The CoinMarketRecap podcast is released every Friday — bringing you all the week's crypto stories in an accessible way, along with in-depth interviews with the people who make the news and fun discussions on emerging trends.
The main drama this week came when Bitcoin (briefly) dipped below $30,000 — an all-important psychological milestone. Some analysts were concerned that further pain could lie ahead, and altcoins with a smaller market cap suffered even steeper declines on a 24-hour timeframe.
Those fears appeared to be misplaced just 24 hours later, when BTC staged an impressive rally. This momentum has remained — but now, the world’s biggest cryptocurrency faces an uphill struggle to retake $34,000.
In other news, Jack Dorsey has said that Bitcoin is going to be a big part of Twitter’s future. The social network’s CEO revealed his vision to analysts after the company’s second-quarter results emerged. Dorsey, an avid crypto enthusiast who is also the CEO of Square, said investing aggressively in the crypto space is hugely important to Twitter and its shareholders.
And, for those who remain skeptical about whether NFTs are in a bubble, there was encouraging news from Damien Hirst’s collection this week. Some 10,000 pieces of artwork were available in The Currency, and new figures show that it was massively oversubscribed. A total of 32,472 people applied for 67,000 NFTs — and this means some applicants will end up empty handed.
Elon Musk Discusses The B Word
Elon Musk and Jack Dorsey are two men who haven’t always seen eye to eye when it comes to crypto. But this week, we saw both executives appear together for The B Word conference, an event about Bitcoin that was being held virtually.
During the event, Musk stressed that he doesn’t dump — and because he had personally invested in Bitcoin (alongside his companies Tesla and SpaceX,) he stands to lose money by negative developments. There’s little doubt that he was trying to address criticism that some of his tweets have caused the markets to take a plunge.
His explanation didn’t go down well with CoinMarketCap’s Molly-Jane Zuckerman, who joined us to give us her take on the week’s news. She said:
“Does he think we’re all idiots? Like, is he an idiot? Okay, he owns Bitcoin — and what did he think would happen when he tweets negative things about Bitcoin’s energy use? I’m not quite sure that he’s as clueless as this quote makes it seem like … Yes he does dump. And it seems like he dumps on purpose.”
What is DeFi?
Initial coin offerings, non-fungible tokens… there always seems to be a new trend that is taking the crypto world by storm.
One of the newer sectors on the scene is decentralized finance — otherwise known as DeFi for short. The total value locked in these protocols stood at about $700 million at the start of 2020. Fast forward to now, and it’s raced up to $57 billion.
Camila Russo, a former Bloomberg News journalist who now covers the crypto space full time, joined us to talk about what DeFi actually is. She has written a book called The Infinite Machine, chronicling the history of Ethereum and its founders, and now runs a DeFi-focused news website called The Defiant.
She said that, through DeFi, services offered through traditional finance are now being recreated and rebuilt from the ground up using smart contracts on the blockchain. This eliminates the need to rely on centralized entities such as banks. Camila added:
“People anywhere in the world — no matter who they are, what school they went to, what their credit score is, how old they are, anyone — can just go and start interacting with these DeFi applications. All you need is a blockchain address and an internet connection. It’s this permissionless, open feature that really attracted this explosive growth.”
Another compelling advantage of DeFi lies in how it can allow people to get much more attractive returns on their savings. Mainstream bank accounts currently offer minimal interest (these rates are even negative in some cases, meaning consumers end up paying banks to store their money.)
Camila explained that, although rates can vary, depositing stablecoins tied to the U.S. dollar can command rates of 4% right now.
She also predicted that the user experience offered by DeFi protocols will improve massively in the coming weeks and months — ensuring that transactions are fast, cheap and easy to complete. When asked whether the Ethereum blockchain will be able to cope after buckling under congestion in recent months, she said a range of layer-two solutions are coming live that help ease pressure on the main network.
Using an analogy to explain what she meant, Camila explained:
“If Ethereum is like a main industrial city like New York, all the layer-two solutions would be the suburbs — when there’s too much population density in big cities, you start seeing these suburbs pop up.”
And when asked what someone who is interested in DeFi should do to keep themselves safe, she had an ultimate checklist.
Top of the agenda is remembering the different risks that can exist in these applications. The smart contract codes that are being used are extremely new, and it is possible for hackers to take advantage of loopholes. Camila said sticking with the larger, well-known protocols and applications can be wise — especially as they now take care of billions of dollars in assets.
She added that it is safer to go with projects that do not have anonymous founders — and it’s important to examine the degree of control that an application’s developers have over the protocol.
“If they can just single-handedly take the protocol’s cash, then stay away from that.”