From Web3 to Donald Trump: What the crypto market is watching

Curious about Web3? You might not fully understand it yet, but it has the potential to revolutionize the internet as we know it.

In this episode of Stocks In Translation, Yahoo Finance's markets and data editor, Jared Blikre, and Yahoo Finance producer Sydnee Fried are joined by former Yahoo Finance anchor and current host and founder of Coinage, Zack Guzman.

The group breaks down Web3, or the next version of the internet, focused on decentralization and user control. Guzman highlights what sets Web3 apart from its predecessors. The discussion then dives deep into blockchain, the decentralized movement in crypto, and explores crypto's influence on US politics.

Lastly, they look at ethereum (ETH-USD) and discuss whether the cryptocurrency could benefit from having a central banker.

For more expert insight and the latest market action, click here.

Find more episodes of Stocks in Translation here.

This post was written by John Tejada.

Video Transcript

Welcome to Stocks in translation.

I'm Jared Blick, your host, Yahoo Finance's Data and Markets editor and I am joined by the voice of the people.

Sydney Fried.

Thanks for tuning in.

And before we jump into the conversation, be sure to like, subscribe and comment, comment on Stocks and translation on Spotify, Apple Music, youtube or wherever you get the podcast.

The gentleman sitting across from me is Zach Guzman.

You might remember him from such years as 2022 and before you were an acre here and now you are the uh host and founder of a web three media company coinage.

And uh we've made a few changes since you got here, but just kind of roll with the punches on the docket.

Today, we're gonna be talking about crypto uh fits in nicely with your career.

Our phrase of the day is Web three.

Besides being the obvious successor to Web two.

What exactly does that mean?

And this episode brought to you by the number 3.4 million that is the estimated worth of Trump's crypto wallet.

So let's jump into this and just give me your big picture overview of where we are with crypto because it's been a wild ride since you left.

It has been and first of all, thank you for having me back.

It's good to be back here and Sid good to hang with you today.

Good to have you.

Yeah, I mean, I think we're at a very interesting time in general in crypto.

If you think about how far the industry and you know, the understanding of what it is has come since I left here in 2022.

It's night and day when you have a leading presidential candidate saying he owns it as you mentioned.

And also how big this industry has gotten when you have behemoths like Blackrock.

Also now stepping in it's, it's wild to come from the FTX collapse to where we are now.

I know it's, it's wild to think.

Uh 10 years ago, I was covering crypto at a Bitcoin conference in San Jose, California very different feel.

Um There was uh there was literally, there were literally people with tinfoil hats out there at the time, but we've moved on and now we want to get to our phrase of the day that is Web three and here is the definition.

Web three is the next version of the internet focused on decentralization and user control.

It uses Blockchain technology to give users more power over their data and online activities.

Devil's in the details.

So where are we with Web three?

Yeah, I mean, I think, you know, it's kind of a, what is it, a crawl walk, run approach whenever you're talking about adoption.

Right.

And so right now the industry will tell you and main players in the industry will tell you we're kind of in the dial up days of the internet, in terms of adoption.

I can hear the modem.

It goes back to where Yahoo came from, I suppose.

But it's like, you know, people need to learn the technology.

And Bitcoin is its simplest form.

In terms of you put money on the Blockchain, you can send it by it and basically just do that, buy, sell trade.

But now with Web three, it's what can you do when Blockchain technology doesn't just impact finance but starts to impact, you know, sectors like I'm in and media uh revolutionizes this idea of ownership on the internet where you can't just like things or comment on things, but then actually own pieces of content.

If it's that identity, what does that look like when you put it on a Blockchain versus having to trust a government or, or any sort of intermediary here?

And you know, it's still, it's, it's hard to keep hearing.

We're early as, as you and I have covered it a long time.

We've been early for a long time.

But, you know, right now we're finally starting to see kind of this adoption cycle really kick into high gear.

And I think that's kind of what has people excited right now?

Can you dumb down Web Three for me even further?

What are people going to be able to do on Web Three that they're not able to do now?

And maybe what was Web Two?

And what, what was?

Yeah.

You know, when people say Web, I don't know, my mind just goes, I mean, I get the crypto side of it.

I'm just not sure what it means for the rest of the internet.

Yeah, I mean, when you talk about web three and why it's, you know, an evolution on web two people often talk about read, write, own permission.

So if you think about web one in the early days of the internet, again, it was mostly not possible for you to do anything on the internet other than just kind of click a link go and access information.

Then you had in the next generation of the internet, read, write and so you could find interactive.

Yeah, a little bit more.

You could, you could kind of write your own blogs, you can do all kinds of things.

Um And then you know, it kind of quasi web two giants came around and made it far easier for people to create content, right?

You could now use Facebook to log in liking and commenting.

So you were more in like a robust read Google Maps got a whole lot better, like lots of stuff.

A honestly, you might know more than this because, like I, when I whipped too, when it was first kind of coming out.

I mean, by age alone, I do know a little bit.

I remember, I remember the dial up all too well.

Uh, but take us, take us to the present now, the D five movement has kind of taken a step back.

I think at least in the US because there was all kinds of, uh, expectations about Gary Gensler coming into the SEC Blockchain, uh professor at MIT.

But um it was, he wasn't, he hasn't been exactly friendly towards crypto.

And it just seems to me like the defi dream of being decentralized is just not going to happen in the US, even with the spot crypto ETF S, it's still a long way from pure defi well, yeah, I mean, I think that that's kind of the third point to own right, rewrite own like the last piece of web three kind of did get sandbagged a bit when the threat of of kind of punishment from the SEC was hanging over everyone's head and everyone in the industry, it became very difficult to deliver on that last piece, read, write on which is ownership and that's kind of what crypto is supposed to all be about.

And you kind of mentioned the piece of regulation and now kind of the ETF S is it's still quite dependent on centralized powers and that's not exactly what shares, you know, fidelity and these are, these are brokers, but this is the old school, this is the old school and they're pretty much here to stay.

It seems like, uh, so what do we, where do we go from here?

I mean, from here, I think why 2024 is so important is that you do now have a presidential candidate in Donald Trump who has rallied around hating on sec chair, Gary Gensler.

He got a huge round of applause when he basically said he would fire Gary Gensler.

So I mean, that shows kind of where the industry is at with being fed up with the threat of punishing these crypto companies that are honestly just trying to experiment.

And we've seen from other people at the SEC, I've interviewed Hester Purse, you know, not just when I was here, but now over at coinage to talk about how it's not only Gary Gensler who is steering the ship and how there are a lot of people who want to see experimentation here in the US when you do let individual users try and offer some sense of ownership.

A rather than kind of going through the old, tested, tried and true kind of IPO issuing of things.

And so, you know, I think there is an excitement building right now, not just within the industry but for people who have touched crypto and people who are excited to try, maybe not fully being sold on the idea that everything in crypto is fraught anymore, which is exciting.

And how much does a US president matter to something like crypto?

We talk a lot about how, you know, maybe the stock market has tended to do better under democratic presidents, but overall, you know, we see different things across the board.

What about something like crypto?

I know Trump has this massive wallet but it does, it mean more than that, more than he's a big user.

I mean, I think it's very difficult to tell where he sits, not just on crypto, but on most issues.

I think that's fair to say sometimes he'll change his tune and with crypto, certainly he has over the last few years going from calling it a scam to day to now selling his own FTS by the way, which is also pretty crazy to step back and think about how quickly he's changed his tune.

But it does matter.

It matters because all of these rules are being written in real time and you can make the argument, you know, no president really gets to steer Congress's trajectory that much.

But when it comes to regulation, a new president does mean a new person at the head of the sec potentially.

Yeah, in a relatively new field, I mean, it's easy to say, well, we, we're talking about these changes that are taking forever to happen.

Bitcoin didn't exist in 2008.

Um, you know, that white paper was published in 2009.

This is a very, very young field.

Um I want to get into some of the technical developments uh specifically in Ethereum and some of its competitors.

I know with Ethereum, uh that network, there's a layer or two deployment.

Um, tell us how that affects the speed and the ability of Ethereum to compete with some of these upstart networks.

Yeah, I think, I mean, this is a huge change even for people who have been covering the industry just in the last year.

Um And I think it's for your guys as viewers, pretty interesting to think about how large of a role Coinbase has played in all of this too because they basically rolled out one of the largest and fastest growing Ethereum layer too.

So just to explain kind of what that means, um you know, sometimes the layer one network as it's called Ethereum is one of those blockchains.

Sometimes it can get crowded before its upgrades.

It got expensive to transact on that Blockchain.

So a lot of people built so called layer twos, which are just networks that are built on top of it to make everything cheaper and quicker.

Um Base is one of those layer twos rolled out by Coinbase kind of incubated.

And right now, its growth is pretty remarkable.

Jared when it comes to how much it's earning on the fees because each time someone uses it to transact Coinbase is racking up now tens of millions of dollars and will be even more as more people use it.

And so, you know, when you think about that, it's interesting because it invites there are cheaper transactions.

So it invites all kinds of different use cases because suddenly everything's gotten far cheaper to build on it.

But also it changes the dynamics of what Ethereum was all about in terms of now, it's kind of earning less itself from network fees, which means Ethereum has gotten slightly more inflationary than it was interesting.

Which kind of dents the whole use case of why anyone like Bitcoin was supposed to be deflation, deflationary, you know, it's built in that you're going to have fewer tokens the next number of years.

How does this?

So is there backlash against this?

But anything anytime something goes against, you know, the original intent, you're going to get a little bit of backlash but or is it just so working so well that people don't care?

I think it is inviting questions as to what the actual plan here is because yes, right now, you're looking at Ethereum inflation rate being perhaps the highest that we've seen ever uh in terms of how the dynamics have changed.

So that's kind of interesting to think about when we are now here with Ethereum ETF S. It's a much different story to sell, I think to investors relative to Bitcoin and being quote unquote digital gold.

And that's simple and people can wrap their heads around it when you're talking about Ethereum being a network that now has layer twos and now everything's being changed.

It's not as, it's not as easy to explain.

And when the numbers start to change, the investment thesis also looks a little bit different when you can't say, hey, it's capped at 21 million as Bitcoin's total supply is so it, it changes the dynamics and I think it also the market might be underestimating how much it means for Coinbase itself as that kind of uh I guess opportunity continues to get bigger and we're going to hit on that.

But I know we got some basic questions to cover here.

Um Starting with uh does Ethereum need a kind of like central banker?

Yeah, we heard about inflation here.

That's a loaded question.

They need to control it.

They need to control this inflation.

Yeah.

No, it's always interesting to think about how much, you know, this industry could be less volatile and more, I guess, you know, centered around protecting against some of that.

But the whole point of crypto is to not have it.

And we saw that can be good sometimes but also bad in others.

Just as recently as the F TX collapse, it would have been nice to have kind of some bank step in and say no, we're going to backstop all of this problematic selling.

So I mean, there are some people who might say yes to that question.

S and then there's probably more people purists who say no.

That's the whole reason crypto exists is you can't print more of it and you can't kind of change when things are bad.

They're supposed to be bad.

We need to take a short break here but coming up, we're going to be talking Trump's crypto wallet plus a Battle Royale for spot.

Crypto flows who carries the ETF torch, who carries it best up next.

All right, we are back and this episode is brought to you by the number 3.4 million.

That's the value of Trump's crypto wallet estimated by Arkham intelligence.

Take it with a grain of salt.

They use a lot of, but we do know from a recent disclosure filing that Trump holds between one and $5 million worth of ether.

We also know that Trump made about 7.15 million from NFT licensing at separate how intertwined and we're, we're, this is something we've been talking about.

How intertwined is the crypto market with Trump now?

And can the Democrats create some kind of leverage on this?

I don't, I don't understand why they're so far behind.

Yeah, this is a massive kind of pain point right now in the industry, Jared.

A lot of people are kind of at each other's throats and whether or not uh debating whether or not people should throw their support behind one candidate versus another.

Um because crypto is a technology.

I think there's a lot of people that think it should really be politicized, right?

I mean, if it can benefit America or Americans, then, you know, we should just kind of say how do we want to use this technology rather than crypto good or bad.

Um But, you know, anytime you have a president as kind of, uh, I guess, divisive as Trump embraces something you're going to have other people just instinctively say I don't like it then.

Um And so right now the industry is a little bit torn on it.

I think they're mostly focused on educating Democrats because I think Republicans really rallied around the idea of financial freedom and uh against big government.

And so it's perhaps not surprising that a tool like Bitcoin might connect with them.

Um But now I think there are a lot of people and I've interviewed congressmen and women who are in the Democratic Party now focused on educating the Kamala Harris camp to say, look now might be a good time to change your stance.

And we are seeing that now, Senator Schumer also came out and said this is something that should be built in the US.

And so I think we're seeing that underway and I think the next, you know, days up until the election, anything could happen, but there is a bit of a sea change underway.

Does any of this noise with the politics of crypto affect pricing at all.

I think it has.

Yeah, I mean, we've seen it in the last few weeks.

I mean, there's been correlations too.

People are looking at, you know, Trump's popularity correlated with the price of Bitcoin.

I think that kind of fell off.

It was correlations come and go and, and I've seen uh studies about the influence of the fed on uh crypto prices and whatever Jerome Powell says.

But it seems to shift over time.

I don't know.

What have you noticed?

No, it's impossible to tease this out.

I mean, like no one knows you can't in a vacuum.

Say, all right, this is the only thing impacting price.

But I do know, you know, in terms of uh sentiment within the industry for builders, for founders like myself, it's, it's always kind of something you watch is, hey, is this going to get any easier or any harder to build in the US and on the margin that does impact of how quickly some of these projects roll out?

Um So, I mean, from a numbers basis, I think it does impact things.

What would this world look like if you didn't have approvals of Bitcoin Etfs or Ethereum Etfs?

And that was a very real thing that potentially could not have happened under Gary Gensler's sec.

So, I mean, these, these decisions do matter and they do impact price.

I think it's fair to say, almost obvious to say that we certainly would not be sitting anywhere near 60 K for Bitcoin.

Had they not been approved.

There are some people who say we'd probably be down closer to like 30 k more in that camp.

So, I mean, really interesting thought experiment.

Yeah, it matters is crypto then because there was, there was a bit where everyone was like, well, it's part of the Trump trade now because he's so gung ho on it.

Do you consider it part of the Trump trade?

If you can even define what the, you know, maybe it's the media defining it.

But would you, would you kind of view it that way?

I would.

Yeah, I think, I think it's definitely fair to say right now, you know, you heard him and you saw the price moves after the Bitcoin conference in Nashville.

He said I want this to be part of a strategic reserve, strategic reserve asset and it popped and I think it's fair to say that he does mean that and there are certainly things that he can do without even Congress, I think to, to deliver on some of those things.

So yes, I think it's probably fair to say you're looking at a pretty big swing if he is indeed the winner here.

But again, there's still time for Kamala Harris to, to, to kind of say, not so fast.

We're not completely throwing our hands up on this technology either.

So we'll see, I want to ask you you had a front row seat to the FTX Collapse.

Excuse me, when you, your founder, as you said, you founded Coinage and you actually got funding from the man himself.

SPF what was that like?

Just kind of watching all of that unfold in real time?

Yeah.

So we raised from a few different investors, Alameda Research, being one of them, uh and being the host of a crypto news outlet.

I also interviewed Sam ahead of his trial and was there in his house ahead of it.

Um I think it was interesting to have a front row seat to that and other collapses, by the way, we also were the first interview, Doon after his big collapse record one.

So we've done two now, pretty big kind of interviews with crypto founders that have almost entirely tanked the system.

Um But to have a front row seat to that, I think, again, speaks to how far we've come right.

There are so many people that left this industry for dead when FTX collapsed and it totally could have, I mean, I don't think people understand how close it was to kind of wiping out everything, but it wasn't just them.

I mean, you had block fight, you had Celsius, you had all these other kind of big centralized lending institutions that also went down and to see the Dominoes fall and to see them fall at Sam's feet and to have interviewed him at his house.

Kind of ahead of that trial and to hear him speak, all these interviews, by the way, are still up on coinage's site at coinage media.

It's wild to be sitting there and thinking about this man thinks he can get out and then to see all of it play out at trial and you were hearing his defenses like his plan basically.

Did you, what were your thoughts?

Uh, it was a long shot.

You know, my thoughts were also Sam, are you sure that you think that you can do this?

And he's like the judge nailed it, by the way, in terms of his sentencing of 25 years, it was basically, look, you thought about this whole trial as kind of game theory.

Uh And he called and called him out for saying you don't really show any remorse here, but the 25 years is fair because I think you might do this again if you were given the chance because it's all just a roll of the dice to you.

And it was, it was kind of a crazy, you know, attempt to dig into Sam's character.

And I thought the judge actually did a pretty good job of doing that.

All right, we wanna get to today's who wore it better and we're gonna stick with our crypto theme and talk about ETF S. So right now, there are 21 funds in all these are spot crypto ETF S with the Spot Bitcoin ETF S having launched in January the Spot E ETF S in July.

Black Rocks ishares, they dominate the totals.

Uh Bitcoin ETF uh that is taking in 20 billion in flows this year.

Their E ETF nearly $1 billion the gray scale ETF S that have been around for years, they kind of throw off the totals because they have higher fees.

But taking out those high fee, ETF S, we've seen $37 billion go into Bitcoin ETF S $2 billion into Ether.

And again, the Ether has only been around for about a month.

So here's where we take a twist.

The numbers clearly favor Bitcoin and Blackrock.

But what we are asking you, Zach, who's the big winner here?

Is it the US investors for finally having access to these products which were literally a decade in the making.

Is it Gary Gensler in the sec who delayed bringing them to market until the market kinks were worked out or do you take the cynical view that it's the ETF sponsors who are winning here, who's wearing the crypto ETF uh hat the best.

It's a lot to digest for you.

Listen, I think, you know, it was well summarized there, Jared actually because there, I mean, you know, there are a lot of people who could have easily just gone to Coinbase and bought these things or, you know, spun up a wallet themselves.

So they really wanted to have exposure to Bitcoin.

Um But a lot of people don't want to do that, they just don't want to deal with any of that.

And so finally you have Black Rocks and the like come along and I would say Blackrock is the big winner here because you know how quickly they've been able to dominate.

Uh Not just the battle for Bitcoin ETF S but also Ethereum ETF S here is really showing, I think their strength.

Um And if you think about how long we have to go, that's huge because the longer this all plays out, the more they are in the driver's seat.

And I know there's a lot of people who are like, why the hell are we talking so much about ETF S when this is all built around China, cut on the Wall Street giants and now here we are.

But I think it's meeting people where they want to be, right?

And the, the main, forget a dollar cost average in your retirement account you buy every two weeks until, I mean, why you got to retire when you already got an oven?

You know, it's kind of make it easy for people.

You know, that's my question, who is buying these ETF S right now?

I mean, there's a lot of kind of like qualitative narratives that it's Boomers, right?

Boomer ETF S that would be the, I've heard that one quite a bit.

I've also, I mean, but I mean, I own them.

So you own the new pick.

ETF and you can just to see, right, just to see how this is all working and what makes sense here.

And there's a lot of people saying too that it also puts pressure on the coin bases of the world because now people might be able to allocate that you've talked about Coinbase a lot here.

Um They just kind of dominate the US market and you just gave an instance where their product has kind of helped things.

Leap frog is what, what, what's the deal with Coinbase?

Are they too big for the US market?

I mean, what?

Yeah, it's really interesting to think about Coinbase role in all this too, right?

Because as I said, there is a potential here.

I've heard rumors that some people are expecting Coinbase to now put all of the money that they hold for their retail and institutional clients basically on the base.

Ethereum layer two.

That would be kind of big because essentially they would just be shifting all of this money that exists onto their own existing network.

And anytime someone wanted to transact it would all be there, that'd be cool for people in crypto, I think because it would be showing kind of like why this matters and why you again wouldn't.

But it sounds like purists might be up in arms, I would think.

Well, you purists are kind of already up in arms for Coinbase being such a large piece of crypto already, you know.

So, I mean, I think they have really shown after the collapse of FTX and Binance that they are the adults in the room.

They're clearly right now kind of jockeying for this last remaining piece that has yet to really be defined as in terms of laws being written around stable coins.

They have a, they have a dog in the fight in us DC.

One of the larger stable coins out there.

Uh The other one, tether is kind of just floating overseas, not really regulated to the same.

There's always controversy about tether, but yes and so I don't know, it's very interesting to think about how Coinbase wants to now leverage kind of the existing trust that they've been able to build up, build up with regulators and kind of where that goes.

But for your average investor, that might be an even better way to play it than owning these things themselves.

Zack as we wrap up here, I want to hear the one thing you think people get wrong about crypto 30 seconds or less.

Um I think everyone gets wrong that it's scams and frauds.

I think we've seen that play out for a long time and that can't be true and have Black Rock welcome in this technology with open arms and potentially, you know, maybe a few presidential candidates.

Um And so I think that that's definitely one thing that people get wrong I think the other thing is it's not as complicated as everybody makes it out to be right now.

Yeah, things have gotten way easier.

And so, you know, you don't need to be a computer whiz or guru or even developer to kind of understand why this stuff matters.

Um And I think the biggest mistake is people always think that this only matters for finance.

I think increasingly as all of the other complications get abstracted away, this is going to matter for every other industry out there.

We're going to leave it there.

Zach really appreciate you stopping by Sydney as always.

Thank you.

And we're going to say goodbye.

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