I recently rewatched SBF being interviewed on the David Rubenstein show. SBF was asked, "Why do so many young people seem so attracted to crypto... it seems like young people are particularly are very interested in it. Why is that?"

"If you're...you know... twenty-one years old, and trying to get access to markets... you want to be able to trade, to invest. You can sign up for an account on crypto-exchange and get full market access. If you try to get that same level of access in equities, in commodities, you can't get it. You're going to end up with heavily mediated access that has like pretty limited amounts of real interactive-ness, limited amounts of liquidity, limited amounts of size, limited amounts of market data. And so for a natively digital generation looking to take more control of their finances, actually being able to do it with crypto is a big big difference."- SBF

As I was watching David Rubenstein's expression to that response, I wasn't sure if it was skepticism or that he was cringing inside.

So much of what SBF had replied to the above insinuates a mindset of wanting unlimited quantities of everything.

It also says something about the rebelliousness and perceived inadequacies felt by younger people, that they don't get the same opportunities and access as older folks. I am not sure if I align with this.

For one, why is having "limited amounts" of liquidity a bad thing for the younger digital generation? That just sounds crazy. Whatever happened to spending within your means?

If you are twenty-one years old, you shouldn't be trying to "get access to markets", you should be trying to acquire hard skills and learn through experience. Providing a platform to unlock more liquidity for trading crypto-assets doesn't seem like a very wise way to get young people equipped with the knowledge of money.

The problem with today's financial markets is that, everyone forgets the first principles of a stock exchange:

Enabling businesses to raise money so that they use the capital to grow their business. Exchanges were initially not meant for punters to speculate amongst each other.

It was greed that got everyone carried away in the frenzy of buying and selling based on story-telling. Bankers were just happy to profit from being the middle-men.

For what the FTX fiasco is worth, it has further reinforced the point that:

Despite how far and sophisticated we have come in terms of building an efficient capital markets, our understanding of risk-reward are now severely distorted.

Rather than using leverage as a financing tool to grow business, a large part of leverage today is being mis-used as a product by bankers to profit from greedy customers who want to achieve outsized investment returns.

Platforms - whether crypto or not - that offer investors the so-called unlimited liquidity to have "more control over finances" simply appeals to the vice of human nature, which is greed. It removes having skin in the game and transfers this risk onto the financial ecosystem buoyed by multiple layers of story-telling.

[Read part I]