192 - Cryptodollars Are the New Eurodollars with Nic Carter
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The Impact of Crypto Dollars on Bitcoin and Ether
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.
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