Moving Toward Adoption

🌐 Moving Toward Adoption

Adoption > Investment

2024 has been all about institutional investment into bitcoin and crypto.

We've had the Bitcoin spot ETFs, which continue to add record inflow, even with stalling prices.

We now have ETH spot ETFs on the way. Although the SEC is taking their time with the S-1 filings.

While I'm all for institutions owning crypto, it doesn't grow the ecosystem. I'm looking for adoption of the technology, and even the theses for growth.

Remember, the Internet had a stock value crash before it built the real applications. Amazon as a company that sells books online is different from Amazon the platform for online business and the Cloud Computing leader.

This was a big week for actual adoption of blockchain technology and the true investment theses behind crypto.

• Public Company buys Bitcoin

• Coinbase releases Smart Wallet

• The Texas Stock Exchange - coming soon

• Robinhood bought a Crypto Exchange

• Gamestop Craziness

• Erik Voorhees’ Aspirational Speech

Another Public Company bought Bitcoin

Semler Scientific is a publicly traded company in the health technology space. Last week they announced they're changing their treasury reserve asset to bitcoin. Then they bought $40 million worth.

The CEO, Eric Semler, says he learned from Microstrategy, and decided to adopt the strategy.

Late last year we said we'll see more companies putting bitcoin on their balance sheets.

First, companies know when their expenses are increasing, regardless of the FED inflation data. They are always forecasting, so they need to plan for increasing costs, which don't always equte to increased revenue.

One way they can do this is to own a store-of-value, and bitcoin fits. Bitcoin is also the most liquid asset ever. So if the company needs to sell to pay some bills, it's a quick process.

Second, new FASB rules allow companies to mark the price to market. This means the value of bitcoin on the balance sheet is updated to the current price.

When Microstrategy and Tesla first bought bitcoin, the rules only allowed them to mark the price down, but not up.

Now publicly traded companies can affect their value positively when bitcoin goes up in value.

Coinbase released their Smart Wallet

Coinbase is trying to address the biggest barrier to adoption - wallets.

Most people aren't ready to start creating and managing their own wallets. That has been the purview of the early adopters and tech elite.

This week Coinbase released a smart wallet. You can set up a wallet without having to know or remember seed phrases. The keys are stored on your mobile device.

Transacting onchain won't feel much different than transacting over a banking or fintech app on your phone.

Imagine one click to pay for produce at the farmer's market. Or having half your paycheck delivered in stablecoins to your wallet.

Making management of onchain money easy is a huge step toward having a financial life outside of banks. You can earn and spend. And you can more easily participate in decentralized applications. You can earn 5% on your USDC the moment you earn it, and all you really have to know how to use is your phone.

Giving people the ability to slowly learn the system, safely and easily, is better than having one institution buy $100 million worth of ETH.

Texas Stock Exchange has Plans

We learned this week that BlackRock and Citadel have plans to build the Texas Stock Exchange, headquartered in Dallas.

They group called TXSE has already raised $120 million, and plans to build an all-electronic exchange to rival NYSE.

There was no direct mention of crypto or blockchain here. However, BlackRock has been a huge proponent of tokenization and onchain assets. They even invested heavily in tokenization platform Securitize, and launched an tokenized fund.

I have to assume they'll build the exchange on blockchain technology. Of course, this doesn't mean they'll trae crypto assets. But it does look positive for more onchain funds and equities. And we know more onchain transactions lead to higher demand for crypto assets.

It also means more people will have to get comfortable with crypto and blockchain technology, and everything it brings.

Robinhood Bought a Crypto Exchange

Robinhood has been at the front of retail crypto adoption. They allowed investors to buy crypto a few years ago, and even move the assets onchain.

Last week they paid $200 million cash to buy BitStamp, one of the most-used exchanges in Europe.

Robinhood is a master at bringing retail investors, and now they can leverage their brand in the US to add crypto internationally. More retail investors isn't always a good thing. Retail investors tend to lose when trying to access risky investments. The move is interesting as another example of the merging of crypto and TradFi.

Gamestop was Back..and then it wasn't

The guy who brought on the first meme stock craze with Gamestop was back at it. Roaring Kitty had a $180 million position - stock and options - when he advertised a YouTube livestream. In anticipation, the stock moved to $69, making him a billionaire.

But it was clear he had no real plan, and the stock plummeted DURING his livestream.

Why am I bringing this up?

The reason he, and thousands of other investors were able to move the price a few years ago was the settlement time. Stocks settle in T+2 days, so the short sellers weren't able to get out of their positions in time as the stock price ran up.

Also, Gamestop is definitely not worth their current valuation, but still issued 75 million more shares as the price moved up.

One way to address the settlement time is to put more assets on public blockchains so they can settle instantly. No more short squeezes. We addressed this earlier with the Texas Stock Exchange.

Additionally, since Gamestop itself isn't a growth company anymore, maybe they follow the Microstrategy playbook and just buy bitcoin. Another public company recently added bitcoin to their balance sheet - Semler Scientific.

Please Watch - Erik Voorhees' Talk

Below is a link to the talk Erik Voorhees gave at the CoinCenter dinner this year. It was fantastic.

Rather than rail against banks and government, Erik gave an aspirational speech, citing the Protestant movement, and the formation of the United States. History and human nature tells us the move to more sovereignty over our finances is inevitable and American.

Have a great week

Adam