For the past After three seemingly glorious years, the magical 30-year-old Sam Bankman-Fried, or SBF, has been crowned the “Crypto King,” bearing an uncanny resemblance to the legendary Robin Hood. Using his quantitative and coding skills instead of bows and arrows, he built at breakneck speed a $32 billion empire: crypto exchange FTX, and the trading company Alameda Research. But it’s all supposed to be about helping the poor (through the trendy new movement, effective altruism)—with former Alameda co-CEO, Caroline Ellison playing Marian’s Handmaid Marian him and an amazing list of A-listers (from top Democrats to sports stars) Merry Men. However, since being escorted out of his Caribbean home in handcuffs on December 12, he proved to be a markedly less cheerful outlaw.
So how did our self-proclaimed modern day Robin Hood who agreed extradition to the United States earlier this week, to finish in the series?
The answer was heralded by another “moral crusader” who more than a decade ago experimented with his own philanthropic fantasy on the other side of the globe: Vikram Akula and the initiative his microfinance. Microfinance refers to institutions that provide financial services, especially small (“micro”) loans, to people who typically cannot access credit from conventional banks—usually poor women, often in rural areas. The concept of microfinance, and the first microfinance institution, Grameen Bank, was founded in the 1970s by economist Muhammad Yunus in Bangladesh and has slowly grown to attract millions of borrowers. domestic and worldwide – Yunus won and not -banking for profit 2006 Nobel Peace Prize for its contribution to the eradication of global poverty.
Akula, who grew up in America, wanted to apply the business acumen he had acquired as a management consultant at McKinsey—the equivalent of Robin Hood’s archery—to microfinance modeling. model in his hometown, India: in particular, by accelerating the process up to applying the logic of fast-growing consumer brands, like Coca-Cola or McDonald’s. He founded his own company, SKS Microfinance, in 1997 to do just that. Driven by the idea that the faster Akula’s company expands, the better it can do, SKS quickly became one of the fastest growing organizations in the history of the industry and Akula became the global face the new daring of microfinance—such as becoming Time Journal list among the 100 most influential people in 2006. By 2010, an IPO of SKS, as proof of purpose profit, was oversubscribed by 14 times.
The similarities between FTX and SKS extend beyond the founders’ rationally rebellious individual trajectories. Like the noble cat-and-mouse game of Robin Hood and his followers with the tyrannical Sheriff, both men operate on the sidelines of the law in the nominal extralegal space between legal and non-legal. legitimacy, with SBF working in the unregulated crypto industry and Akula in primarily the unregulated South Asian microfinance sector. (In 2010, Akula also got a warrant for his arrest, though as “sheriff” in India is, he was never arrested.) And both were motivated, nominally — like “man of the people” Robin Hood—for his zeal to democratize empowering the people.
Indeed, the early models of cryptocurrencies and microfinance have much in common. electronic money is a decentralized digital currency (include, e.g. Bitcoin, Ethereum, Tether, Binance Coin and Dogecoin) are traded on cryptocurrency exchanges (such as Coinbase, Kraken, Gemini and, until recently, FTX, as well as several brokerage platforms such as Robinhood, Webull and eToro). Unlike regular “fiat money” issued by the government, cryptocurrency is not backed by any physical assets: Its value is entirely created by general consensus. Because transactions (“blocks”) are verified and recorded (in a persistent link or “chain”) in the code known as the blockchain—the equivalent of a checkbook distributed across countless computers on around the world—it’s supposed to be open, universal, and consensus-based: everyone’s ultimate ledger or an opportunity for millions of ordinary people to co-author their own collective financial story.
The notable microfinance model, on the other hand, is to provide loans without contracts or collateral, but instead through “group lending” or organizing borrowers into support groups. peer-to-peer support, usually five people—dramatically expands the reach of finance by allowing virtually anyone (even those without legal or financial assets) to access credit, making it become everyone’s bank. Despite the absence of conventional sanctions mechanisms, and again, lending secured by physical assets (collateral), microfinance institutions achieve and maintain very high repayment rates. significantly higher—reportedly over 95%—by consensus or consensus among borrowers. The focus of both is on peer-to-peer relationships and the dynamics of replacing traditional financial hierarchies, like Robin Hood’s commitment to redistribution in the form of financial justice.
