Sam Bankman-Fried has currently estimate with a net worth of over $10 billion. His fortune was made in what is now consider by many traditional investors as a tulip fancy or old school ponzi scheme. Yet ask yourself this, if Sam can become a legal billionaire, how is this a scam? You hear stories of people trying to get rich and fail or ones who do get arrested due to some shady business activities. Yet Sam is known world wide and somewhat of an international star as being one of the youngest and richest people on the planet. Also to add he made his fortune through cryptocurrency.
First off you maybe thinking Sam is a diamond hand hloder of crypto or an early adopter. He actually started learning about cryptocurrency during the 2017 crypto boom. Sam originally a quantitative analyst for Jane Street was trying to switch fields in search for better rewards in life and economically.
What Sam noticed in 2017 during the crypto boom was the lack of efficiency in crypto exchange markets to handle the retail demand on a global scale. What was very eye opening was the discrepancy in price traded of a crypto in one part of the world versus another. For instance back in 2017 the US average price of bitcoin was $10k while in South Korea it was $15k. Sam so the difference in price as a way to profit by arbitrage.
Definition of arbitrage - the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset. "profitable arbitrage opportunities"
At the time Sam could not capitalize in performing any arbitrage with Korean bitcoin price, however there was other countries were price gap in crypto did exist and he could legally perform arbitrage. Such as place as in Japan.
Sam went on to create his own firm Alameda Research and started moving millions of dollars in purchasing bitcoin in the USA and selling them for a profit in Japan. Then took the currency in Japan exchange it back to US currency and bought more bitcoin only again to sell it at a higher prices in Japan. He would do this continuously on a daily basis and earn more than 10% daily in returns. The amount he was buying and selling were in the hundreds of millions and it was done on a daily basis.
You maybe wondering if he was able to do this in 2017 then why did not others do the same? In an interview Sam explained,
"You do have to put together this incredibly sophisticated global corporate framework in order to be able to actually do this trade,"
Sam figured out how to make the transactions seemliness and in large quantities. He would go on to do this with as much as $200 million dollars trading in a day and earn $20 million in profits.
Sam in 2021
Today Sam continues to perform arbitrage in crypto trades and although not as lucrative as in the past he still manages large returns. He still operates his firm Alameda Research and he has been open that he wants to donate a majority of his wealth when he passes.
Sam does warn that due to lack of crypto regulations and plenty of scams around the world regarding crypto that investors must always do their own due diligence before they trade. Yet he does say that even today there are plenty of opportunities in the crypto space to invest and profit in.
What an amazing story of Sam Bankman-Fried. I only heard of his name today as there was a story about him that came out today about an interview he made recently. What is so amazing is that Sam started investing in crypto in 2017 rather than in 2009, which majority of rich crypto investors I had assume started off on. Sam has set as an example that no matter how late someone is in learning about crypto they can still come out ahead. We not talking about just being ahead, Sam turned himself into a billionaire with crypto! Within less than 3 years, as his net worth at 2020 is estimated close to $10 billion. That kind of speed in return and amount he was able to earn is beyond any person I ever heard of or seen off. He basically saw and opportunity and seized upon it.
None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!
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