eli5: Isn’t the whole FTX, FTT token analogy basically what companies do when they get listed on the nasdaq, etc? Selling shares for money?
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Shares of stock have an inherent value. They entitle the holder to a share (hence the name) of any profits made by the company that issued it. Firms have to be careful, for both regulatory and market reasons, before issuing new shares on top of whatever else is out there, because this dilutes the value of existing shares by dividing those profits among more people. It’s usually big news when a company first issues shares or does something that changes the number of shares in the market.
A crypto token, despite having no inherent value, could be used for this purpose if the issuer made the right promises and wrote the right contracts, but that’s not what FTX was doing. They were giving themselves more of their own token whenever they needed to balance the books. You would think this is a bad idea because it would devalue the token, and you’d be right. They were just secretive about this behavior, so all that devaluation hit all at once when investors realized what was happening.
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