Understanding the FTX collapse

Over the past few days, the FTX collapse has unfolded, revealing fraud and corruption of epic proportions taking place. This unfortunate event should come as no surprise to those experienced in the shenanigans of the crypto market. 

Sadly, the crypto industry is littered with tales of charismatic founders who promised users the moon and then exit-scammed with their life savings to a country without extradition agreements. Sam Bankman-Fried is just another example of a long list of crypto-scammers who talk a good game about things like “effective altruism” while operating in the most unethical manner imaginable.

The dilemma people who are interested and invested in cryptocurrencies often find themselves in is one that repeats every bull cycle. Charismatic founders pitching all manner of blockchain and decentralized solutions entice naive investors to throw money at the latest shiny thing, which 99% of the time ends up being nowhere near as impressive or useful as advertised, and in some cases ends up being nothing more than vapourware. The crypto founder is hailed by sycophantic tech-journalists as being a once in a generation genius, all the while running nothing more than an old fashioned ponzi scheme. Insider trading, front-running by hedge funds, pre-mines and pump-n-dumps are all standard procedure in the predatory world of altcoins.

If at this point you are thinking, “This all sounds terrible” then we wholeheartedly agree with you. How is the average person, who works a full time job, has a family and other commitments supposed to be able to separate the scams from the moonshots in the crypto world? Well to be brutally honest, you can’t. If you play the altcoin casino, sooner or later you will get burned. This is just a statistical fact. Many well intentioned altcoin projects trend towards degenerate scamming over time as the projects fail to achieve their initial goals and have to pivot in order to stay afloat. So even if you manage to find an ethical team and project, you could still end up losing your shirt.

For this reason, we have taken the conservative approach at upnup. The only way to avoid the scams is simply not to engage with them at all or to perform a very large amount of due diligence on a small amount of projects that have a proven track record, are sufficiently decentralized and actually have some real world utility. For this reason, the only crypto-asset we offer on the upnup app currently is Bitcoin.

Bitcoin has no founding team, no marketing department, no CEO, no pre-mine, no proof of stake and no VC backing. Bitcoin is backed by raw energy, creating “unforgettable costliness”, a state which ruins the incentives for cheating. If you haven’t yet, we highly recommend reading this illuminating explainer of what money really is by Nick Szabo, published in 2002, seven years before Bitcoin was released.

Many people have asked us why we have not added other altcoins to the upnup app, now you know. We place the financial wellbeing of our clients first and as such are extremely conservative with our asset choice. 

A further step we are taking to protect our users is by introducing the ability to withdraw your Bitcoin to your own self custody wallet. This feature will be released within the next few weeks. The best way to protect your Bitcoin from external risk is to hold it in a wallet that you control the private keys too. 

Upnup was designed to help you accumulate Bitcoin, the most scarce asset in the universe. This is a marathon, not a sprint. We encourage all of our users to take the long term view on this asset and avoid the minefield that is the altcoin landscape. Massive short term gains are enticing, but the risk you take on is often just not worth it. Staying humble, stacking sats and focussing on the things in your life that you are good at or bring you joy is a far safer strategy!


by Ricki Allardice
upnup product owner

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Understanding the FTX collapse

Over the past few days, the FTX collapse has unfolded, revealing fraud and corruption of epic proportions taking place. This unfortunate event should come as