Conversation

SBF
@SBF_FTX
Replying to
@SBF_FTX
23) And on January 28th 2021, there was a lot of retail trading volume. Which meant tens (hundreds?) of billions of dollars of pending settlements between tens of counterparties which would take days. As GME rose in price, so did the potential loss if settlement failed.
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SBF
@SBF_FTX
24) And eventually that risk got too big for the brokers, which had to partially shut down. How does crypto help this? Well, first of all, with a full stack product, settlement is way simpler. Here's what it takes to buy and settle on ftx.com/trade/BTC/USD:
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SBF
@SBF_FTX
25) On FTX, everyone can send orders straight to the exchange; in equities, only the wealthiest traders can. Which means you can bypass all of the settlement risk from intermediaries. But there's another reason that blockchain helps.
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SBF
@SBF_FTX
26) Say you tokenize stocks. Instead of waiting 2 days to settle, you can just swap AAPL-token <> USD-token on a blockchain. Which, remember, takes about 10 seconds and costs about $0.0002 in fees. No remaining settlement uncertainty or risk.
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SBF
@SBF_FTX
28) So how about social media? Right now, if you tweet something, and your friend pulls out Facebook, they can’t see your tweet. Social media networks are isolated, not interoperable.
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SBF
@SBF_FTX
29) This means that everyone has to manage 10 different apps, and our networks and conversations are fractured. In addition, all of your network, and friends, and data, are tied to a specific platform.
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SBF
@SBF_FTX
30) The largest networks have pseudo-monopolies, with gigantic network effects that prevent new competitors. And how does censorship work? Well, basically, the leaders of the top few social networks have to make unilateral decisions.
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SBF
@SBF_FTX
31) Let’s say that, instead, we put messages on a blockchain. So if you used Blockchain-Twitter (BT): --You type the message in BT’s interface --BT posts the message on a public blockchain --Your friend pulls out Blockchain-Facebook (BF) --BF reads your message and displays it
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SBF
@SBF_FTX
32) By using an underlying public chain for messages, we’ve made different networks compatible. You can use any platform, and still talk to all your friends on every platform. Your messages, and network, are yours: you can move platforms and keep them.
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SBF
@SBF_FTX
Replying to
@SBF_FTX
34) I could see blockchain having a large impact on payments, remittances, market structure, and social media. And this list isn’t exhaustive; there are tons of areas blockchain can innovate in. I haven’t really touched at all on DeFi, or web3 gaming.
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SBF
@SBF_FTX
35) But taking a step back: how many of these areas has crypto revolutionized so far? I think the answer is “not really any of them”. It’s starting to impact some, but not in a widespread way yet. So what could get us there from here?
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SBF
@SBF_FTX
36) (i) Technology. Right now the fastest chains can handle 5-50k TPS. We probably need to scale that up to ~1m TPS, whether it’s through L1s, L2s, lightning, rollups, etc. I’m guessing we’ll get there in ~3-7 years.
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SBF
@SBF_FTX
37) (ii) Regulation. There needs to be regulatory clarity in order to get mass adoption, and the major platforms have to become licensed. I’m really impressed by the progress the US has made in the last year!
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SBF
@SBF_FTX
38) (iii) Great products. Builders have to focus on building great products, not on monetization as the core product.
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SBF
@SBF_FTX
39) (iv) Network effects. Many of these use cases don’t work unless two people both use crypto: buyer/seller; sender/receiver; tweeter/reader. That means we have to get up to ~30% adoption by person for (30%^2 =10%) adoption by transaction.
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