It’s painful for me to type this because I got into a minor accident on Thursday night. After I cleaned up the blood and applied bandages, I gingerly lowered myself onto the couch and decided to look at Twitter. Turns out that the time I hit my head on asphalt was about the time that the same thing happened to FTX and Sam Bankman-Fried (SBF). My physical injuries are starting to get less painful, but my injuries caused by the cascade of failures in the wake of FTX are getting worse. We are at the point of contagion and I think just about every centralized crypto lender will need a massive infusion or go under.

I suspect that all the CeFI firms in the crypto asset space who either engage in borrow/lend, prop bets, or issue their own tokens to fund activities are inevitably going to teach us a very painful and unwelcome lesson: all of these activities will lead to ruin without a governmental lender of last resort. The list of the dead and wounded is long and surprising: Celsius, BlockFi, Voyager, and Genesis. To this list of casualties, we add a surprising new entrant: FTX.

You might be forgiven for believing that successful investors buy good investments at a low price and make money by selling them for a higher price. I’ll even forgive if you believe that successful investors make even more money if an investment is bought for cheaper.

I follow Adam Cochran (@adamscochran) on Twitter because he’s a very smart, very thoughtful guy, who posts insightful (but epically long) tweet-storms. Adam, if you’re reading this, kudos! So, just know that when I’m going to talk about a tweet Adam posted today, I do so with respect for his insights and intelligence. Here’s the tweet:

Economist Milton Friedman once wrote, “Inflation is always and everywhere a monetary phenomenon.” Maybe -- though I have my doubts based on how scarcity can work. Today, though, I want to talk about inflation worries during a time when the Fed is raising rates at a historically fast rate. Fed Chair Jerome Powell gave a press conference in which he fed-speak said: prices are going up too fast so we are going to raise rates until lots of people lose their jobs, lots of people’s retirement savings are erased, and lots of people will become unable to finance a house. That’s a lot of pain to inflict, so it better be worth the suffering. Right?

Is it possible to comment on the current price of a cryptocurrency without making a price prediction? If so, then I want to talk about the price of ether (the native token of the Ethereum network). At the moment I’m writing this, ether is trading at $1576 per token. We don’t yet have any pricing models that enjoy broad consensus, so the price of ether is essentially speculative. We neither understand exactly why it is trading at $1576 or whether it will go up or down in the near future.

Investors in cryptocurrencies have achieved wildly different results. Some have become billionaires, some have gone bankrupt, some have just managed to tread water with middling portfolio results. I could (and maybe will) write many posts about what separates the performance of the very successful from the very unsuccessful. Today, I want to explore something more directly related to investment performance than you might think: the need to be entertained by your investments.

In general…

If you surveyed Bitcoin holders about what they think most important about their token, most would probably mention the fixed supply of 21 million bitcoin. Indeed, the 21-million-bitcoin maximum supply is probably the fact about Bitcoin that is best known among the public. But how many people know that the original Bitcoin white paper written by Satoshi Nakamoto does not discuss the 21 million bitcoin limit?