Why This Crypto Billionaire Plans To Only Keep 1% Of His Earnings
Crypto billionaire Sam Bankman-Fried is the CEO of the world's second-largest crypto exchange, and one of the wealthiest men in the world. The 30-year-old started FTX in 2019, and in less than three years, built a $40 billion business. His headquarters is in Nassau, Bahamas, where he also lives, according to The New York Times.
In a talk at a recent Crypto Bahamas conference, he shared his early experiences in the cryptocurrency industry. According to him, he didn't know much about Bitcoin when he started but noticed that the crypto market had inefficiencies. So, he founded a crypto trading firm, Alameda Research, in 2017 to capitalize on these inefficiencies. He and his team saw that bitcoin prices in Japan were 10% higher than in the United States, and he could profit by buying it at a cheaper rate and selling it in Japan. It sounded simple, but in reality, it was complex to pull off given that crypto markets were often seen as nefarious in the financial sector at the time (via The New York Times).
There were some infrastructure problems, including issues with finding banks in Japan to facilitate back-and-forth money transfers. However, they were able to resolve them and Bloomberg reports that at its highest, Alameda was sending $15 million between Japan and the United States, earning $1.5 million. It was only weeks before the company earned about $20 million in profit. That was when Bankman-Fried and his colleagues decided to build their own cryptocurrency exchange platform.
He wants to give his money away
Alameda's huge successes motivated Bankman-Fried and his colleagues to build FTX, a Bahamian-based cryptocurrency platform for people who want to buy and sell cryptocurrencies. The platform made him one of the richest people in the world. In 2022, Forbes estimated his personal wealth to be $21.2 billion.
One of the intriguing aspects of the young crypto billionaire is his commitment to only keep 1% of his earnings or $100,000 a year, and give the rest away (via Bloomberg). His philosophy is best described as "effective altruism." This type of thinking aims to better the world and help as many people as possible using rationale and evidence. For him, his giving philosophy started long before FTX. At his first Wall Street job he gave away half his salary to charity. The MIT graduate gave $50 million to pandemic-related causes and AI research (via Bloomberg). He also donates to other causes such as climate change and space research. In 2022, he has plans to give away up to $1 billion (via The New York Times.) He is also reported to have given millions of dollars to Biden's political campaign.
By a billionaire's standards, Bankman-Fried is seemingly modest. He drives a Toyota Corolla and is often dressed in shorts and a t-shirt. He told Bloomberg, "You pretty quickly run out of really effective ways to make yourself happier by spending money," he said, adding, "I don't want a yacht."