Exclusive Interview with FTX Founder SBF: Making money to have the biggest positive impact on the world

The little-known story behind cryptocurrency billionaire Sam Bankman-Fried.

The unknown story behind cryptocurrency billionaire Sam Bankman-Fried.

(This article is authorized to be reprinted from ChainNews, the original title is "Interview with FTX founder SBF: Making money is to have the greatest positive impact on the world". Original article here)

There have been many reports about Sam Bankman-Fried in the media. He is a 29-year-old vegetarian, a cryptocurrency billionaire who rapidly gained fame by leveraging the price differences of BTC between Korea and the U.S. to earn huge profits. Subsequently, he founded FTX, the world's largest and fastest-growing digital asset exchange. However, as I read more and more reports about him, I began to realize that the mainstream media has overlooked a fundamental point, which is Bankman-Fried's worldview. Bankman-Fried is like the Rand of the cryptocurrency field, building his business philosophy on the foundation of effective altruism and utilitarianism advocated by Jeremy Rand. He doesn't just want to be the richest cryptocurrency billionaire. He wants to have the greatest positive impact on the world. As long as money can achieve that, he will continue to make money.

Brendan Doherty: Welcome to Icons of Impact. For those outside the cryptocurrency circle, they may not know that you have two rapidly growing companies. Can you introduce Alameda and FTX to us?

Sam Bankman-Fried: After graduating from MIT, I worked at Jane Street Capital for three and a half years. It was a great work experience. After leaving Jane Street Capital, I started my entrepreneurial journey and chose to enter the cryptocurrency field.

The first company was the cryptocurrency quantitative trading company Alameda. We found that all signs indicated a significant liquidity demand in the cryptocurrency field, but the available liquidity was scarce. At that time, everyone was talking about cryptocurrency. We saw huge price fluctuations and a large influx of funds, which clearly indicated that people from many different countries were trying to buy various types of cryptocurrencies through various methods. No matter how big the cryptocurrency market has become, this phenomenon has only just begun a few months ago. This means that the majority of global buyers are not able to join the cryptocurrency ecosystem in time.

Doherty: So you found a business opportunity in the cryptocurrency infrastructure?

Sam Bankman-Fried: Yes, we suspected whether the number of service infrastructures provided for the cryptocurrency market was sufficient. This means that demand might exceed liquidity, leading to significant market price differences and arbitrage trading. So I entered the cryptocurrency field to see if my ideas were practical, and the results proved that they were.

Doherty: Did you create FTX based on this idea?

Sam Bankman-Fried: A year later, we started FTX. When I started trading cryptocurrencies, if you wanted to buy Apple's stock, retail investors would usually buy it through platforms like Robinhood and then resell it through clearing companies and other institutions. At the end of 2018, these platforms were a mess. Due to a lack of measures to retain customers, they were losing $1 million in customer assets on average each day. For me, this was just a symptom of the problem, not the core issue. So it seemed like a huge market gap and a significant market space. I thought FTX could do better. I wanted to bring buyers, sellers, and exchanges together. Therefore, we launched FTX in the spring of 2019 and developed it from nothing to its current position as the fourth largest cryptocurrency exchange outside of China.

Doherty: FTX has achieved amazing growth. Based on this, I would like to focus on one of your less publicized areas of work. You often make significant transactions in the cryptocurrency field, and FTX has also achieved rapid growth, which has attracted a lot of media attention. But I am interested in deeper issues, all of which are based on your worldview. You have mentioned that you hope to maximize FTX's positive impact on the world. Let's start from here. Where do you think we should start?

Sam Bankman-Fried: It depends on specific actions. For many of my friends, their answer is to contribute to the world through their work, such as choosing to work with cooperative organizations and having a direct significant impact. When it comes to effective altruism, I think this point is often overlooked. For FTX, we are very focused on the entire budget expenditure. I think it is easy to overlook the recipients of donations and the purpose of the donated funds. But for me, the most important thing is to find the most effective donation targets.

Doherty: You have previously said that effective altruism is about making the most money and then using that money to have the greatest positive impact on the world. I think there might be a contradiction in this. Some critics would say that part of the reason for economic inequality is our thinking capacity. How do you view this perspective?

Sam Bankman-Fried: Some behaviors only appear to be altruistic, and all actions that achieve effective altruism have direct and indirect impacts. You must quantify the impact based on these two factors. There are many professions that are harmful to the world. Even if you make a lot of money from these professions and donate the profits effectively to charities, it may not be the right thing to do. So, if you have a negative impact, even if these profits are effectively donated to charities, you should not receive too much praise for it. I think you need to quantify the whole thing, and for me, this is the core of effective altruism. You can never perfectly quantify the world, but you can set specific goals for everything.

Doherty: You made a good distinction earlier. If someone like Elon Musk earns billions of dollars through Tesla, it is different from ExxonMobil earning billions of dollars from fossil fuels. Both have made billions of dollars in profits, but their external impacts are vastly different.

Sam Bankman-Fried: Yes, it is difficult to say that Tesla's business is harming the world. You could say that Elon Musk has made a significant positive contribution by creating green technology. Or, if you do not approve of Tesla, you could argue that it is a waste of resources and that Tesla will fail. But in any case, Tesla is not the main culprit in destroying the world.

Doherty: I agree with your view. Now let's talk about charity. I see you have a different approach to charity, especially the concept of crowdfunding. What does it mean to involve your consumers, audience, and community in the decision-making of the FTX Foundation?

Sam Bankman-Fried: So initially, we wanted to donate 1% of the money earned by FTX to charities, but this was not the ultimate factor that determined how much money I could donate. We wondered if we could immediately take concrete public measures? Get people involved in charitable activities. For example, users can vote on the direction of the foundation's funds. Users can also make donations to the foundation, and we were really amazed by this proactive approach. Some users have already committed to donating $6 million. Many people in the cryptocurrency field have made a lot of money over the past decade, and they naturally think about what kind of global impact they will have. Therefore, I think cryptocurrency technology has huge potential, and people can make significant contributions to noble causes. So donating is an easy way to get people involved in charitable activities.

Doherty: Let's talk about utilitarianism, a concept you often mention as the basis of your thinking. Can you talk about your views on utilitarianism and how it has changed your behavior?

Sam Bankman-Fried: For me, utilitarianism means making the most money and becoming the happiest person. This may sound a bit pathological or foolish, of course if you want to achieve similar goals, but it is actually a powerful concept that has a strong impact in many situations. Utilitarianism is about maximizing everything. Some say that as long as you don't do bad things, you will live well. I think it is just as important to find ways to help humanity and avoid doing bad things. You should consider what actions you can take in your life, what actions can make the world a better place to the greatest extent.

Doherty: I heard that your parents are law professors at Stanford University. Have they influenced your utilitarian tendencies? Or did you discover it yourself?

Sam Bankman-Fried: Yes, they are both utilitarians, or at least they have studied utilitarian concepts. I first encountered this concept when I was very young.

Doherty: That's quite early! I found a few interesting quotes from you and would like to hear your interpretation. You said, "Money can measure care for others." Can you explain this in detail?

Sam Bankman-Fried: There are many ways to do good in the world. One way is to donate money to charities. This is not always a perfect way of thinking, as powerful as money is, it is not irreplaceable. Money has one good aspect, which is that when trying to compare the merits of two different interventions, if we can measure many things with the same unit, it is a huge advantage. Once you have money, how much good can you do with that money? You will think about doing good in this aspect. When you are making various trade-offs, you can consider how much benefit you can bring by doing this.

Doherty: That's right, and money can meet needs more targetedly. You have also said before that you "got a bad reputation by accepting a larger new project casually." What is the next project you want to build?

Sam Bankman-Fried: There are some projects that are not very public right now. I have spent a lot of time on giving raises to employees at FTX. But many people are thinking about what the future of the company will be like. What will be the best future? How can I achieve such a future? You can easily be misled into thinking that everything you do is within your reach, without considering everything you can do from a broader perspective. For FTX, we can focus on acquiring more core users, but this has limitations. I also want to consider how we can reach out to other groups of people who have never been reached before. What do we need to do to build a global brand while maintaining today's culture, reputation, and user goodwill? All of these require more coordination and effort over time. These groups are truly new to us, but they are essential for achieving the farthest future of FTX.

Doherty: I agree with your view that we all need to think about how to live the most fulfilling life, not just self-satisfaction. Thank you, Sam Bankman-Fried, for this wonderful interview.