at least some pieces of it , some checksums for it , it makes it a lot harder to fabricate them , ” SBF tell .
Enron , of course , was a Texas - found zip company that was pull strings its book , despite audit by a supposedly reputable business firm have it away as Arthur Andersen . Enron made $ 74 billion in investor assets vanish when it register for failure in 2001 . And if the allegations against FTX are correct , and SBF was co - mingling funds by take customer deposit on FTX and hazard them out at its sister troupe Alameda Research , there ’s wad of room for comparability in these multi - billion dollar sign implosions .
Another reason the reference of Enron is amusing ? After FTX filed for bankruptcy , the unexampled chief operating officer became John Ray III , the same adult male who oversaw Enron after its spectacular flop . After Ray took over he wrote , “ never in my career have I seen such a complete loser of corporate controls . ” FTX is obviously worsened than Enron , if you believe Ray .
But was SBF right on about blockchain ? And what the hell on earth is this blockchain ? Blockchain can be thought of as fundamentally a decentralised database that ’s maintain by offering bonus for citizenry to keep the connection up and head for the hills . In the showcase of Bitcoin ’s blockchain , the motivator is Bitcoin , as that ’s what all those “ miner ” are doing all daytime long when they ’re using so much vigor — they’re basically maintaining a database of transactions in the sky and getting paid for it in Bitcoin .
But would Enron have been kept more good if its books were kept on the blockchain ? Maybe . But it ’s hard to imagine any society wanting all of its fiscal record stored in such a public fashion . SBF evoke that “ some art object ” of Enron ’s books might have profit from being on the blockchain , but that ’s sure enough not the lawsuit for any other large company in the substantial world .
In fact , most of those “ we ’re move to blockchain ” articles you read about a few years ago are all outdated now . The companies who tried to use blockchain technology due to all the hoopla observe really move to a blockchain database to beexpensive and unnecessary .
Ironically , FTX was n’t keeping anything important on the blockchain when SBF was advocating for its utilization . It actually would ’ve been utilitarian to keep the caller reliable if there had been an accurate ledger of all the ways money was moving between FTX and Alameda . But that was n’t happening within the party , and blockchain likely would n’t have been the result .
Bitcoin ’s blockchain can only process or so seven minutes per irregular , which is just one of the reasons it has n’t become a good way to pay for things . And while Ethereum is a little better at 20 proceedings per second , that ’s nothing when you take a spirit at our modern digital financial system . Visa can work on 24,000 transactions per secondly , grant toCrypto.com . And until crypto can get close to Visa ’s telephone number , people will still be using Bitcoin for little more than get rich quick schema .
Alameda ResearchBitcoinComputingCryptocurrenciesEthereumSam Bankman - Sam Bankman - Fried
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