HomeCryptocurrencyIs digital currency dead?

Is digital currency dead?

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associate editor darren fonda wrote the story and he joins us now daryn thanks for coming on the show thank you uh so obviously ugly times for bitcoin are we gonna look back on this and say okay this whole cryptocurrency thing was just a fad or is this just a tough time and you know all assets go through bear markets you know i think is being hit really hit uh hit hard right now uh by tighter monetary policies and uh rising and um as the fed tries to fight uh sky-high inflation there's a lot less demand um for risky assets and is one of them you don't really get any cash flows in any uh and it's very hard to value cryptos like stocks or bonds and i think there's a lot of fear right now going on in markets bitcoin is down more than 50 and that's raising a lot of questions about what is it actually good for other than trading yeah that is a good question um but those people who who would love to make some of those big profits we used to see in bitcoin are wondering when the fed stops hiking if we think rates aren't going to go up anymore is that bullish for bitcoin when should they get back in you know it's extremely difficult to time an investment in bitcoin it's highly volatile and it has no intrinsic value some people would argue that it's like digital gold that is a store of value and that it can be a hedge against inflation but the jury is really out on that fact um and we may now be in a crypto winter another problem is that crypto has become highly correlated to tech and if that continues to be the case it may not add much diversification benefits to a portfolio hey darren i want to take a look at another spot in the crypto space which was the big blow up of the stable coin tara does that mean that stable coins aren't really stable so terra was kind of an unusual animal uh it was a so-called algorithmic stable coin it was trying to hold a peg by linking to another stable coin called luna the whole thing collapsed it wiped out around 40 billion dollars and it really raised a lot of questions about whether algorithmic stable coins um can be trusted to hold their value that's not necessarily the case with two of the largest kind of traditional stable coins which are tether and usdc those ones have hold their pegs uh but have held their picks but uh you know i think there's still a lot of questions about how stable stable coins will really be and whether they will actually make a leap um from crypto markets where they're used for trading and liquidity to you know standard finance for payments for remittances there's some evidence that that's happening but the transaction fees can still be quite high so darren let me get this straight i could buy one of these stable coins and if everything goes right i get my money back and if not it all goes poof what's the point yeah i mean yeah ben i don't know if that's exactly the case uh it's definitely true that things went poof in terror i don't think necessarily that's going to happen with usdc tether is a bit opaque about its holdings uh what what its reserve assets are but there definitely is risk in stable coins that said they are taking off in emerging markets like turkey so their use cases are increasing but there's still a lot of questions about their security hey darren jack how i'm a crypto skeptic so i'm now doubling down on my allocation of zero ever but if someone's asking me they want to they want to buy something but they don't want to take too much risk i'm tempted to tell them forget the bitcoin buy something trashy where you can get a skegion coins for the price of a big mac that way at least you don't have to put up too much money what would you tell that person i would say be careful uh those tiny little tokens don't trade on the major exchanges and you can still lose your shirt in them if you know you don't want to obviously put a lot of money into any of these little things uh bitcoin is the largest and most liquid crypto a lot of advisors would say you can't really go wrong if you put two to three percent of your portfolio in bitcoin um but you probably don't want to put much more than that in there there's another way to gain exposure to crypto which is through stocks um there's a lot of stocks out there that have blockchain exposure there's companies like coinbase uh and robin hood there are exchanges there are payment apps like block uh and paypal and then there's companies like nvidia which makes chips for bitcoin miners and there's a bank silver gate capital that's trying to become a kind of crypto services bank um and they have another business as well and kind of more traditional banking so these are kind of the safer ways to play the growth in blockchain technology and maybe some of the tokens in bitcoin as well so the stocks sound interesting thanks so much darren fonda thanks for coming on thank you

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