11/15/2021: Weekly Newsletter
“Are there any cryptos not tied to the US Dollar?”
-Sean
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Short answer, yes -there are many cryptocurrencies that are not tied to the US dollar. But let’s dive in:
There are coins like, Tether and USDC, that are “pegged to other assets such as the US dollar or the Euro... Stablecoins’ name reflects the idea that the peg makes them less volatile than cryptocurrencies such as Ethereum or Bitcoin, which can vary widely in value. Typically, when someone sets up a stablecoin, there’s a reserve for the assets, which are held as collateral.”
These types of crypto track closely to the US Dollar (or to whatever asset their backed by). The chart below shows the price of Tether over the last year. As you can see the price floats slightly above or below $1.00.
Tether and other stablecoins can be used as payment or as a way to hold money. If someone is trading a lot of crypto, they might use tether. For example, if selling some bitcoin, rather than sell bitcoin for dollars, then buying ethereum with dollars; instead, one might sell bitcoin for tether and then use tether to buy ethereum. They may do this because it might be faster and have less fees.
I think it’s important to note that there has been some controversy with Tether about how fully ‘backed’ it is by US dollars. There is no government backing of this cryptocoin. So I would personally argue that holding actual US Dollars is going to be less risky than holding a deritative asset that tracks the US Dollar. However, some crypto traders use Tether and other similar currencies as a way to make trading crypto faster.
Have a question? Send an email to walletstreetpodcast@gmail.com, tweet @walletstreet, or message on instagram @walletstreetpod.
Money & Crypto
Binance’s story to becoming the largest crypto exchange (Wall Street Journal)
China Singles Day brings in $139B for Alibaba and JD.com (CNBC)
FinTech companies in Africa growing (The Economist)
This seems fairly obvious to me…all else equal, wouldn’t you want to own the underlying asset rather than the derivative? In this case, having exposure to Coinbase means you also have exposure to the company’s profit and losses, ability to generate cash, competitive headwinds, C suite decision making and more. (Coindesk)
Newly elected NYC mayor Eric Adams to receive first few paychecks in bitcoin (CNBC)
How crypto Solana has grown (Bloomberg)
Lime raises $523M (TechCrunch)
Brazil’s Nubank to IPO soon (The Block Crypto)
Tech & Science
What happens during 1 minute on the internet? (Visual Capitalist)
Why companies like Facebook change their name (Visual Capitalist)
Etc.
🎧 Have you never seen Lord of the Rings, Fast & Furious, or Star Wars and wanted to understand what all the hype was about? Or have you ever been a fan who tries to explain these movies to people? Comedians Nicole Byer and Lauren Lapkus watch these movies for the first time and it is hilarious
🎧Esther Perel’s podcast is baaaaacccckkkk with a new season. Can you tell I’m excited?! It’s basically like free therapy.
🎧 Katie Couric atlks about her new book, her experience as a reporter, and leaving the Today Show
🎥 I’ve recently started watching the much buzzed about Succession and finally understand the hype
Disclaimer: All opinions are my own. The content on this site and on the podcast does not constitute financial, legal, accounting, tax, or investment advice.
