Kelly Evans: Taking crypto seriously
While we're all over here guffawing about dogecoin, the actual crypto economy is taking off
What do I mean? Take the rise of non-fungible tokens (NFTs). These wouldn't be possible without the underlying "rails" they exist on--in large part, the ethereum network. Wait, isn't ethereum a cryptocurrency? Yes, and it's at a record high again today. But unlike Bitcoin, it's also a software platform that can power other decentralized apps. It's kind of like Bitcoin and the blockchain all in one.
And these new tokens, NFTs, are a total game-changer. I haven't been this excited by something new on the scene since cloud computing a decade ago--and look how much value the cloud has created in that relatively short period of time. At least, what, $3 trillion just roughly using the market caps of Microsoft, Google, and Amazon?
Why the excitement? Because NFTs, like the cloud, are a completely new process and payment scheme--except while that one accrued to the big tech platforms, this one accrues to the individual creator. Now, sure, big content creators like the NBA and CNBC could also benefit from selling or owning their tokenized content, but so can the little guys. For instance, people who just so happened to appear in content that went viral in recent years are now able to sell that content as tokens--in one case, earning over $400,000.
And there are all sorts of interesting things you can do with these "blockchains," to speak, that weren't possible before. For instance, you can build royalties into NFTs so that each time they're sold or transferred, the original creator gets, say, a 3% commission. Or take a new coin that was just launched--Superdoge. Sounds like a joke ("the world's first superhero meme coin"), but guess what? My friend's charity has already collected over $70,000 from it. How? Because this coin donates 2% of every transaction to charities, including hers.
Still, these new blockchains and crypto coins have a ways to go before they're fully ready for widespread use and adoption. Each coin has its own approach to "monetary policy," for better or worse. And the ethereum network apparently can run very high transaction costs--critics argue it has "anti-network" effects because the costs rise alongside price and usage. As for security? There are lingering concerns.
But it's important to point out that the value of any coin per se isn't what's most interesting about the world of crypto payments. It's the process innovation, the rise of NFTs, the possibilities for replacing the current middlemen (Visa, Mastercard, etc.). And it would be ludicrous not to expect more regulation, especially as users offer innovative ways to use crypto securitization to avoid, say, higher capital gains tax rates.
Still, the real threat is not so much that governments crack down on crypto but that they appropriate it for themselves--using digital dollars that track everything we do the way China has already begun to with "digital yuan." If that's the end game, might as well enjoy this period of furious innovation while it lasts.
See you at 1 p.m!
Kelly