The Impact of Crypto Dollars on Bitcoin and Ether

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If crypto dollars rise to the scale of the euro dollar market, it will have varied impacts on crypto native assets like Bitcoin and Ether. The ability to embrace or reject this change will determine the outcome. Currently, a significant percentage of dollar value settlements on blockchains are happening in dollars rather than Bitcoin or Ether. This shift poses a challenge to protocol engineers to adapt their blockchains to benefit from settling non-native assets. Ethereum has been successful in extracting value through fees and burn mechanisms from ETH tokens settling in fiat. On the other hand, Bitcoin faces uncertainties as there are limited settlements in crypto dollars on its blockchain. While the influx of stablecoins challenges Bitcoin's role as a medium of exchange or bridge currency, it also signifies real-world economic usage. The key is to position blockchains to benefit from this trend, with some L1s positioning themselves as preferred stablecoin domiciles. For newer and smaller L1s, distinguishing themselves in this aspect could be crucial. The intensifying trend of settling dollars on blockchains presents a significant opportunity, and how various L1s and L2s adapt to this shift will be interesting to observe.

Cryptodollars are the new Eurodollars. What are Eurodollars, though? Well, we get into that in today’s episode with 8-time repeat Bankless guest, Nic Carter. Nic is a partner at Castle Island Ventures, Fidelity alumni, co-founder and board member of Coin Metrics, and a prolific writer of editorials and academic articles alike, Nic is also a believer that the halvening is always priced in, he’s a stablecoin connoisseur, an onchain wizard, and an unlicensed vespa driver.

------ ✨ DEBRIEF | Ryan & David unpacking the episode: https://www.bankless.com/debrief-nic-carter-stablecoins

There’s over $10 trillion dollars worth of Cryptodollars out there and Nic believes that number could grow even bigger. Stablecoins are often called crypto’s killer app, however, Nic thinks we aint seen nothing yet!

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------ TIMESTAMPS

0:00 Intro 8:25 Stablecoin Tribe 10:20 The State of Stablecoins in 2023 13:40 Stablecoin’s Product Market Fit 17:16 Stabelcoin Haters 19:00 Growth of the Euro-Dollar Market 21:04 Euro vs. Crypto Dollars 24:30 Federal Reserve History 34:45 Stablecoin Incentives 37:00 Euro-Dollar vs. U.S.-Dollar Backing 43:00 Circle 45:40 PYUSD 46:56 Crypto-Dollars vs. Euro-Dollars 51:15 Why the Rise of Stablecoins? 55:57 Democratic Inclusion of Crypto-Dollarization 59:19 Chart 1:03:05 Tokenized Treasury 1:07:16 Regulatory Idea Maze 1:15:00 Big Banks 1:19:30 Stablecoin Roadmap 1:24:57 Crypto Bullishness 1:28:52 Stablecoin Predictions 1:32:12 Closing & Disclaimers

----- RESOURCES

Nic Carter https://twitter.com/nic__carter

----- Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures