Yahoo Finance’s Akiko Fujita and Zack Guzman discuss crypto’s wild ride with Kraken CEO Jesse Powell.
AKIKO FUJITA: Bitcoin surging ahead to a 10-day high. Let’s take a look at where it’s trading right now, well above that $36,000 level, up 6%. Some attributing the spike here to Elon Musk and his Twitter bio, specifically. Not necessarily endorsing Bitcoin, but sort of alluding to it. That providing a big lift.
Let’s bring in Jesse Powell. He is the CEO of Kraken. And Jesse, I imagine you have been listening to all of the conversations over the last several days about the users who are on Reddit, this movement behind GameStop. It feels like, in many ways, that has strengthened the case for something like a Bitcoin and this need for a decentralized financial system.
How much of the sentiment that we have seen in the equity markets have spilled over into cryptocurrency?
JESSE POWELL: Quite a lot, actually. And people that started trading with cryptocurrencies first are shocked to find out how the equities markets actually work, with so many middlemen in the process, not actually owning your stocks, having someone else technically own them, having someone else custody them, not being able to move them wherever you want instantly.
It’s a very different system, and I think it’s a system that is really no longer necessary now that we have a crypto system. And I think we’d be much better off with a bare instrument system where people can take their shares, move them anywhere they want, trade them anywhere they want, and trade directly on exchange.
And because they can’t do that now, because there’s so many middlemen involved in the process, you have so many opportunities for bad things to happen. There’s just not much transparency there. And the little guy really is at a disadvantage in a system like that.
ZACK GUZMAN: And so Jesse, I mean, what kind of boost in users have you seen here in the wake of all this? And, I guess, as a follow up question to that, crypto seems very similar in the fact that you sometimes got to go through, like, a Coinbase or a centralized exchange to, maybe, get started. But then from there, we’re seeing decentralized finance and the applications there, really start taking off now.
JESSE POWELL: Yeah. So people can buy Bitcoin in a number of places. There are more than 100 exchanges around the world. Kraken is a great way to buy Bitcoin all over the world. Once you get into Bitcoin, you can move your Bitcoin anywhere. It’s a permissionless blockchain. And you can convert your Bitcoin into other assets like Ethereum.
And Ethereum gives you access to a whole world of decentralized smart contracts, decentralized exchanges, lending protocols. DeFi is really eating the world of finance, whether people know it or not yet. I think 10 years from now, we’re all going to be doing 90% of our financial services on a blockchain.
AKIKO FUJITA: So what does that look like? If you think about how trading is done today, at least in equities, how do you apply what we have seen in cryptocurrencies to the way things are traded in the traditional markets?
JESSE POWELL: I think it’s going to be up to the regulators and the lawmakers to allow for this to happen. I mean, there’s technically nothing preventing this from happening today. Conceivably Kraken could buy a bunch of Apple shares, tokenize them, and allow people to buy them and trade them even on a decentralized exchange.
So what we really need is some innovation in the regulatory and legislative space. The technology is there today. So I think you’ll see stocks trading, just like people trade Bitcoin, just like people trade FX, where they’re bare instruments. You can take them anywhere you want. You can hold them yourself. You don’t have to go through a clearing agency. They’re settled instantly. I think all of that is eventually coming to equities on blockchain.
ZACK GUZMAN: Jesse, I mean, when we think about where we go from here, I think that is a very interesting break in terms of what we’re seeing play out as more attention shifts over to the world of DeFi. And it kind of becomes a little bit more attractive. And we’ve had a number of guests talking about Ethereum being the overlooked opportunity in the crypto space.
When you look at the way, maybe, Bitcoin’s dominance as a percentage share of all the crypto assets out there, and what money is flowing into Bitcoin over some of these other tokens, what does it say to you about, maybe, where we’re at in this adoption cycle of more people realizing the capabilities?
JESSE POWELL: I think we’re still extremely early in the space. Most people in the world don’t have cryptocurrency. Most people aren’t even paying attention to it. You still hear people asking you who the CEO of Bitcoin is. So I think there’s not the understanding there yet, but I think with more players getting into it– PayPal is getting into it, CashApp is getting into it– I think those guys with that retail reach will expose Bitcoin to more consumers, and more consumers will start to realize the value of it, start to use it as a store of value, start to use it as a transactional currency.
And I think just the more money printing that’s going on, the less trust people have in governments the less trust people have in the financial system, the stock market, the more they will look to the crypto markets where they have complete transparency, full custody of their assets, and the ability to do what they want when they want.
AKIKO FUJITA: Jesse, it feels like the conversation around Bitcoin, at least, has really shifted. Because we’ve seen a lot of these institutional investors get in over the last year or so. But for every one of those, we have something like a dogecoin. Can you explain to me the spike that happens? What do you make of it?
JESSE POWELL: Yes. Dogecoin has been around for a long time. It started as a meme. It started as a joke, but it has gained a lot of traction with the online– the Reddit community, the online meme community. And it has gone up to $0.08 in the last 24 hours, and I think it’s back down at $0.04 or $0.05 right now. And it was $0.01 a couple of days ago. So it is all over the place, highly volatile. The internet has taken a liking to it.
I would not see it in the same category as Bitcoin as a store of value. But it is certainly a fun coin. You know, historically people have used it to play around with, to dabble into cryptocurrency because it’s so cheap. You know, you can buy dogecoin– well, until today– for a penny or less. So it’s a good way to get in and start experimenting. And there’s a great subreddit, r/dogecoin, if people want to learn more about it.
ZACK GUZMAN: And that, to me, is kind of the breaking point here, too. Because it’s become clear this week, if anything has made it clear, there are such a thing as speculative bubbles for things that don’t have any necessarily underlying value. And it’s just kind of made clear, when we talk about Bitcoin and Ethereum, these are two different camps.
But just real quick, before we let you go, Jesse, because I want to make sure I had it right. We were talking– have you seen– it was a six-fold increase in the amount of sign-ups?
JESSE POWELL: Yeah. I mean, in the last 24 hours. Something obviously happened that caused a lot of people to come into cryptocurrency just in the last day.
ZACK GUZMAN: That’s insane. That’s insane, as we talk about this. Jesse Powell, the CEO of Kraken, I appreciate you joining us to break down the moves we’re seeing play out there. Thanks again. Be well.
JESSE POWELL: Anytime. Thanks for having me.