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Bitcoin Market Journal

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HEALTH, WEALTH, AND HAPPINESS

April 25, 2022

Wealth can only be accumulated by the earnings of industry and the savings of frugality.

- John Tyler

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New Workshop: How to Earn Interest on Ethereum. Learn about the upcoming upgrade to Ethereum, and how to earn loads of interest by staking your ETH using services like Lido and Rocket Pool.


This is a members-only event: mark your calendar for Wednesday, May 4 at 6:30 pm EST, and click here to RSVP.


Not a member yet? Click here to become a Blockchain Believer and get access to this workshop -- and all past workshops as well!

Whale Reads



Whale Reads

Worthy news for aspiring whales


Stripe introduces stablecoin payments(Stripe): The leading global payments company is now allowing marketplace companies to pay their sellers in crypto, via the USDC stablecoin.


For example, Twitter power users can charge fans to join their "Ticketed Spaces" online events. Those Twitter users can now choose to be paid in USDC, with Stripe as the gateway.


Over 3 million websites use Stripe for payments, so this will introduce a huge new market to crypto. There are two opportunities for smart investors.


Investor Takeaway: While Stripe is still a private company, you can still buy into this deal by investing in Circle, which owns USDC (read our guide to investing in Circle here).


On the crypto side, the new integration is built on Polygon, the Layer 2 solution for Ethereum. This gives Polygon a lot more street cred: if they're trusted by Stripe, they're playing with the pros. (See below.)

Your Money is Growing



Your Money is Growing

Truth, in numbers


To unpack how Stripe's USDC integration works, here's the tech stack behind it:

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Built on Ethereum (Layer 1), Stripe is using Polygon (Layer 2) to reduce the costs of moving USDC (the crypto asset). Stripe then lets its customers pay their customers in USDC.


For example, a marketplace like Twitter Spaces uses Stripe to manage payments. Now Twitter Spaces can enable one of its customers -- like the OhhShiny Show -- to receive their payments from fans not just in U.S. dollars, but also in USDC.


Investor takeaway: If this proves successful, expect other web companies to use Polygon, Circle, and USDC as their "bridge" between the worlds of traditional and crypto finance. It's an important step toward the marriage of traditional finance and DeFi.

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Block Market Daily

with Mati Greenspan


Hi Everyone,


On the most recent episode of Bloomberg's Odd Lots podcast, participants threw some harsh criticisms of DeFi staking platforms at Sam Bankman-Fried. 


The hosts are no dummies either. Bloomberg's Tracy Alloway and Joe Weisenthal were joined by Matt Levine. 


"Well I'm in the ponzi business and it's pretty good," Levine said mockingly. 


"It doesn't have any real economic use," Weisenthal retorted. 


Bankman-Fried replied "so let's play with this a bit," or something like that. For the exact transcript, catch the full episode.

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The question of how tokens derive value seems to be the crux of most skepticism toward digital assets, and from an outsider's perspective, it certainly must seem like a giant speculative echo chamber. 


Conceptually, it kind of is, but as Bankman-Fried explains, sometimes we're just looking at an empty box, but most protocols are a bit more. 


In fact, I don't know many successful projects that claim to have value simply due to the fact that there's a token, except bitcoin of course.


Kidding aside, while utility is a main factor contributing to crypto valuation, DeFi yields in particular tend to derive value from a process that I like to call. ...

The crypto ponzi 


To me, it's quite different from what Bernie Madoff did by taking new money to pay off old investors, but it may seem similar because early adopter rewards are often quite substantial. 


For clarity, here's the traditional definition of Ponzi scheme, according to Merriam-Webster. ... 

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The operative word here is "swindle" of course. Without it, the stock market fits the definition quite nicely.


The main difference here between public equities and tokenized assets is that shares of stock represent ownership rights in a company, while digital assets generally represent participation in a network.


It's a very fine difference, but it's critical to understanding how the value is derived. 

Inflation magic


However, the magic of crypto lies in something I've heard referred to as "user inflation," where the rapid growth/decline of a network translates into drastic price changes in the underlying token.


It's the same principle that gave Facebook, Inc. and Google massive valuations well before their revenue models became clear.


The difference is that with crypto, people have the option to literally get in at the ground floor. It provides the general public with the same opportunities and risks that extremely early investors had in any of today's big tech companies.


Yes, that unfortunately means there will naturally be many failures and even outright scams, but ultimately, the benefits of making the switch from Web 2.0 to Web 3.0 are nothing short of revolutionary, at least in my mind.


Let's not forget that DeFi lending protocols are still in their diapers, and the earliest implementations are understandably ones that enable trading and marketplace building.


Paying out freshly minted tokens to encourage user growth can be very effective, especially when more users leads to things like higher trading volumes and more value locked within a protocol.


The strategy of providing free coupons has worked countless times in helping traditional businesses get the ball rolling, but protocols that do this should at least have some sort of strategy to reduce their rate of issuance once user growth begins to decline, otherwise they may have problems later.


Ultimately, the market is affected in the short-term by speculation, but in the long-term, the investors who have a diamonds hands or HODL mindset must outweigh the speculators in order to achieve sustainability.


And investors like that are generally attracted to things like real-world usage and long-term establishment in the market.


Either way, hope you have a great week ahead!

Mati Greenspan

Analysis, Advisory, Money Management

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That's a great point, Michael! Thank you for clarifying the matter. 

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