Casey Wagner

The latest crypto crisis, in many ways the biggest yet, has lined up perfectly with this year’s Thanksgiving holiday, setting investors and industry members up for the inevitable “I told you so” from friends and relatives.&nbsp;



Dinner guests who had never heard of FTX or its disgraced quirky founder Sam Bankman-Fried before last week will be at the table with questions — and likely a few criticisms. 



Before you stuff your face, stuff your brain with this quick news breakdown to keep you on point.



What is FTX?&nbsp;



Founded in 2019 in Hong Kong and moved to the Bahamas in 2021, crypto exchange FTX was run by Bankman-Fried, one of crypto&#8217;s richest billionaires when things were good now boasts two commas at most. 



Bankman-Fried is the son of two compliance attorneys and — before losing billions in user funds — was largely adored for his down-to-earth, idiosyncratic ways. He quickly won the hearts and minds of investors, politicians, athletes and celebrities. (He slept on a beanbag! How fun and relatable!)



Why did it fail?&nbsp;



It all came crashing down earlier this month when a leaked balance sheet revealed that another one of Bankman-Fried’s ventures, hedge fund Alameda Research, held a lot of FTT, FTX’s own native digital currency. If FTT were to fall, which — spoiler alert — it quickly did, Alameda would be in trouble.



Soon after, rival exchange leader Changpeng “CZ’’ Zhao of Binance <a href="https://blockworks.co/news/binance-ceo-goes-full-fud-in-attempt-to-bury-ftx" target="_blank" rel="noreferrer noopener">said his firm was selling</a> its FTT. Bankman-Fried responded, essentially, by saying “bring it on.”&nbsp;



FTX customers became worried and <a href="https://blockworks.co/news/ftx-native-token-ftt-plunges-following-takeover-news" target="_blank" rel="noreferrer noopener">started to pull their funds off FTX</a>, which was a problem, since the money wasn’t there. The exchange halted withdrawals on Nov. 8 and <a href="https://blockworks.co/news/cryptos-erase-gains-ftx-token-slips-further-on-bankruptcy-news" target="_blank" rel="noreferrer noopener">filed for bankruptcy</a>, along with more than 130 of its subsidiaries, on Nov. 11.&nbsp;



Bankman-Fried later <a href="https://www.vox.com/future-perfect/23462333/sam-bankman-fried-ftx-cryptocurrency-effective-altruism-crypto-bahamas-philanthropy" target="_blank" rel="noreferrer noopener">confirmed</a> FTX needed $8 billion to satisfy creditors. He also said reports that <a href="https://blockworks.co/news/worse-than-enron-sbfs-ftx-has-a-complete-absence-of-trustworthy-information" target="_blank" rel="noreferrer noopener">FTX funds had been used to fund trades at Alameda</a> — a big no-no — were, in fact, true.&nbsp;



Oh, and then, to make matters worse, <a href="https://blockworks.co/news/what-happened-ftx-hack" target="_blank" rel="noreferrer noopener">a hacker made off with $477 million</a> still remaining on FTX. You can’t make this stuff up.&nbsp;



How is Genesis involved?&nbsp;



Crypto brokerage Genesis is collateral damage, and it’s probably going to cause more.&nbsp;



Genesis, owned by Digital Currency Group (also the company behind Grayscale), initially said it would not be impacted by FTX’s woes.&nbsp;



Then, on Nov. 9, the company said it had lost $7 million. By Nov. 10, the firm said it actually had $175 million tied up on FTX. On Nov. 16, the company shut down its lending service and halted withdrawals. 



The next day, Genesis said it was seeking $1 billion in funding. On Monday, the firm confirmed that without the capital raise, it would be forced into bankruptcy.&nbsp;



Is crypto over?&nbsp;



Odds are, at least some of your Thanksgiving companions will say this is the beginning of the end for crypto. Here’s some tips on how to deal with naysayers, in case you find yourself on the defense.&nbsp;



When the cousin you convinced last year to buy bitcoin asks about the price… 



There is no denying crypto is a volatile asset class, and the higher it goes, the further it can fall. It’s important to remember the technology thesis hasn’t changed, plus stocks are down, too.



When your uncle says the whole thing is a Ponzi scheme… 



Clearly, there are bad actors in the space, and traditional finance is no different.&nbsp;



When your parents say the tokens have no value… 



Some of them certainly don’t. But, cryptocurrency has become the foundation for an entire financial system built from scratch, and it’s probably not done finding new and better ways of doing things the traditional financial world has been doing for centuries.&nbsp;



When someone brings up all those hacks… 



Hacks are at an all time high, sure. But financial theft is nothing new, and all the more reason to brush up on your cold-storage options.&nbsp;



These responses should cover the more annoying crypto questions from non-coin folk this year — enjoy your Thanksgiving! 



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A Field Guide to Thanksgiving Crypto Banter in 2022

Morgan Chittum

<div id="highlights-block_619e9f3d1ed7d" class="highlights">
 <ul>
 <li>Unlike Web2, where most of the power and ownership is concentrated in big tech, Web3 will be decentralized and ideally governed by its participants</li>
 <li>Facebook defines the metaverse as “a set of virtual spaces where you can create and explore with other people who aren’t in the same physical space as you”</li>
 </ul>
 
</div>



Your grandma has just asked you to pass the pumpkin pie, green bean casserole or some other dish at Thanksgiving dinner.&nbsp;



Following discourse around career updates and hometown gossip, someone at the table brings up Facebook (or I mean Meta.) Chaos and confusion ensue over the company’s recent <a href="https://cms.blockworks.co/zuckerberg-says-facebooks-new-name-will-be-meta/" target="_blank" rel="noreferrer noopener">rebranding</a>. Meanwhile, you’ve been privately checking <a href="https://messari.io/" target="_blank" rel="noreferrer noopener">Messari</a> to make sure the price of ETH hasn’t plummeted since you sat down ten minutes ago.



But, as the resident crypto expert, you’re deemed the chosen one to explain. You’ve gone deep down the rabbit hole, listened to <a href="https://www.youtube.com/c/Bankless" target="_blank" rel="noreferrer noopener">Bankless’ podcasts</a> religiously and are in six different discord servers, preparing all year for this moment to evangelize the entire table.&nbsp;



Inspired by Joe Weisenthal’s newsletter from <a href="https://twitter.com/TheStalwart/status/1463477880684486669?s=20" target="_blank" rel="noreferrer noopener">Bloomberg</a>, here’s how you can respond to these questions &#8211; and other proposed ramblings &#8211; to get you through Thursday.



Q: Okay, Morgan. I’m seeing something on the internet called “Web3.”&nbsp; What is Web3? Why do I need a third web?



A: Well, *insert loved one’s name*, it’s not quite three different “webs,” per se. Think of Web3 as the successor of Web2.&nbsp;



Web2, which debatably reigned from 2005 to 2020, was when the internet “was about siloed, centralized services run by [big] corporations” like Google, Apple and Amazon. (I’ll text you Chris Dixon’s <a href="https://future.a16z.com/why-web3-matters/" target="_blank" rel="noreferrer noopener">blog post</a> about this later.)



We are at the very early stages of Web3 now though.&nbsp;



Unlike Web2, where most of the power and ownership is concentrated in big tech, this will be decentralized and ideally governed by its participants. So creators, builders and users of Web3 can own pieces of internet services by collecting tokens such as NFTs.



Q: Slow down there, kiddo. Is a NFT that thing <a href="https://www.theverge.com/2021/9/20/22684780/snoop-dog-nft-booster-cozomo-medici-reveal-prank-crypto" target="_blank" rel="noreferrer noopener">Snoop Dogg</a>, <a href="https://twitter.com/jimmyfallon/status/1459164143626424321?s=20" target="_blank" rel="noreferrer noopener">Jimmy Fallon</a> and <a href="https://twitter.com/ReeseW/status/1452432533774168066?s=20">Rees</a><a href="https://twitter.com/ReeseW/status/1452432533774168066?s=20" target="_blank" rel="noreferrer noopener">e Witherspoon keep talking about? </a>



A: Let’s break this down <a href="https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq" target="_blank" rel="noreferrer noopener">more.</a> A NFT is a non-fungible token. 



Q: That’s not helpful.



A: Non-fungible means that it&#8217;s a unique asset and cannot be copied. Think of a baseball card. But these are mostly digital and are powered by different blockchains. Blockchain technology and a decentralized ledger allow everyone to know that the NFT is yours. A lot of people refer to this as “verifiable ownership.”



Additionally, you can bid on or purchase them on various marketplaces, using cryptocurrencies like ethereum, solana or polygon. Some are really expensive though. Individual NFTs within popular collections, such as the Bored Ape Yacht Club, have been sold for more than $3 million.&nbsp;



There are other use <a href="https://www.coindesk.com/business/2021/10/14/15-nft-use-cases-that-could-go-mainstream/" target="_blank" rel="noreferrer noopener">cases</a> for NFTs, such as gaming, medical records and fashion, but they’re widely known for being art-based right now.&nbsp;&nbsp;



Q: But what’s the metaverse? Mark Zuckerberg keeps talking about it and even rebranded Facebook because of this, right?&nbsp;



A: There’s a lot to unpack here. Zuckerberg changed Facebook&#8217;s corporate name to Meta, yes. (Additionally, the company plans to invest at least $10 billion in the metaverse this year alone).&nbsp;



Facebook <a href="https://about.fb.com/news/2021/09/building-the-metaverse-responsibly/" target="_blank" rel="noreferrer noopener">defines</a> the metaverse “as a set of virtual spaces where you can create and explore with other people who aren’t in the same physical space as you.”



But for the sake of dodging gross generalizations, I’ll quote Matthew Ball’s <a href="https://www.matthewball.vc/all/forwardtothemetaverseprimer" target="_blank" rel="noreferrer noopener">“Framework for the Metaverse</a>” as well.



Ball describes the metaverse as “a massively scaled and interoperable network of real-time rendered 3D virtual worlds which can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications and payments.”



Q: We’ve covered a lot and I’m ready to make some money.&nbsp; What should I invest in then?&nbsp;&nbsp;



A: Let’s save that for Christmas, Grandma.



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