🔍
How Altcoins Like Ether And USDC Took Over More And More Of The Crypto Market - YouTube
Channel: CNBC
[2]
The entire global cryptocurrency
market was worth $1.6 trillion
[6]
by the end of July 2021. That's
more than six times what the
[10]
crypto market was worth in July
of 2020.
[13]
And it became very trendy on
Wall Street to kind of trade
[16]
cryptocurrencies. And I think
that's really what the last 18
[19]
months have been about, that
hype cycle.
[22]
Bitcoin is now old money. I
mean, you look at all of these
[26]
altcoins.
[26]
Now I own ethereum. I feel like
you have to have exposure to
[31]
bitcoin, just like you have to
have exposure to gold.
[33]
It's a good reminder that the
story is bigger than just
[35]
bitcoin.
[37]
In fact, the current number of
altcoins clocks in at more than
[40]
11,000 and counting. This
includes ether, USDC, and of
[44]
course, dogecoin.
[46]
When Elon Musk showed dogecoin
on Saturday Night Live, I mean,
[50]
that was the peak right there.
You don't get any more hype than
[52]
that.
[53]
Bitcoin's dominance has fallen
in the last five years.
[56]
In December of 2016, bitcoin
dominated the crypto market,
[60]
controlling 96% of the industry.
Now altcoins are taking up a
[65]
larger and larger share.
[67]
By the end of July 2021, bitcoin
made up less than half of the
[70]
global crypto market. Crypto's
renewed attention and volatility
[75]
has caught the eye of government
officials like U.S. Treasury
[78]
Secretary Janet Yellen. She's
now pushing for regulators to
[81]
police digital currencies,
specifically the kind known as
[85]
stablecoins.
[86]
But with the number of altcoins
growing in number and value,
[89]
will it be too little too late?
[92]
Here's how altcoins work.
[100]
Altcoins are basically any
cryptocurrency other than
[103]
bitcoin. Currently, there are
more than 10,000 altcoins in the
[107]
world.
[108]
Altcoins are powered by
blockchains. They can be traded,
[111]
held as a store of value, used
to pay for transaction fees or
[115]
incentivize miners.
[117]
Bitcoin, the first
cryptocurrency laid out the
[119]
technological groundwork for
many altcoins. Nicknamed digital
[123]
gold, bitcoin now primarily gets
thought of as a store of value.
[128]
Today the price of bitcoin
influences the price of other
[131]
altcoins, but other coins and
their blockchains offer
[135]
additional capabilities and
flexibility, hence the need for
[138]
altcoins.
[138]
This is known as bitcoin
maximalism.
[141]
Bitcoin maximalism basically
states that bitcoin is the only
[144]
blockchain that actually has
value. And there's no use for
[147]
blockchain other than bitcoin.
[149]
Most of the coins out there are
either worthless or should be
[153]
worthless, or don't bring very
much utility to the table. But
[157]
you know, 95% that of let's say,
10-20,000 coins that are out
[161]
there, that means that there are
thousands of coins that do have
[164]
value and do have utility.
[166]
Determining a coin's usefulness
depends on a number of factors.
[170]
So we asked a developer, a
crypto trading exchange, a
[173]
crypto asset manager, and an
investor what they look for.
[177]
Developers in general are
extremely focused on blockchain
[181]
technology.
[182]
We talk directly to customers.
We try to understand what
[184]
they've been interested in and
what they've seen. And then we
[187]
go through our own internal process.
[182]
What we look at is actually the
technical capability, we try to
[183]
understand the team and try to
understand, you know, what's
[193]
actually live on the project. We
try to make sure that the
[196]
technology is actually working.
[197]
The first mistake that people
make is that they get hyper
[201]
focused on the technology,
[202]
Which blockchain is a little bit
faster than the other one? Which
[205]
one is more efficient, which one
scales better?
[208]
And they forget that in this
market, size really does matter.
[212]
Don't get over focused on the
technology.
[214]
The other big mistake, which is
the flip side of this coin, is
[218]
don't assume that we're at the
end of crypto history, and that
[222]
what exists right now will be
what exists in the future.
[224]
Volumes are an excellent
indication of where the markets
[228]
heading and how big a project
is. The other metric that I
[232]
would say not to discount is
social metrics.
[235]
We think about cryptocurrencies,
they're not companies, right?
[239]
They're not currencies. They're
actually, what they are is
[241]
networks at the end of the day.
The best way to evaluate a
[244]
network is how many people are
talking about it.
[251]
It's important to think of these
crypto assets as backed by
[254]
technology. And each technology
can be optimized to be really
[257]
good at one or another thing. In
the same way that Microsoft is a
[261]
software company optimized to be
good at one thing, and
[264]
Salesforce is a software company
optimized to do another thing.
[267]
Crypto assets can be divided
into various categories.
[270]
A store value — so the place to
hold your money.
[273]
They can be used in smart
contracts, which is an agreement
[276]
between buyer and seller.
[278]
There are utility tokens.
[280]
And then there's a specific
subset of cryptocurrencies
[283]
called stable coins, which have
a value pegged to a real world
[286]
asset such as a fiat currency
like the US dollar or a
[290]
commodity like gold.
[291]
We're going to look at a few
popular players in these
[294]
categories.
[295]
The Ethereum blockchain often
gets described as a world
[298]
supercomputer. Its ability to
run decentralized applications
[302]
and deploy smart contracts makes
it favorable to developers like
[305]
Austin Bunsen.
[306]
So Bitcoin is like really good
at this very, very one very,
[309]
very simple thing which is like
being decentralized censorship
[313]
resistant money. Ethereum, on
the other hand, is very focused
[318]
on being a general computation
platform that any developer can
[322]
build on.
[323]
Ethereum is growing so quickly
that it received an upgrade in
[327]
August 2021 to help it keep pace
with miners and transactions
[331]
alike.
[331]
Within Ethereum there are
cryptocurrencies like Polygon
[334]
which assists with the
blockchain's congestion and
[337]
Uniswap, a popular decentralized
crypto exchange. There's also
[341]
Polkadot, a rival to the
Ethereum blockchain.
[344]
Within the fast-growing arena of
decentralized finance,
[347]
stablecoins are considered a
volatile-free asset because
[351]
their value is connected to
currencies or other reserve
[354]
assets.
[355]
Examples of stablecoins include
USDC and tether, both of which
[359]
are pegged to the U.S. dollar.
[361]
Then there are speculative
tokens built on technology that
[364]
doesn't have a fundamental use
case or project. The most well
[368]
known is dogecoin, which was
branded after a viral dog meme
[373]
from years ago.
[374]
It's important to note that the
crypto industry remains rife
[378]
with scams.
[379]
Popular tactics include 'pump
and dump' schemes, where
[382]
investors plant false news in
order to push prices higher.
[385]
There's also the 'rug pull'.
That's when founders abandon a
[388]
project take the money raised
and then disappear.
[397]
When Wall Street institutions
like JPMorgan and Goldman Sachs
[401]
piled into bitcoin and other
cryptocurrencies, after years of
[404]
avoiding them, the news caused
crypto prices to soar.
[408]
18 months ago, this was still
primarily a grassroots retail
[412]
phenomenon with crypto owned
mostly by individual investors.
[415]
Beginning shortly after the
pandemic started, beginning
[419]
around May or so, we started to
see institutions move into
[422]
crypto in a major way.
[424]
Not to be deterred at the retail
investors who were drawn to meme
[427]
stocks, like GameStop also
invested in digital currencies
[430]
like dogecoin.
[432]
We've had millions of customers
sign up, over 3 million since
[435]
the beginning of the year.
Really a lot of active interest
[438]
and growth with bitcoin and
beyond.
[441]
Lots more cryptocurrencies
polkadot being one, ethereum two
[445]
and staking capabilities there.
[447]
It's not just about trading and
buying and selling anymore.
[450]
There are a lot more activities
that you can take.
[453]
Crypto's popularity from retail
investors and Wall Street has
[456]
picked up the attention of
government officials, making it
[459]
a prime target for regulation.
[461]
Conversations about crypto
regulation go back as early as
[464]
2013. But governments at the
time didn't really understand
[468]
the technology and the crypto
market was tiny compared to now.
[472]
Since then, the government's
understanding of crypto has
[475]
vastly improved.
[477]
In July 2021, Treasury Secretary
Janet Yellen hinted at
[481]
regulating stablecoins.
[483]
Central banks see the growing
asset as a threat to financial
[487]
stability. Then in August 2021,
SEC chair Gary Gensler called
[492]
for tougher regulation to
protect investors.
[494]
The regulators are probably
going to get what they want, in
[497]
most respects.
[498]
And what the regulators want, in
my experience, is not to crack
[502]
down and eliminate this
industry, not to strangle it in
[505]
its crib. But they do have
strict requirements for how
[510]
companies like Kraken, Coinbase,
Binance, Bitstamp and Gemini,
[516]
and all the rest, treat their
customers how we mitigate risks.
[521]
I think we're going to see more
development of that.
[525]
Crypto projects like Ethereum
and Cardano have moved to
[528]
countries like Malta and
Switzerland, areas with
[530]
crypto-friendly regulation.
Advocates warn this trend could
[534]
result in the U.S. missing out
on a huge opportunity.
[538]
More and clearer regulation
could be the single biggest
[541]
driver of the next bull market
of crypto. The way to evaluate
[545]
whether the new regulations
which are definitely coming are
[548]
going to help or hurt crypto is
this. If these new regulations
[552]
put crypto on par with the
traditional financial system,
[555]
crypto's going to win because
the underlying technology is
[558]
more efficient.
[559]
It's more inclusive, it's more
innovative, it's newer, it's
[562]
faster, and better.
Most Recent Videos:
You can go back to the homepage right here: Homepage