Most productive people are habitual.

Early in the day, do important tasks.

In his best-selling book Eat That Frog, Brian Tracy advised starting the day with your hardest, most important activity.

Most individuals work best in the morning. Energy and willpower peak then.

Mornings are also ideal for memory, focus, and problem-solving.

Thus, the morning is ideal for your hardest chores.

It makes sense to do these things during your peak performance hours.

Additionally, your morning sets the tone for the day. According to Brian Tracy, the first hour of the workday steers the remainder.

After doing your most critical chores, you may feel accomplished, confident, and motivated for the remainder of the day, which boosts productivity.

Develop Your Essentialism

In Essentialism, Greg McKeown claims that trying to be everything to everyone leads to mediocrity and tiredness.

You'll either burn out, be spread too thin, or compromise your ideals.

Greg McKeown advises Essentialism:

Clarify what’s truly important in your life and eliminate the rest.

Eliminating non-essential duties, activities, and commitments frees up time and energy for what matters most.

According to Greg McKeown, Essentialists live by design, not default.

You'll be happier and more productive if you follow your essentials.

Follow these three steps to live more essentialist.

Prioritize Your Tasks First

What matters most clarifies what matters less. List your most significant aims and values.

The clearer your priorities, the more you can focus on them.

On Essentialism, McKeown wrote, The ultimate form of effectiveness is the ability to deliberately invest our time and energy in the few things that matter most.

#2: Set Your Priorities in Order

Prioritize your priorities, not simply know them.

“If you don’t prioritize your life, someone else will.” — Greg McKeown

Planning each day and allocating enough time for your priorities is the best method to become more purposeful.

#3: Practice saying "no"

If a request or demand conflicts with your aims or principles, you must learn to say no.

Saying no frees up space for our priorities.

Place Sleep Above All Else

Many believe they must forego sleep to be more productive. This is false.

A productive day starts with a good night's sleep.

Matthew Walker (Why We Sleep) says:

“Getting a good night’s sleep can improve cognitive performance, creativity, and overall productivity.”

Sleep helps us learn, remember, and repair.

Unfortunately, 35% of people don't receive the recommended 79 hours of sleep per night.

Sleep deprivation can cause:

• increased risk of diabetes, heart disease, stroke, and obesity

• Depression, stress, and anxiety risk are all on the rise.

• decrease in general contentment

• decline in cognitive function

To live an ideal, productive, and healthy life, you must prioritize sleep.

Follow these six sleep optimization strategies to obtain enough sleep:

• Establish a nightly ritual to relax and prepare for sleep.

• Avoid using screens an hour before bed because the blue light they emit disrupts the generation of melatonin, a necessary hormone for sleep.

• Maintain a regular sleep schedule to control your body's biological clock (and optimizes melatonin production)

• Create a peaceful, dark, and cool sleeping environment.

• Limit your intake of sweets and caffeine (especially in the hours leading up to bedtime)

• Regular exercise (but not right before you go to bed, because your body temperature will be too high)

Sleep is one of the best ways to boost productivity.

Sleep is crucial, says Matthew Walker. It's the key to good health and longevity.

Yes, client meetings are difficult. Especially when I'm alone.

Clients must tell us their problems so we can help.

In-meeting challenges contribute nothing to our work. Consider this:

• Clients are unprepared.

• Clients are distracted.

• Clients are confused.

Introducing Jack Dorsey's Google Doc approach

I endorse his approach to meetings.

Not Google Doc-related. Jack uses it for meetings.

This is what his meetings look like.

• Prior to the meeting, the Chair creates the agenda, structure, and information using Google Doc.

• Participants in the meeting would have 5-10 minutes to read the Google Doc.

• They have 5-10 minutes to type their comments on the document.

• In-depth discussion begins

There is elegance in simplicity. Here's how Jack's approach is fantastic.

Unprepared clients are given time to read.

During the meeting, they think and work on it.

They can see real-time remarks from others.

Discussion ensues.

Three months ago, I fell for this strategy. After trying it with a client, I got good results.

I conducted social control experiments in a few client workshops.

Context matters.

I am sure Jack Dorsey’s method works well in meetings. What about client workshops?

So, I tested Enterprise of the Future with a consulting client.

I sent multiple emails to client stakeholders describing the new approach.

No PowerPoints that day. I spent the night setting up the Google Doc with conversation topics, critical thinking questions, and a Before and After section.

The client was shocked. First, a Google Doc was projected. Second surprise was a verbal feedback.

“No pre-meeting materials?”

“Don’t worry. I know you are not reading it before our meeting, anyway.”

We laughed. The experiment started.

Observations throughout a 90-minute engagement workshop from beginning to end

For 10 minutes, the workshop was silent.

People read the Google Doc. For some, the silence was unnerving.

“Are you not going to present anything to us?”

I said everything's in Google Doc. I asked them to read, remark, and add relevant paragraphs.

As they unlocked their laptops, they were annoyed.

Ten client stakeholders are typing on the Google Doc. My laptop displays comment bubbles, red lines, new paragraphs, and strikethroughs.

The first 10 minutes were productive. Everyone has seen and contributed to the document.

I was silent.

The move to a classical workshop was smooth. I didn't stimulate dialogue. They did.

Stephanie asked Joe why a blended workforce hinders company productivity. She questioned his comments and additional paragraphs.

That is when a light bulb hit my head. Yes, you want to speak to the right person to resolve issues!

Not only that was discussed. Others discussed their remark bubbles with neighbors. Debate circles sprung up one after the other.

The best part? I asked everyone to add their post-discussion thoughts on a Google Doc.

After the workshop, I have:

• An agreement-based working document

• A post-discussion minutes that are prepared for publication

• A record of the discussion points that were brought up, argued, and evaluated critically

It showed me how stakeholders viewed their Enterprise of the Future. It allowed me to align with them.

Finale Keynotes

Client meetings are a hit-or-miss. I know that.

Jack Dorsey's meeting strategy works for consulting. It promotes session alignment.

It relieves clients of preparation.

I get the necessary information to advance this consulting engagement.

It is brilliant.

Steve Jobs' initial mission at Apple in 1997 was to destroy. He killed the Newton PDA and Macintosh clones. Apple stopped trying to please everyone under Jobs.

Afterward, there were few highly targeted moves. First, the pink iMac. Modest success. The iPod, iPhone, and iPad made Apple the world's most valuable firm. Each maneuver changed the company's center of gravity and won.

That's the idea behind Schwerpunkt, a German military term meaning "focus." Jobs didn't need to win everywhere, just where it mattered, so he focused Apple's resources on a few key goods. Finding your Schwerpunkt is more important than charts and analysis for excellent strategy.

Comparison of Relative Strength and Relative Weakness

The iPod, Apple's first major hit after Jobs' return, didn't damage Microsoft and the PC, but instead focused Apple's emphasis on a fledgling, fragmented market that generated "sucky" products. Apple couldn't have taken on the computer titans at this stage, yet it beat them.

The move into music players used Apple's particular capabilities, especially its ability to build simple, easy-to-use interfaces. Jobs' charisma and stature, along his understanding of intellectual property rights from Pixar, helped him build up iTunes store, which was a quagmire at the time.

In Good Strategy | Bad Strategy, management researcher Richard Rumelt argues that good strategy uses relative strength to counter relative weakness. To discover your main point, determine your abilities and where to effectively use them.

Steve Jobs did that at Apple. Microsoft and Dell, who controlled the computer sector at the time, couldn't enter the music player business. Both sought to produce iPod competitors but failed. Apple's iPod was nobody else's focus.

Finding The Center of Attention

In a military engagement, leaders decide where to focus their efforts by assessing commanders intent, the situation on the ground, the topography, and the enemy's posture on that terrain. Officers spend their careers learning about schwerpunkt.

Business executives must assess internal strengths including personnel, technology, and information, market context, competitive environment, and external partner ecosystems. Steve Jobs was a master at analyzing forces when he returned to Apple.

He believed Apple could integrate technology and design for the iPod and that the digital music player industry sucked. By analyzing competitors' products, he was convinced he could produce a smash by putting 1000 tunes in my pocket.

The only difficulty was there wasn't the necessary technology. External ecosystems were needed. On a trip to Japan to meet with suppliers, a Toshiba engineer claimed the company had produced a tiny memory drive approximately the size of a silver dollar.

Jobs knew the memory drive was his focus. He wrote a $10 million cheque and acquired exclusive technical rights. For a time, none of his competitors would be able to recreate his iPod with the 1000 songs in my pocket.

How to Enter the OODA Loop

John Boyd invented the OODA loop as a pilot to better his own decision-making. First OBSERVE your surroundings, then ORIENT that information using previous knowledge and experiences. Then you DECIDE and ACT, which changes the circumstance you must observe, orient, decide, and act on.

Steve Jobs used the OODA loop to decide to give Toshiba $10 million for a technology it had no use for. He compared the new information with earlier observations about the digital music market.

Then something much more interesting happened. The iPod was an instant hit, changing competition. Other computer businesses that competed in laptops, desktops, and servers created digital music players. Microsoft's Zune came out in 2006, Dell's Digital Jukebox in 2004. Both flopped.

By then, Apple was poised to unveil the iPhone, which would cause its competitors to Observe, Orient, Decide, and Act. Boyd named this OODA Loop infiltration. They couldn't gain the initiative by constantly reacting to Apple.

Microsoft and Dell were titans back then, but it's hard to recall. Apple went from near bankruptcy to crushing its competition via Schwerpunkt.

Rather than a destination, it is a journey

Trying to win everywhere is a strategic blunder. Win significant fights, not trivial skirmishes. Identifying a focal point to direct resources and efforts is the essence of Schwerpunkt.

When Steve Jobs returned to Apple, PC firms were competing, but he focused on digital music players, and the iPod made Apple a player. He launched the iPhone when his competitors were still reacting. When Steve Jobs said, "One more thing," at the end of a product presentation, he had a new focus.

Schwerpunkt isn't static; it's dynamic. Jobs' ability to observe, refocus, and modify the competitive backdrop allowed Apple to innovate consistently. His strategy was tailored to Apple's capabilities, customers, and ecosystem. Microsoft or Dell, better suited for the enterprise sector, couldn't succeed with a comparable approach.

There is no optimal strategy, only ones suited to a given environment, when relative strength might be used against relative weakness. Discovering the center of gravity where you can break through is more of a journey than a destination; it will become evident after you reach.

Introduction

Markets rely on knowledge.

The internet provided practically endless knowledge and wisdom. Humanity has never seen such leverage. Technology's progress drives us to adapt to a changing world, changing our routines and behaviors.

In a digital age, people may struggle to live in the analogue world of their upbringing. Can those who can't adapt change their lives? I won't answer. We should teach those who are willing to learn, nevertheless. Unravel the modern world's riddles and give them wisdom.

Adapt or die . Accept the future or remain behind.

This essay will help you comprehend Bitcoin better than most market participants and the general public. Let's dig into Bitcoin.

Join me.

Ascension

Bitcoin.org was registered in August 2008. Bitcoin whitepaper was published on 31 October 2008. The document intrigued and motivated people around the world, including technical engineers and sovereignty seekers. Since then, Bitcoin's whitepaper has been read and researched to comprehend its essential concept.

I recommend reading the whitepaper yourself. You'll be able to say you read the Bitcoin whitepaper instead of simply Googling "what is Bitcoin" and reading the fundamental definition without knowing the revolution's scope. The article links to Bitcoin's whitepaper. To avoid being overwhelmed by the whitepaper, read the following article first.

Bitcoin isn't the first peer-to-peer digital currency. Hashcash or Bit Gold were once popular cryptocurrencies. These two Bitcoin precursors failed to gain traction and produce the network effect needed for general adoption. After many struggles, Bitcoin emerged as the most successful cryptocurrency, leading the way for others.

Satoshi Nakamoto, an active bitcointalk.org user, created Bitcoin. Satoshi's identity remains unknown. Satoshi's last bitcointalk.org login was 12 December 2010. Since then, he's officially disappeared. Thus, conspiracies and riddles surround Bitcoin's creators. I've heard many various theories, some insane and others well-thought-out.

It's not about who created it; it's about knowing its potential. Since its start, Satoshi's legacy has changed the world and will continue to.

Block-by-block blockchain

Bitcoin is a distributed ledger. What's the meaning?

Everyone can view all blockchain transactions, but no one can undo or delete them.

Imagine you and your friends routinely eat out, but only one pays. You're careful with money and what others owe you. How can everyone access the info without it being changed?

You'll keep a notebook of your evening's transactions. Everyone will take a page home. If one of you changed the page's data, the group would notice and reject it. The majority will establish consensus and offer official facts.

Miners add a new Bitcoin block to the main blockchain every 10 minutes. The appended block contains miner-verified transactions. Now that the next block has been added, the network will receive the next set of user transactions.

Bitcoin Proof of Work—prove you earned it

Any firm needs hardworking personnel to expand and serve clients. Bitcoin isn't that different.

Bitcoin's Proof of Work consensus system needs individuals to validate and create new blocks and check for malicious actors. I'll discuss Bitcoin's blockchain consensus method.

Proof of Work helps Bitcoin reach network consensus. The network is checked and safeguarded by CPU, GPU, or ASIC Bitcoin-mining machines (Application-Specific Integrated Circuit).

Every 10 minutes, miners are rewarded in Bitcoin for securing and verifying the network. It's unlikely you'll finish the block. Miners build pools to increase their chances of winning by combining their processing power.

In the early days of Bitcoin, individual mining systems were more popular due to high maintenance costs and larger earnings prospects. Over time, people created larger and larger Bitcoin mining facilities that required a lot of space and sophisticated cooling systems to keep machines from overheating.

Proof of Work is a vital part of the Bitcoin network, as network security requires the processing power of devices purchased with fiat currency. Miners must invest in mining facilities, which creates a new business branch, mining facilities ownership. Bitcoin mining is a topic for a future article.

More mining, less reward

Bitcoin is usually scarce.

Why is it rare? It all comes down to 21,000,000 Bitcoins.

Were all Bitcoins mined? Nope. Bitcoin's supply grows until it hits 21 million coins. Initially, 50BTC each block was mined, and each block took 10 minutes. Around 2140, the last Bitcoin will be mined.

But 50BTC every 10 minutes does not give me the year 2140. Indeed careful reader. So important is Bitcoin's halving process.

What is halving?

The block reward is halved every 210,000 blocks, which takes around 4 years. The initial payout was 50BTC per block and has been decreased to 25BTC after 210,000 blocks. First halving occurred on November 28, 2012, when 10,500,000 BTC (50%) had been mined. As of April 2022, the block reward is 6.25BTC and will be lowered to 3.125BTC by 19 March 2024.

The halving method is tied to Bitcoin's hashrate. Here's what "hashrate" means.

What if we increased the number of miners and hashrate they provide to produce a block every 10 minutes? Wouldn't we manufacture blocks faster?

Every 10 minutes, blocks are generated with little asymmetry. Due to the built-in adaptive difficulty algorithm, the overall hashrate does not affect block production time. With increased hashrate, it's harder to construct a block. We can estimate when the next halving will occur because 10 minutes per block is fixed.

Building with nodes and blocks

For someone new to crypto, the unusual terms and words may be overwhelming. You'll also find everyday words that are easy to guess or have a vague idea of what they mean, how they work, and what they do. Consider blockchain technology.

Nodes and blocks: Think about that for a moment. What is your first idea?

The blockchain is a chain of validated blocks added to the main chain. What's a "block"? What's inside?

The block is another page in the blockchain book that has been filled with transaction information and accepted by the majority.

We won't go into detail about what each block includes and how it's built, as long as you understand its purpose.

What about nodes?

Nodes, along with miners, verify the blockchain's state independently. But why?

To create a full blockchain node, you must download the whole Bitcoin blockchain and check every transaction against Bitcoin's consensus criteria.

What's Bitcoin's size? 

In April 2022, the Bitcoin blockchain was 389.72GB.

Bitcoin's blockchain has miners and node runners.

Let's revisit the US gold rush. Miners mine gold with their own power (physical and monetary resources) and are rewarded with gold (Bitcoin). All become richer with more gold, and so does the country.

Nodes are like sheriffs, ensuring everything is done according to consensus rules and that there are no rogue miners or network users.

Lost and held bitcoin

Does the Bitcoin exchange price match each coin's price? How many coins remain after 21,000,000? 21 million or less?

Common reason suggests a 21 million-coin supply.

What if I lost 1BTC from a cold wallet?

What if I saved 1000BTC on paper in 2010 and it was damaged?

What if I mined Bitcoin in 2010 and lost the keys?

Satoshi Nakamoto's coins? Since then, those coins haven't moved.

How many BTC are truly in circulation?

Many people are trying to answer this question, and you may discover a variety of studies and individual research on the topic. Be cautious of the findings because they can't be evaluated and the statistics are hazy guesses.

On the other hand, we have long-term investors who won't sell their Bitcoin or will sell little amounts to cover mining or living needs.

The price of Bitcoin is determined by supply and demand on exchanges using liquid BTC. How many BTC are left after subtracting lost and non-custodial BTC? 

We have significantly less Bitcoin in circulation than you think, thus the price may not reflect demand if we knew the exact quantity of coins available.

True HODLers and diamond-hand investors won't sell you their coins, no matter the market.

What's UTXO?

Unspent (U) Transaction (TX) Output (O)

Imagine taking a $100 bill to a store. After choosing a drink and munchies, you walk to the checkout to pay. The cashier takes your $100 bill and gives you $25.50 in change. It's in your wallet.

Is it simply 100$? No way.

The $25.50 in your wallet is unrelated to the $100 bill you used. Your wallet's $25.50 is just bills and coins. Your wallet may contain these coins and bills:

2x 10$ 1x 10$

1x 5$ or 3x 5$

1x 0.50$ 2x 0.25$

Any combination of coins and bills can equal $25.50. You don't care, and I'd wager you've never ever considered it.

That is UTXO. Now, I'll detail the Bitcoin blockchain and how UTXO works, as it's crucial to know what coins you have in your (hopefully) cold wallet.

You purchased 1BTC. Is it all? No. UTXOs equal 1BTC. Then send BTC to a cold wallet. Say you pay 0.001BTC and send 0.999BTC to your cold wallet. Is it the 1BTC you got before? Well, yes and no. The UTXOs are the same or comparable as before, but the blockchain address has changed. It's like if you handed someone a wallet, they removed the coins needed for a network charge, then returned the rest of the coins and notes.

UTXO is a simple concept, but it's crucial to grasp how it works to comprehend dangers like dust attacks and how coins may be tracked.

Lightning Network: fast cash

You've probably heard of "Layer 2 blockchain" projects.

What does it mean?

Layer 2 on a blockchain is an additional layer that increases the speed and quantity of transactions per minute and reduces transaction fees.

Imagine going to an obsolete bank to transfer money to another account and having to pay a charge and wait. You can transfer funds via your bank account or a mobile app without paying a fee, or the fee is low, and the cash appear nearly quickly. Layer 1 and 2 payment systems are different.

Layer 1 is not obsolete; it merely has more essential things to focus on, including providing the blockchain with new, validated blocks, whereas Layer 2 solutions strive to offer Layer 1 with previously processed and verified transactions. The primary blockchain, Bitcoin, will only receive the wallets' final state. All channel transactions until shutting and balancing are irrelevant to the main chain.

Layer 2 and the Lightning Network's goal are now clear. Most Layer 2 solutions on multiple blockchains are created as blockchains, however Lightning Network is not. Remember the following remark, as it best describes Lightning.

Lightning Network connects public and private Bitcoin wallets.

Opening a private channel with another wallet notifies just two parties. The creation and opening of a public channel tells the network that anyone can use it.

Why create a public Lightning Network channel?

Every transaction through your channel generates fees.

Money, if you don't know.

See who benefits when in doubt.

Anonymity, huh?

Bitcoin anonymity? Bitcoin's anonymity was utilized to launder money.

Well… You've heard similar stories. When you ask why or how it permits people to remain anonymous, the conversation ends as if it were just a story someone heard.

Bitcoin isn't private. Pseudonymous.

What if someone tracks your transactions and discovers your wallet address? Where is your anonymity then?

Bitcoin is like bulletproof glass storage; you can't take or change the money. If you dig and analyze the data, you can see what's inside.

Every online action leaves a trace, and traces may be tracked. People often forget this guideline.

A tool like that can help you observe what the major players, or whales, are doing with their coins when the market is uncertain. Many people spend time analyzing on-chain data. Worth it?

Ask yourself a question. What are the big players' options?  Do you think they're letting you see their wallets for a small on-chain data fee?

Instead of short-term behaviors, focus on long-term trends.

More wallet transactions leave traces. Having nothing to conceal isn't a defect. Can it lead to regulating Bitcoin so every transaction is tracked like in banks today?

But wait. How can criminals pay out Bitcoin? They're doing it, aren't they?

Mixers can anonymize your coins, letting you to utilize them freely. This is not a guide on how to make your coins anonymous; it could do more harm than good if you don't know what you're doing.

Remember, being anonymous attracts greater attention.

Bitcoin isn't the only cryptocurrency we can use to buy things. Using cryptocurrency appropriately can provide usability and anonymity. Monero (XMR), Zcash (ZEC), and Litecoin (LTC) following the Mimblewimble upgrade are examples.

Summary

Congratulations! You've reached the conclusion of the article and learned about Bitcoin and cryptocurrency. You've entered the future.

You know what Bitcoin is, how its blockchain works, and why it's not anonymous. I bet you can explain Lightning Network and UTXO to your buddies.

Markets rely on knowledge. Prepare yourself for success before taking the first step. Let your expertise be your edge.

This article is a summary of this one.

A fraud, free-market, antifragility tale

Crypto's only rival is public opinion.

In less than a week, mainstream media, bloggers, and TikTokers turned on FTX's founder.

While some were surprised, almost everyone with a keyboard and a Twitter account predicted the FTX collapse. These financial oracles should have warned the 1.2 million people Sam Bankman-Fried duped.

After happening, unexpected events seem obvious to our brains. It's a bug and a feature because it helps us cope with disasters and makes our reasoning suck.

Nobody predicted the FTX debacle. Bloomberg? Politicians. Non-famous. No cryptologists. Who?

When FTX imploded, taking billions of dollars with it, an outrage bomb went off, and the resulting shockwave threatens the crypto market's existence.

As someone who lost more than $78,000 in a crypto scam in 2020, I can only understand people’s reactions.  When the dust settles and rationality returns, we'll realize this is a natural occurrence in every free market.

What specifically occurred with FTX? (Skip if you are aware.)

FTX is a cryptocurrency exchange where customers can trade with cash. It reached #3 in less than two years as the fastest-growing platform of its kind.

FTX's performance helped make SBF the crypto poster boy. Other reasons include his altruistic public image, his support for the Democrats, and his company Alameda Research.

Alameda Research made a fortune arbitraging Bitcoin.

Arbitrage trading uses small price differences between two markets to make money. Bitcoin costs $20k in Japan and $21k in the US. Alameda Research did that for months, making $1 million per day.

Later, as its capital grew, Alameda expanded its trading activities and began investing in other companies.

Let's now discuss FTX.

SBF's diabolic master plan began when he used FTX-created FTT coins to inflate his trading company's balance sheets. He used inflated Alameda numbers to secure bank loans.

SBF used money he printed himself as collateral to borrow billions for capital. Coindesk exposed him in a report.

One of FTX's early investors tweeted that he planned to sell his FTT coins over the next few months. This would be a minor event if the investor wasn't Binance CEO Changpeng Zhao (CZ).

The crypto space saw a red WARNING sign when CZ cut ties with FTX. Everyone with an FTX account and a brain withdrew money. Two events followed. FTT fell from $20 to $4 in less than 72 hours, and FTX couldn't meet withdrawal requests, spreading panic.

SBF reassured FTX users on Twitter. Good assets.

He lied.

SBF falsely claimed FTX had a liquidity crunch. At the time of his initial claims, FTX owed about $8 billion to its customers. Liquidity shortages are usually minor. To get cash, sell assets. In the case of FTX, the main asset was printed FTT coins.

Sam wouldn't get out of trouble even if he slashed the discount (from $20 to $4) and sold every FTT. He'd flood the crypto market with his homemade coins, causing the price to crash.

SBF was trapped. He approached Binance about a buyout, which seemed good until Binance looked at FTX's books.

Binance's tweet ended SBF, and he had to apologize, resign as CEO, and file for bankruptcy.

Bloomberg estimated Sam's net worth to be zero by the end of that week. 0!

But that's not all. Twitter investigations exposed fraud at FTX and Alameda Research. SBF used customer funds to trade and invest in other companies.

Thanks to the Twitter indie reporters who made the mainstream press look amateurish. Some Twitter detectives didn't sleep for 30 hours to find answers. Others added to existing threads. Memes were hilarious.

One question kept repeating in my bald head as I watched the Blue Bird. Sam, WTF?

Then I understood.

SBF wanted that FTX becomes a bank.

Think about this. FTX seems healthy a few weeks ago. You buy 2 bitcoins using FTX. You'd expect the platform to take your dollars and debit your wallet, right?

No. They give I-Owe-Yous.

FTX records owing you 2 bitcoins in its internal ledger but doesn't credit your account. Given SBF's tricks, I'd bet on nothing.

What happens if they don't credit my account with 2 bitcoins? Your money goes into FTX's capital, where SBF and his friends invest in marketing, political endorsements, and buying other companies.

Over its two-year existence, FTX invested in 130 companies. Once they make a profit on their purchases, they'll pay you and keep the rest.

One detail makes their strategy dumb. If all FTX customers withdraw at once, everything collapses.

Financially savvy people think FTX's collapse resembles a bank run, and they're right. SBF designed FTX to operate like a bank.

You expect your bank to open a drawer with your name and put $1,000 in it when you deposit $1,000. They deposit $100 in your drawer and create an I-Owe-You for $900. What happens to $900?

Let's sum it up: It's boring and headache-inducing.

When you deposit money in a bank, they can keep 10% and lend the rest. Fractional Reserve Banking is a popular method. Fractional reserves operate within and across banks.

Fractional reserve banking generates $10,000 for every $1,000 deposited. People will pay off their debt plus interest.

As long as banks work together and the economy grows, their model works well.

SBF tried to replicate the system but forgot two details. First, traditional banks need verifiable collateral like real estate, jewelry, art, stocks, and bonds, not digital coupons. Traditional banks developed a liquidity buffer. The Federal Reserve (or Central Bank) injects massive cash into troubled banks.

Massive cash injections come from taxpayers. You and I pay for bankers' mistakes and annual bonuses. Yes, you may think banking is rigged. It's rigged, but it's the best financial game in 150 years. We accept its flaws, including bailouts for too-big-to-fail companies.

Anyway.

SBF wanted Binance's bailout. Binance said no, which was good for the crypto market.

Free markets are resilient.

Nassim Nicholas Taleb coined the term antifragility.

“Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.”

The easiest way to understand how antifragile systems behave is to compare them with other types of systems.

• Glass is like a fragile system. It snaps when shocked.

• Similar to rubber, a resilient system. After a stressful episode, it bounces back.

• A system that is antifragile is similar to a muscle. As it is torn in the gym, it gets stronger.

Time-changed things are antifragile. Culture, tech innovation, restaurants, revolutions, book sales, cuisine, economic success, and even muscle shape. These systems benefit from shocks and randomness in different ways, but they all pay a price for antifragility.

Same goes for the free market and financial institutions. Taleb's book uses restaurants as an example and ends with a reference to the 2008 crash.

“Restaurants are fragile. They compete with each other. But the collective of local restaurants is antifragile for that very reason. Had restaurants been individually robust, hence immortal, the overall business would be either stagnant or weak and would deliver nothing better than cafeteria food — and I mean Soviet-style cafeteria food. Further, it [the overall business] would be marred with systemic shortages, with once in a while a complete crisis and government bailout.”

Imagine the same thing with banks.

Independent banks would compete to offer the best services. If one of these banks fails, it will disappear. Customers and investors will suffer, but the market will recover from the dead banks' mistakes.

This idea underpins a free market. Bitcoin and other cryptocurrencies say this when criticizing traditional banking.

The traditional banking system's components never die. When a bank fails, the Federal Reserve steps in with a big taxpayer-funded check. This hinders bank evolution. If you don't let banking cells die and be replaced, your financial system won't be antifragile.

The interdependence of banks (centralization) means that one bank's mistake can sink the entire fleet, which brings us to SBF's ultimate travesty with FTX.

FTX has left the cryptocurrency gene pool.

FTX should be decentralized and independent. The super-star scammer invested in more than 130 crypto companies and linked them, creating a fragile banking-like structure. FTX seemed to say, "We exist because centralized banks are bad." But we'll be good, unlike the centralized banking system.

FTX saved several companies, including BlockFi and Voyager Digital.

FTX wanted to be a crypto bank conglomerate and Federal Reserve. SBF wanted to monopolize crypto markets. FTX wanted to be in bed with as many powerful people as possible, so SBF seduced politicians and celebrities.

Worst? People who saw SBF's plan flaws praised him. Experts, newspapers, and crypto fans praised FTX. When billions pour in, it's hard to realize FTX was acting against its nature.

Then, they act shocked when they realize FTX's fall triggered a domino effect. Some say the damage could wipe out the crypto market, but that's wrong.

Cell death is different from body death.

FTX is out of the game despite its size. Unfit, it fell victim to market natural selection.

Next?

The challengers keep coming. The crypto economy will improve with each failure.

Free markets are antifragile because their fragile parts compete, fostering evolution. With constructive feedback, evolution benefits customers and investors.

FTX shows that customers don't like being scammed, so the crypto market's health depends on them. Charlatans and con artists are eliminated quickly or slowly.

Crypto isn't immune to collapse. Cryptocurrencies can go extinct like biological species. Antifragility isn't immortality. A few more decades of evolution may be enough for humans to figure out how to best handle money, whether it's bitcoin, traditional banking, gold, or something else.

Keep your BS detector on. Start by being skeptical of this article's finance-related claims. Even if you think you understand finance, join the conversation.

We build a better future through dialogue. So listen, ask, and share. When you think you can't find common ground with the opposing view, remember:

Sam Bankman-Fried lied.