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With the United States announcing it will print a seemingly unlimited supply of dollars to offset the effects of the COVID-19, cryptocurrencies have a unique opportunity to position themselves as a reliable store of value. To help people understand the social potential of cryptos, Sam Bankman-Fried, CEO of cryptocurrency trading platform FTX, answers some frequently asked questions.

Sam Bankman-Fried, CEO and founder of FTX
Sam Bankman-Fried, CEO and founder of FTX answers some frequently asked questions about cryptocurrencies. FTX

What is the long-term value of cryptocurrencies, both from an economic and social perspective?

To understand the value of a universal currency, such as bitcoin, we must realize how inconvenient and ridiculous our current financial and economic processes are. If we were to redesign the world from scratch, it's obvious we wouldn't have as many currencies. For example, how many countries have changed their money or adopted another country's one? It makes absolutely no sense.

Today's daily transactions are another case study for the value of cryptos. While most people believe that swiping their credit card is an easy gesture, the underlying process for credit transactions is incredibly complicated. But the best example to convince you of the value of cryptos is wire transfers. We all know wire transfers are a pain: They take hours to clear, cost a lot of money and need two days to arrive; most banks don't provide customers with an easy way to send them; and when they do, they charge a 3 percent fee!

Furthermore, cryptos can become a reliable store of value. For years, we used the gold standard to back our currencies, and to this day many investors consider gold to be a secured store of value. When you think about it, however, gold is kind of a ridiculous object. It's this random metal that you have to physically mine and store, and there is no way to know how much is or isn't left. Instead of using the physical characteristics of rare metals, we could use the algorithmic properties of the blockchain to mimic the scarcity that makes the value of gold; and then instead of storing it physically, we could save it digitally.

Now let's compare. On the one hand, you have all these currencies that are hardly exchangeable and that are supported by ancient, burdensome processes. On the other hand, you have something new, multinational, easy to move and instantaneous. Cryptocurrencies have the potential to solve the bottlenecks of our current monetary system.

"Cryptocurrencies have the potential to solve the bottlenecks of our current monetary system."

In his 2008 white paper that first detailed bitcoin, the developer known as Satoshi Nakamoto claimed to "propose a system for electronic transactions without relying on trust." Can blockchain really replace trust?

There is a specific way in which blockchain replaces certain forms of trust. If you want to know how many bitcoins are at this address for example, no trust is involved. All you need to do is check the address and the blockchain will reveal its value. Proving ownership of an asset without relying on the claims of external institutions is a powerful thing.

However, there is a multitude of aspects where blockchain will not replace trust. For example, how can we monitor transactions that involve exchanging something on the blockchain for something not on the blockchain? Let's imagine I'm buying a coffee with bitcoin. Thanks to blockchain technology, I can prove that I sent the bitcoin; but can I prove that I got the coffee? How will the coffee get on the blockchain? As such, I believe that blockchain technology and traditional forms of trust are not incompatible; they are complementary.

"Blockchain technology and traditional forms of trust are not incompatible; they are complementary."

Despite cryptocurrency tradingbeing a young market, FTX has been able to innovate thanks to products such as your"2020 US Election." How do you enforce that philosophy in your team?

The greatest strength of FTX is its human resources. As most of our employees are either traders or heavy users of digital currencies, we always had a clear idea as to what the market wanted, and how to design our products.

At FTX, our goal is to build the best product in the fastest time possible, and anything that gets in the way of that objective must be swiftly removed.

FTX's"2020 US Election"is a series of futures contracts that allow investors to trade on the outcome of the U.S. election. Practically speaking, howdoes this product work?

We made this product as straight forward as possible. Traders can choose from 6 contracts, each belonging to a candidate, which expire to $1, if he or she wins the elections, and zero dollars otherwise. To give you an example, the price of each Trump Contract is equal to the probability that he wins re-election. So if you think there's a 50 percent chance of Trump winning, then Trump should trade at 50 cents. He is currently trading at 43 cents, so if you think the odds are at 80 percent, buy now because it will pay out in expectations! If you think the odds are at 30 percent, it's a good moment to sell.

Since its founding in 2019, FTX has donated over $7 million to charity. Why is it important for FTX to have a social cause?

If your goal with your money is to buy cars, then your fifth car really isn't as valuable as your first one. If your goal is donating, the fifth malaria vaccine is as good as the first. When you think socially, the scope of problems to address is endless. This fuels us into taking a bolder path.

"If your goal is to buy cars, your fifth car isn't as valuable as your first one. If your goal is donating, the fifth malaria vaccine is as good as the first."

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