January 30, 2023

Angel investor Balaji Srinivasan says the collapse of crypto exchange FTX should be treated as “a preview of the state’s failure”. He warned that US dollar bank accounts could one day be “frozen or blown to worthlessness”, emphasizing that authorities “will show no interest in prosecution”. Srinivasan warned, “That world is coming and we need alternatives.”

Balaji Srinivasan on FTX, state bankruptcy and US dollars becoming worthless

Angel investor Balaji Srinivasan commented on the collapse of crypto exchange FTX in a series of tweets on Saturday. Formerly the CTO of crypto exchange Coinbase and a general partner at venture capital firm Andreessen Horowitz (a16z), Srinivasan is also the author of The Network State, a WSJ bestseller.

“Treat FTX like a foretaste of state failure,” he wrote, adding:

One day your USD bank account balance may be frozen or inflated to worthlessness. The authorities will show no interest in prosecution – they are the ones who ordered it in the first place. That world is coming and we need alternatives.

“It’s all just a dress rehearsal for the ultimate carpet pull — when the state prints trillions, monetizes the debt, and ends the fiat age,” the angel investor explained in another tweet. “Our space will be prepared. We know what that looks like. And our trust minimizing systems will be life rafts for the world.”

Many people on Twitter agreed with Srinivasan, stating that bitcoin and decentralization are the answer.

However, some disagreed and told the entrepreneur that FTX is a fraud and a Ponzi scheme. “It is not a preview of a state’s failure. It has nothing to do with that. It’s just fraud,” one person wrote. “How can you equate a 32-year-old con artist who had no control, structure, systems or governance with the US government?” wondered another. A third opined, “Comparing regulated banking sector to unregulated crypto exchange is misleading.”

Srinivasan also commented on bitcoin as a hedge against inflation in another tweet on Saturday. The angel investor detailed:

It is a protection against hyperinflation, currency depreciation, bank freezes and asset seizures. It has already proven itself in that role, in places like Venezuela, Lebanon, Nigeria. For ‘standard’ inflation, it may eventually play a gold-like role, but that will take decades to show.

Do you agree with Balaji Srinivasan about FTX and bitcoin? Let us know in the comments below.

Kevin Helms

Austrian economics student Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests are in Bitcoin security, open source systems, network effects and the intersection between economics and cryptography.

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