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welcome to episode 24 Today
we're stepping into the future
and unpacking crypto's biggest predictions for 2025
drawing insights from bit wise
Coinbase and Vanek
this episode brings you a comprehensive summary
of the trends and forecasts
shaping the next wave of the crypto revolution
let's dive in
okay so are you ready to take a trip into the future
finance with me always up for a good adventure
I uh
I brought my scuba gear are you ready to dive in
let's do it alright
so today we are going deep into these reports
one from Bit Wise and one from Coinbase
and they're both painting this
really interesting picture
of what crypto could look like in 2025
and beyond yeah
and I think what's so fascinating about these
two reports is
they both agree on this overall trajectory
that crypto is going mainstream
but they kind of highlight different aspects by
at the each of their own angle
exactly so
you can kind of think of bit wise as like
your investment guide
so they're looking at bitcoin prices
they're looking at uh
what's happening with etfs
and what's happening with government
adoption of crypto
whereas Coinbase is taking this broader market view
got it and they're looking at things like stable coins
or looking at tokenization
they're diving deep into the world of layer twos
oh yeah those layer 2 are getting a lot of buzz
and they even go into this really mind blowing space
where crypto and AI are starting to converge
okay so no matter where you are in your crypto journey
whether you're just dipping your toes in
or you're already a seasoned investor
this deep dive is gonna give you some serious
food for thought definitely
and I think one of the
big headlines that jumps out from both reports
is this prediction that Bitcoin
Ethereum and Salona are all gonna hit new
all time highs in 2025 okay
so those are the three to watch
especially Bitcoin okay
what are they saying about bitcoin
bit wise is particularly bullish on Bitcoin
they're predicting it could reach $200,000
or even 500,000 $500,000
that's a big jump
what makes them think Bitcoin has that
kind of firepower well
few things first off
you gotta remember bitcoin has a limited supply
there will only ever be 21 million bitcoins right
so as more people in institutions wanna buy it
that scarcity drives the price up
symbol supply and demand economics
1:00 0 one exactly
and then bitwise is also expecting to see a surge in
what they call ETF flows
so that means
more folks will be investing in Bitcoin
through exchange traded funds
more demand limited supply recipe for higher prices
and there's another factor that could
really boost the price
the Bitcoin having event which is coming up soon okay
remind me about having what is that all about
so basically every four years or so
the rate at which new bitcoins are created
gets cut in half okay
so it's like slowing down the printing press
and this has historically
LED to some pretty
significant price increases in the past interesting
so less Bitcoin coming into the market
even more scarcity exactly
and on top of all that bit wise
also thinks that governments might start buying bitcoin
governments buying bitcoin
now that's a new one
they even predict that the US government
could establish a strategic bitcoin reserve
and we're talking 1 million bitcoins
whoa hold on
the US government buying bitcoin
that's a massive move
what kind of impact would that have on the market
it would be huge I mean
first off the sheer size of that purchase would send
shockwaves through the market
probably push the price way up
but it also sends a signal that
Bitcoin is being taken seriously
as a global asset you know right
it's almost like a seal of approval
almost like
countries are gonna start competing to amass their own
bitcoin reserves it's definitely a possibility
this bitcoin arms race
it's like a real life game of monopoly
but instead of hotels and boardwalk
it's all about digital gold
it's fascinating to think about
but let's bring it back down to earth for a second
and focus on something else
that can drive those bitcoin prices up
okay etfs
etfs remember those Bitcoin etfs that launched in 2024
yeah the ones that set all those records exactly
well bit wise is predicting
even more money will flow into those etfs in 2025
but didn't everybody who wanted in on that action
already buy in I mean
it was such a huge launch
not even close
we haven't seen the big players enter the arena yet
oh you mean like the Wall Street giants
exactly the Morgan Stanleys
the Merrill inches of the world
they've been holding their wealth managers back so far
but bitwise thinks that dam is about to break
okay so break it down for me
what is this ETF surge mean for the average investor
why should I care well
etfs make it so much easier for people to invest in
Bitcoin without having to deal with
all the technical complexities okay
you know setting up a crypto wallet
worrying about security okay
it's like
buying a share of a company that holds bitcoin instead
so it's like a more user friendly onramp to Bitcoin
it exactly
and Coinbase even suggest that a feature called
in kind creation and redemption
could make etfs even more attractive
in kind creation and redemption
okay you lost me there
what is that all about so
it sounds complicated but it's actually pretty simple
imagine instead of buying and selling bitcoin for cash
every time somebody buys or sells an ETF share right
they could use bitcoin directly
so instead of exchanging your dollars for Bitcoin
to buy into the ETF
you could simply exchange your bitcoin for ETF shares
and vice versa so less friction
faster transactions and potentially lower costs
exactly okay
so Coinbase is making a big bet on etfs
but they're also
making some bold predictions about their own future
aren't they yeah
they actually think that Coinbase could surpass Charles
Schwab
to become the most valuable brokerage in the world
wow that's a pretty ambitious goal
their stock could go above $700 per share
that's a serious jump
what makes them think they can pull that off
well
remember how we talked about crypto going mainstream
yeah
Coinbase is betting that they'll be the go to platform
for all those new investors
and they've already got this massive user base
they do
and they're constantly expanding their offerings
so it's not totally out of the realm of possibility
okay so Coinbase is feeling pretty confident
and speaking of confidence
bit wise is predicting
a whole wave of other crypto companies
going public in 2025 yeah
they mention Kraken Anchorage
and Chain Analysis as some of the strong contenders
wow so
for anyone who
maybe missed out on those early bitcoin gains
this could be their chance to get in
on the ground floor potentially
but remember ipos are always risky right
do your research
understand the company and the market before investing
okay solid advice
let's move on to something that both reports agree
is about to explode
stable coins stable coins
so I know
they're supposed to be less
volatile than other cryptos
but help me understand
how they fit into this whole picture
so stable coins are designed to maintain a stable value
they're usually pegged to a fiat currency
like the US dollar right
and this makes them ideal for everyday transactions
so they have the potential to really
disrupt the whole world of payments
speaking of everyday transactions
I was just reading that
stablecoins have already settled
trillions of dollars this year
yeah when we're talking almost as much as visa
it's incredible how quickly they've grown
yeah it's moving way faster than I realized definitely
and both reports agree that stablecoins are poised
for even more massive growth in the coming years
but Coinbase goes a little bit deeper
they actually examine different types of stable coins
okay and how they could
potentially disrupt traditional payment systems
so break it down for me
what types of stable coins are out there
and how could they change the way we pay for things
so the most common types are centralized stable coins
like tether and circles USDC
which are basically backed by reserves of fiat currency
held by a central entity okay
so they offer the advantage of being relatively stable
and liquid
but they're also subject to the risks associated with
you know centralized control right
makes sense so
what are the alternatives
if I don't wanna centralize stable coin
well there are also decentralized stablecoins like Dai
which are backed by a basket of cryptocurrencies
held in a spark contract okay
these stablecoins are more resistant to censorship
and manipulation
but they can be a little bit more volatile
and complex to manage oh
so it's a trade off it is
and then Coinbase also thinks that eventually
we might have a system with many smaller
interoperable stablecoins
okay so
think of it like different banks
issuing their own digital dollars
but they're all seamlessly interchangeable usually
so more like a network of stablecoins
exactly and this could create a more decentralized
and resilient stable coin ecosystem
okay so
that's a pretty
radical shift from how we think about money today
it is and it just shows how much
potential there is for stable coins to change the game
okay speaking of changing the game
let's talk about tokenized real world assets
no yeah
this concept just blows my mind
you know imagine owning a fraction of a building
or a piece of art through a token on a blockchain
hmm that means almost hard to wrap my head around it
it's definitely
one of the most exciting areas in crypto
right now
and both reports predict huge growth in this sector
but Coinbase actually takes it a step further
and they show us what's already happening right
they mention tokenize US Treasuries exactly
they're already being traded wow
and big players like Blackrock are getting involved
they are this is not just some futuristic idea
it's happening right now okay
so help me understand the hype
what's so exciting about this whole
tokenized asset thing imagine a world where you can
buy and sell fractions of real estate
finer or private company stock
with the same ease as trading stocks today
okay yeah
I see the appeal that's the promise of tokenization
right it can make investing in these alternative assets
more accessible more liquid and more efficient
so it's a win for investors
but what about the companies
or individuals who are actually issuing these tokens
what's in it for them well
tokenization can help them raise capital more easily
and tap into a wider pool of investors right
it can also streamline the management
and transfer of these assets
you know less paperwork
lower administrative costs
so it's a win win potentially
but there are definitely challenges that need to be
addressed particularly when it comes to regulation
right you know
how do you ensure compliance with securities laws
how do you protect investors in this new digital world
that makes sense
Coinbase also points out the importance of security and
you know the need for really robust infrastructure
to support all of this okay
those are some big hurdles to clear
but it seems like
the potential benefits of tokenization are so massive
the people are willing to put in the work
absolutely I think
it could fundamentally change the way we think about
ownership and investment okay
before we move on
let's address the elephant in the room regulation
everybody's talking about it
both reports acknowledge the uncertainty
but I'm curious to hear coinbases take on this
specific
developments that are happening around the world yeah
they actually give a really good overview of the global
regulatory landscape and in the US
things are actually looking pretty good right now
oh that's good to hear
the political winds have shifted
and we're actually seeing some bipartisan support
for clearer crypto regulations
so is the US
finally gonna create a regulatory framework that
makes sense for crypto
it seems like we're headed in the right direction okay
The House of representatives recently passed this Bill
called the Financial Innovation
and technology for the 21st Century Act
I think I saw something about that
fi t 21 fi t 21
and this aims to provide a clearer definition
of what constitutes a digital commodity okay
and it outlines which agency
either the CFTC or the SEC
has jurisdiction over different types of crypto assets
the more clarity less regulatory uncertainty
that's gotta be good for the industry right
exactly and Coinbase believes this shift
could have a really big
positive impact on crypto performance in 2025 okay
you know a more favorable
regulatory environment is gonna
attract even more investment right
make sense so things are looking up in the US
but what about the rest of the world
is there
like a global consensus on how to regulate crypto
not yet
but we're starting to see some frameworks emerge
The European Union for example
is already implementing its Mica regulation okay
the markets in Crypto Assets regulation
and this provides clear
rules for issuing and trading crypto assets
and it set standards for crypto
asset service providers
so sounds like the EU is ahead of the game on this one
they are and Coinbase
believes that this will actually help
foster innovation in the European
crypto industry interesting
so the US is catching up the EU is leading the way
any other notable developments
happening around the world
yeah definitely
the UK is also taking a proactive approach
they've got plans to introduce a comprehensive
regulatory framework for digital assets
uh Hong Kong is
making moves to reclaim its position as a global
financial hub right
and they're doing this by introducing crypto
friendly legislation
and issuing licenses for virtual asset
training platforms yeah
Singapore is fostering a booming crypto ecosystem
and the Middle East
and North Africa are seeing a surgeon
interest and adoption partly
thanks to some clearer
regulatory frameworks that are emerging in that region
so overall it seems like the global
regulatory tide is turning in favor of crypto
that's the general trend
and as we get more regulatory clarity
I think we'll see even more institutional adoption
and investment in the space
okay before we dive deeper into some of
the specific technologies
and trends that are shaping the crypto landscape
hmm I'm curious to hear what Coinbase has to
say about their own layer 2 network base
oh yeah it's been a lot of buzz lately
base has been a huge win for Coinbase
it's already the second largest Ethereum
layer 2 by total value locked wow
with
almost $12 billion in assets secured on the platform
and it's becoming a major player in the defi space
that's some serious growth yeah
what do you think is driving that success
so Coinbase attributes it to Bases Security
its low cost and its developer friendly design okay
and they've also made this really smart move
by sharing a percentage of Bases
sequencer revenue with the optimism collective okay
what does that mean I'm playing English
so basically they're giving back to the community
and they're helping to foster a thriving ecosystem of
applications and developers on the platform
so it's not just about making money
it's about building a sustainable ecosystem
exactly
and that's a key part of Coinbase's overall strategy
they wanna be more than just an exchange right
they wanna be the leading platform for the entire
crypto economy that's a bold ambition
and it sounds like base is a key piece of ABPUC or okay
so we've covered a lot of
ground in this first part of our deep type
but there's still so much more to explore
we're gonna take a quick break
when we come back
we'll delve into the world of layer 2 blockchains
oh yeah and explore why they're so crucial
to the future of crypto stay tuned
alright so we're back and before the break
we are talking about base
and how it's built on this layer 2 network
and you might be thinking
wait a minute another layer
isn't blockchain already complicated enough
yeah my brain is already kind of fried
but
layer 2 is actually solving a big problem for crypto
okay scalability okay
so explain it to me like I'm 5
why do we need these layer twos
and how do they actually make crypto more scalable
alright so imagine a highway with only one lane okay
it's gonna get congested pretty quickly right
make sense so
that's kind of like the original
Bitcoin and Ethereum blockchains
they can only handle a limited number of transactions
per second layer twos are like
building express lanes on top of that highway
so they allow transactions to happen much faster
and cheaper without sacrificing
the security of the main blockchain okay
so more transactions lower fees
that's a good thing exact
so why is coin base so bullish on layer twos
well they're seeing them as the main stage
for a lot of the crypto activity that's happening
especially in this world of decentralized finance
Defi and
their report actually shows this massive increase
in the number of transactions
and users on layer 2
so it's not just hype the numbers are there exactly
and they highlight a couple of specific
layer 2 projects okay
arbitram and of course their own base
of course and they really see layer twos as this
essential infrastructure for the future of crypto
okay so
if layer twos are built on top of existing blockchains
what are layer threes oh
we're getting even more meta
I know right
so layer threes take things a step further
okay imagine them as specialized blockchains
built on top of those layer twos
so they can offer even lower costs
and even more customization options
and they can really cater to very specific needs
okay so are layer threes kind of like niche boutiques
while layer twos are more like department stores
I like that analogy and Coinbase
actually envisions a future
where we have millions of these specialized
layer threes creating this really
diverse and vibrant blockchain ecosystem
okay it's mind boggling to think
how much innovation is happening
this space absolutely
and all this innovation leads us to one
really mind blowing concept that Coinbase highlights
and that's the convergence of crypto and AI
okay now this is where I need you to hold my hand
crypto and AI
how do those two seemingly unrelated worlds collide
yeah so we're talking about the bleeding edge here
okay imagine AI agents
so think sophisticated bots
go
using crypto wallets to do things like make purchases
online access data
even pay for computing power
so basically AI is using crypto as its currency
you got it
and this could create entirely new economic systems
where AI becomes a major economic force
so my AI
assistant could be out there
using crypto to manage my finances
and negotiate deals for me
it's a paradigm shift
that's both amazing and a little terrifying
it is and Coinbase Ventures
is actually actively investing in this convergence okay
they see cryptos key features
its efficiency its borderless nature
its programmability as
the perfect fuel to power this next generation of AI
applications so
we're talking about AI interacting with the internet
using crypto as its currency
exactly it's like a glimpse into this future
where these two seemingly disparate technologies
crypto and AI are deeply intertwined
okay this is all incredibly fascinating
but let's bring things back down to earth for a bit
and talk about Bitcoin I mean
both reports agree that it's been the star of the show
in 2024 yeah
for sure
what is Coinbase saying about Bitcoin's performance
and where it's headed so
they're saying that in this current crypto market cycle
we've seen a shift towards higher quality
digital assets with Bitcoin leading the pack
why do you think that is I mean
is it all about bitcoin
being seen as this safe haven asset
I think that definitely plays a role
you know with all the economic uncertainty in the world
people are looking for assets that they believe
will hold their value and bitcoin
with its limited supply
and its growing institutional adoption
is increasingly being viewed as this digital
version of gold right
and remember those spot bitcoin
etfs that launched in the US earlier this year
yes oh
a Coinbase's report says
those etfs have attracted over $30 billion since then
its and to put that into perspective
the gold ETF equivalent
attracted less than $5 billion in its first year
I know
the sheer scale of institutional investment in bitcoin
is a clear indicator
that it's becoming more mainstream
so it's no longer just the tech savvy
early adopters who are buying bitcoin
no we're talking about big players endowments
pension funds hedge funds
all joining the party wow
so who's holding all the bitcoin now
like what's the breakdown
so Coinbase mentions that institutions
now own about 25% of all the shares in those US spot
bitcoin etfs
wow that's a significant chunk
it is
and this institutional interest is actually driving
bitcoin's dominance okay
so it's market cap share which is basically
the percentage of the total crypto market cap
that bitcoin represents
is at its highest level since 2021
so bitcoin is still king for now
it seems for now
okay so what happens after that
you know
do these institutions start looking at other crypto
assets I mean
it's definitely a possibility as the market matures
we could see some of that capital flowing into other
riskier assets interesting
so it sounds like it's still early days
for institutional involvement in the broader
crypto market yeah
so but let's stick with Bitcoin for a second
no I'm curious to know how all this institutional money
is actually impacting how Bitcoin is traded
so Coinbase
breaks down the average daily trading volumes by
product type so spot
perpetual futures and term futures
okay and what's fascinating
is that futures trading
still makes up the lion share of bitcoin
trading activity over 75%
and this suggests that a lot of the action is driven by
speculation and short term trading strategies
so bitcoin is still a volatile asset
which attracts traders
looking to make a quick profit from those price swings
exactly
but with the launch of Bitcoin ETF options in November
right spot volumes are starting to pick up
and this could indicate a shift towards some longer
term investment strategies
okay so
what does all this mean for the average investor
who's just starting to explore bitcoin
well for when
it means that
Bitcoin is becoming increasingly accessible
and liquid
there are more ways to invest in it than ever before
and the infrastructure is constantly improving
but remember bitcoin is still a volatile asset right
so do your research and understand the risks involved
solid advice
never invest more than you can afford to lose
exactly but beyond just buying and holding Bitcoin
it's interesting to look
at what's happening in the broader Bitcoin ecosystem
oh yeah
Coinbases
report highlights some pretty fascinating developments
like the emergence of new infrastructure
being built on top of the Bitcoin blockchain
so
what kind of infrastructure are we talking about here
I thought Bitcoin was pretty limited
in terms of functionality
compared to something like Ethereum
you're right historically
Bitcoin has mainly served as the store of value
but that's changing oh
we're actually seeing the rise of layer 2 networks
bridges virtual machines
wallets even staking protocols
all being built on top of the Bitcoin blockchain
hold on bitcoin is getting its own layer twos
I thought those were primarily an Ethereum thing
they were but now Bitcoin is catching up
and this is made possible by something called the bit
VM or Bitcoin virtual machine
which basically unlocks more complex
smart contract functionality on Bitcoin
okay ELA I 5 for me
what does this mean in plain English
like what can you actually do
with these new functionalities
so we're already seeing some pretty cool applications
emerge like non custodial vaults
that allow for reversible and recurring transactions
so imagine being able to schedule bitcoin transfers
like you schedule Bill payments
so Bitcoin is becoming more than just a digital
piggy bank exactly
and it's all thanks to these layer
2 solutions that are expanding its capabilities
wow so
what's driving this sudden
explosion of innovation in the Bitcoin ecosystem
well the upcoming having event is definitely a factor
as the block rewards for Bitcoin miners decrease
they're looking for new ways to generate revenue
and keep the network running
although an evolutionary pressure adapter die in a way
yes
but it's also about realizing Bitcoin's full potential
interesting so
Coinbase is highlighting how
Bitcoin is becoming more than just a store of value
but they also mention some challenges with Bitcoin
layer twos right
right so
the Bitcoin community
is much more decentralized than the Ethereum community
okay so
coordinating and implementing large
scale changes to the Bitcoin network
can be a lot more challenging
and since there's no central authority
calling the shots there is a risk of fragmentation
and competing solutions exactly
it's a classic trade off between decentralization
and efficiency okay
so tell me more about these Bitcoin layer twos coming
Coinbase mentions a few leading contenders
in their report are there any that stand out to you
well
there's a lot of experimentation happening right now
some networks like stacks and Root Stock
have been around for a while
and they have their own ecosystems
others like Bitlare and core are newer
and they're approaching things a little bit differently
so it's a pretty diverse landscape
with different design philosophies
and different functionalities
it sounds like
the Bitcoin layer 2 landscape is still very much
in its early stages and it's anyone's guess
which solutions will ultimately prevail
absolutely it's a dynamic and competitive space
with lots of innovation happening
but despite the challenges
Coinbase believes that
the development of this
new infrastructure will be a defining trend
for Bitcoin in 2025
okay
so before we jump into this fascinating world of Salana
which Coinbase devotes a whole section too
uh huh I'd love to take a detour
and talk about stable coins in more detail
sounds good I mean
they are crucial part of the crypto ecosystem
and their growth in 2024
has been nothing short of remarkable
yeah for sure
Coinbase's report mentions that
the stable coin market has settled
nearly $27 trillion in transactions
this year wow
that's almost three times the volume from last year
it's incredible what's driving this explosive growth
so a few things
were seeing increasing demand for digital dollars
and the use cases for stable coins
are expanding rapidly okay
they're being used for everything from remittances
and cross border payments
to trading and lending and defi protocols
yeah it's interesting to see how stable coins
are kind of blurring the lines between the traditional
financial system in the crypto world
and Coinbase even mentions that establish players
like visa are exploring ways to integrate
stable coins into their operations
yeah they're not just dismissing stable coins
as this passing fad
they recognize the potential for disruption
it sounds like we're witnessing the early stages of a
major shift in how money moves around the world
it's definitely a trend to watch
okay so while the stablecoin market is growing rapidly
it's also becoming increasingly concentrated right
Coinbase's report highlights that two issue
a circle and tether currently
control about 90% of the total stable coin market cap
wow so it's a duopoly
does Coinbase see this trend continuing
I mean they're not so sure
they actually envision a future where we have many
smaller interoperable stablecoins
similar to how we view dollars held at different banks
as interchangeable today so
a more diverse and decentralized stablecoin ecosystem
absolutely and that could foster greater competition
and innovation
ultimately benefiting both consumers and businesses
that's a pretty hopeful vision
for the future of stablecoins
but there's another trend in the stablecoin market
that Coinbase highlights
and that's the search for synthetic yield rights
what is synthetic yield
and why are people so obsessed with it
so as more investors hold stable coins
they're looking for ways to
generate returns on these assets right
they want their money to make money
exactly and Coinbase mentions Athena as a prime example
Athena
it's a protocol that tokenizes the difference between
spot and futures prices
4 ethereum okay
and this allows Athena to offer a yield bearing
stablecoin USD USD
okay and this gives investors a way to earn interest
on their stablecoin holdings
so it's similar to a money market fund
but in the decentralized world of defi
exactly and it's just one example of the innovative
financial products that are being built on top of this
stable coin infrastructure okay
so what else does Coinbase have to say about
the future of stable coins
so they predict that
stablecoins will continue to gain traction
in the coming years
driven by their increasing use in remittances
digital capital markets
and in providing financial services to the
unbanked and underbanked
so stablecoins aren't just a tool for speculation
they actually have the potential to make a real
impact on people's lives absolutely
and as the technology improves
and regulations become clearer
we can
expect stablecoins to play an even more prominent role
in the future of finance okay
before we wrap up this part of our deep dive
let's shift our attention
something that has the potential
to really
revolutionize the way we think about ownership
and investment tokenization
yeah it's a big one
Coinbase's report says that the market for tokenized
real world assets has grown over 60% in 2024
wow and they predict
it could reach a staggering
$30 trillion in the next five years
that's huge those are some massive number
so clearly tokenization is catching
the attention of some major players
but what exactly are tokenized real world assets
I think we bring this down for our listeners
who might not be familiar with the concept
sure so imagine you own a piece of real estate
a valuable piece of art or shares in a private company
okay
tokenization allows you to represent these assets as
digital tokens on a blockchain
okay
these tokens can then be easily traded and transferred
making it much simpler to buy
sell and manage these assets
so
instead of dealing with all the traditional paperwork
and intermediaries you can trade these assets digitally
just like cryptocurrencies exactly
it streamlines the entire process
making it faster cheaper
and more transparent okay
so Coinbase gives some real world
examples of tokenization already happening right
yes they
discuss this growing market for tokenized US Treasuries
which allows investors to buy and sell
fractions of these government bonds on a blockchain
okay they also highlight how companies like Blackrock
and Franklin Templeton
major players in traditional finance
are embracing tokenization to improve efficiency
and reduce costs in their operations
so this isn't just a theoretical concept
it's already being implemented by some of
the biggest names in finance
exactly and Coinbase believes that tokenized
real world assets will be a defining feature of
the next crypto market cycle
but they also mention some challenges right
of course tokenization is still in its early stages
and there are hurdles to overcome
Coinbase highlights three main challenges
for institutional adoption okay
technological risk
custodial and infrastructure buildout risks
and then the need to comply with regulations
like KYC and AML those are all valid concerns
can you elaborate on what those challenges actually
entail sure
so when it comes to technological risk
it's all about ensuring the security and reliability
of the platforms
and protocols that are used for tokenization right
we need really robust
systems that can handle the complexity of
managing and transferring these tokenized assets
so it's about building trust
and confidence in the technology exactly
and then there's issue of custody
you know who holds these tokenized
assets and how are they secured
and this is where the need for
secure and reliable custodial solutions comes in
we need institutions that can provide
the same level of security
and trust that we expect from traditional custodians
so we need
like a bridge between the traditional world of finance
and this new world of tokenized assets
precisely and then finally
there's the regulatory challenge
hmm how do we ensure that tokenized
assets comply with existing regulations
that are designed to prevent money laundering
and other financial crimes
yeah
it sounds like regulators are gonna have their hands
full
trying to keep up with this rapidly evolving space
yeah but
queenbase remains optimistic about
the future of tokenization right
they do they point out that there's a lot of progress
being made on the technological front
okay with more secure
and sophisticated protocols being developed
and there's also
this growing awareness among regulators
of the need to create a clear and supportive
regulatory framework for tokenized assets
it sounds like
tokenization is a space that's ripe for innovation
in disruption
it's definitely something we'll be keeping a close
eye on
okay
so we're back and ready to wrap up our crypto journey
we are talking about tokenization before the break
but now let's zoom in on one blockchain in particular
that Coinbase highlights Solana
Solana has definitely been making waves
it's become this go to
platform for developers and users
who are looking for high speed
low cost transactions yeah
I've been hearing a lot of buzz about it yeah
it's attracting a ton of attention
especially from retail investors
who
are drawn to its performance and its user friendliness
okay so what makes Salona so special
well one thing is that its transaction fees are
way lower than Ethereums
oh yeah those gas fees on Ethereum can be a real killer
exactly and this cost advantage has been
attracting a lot of
applications that require high performance
like decentralized exchanges
and all those blockchain
games that everyone's talking about right
so it's all about speed and affordability
and Solana also has this really unique
framework of what they call
localized fee markets okay
localized fee markets what is that all about
so
instead of having one fee market for the whole network
right Salona allows different applications
or smart contracts to set their own transaction fees
okay so it's like a more dynamic system
exactly and it means that fees can be tailored to the
civic demands of each application
so it prevents congestion
and it ensures smoother operation
so more efficient less traffic jams exactly
it's a clever way to optimize the network
but Coinbase also points out that a lot of Salona's
recent growth has been driven by mean
coin trading is that sustainable in the long run
or is it just a temporary hype cycle
that's a good question I mean
mean coins can be super volatile and speculative
so while they've generated a lot
of buzz and activity on Salona
it's unclear whether this will translate into long term
sustainable growth
Coinbase's report actually reveals some pretty
eye opening numbers about Solana's Meancoin frenzy
they say that in November
over 85% of all decentralized exchange volume on Solana
was from meme coins wow
that's a massive jump from just 40%
at the beginning of the year
yeah that just shows you how quickly trends
can shift in the crypto world
yeah it does
so what happens to Solana
if the meme coin bubble bursts
is it game over not necessarily
Solana has a lot more to offer than just Meancoins
they have a growing
ecosystem of applications and developers
who are working on a wide range of projects
okay from decentralized finance to NFTS
and queenbase points out that Solana's
straightforward focus
on just increasing transaction speed
at the base layer is a key advantage
they're not relying on layer 2 solutions like Ethereum
so speed and efficiency are baked into Salona's DNA
exactly
but they also highlight some challenges that Salona
needs to overcome
if it wants to achieve mainstream adoption
okay like what
well one concern is the lack of client diversity
this refers to
the different software programs that connect to
and interact with the Salona network okay
right now
there's a high level of reliance on a single client
okay
and this could pose a risk to the network's resilience
so if that one client were to fail
it could disrupt the whole network
that's the concern and another challenge is
Solana's relatively high inflation rate
inflation
isn't that a problem for traditional currencies too
how does inflation work with cryptocurrencies
so it's a bit different with cryptocurrencies
inflation typically refers to
the rate at which new tokens are being created
and added to the circulating supply
and Solana's annual inflation rate is currently around
5.2% which is significantly higher than bitcoins
back 8% or Ethereums point four %
so does that mean that the value
of existing slottokens could be deluded
over time it's a possibility
but Solana's inflation rate is designed to decrease
over time and eventually reach a stable rate of 1.5%
so the inflationary pressure should gradually ease
but it's definitely
something that investors need to be aware of
okay so Solana has a lot going for its speed
low costs a vibrant ecosystem
but also faces some challenges
what's Coimbase's overall assessment of its prospects
so they acknowledge Salona's impressive growth
but they caution that its long term success will
depend on its ability to address these challenges
and transition from this meme coin driven market
to a more diverse and sustainable ecosystem
so it's a bit of a wait and see approach
yeah I mean
it's still a relatively young platform
so it'll be interesting to see
how it evolves in the coming years
okay let's shift our focus back to
the broader crypto landscape
Ivy regulation is on everyone's mind
and Coinbase provides a really
comprehensive overview of where things stand globally
what are the key takeaways
well it's a complex landscape
but one thing is clear the global
regulatory tide is turning in favor of crypto
we're seeing a shift from this wait and see approach
to a more proactive
and supportive stance from regulators around the world
that's good news for the industry
yeah it sounds like
the Wild West days of crypto are coming to an end
yeah me
and this
increased regulatory clarity
is paving the way for greater institutional adoption
and investment Coinbase highlights some interesting
regional developments
like the passage of the Fi t 21 Bill in the US
it seems like the US is finally
starting to catch up to other regions
in terms of creating a clear
regulatory framework for crypto
yeah they Fi t 21 is a major step forward
it provides some much needed clarity on key issues
like the classification of digital assets
and the division of regulatory authority
between the CFTC and the SEC
and Coinbase
believes that this will create a more favorable
environment for crypto businesses
and investors in the US
what about other parts of the world
any notable highlights
so the EU is leading the card with Mica
their comprehensive crypto regulation
that's being implemented across all member states right
Mica set standards for everything
from issuing and trading crypto assets
to the operation of crypto service providers
it's a really comprehensive framework
that aims to foster innovation
while also protecting investors
the EU is often ahead of the curve
when it comes to regulation
yeah it's interesting to see them taking signature
proactive stance on crypto
absolutely and they're not alone
the UK is also developing its own
comprehensive regulatory framework
while Hong Kong is positioning itself
as a global crypto hub
it sounds like we're seeing a global race
to create the most attractive
regulatory environment for crypto businesses
and investors it's an exciting time
and as these regulatory frameworks mature
we can expect to see a surge in institutional adoption
and mainstream acceptance of crypto
okay before we wrap up our deep dive
let's zoom in on Coinbase itself
their report
concludes with an update on their offerings
and their vision for the future
what are they up to so
Coinbase is making some significant investments
in its institutional business
okay recognizing the growing importance of this segment
so
they've launched a bunch of new products and services
tailored to institutional needs
like Coinbase Prime their prime brokerage platform
and Coinbase International Exchange
which offers a range of futures
and spot trading options to clients outside the US so
they're going all in on institutional adoption
absolutely and they're also focusing on making crypto
more accessible and user friendly
remember those smart wellants we talked about earlier
yeah Coinbase sees them as a key
enabler of mainstream adoption
right offering a much smoother
and more intuitive experience
for managing your crypto assets
so it sounds like Coinbase
is really
trying to position itself as the bridge between
the traditional financial world
and this new world of crypto
exactly
they wanna be the one stop shop for everything crypto
from trading and custody to education and innovation
and they're not just building for today
they're also looking ahead to the future
their report is full of references to
the convergence of crypto
and AI it's clearly a major focus for them
yeah they see it as the next frontier
they believe that crypto will be
the underlying infrastructure that powers
the AI driven economy of the future
okay I gotta ask
what does Coinbase see as their role in this future
where crypto and AI are all intertwined
they're positioning themselves
as the platform that will connect these two worlds
they wanna provide the tools
and the infrastructure that
enable developers to build this next generation of AI
powered applications on top of crypto networks
that's a bold vision it is
and while the future is always uncertain
Coinbase seems determined to be at the forefront
of this technological revolution
well this has been an incredible
deep dive into the future of crypto
we've covered so much ground
from market trends and regulatory developments
to cutting edge technologies
like layer twos and tokenization
both bitwise and Coinbase
paint a very optimistic picture of mainstream adoption
institutional investment
and the transformative power of crypto
it's clear that the crypto landscape is evolving
at an incredible pace and while there
will undoubtedly
be challenges and uncertainties along the way
the opportunities are immense
what's the one key take away
you want our listeners to remember from this deep dive
crypto is here to stay
it's reshaping the financial system
the internet
and the way we think about value and ownership
so whether you're a seasoned investor
or just starting to explore this world
it's essential to stay informed
stay curious and be a part of this exciting journey
those are words to live by in the crypto world
thanks for joining us
on this deep dive into the future of finance
we'll be back soon with another episode
exploring the cutting edge of tech and innovation
until then happy investing