Speaker 1: Sometimes it's good to define our terms, even for those
Speaker 1: of us who do this every day for a living
Speaker 1: Bitcoin maximalist, bridge ship, crypto, bridge, Bitcoin, blocorn steaky. I'm
Speaker 1: Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News,
Speaker 1: and this is Bloomberg Crypto, a new daily Bloomberg I
Speaker 1: Heeart podcast. It's Monday, June six. You might already consider
Speaker 1: crypto to be synonymous with the word volatility, But what
Speaker 1: about all the other words that get thrown around by enthusiasts.
Speaker 1: What's staking all about? What's a bridge? And why are
Speaker 1: so many folks on Twitter sending messages that just say
Speaker 1: GM Joining me today, Bloomberg reporters Hannah Milla and Vildanna
Speaker 1: Hodrick are here to help with a crypto glossary. I
Speaker 1: am really glad to be joined today by two truly
Speaker 1: excellent colleagues of mine. One is Hannah Miller, who's joining
Speaker 1: us from her home studio in San Francisco, and the
Speaker 1: other is Voldana Hodrick, who's draining us from her home
Speaker 1: studio in New York City. Thank you both. So we're
Speaker 1: gonna talk words today, which I suppose as journalist is
Speaker 1: like what we do all the time anyway, but today
Speaker 1: we're gonna specifically talkwards when it comes to defining some
Speaker 1: of the terms like a thrown around a lot in crypto,
Speaker 1: because this is a word that's been in the news
Speaker 1: a lot, or should say, two words that have been
Speaker 1: in the news a lot. We're gonna kick things off
Speaker 1: with algorithmic stable coins. Yeah, this has been such a
Speaker 1: hot topic as of late, considering the crash of terror
Speaker 1: USD coin. Algorithmic stable coins are pretty complex but also
Speaker 1: very interesting. They have their price maintained by a relationship
Speaker 1: with another cryptocurrency and also through just complex mathematical equations.
Speaker 1: So in the case of Terra USD that was pegged
Speaker 1: to the Luna token, and basically if the price of
Speaker 1: one dropped, investors would be incentivized to buy the other one,
Speaker 1: and the hopes that this would maintain a peg for
Speaker 1: USD coin and keep it close to a dollar. Okay,
Speaker 1: so da old coins tell us more. An alt coin
Speaker 1: is basically just any coin that isn't Bitcoin. You might
Speaker 1: hear people referring to alts or alt coins alternative coins,
Speaker 1: and they're really just talking about any smaller token or
Speaker 1: smaller coin that isn't bitcoin, And they also are in
Speaker 1: the news recently just because we're having to sell off
Speaker 1: in the crypto market and you see bitcoins sometimes holding
Speaker 1: up just a lot better than some of these alternative coins,
Speaker 1: and so you're hearing people talking all coins and just
Speaker 1: how much they've been suffering through the recent downturn. Speaking
Speaker 1: of bitcoin, what is a bitcoin maximal list? Yeah, bitcoin
Speaker 1: maximalist or you know Bitcoin maxi for sure. Um, they're
Speaker 1: all in on Bitcoin, which is the most widely held cryptocurrency,
Speaker 1: and these people believe that the future is only for Bitcoin.
Speaker 1: This will be the only digital currency that we're going
Speaker 1: to need. They don't care about all coins. They're basically
Speaker 1: all in. And some people also consider this term to
Speaker 1: be a little derogatory. Do the Bitcoin maxis consider this
Speaker 1: m to be derogatory or do other people consider it
Speaker 1: to be derogatory? You know, I've spoken to some maxis
Speaker 1: who are proud to wear the label, you know, and
Speaker 1: you know, wear it as a badge of honor. But
Speaker 1: I've also spoken to others who are like all in
Speaker 1: a bitcoin, but they're like, don't call me that. So
Speaker 1: I think it depends a bit on personal preference. Got it. Well,
Speaker 1: that was fun. So now let's go complicated crypto bridge. Yeah.
Speaker 1: So crypto bridge just have been in the news as
Speaker 1: of late. Um we saw with the hack of the
Speaker 1: Ronan bridge, which is essential to the Axi Infinity and
Speaker 1: FT game. And crypto bridges basically connect different blockchains and
Speaker 1: allow people to transfer digital assets from one block chain
Speaker 1: to another. And there are questions about than being vulnerable
Speaker 1: and whether they pose a security risk because these are
Speaker 1: very complex tools within the crypto space. Got it. So
Speaker 1: a way for somebody to think about that is like
Speaker 1: they act almost as translators, just mechanisms for you to
Speaker 1: move something from a to B in one way or another.
Speaker 1: And people might think of bridges is like, well, here's
Speaker 1: a physical structure or here's a place, but like what
Speaker 1: how do bridges work? Exactly? Like are these just software?
Speaker 1: Are they programs? Are they companies? Like what are these things? Yeah?
Speaker 1: Their software? Um, you know, I think it's a good
Speaker 1: visual seeing that bridge, but really at the end of today,
Speaker 1: these are very complex pieces of software that could be
Speaker 1: open to security flaws and holes that hackers can exploit.
Speaker 1: So there is a question of how do we make
Speaker 1: these bridges safer? Well, Another thing that has certainly been
Speaker 1: super topical is this idea of crypto winter. A great
Speaker 1: chill has descended on the markets. A chill has descended
Speaker 1: on the Market's what a great way to put it.
Speaker 1: But a crypto winter is just a prolonged stretch of
Speaker 1: time where crypto prices are in a decline. So they
Speaker 1: might be stagnant for a while, but you know, overall,
Speaker 1: we're talking about a major downturn in the market. When
Speaker 1: you think about the winter, you're thinking about freezes, stagnation, unpleasantness,
Speaker 1: really cold temperatures, and so that's exactly what crypto winter,
Speaker 1: the term is supposed to emote. We had one back
Speaker 1: in two thousand and eighteen when crypto prices were declining,
Speaker 1: and we also have some people calling what's happening with
Speaker 1: the market this year a crypto winter, just because we've
Speaker 1: had this huge downturn in prices. One of the more
Speaker 1: I suppose topical parts of crypto or the contrast between
Speaker 1: what's called defy and trod FI or decentralized finance and
Speaker 1: traditional finance. Traditional finance is a concept that I think
Speaker 1: people pretty much understand right It's like it's the idea
Speaker 1: of wall streets, it's banks, it's it's brokers, it's insurance companies.
Speaker 1: What's defined exactly? Yeah, So DEFY is short for Decentralized
Speaker 1: Finance UM, and basically it envisions a world where financial
Speaker 1: transactions are conducted over blockchain and where middlemen like banks
Speaker 1: or brokers are cut out. It hinges on peer to
Speaker 1: peer transactions. So this is really what people see as
Speaker 1: the future of finance if they're you know, big DEFIVE supporters,
Speaker 1: and there's obviously really exciting stuff going on there. There's
Speaker 1: concerns of a regulation and we've also seen two people
Speaker 1: migrate from working in trad FI to DEFY, which is
Speaker 1: something that I'm really interested in writing about. Right, so
Speaker 1: they're going from like a citadel to a pure play
Speaker 1: crypto company exactly now on the idea of pure play
Speaker 1: crypto companies, there's also a concept of AX help me
Speaker 1: understand or help our audiences understand what a dex is.
Speaker 1: A dex is just a decentralized exchange. So if you're
Speaker 1: thinking about traditional financial markets, you're thinking about the stock market,
Speaker 1: you might think of a stock exchange like the New
Speaker 1: York Stock Exchange. Then nicey that has sort of like
Speaker 1: a power structure in place, and a decentralized exchange is
Speaker 1: something like a unit swap maybe you've heard of unit
Speaker 1: swap or d y d X, where users can trade coins,
Speaker 1: they can trade crypto derivatives, but it's anonymously and there
Speaker 1: are no intermediaries, there are no banks involved. Earlier kind
Speaker 1: of you mentioned acci Infinity and an FT game, which
Speaker 1: brings us to this concept of game five, which, as
Speaker 1: far as I'm concerned, is a slightly misleading thing because
Speaker 1: I don't think that any of the crypto games I've
Speaker 1: played are actually fun, but I will leave that to
Speaker 1: you to say more on. Yeah, game five is a
Speaker 1: really interesting area that I love reporting on. UM it's
Speaker 1: you know, combination the words game and finance, and basically
Speaker 1: it's a way to describe n f T and crypto
Speaker 1: games that place a heavy emphasis on earning crypto tokens
Speaker 1: through the game. And it's also connected to the term
Speaker 1: play to earn, which would be something used to describe
Speaker 1: a game like Acxie Affinity, where a lot of the
Speaker 1: main objective is focused on earning money. So a lot
Speaker 1: of people describe these sort of play to earn games
Speaker 1: is just sort of financial tools and investment platforms with
Speaker 1: debatable Yeah, basically it is a very charitable way of
Speaker 1: pussing as Yes, but these these games do have people
Speaker 1: playing them right there. There's a fairly lively ecosystem in them.
Speaker 1: Oh yeah, they've actually become part of the gig economy
Speaker 1: in certain places like Accie Affinity is really popular in
Speaker 1: the Philippines, and we saw a lot of interest grow
Speaker 1: there during the pandemic when people were quarantined and at
Speaker 1: home and you know, just on their computers all day.
Speaker 1: So it's become a job for people in a way
Speaker 1: to earn a living income. Got it, Thank you, Hannah
Speaker 1: and Voldonna. We'll be right back with more terms from
Speaker 1: our Bloomberg cryptoglossary. Well, we've said n f T a
Speaker 1: couple of times now, so now we get to explain it.
Speaker 1: So n f T s are non fungible tokens. People,
Speaker 1: if they know what they are, they might think of
Speaker 1: them just as monkeys, but are what else are they?
Speaker 1: This has been a super hot topic the last couple
Speaker 1: of years, especially since the pandemic has broken out. So,
Speaker 1: as you said, they're non fungible tokens. They basically just
Speaker 1: allow holders of like an art piece or collectible to
Speaker 1: track ownership of that art on the blockchain. So a
Speaker 1: meme can be an n f T, art can be
Speaker 1: an n f T. A clip of something that happened
Speaker 1: maybe in a sports game, can also be an n
Speaker 1: f T. Like I said, they were super popular last year.
Speaker 1: The markets sort of come down a bit since then.
Speaker 1: But we did have notably Ukraine selling their own n
Speaker 1: f T s to fund their war efforts earlier this year.
Speaker 1: So let's say I spent five which I'm not making up.
Speaker 1: People have done that. Where would I show it off?
Speaker 1: A lot of people show it off on their Twitter
Speaker 1: profile pictures basically, or you might tell your friends about it,
Speaker 1: or you might hold it in your your crypto wallet.
Speaker 1: But yeah, it's just code basically on the blockchain. That
Speaker 1: seems less fun. This does seem fun. Talk to me
Speaker 1: about ship coins. Yeah, it's okay for me to say
Speaker 1: ship absolutely alight only on the show Cool Cool So
Speaker 1: ship coins. Yeah. This is a derogatory term for cryptocurrencies
Speaker 1: that are perceived to have little or no value and
Speaker 1: no real discernible purpose. You know, we've seen it used
Speaker 1: to describe things like meme coins like dodge coin, where
Speaker 1: people are just like, this is dumb. To make matters
Speaker 1: even more complicated, there actually is a cryptocurrency chitcoin, just
Speaker 1: for maximum fun. Oh yeah, do we know what that
Speaker 1: coin is trading at. I just looked it up, the
Speaker 1: shipcoin cryptocurrencies trading it for actions of a scent appropriately
Speaker 1: enough makes sense. Another concept that people say makes sense
Speaker 1: but other folks have questions about is the whole idea
Speaker 1: of who's going to talk to me about that? So
Speaker 1: staking is when, if you're a crypto investor, for instance,
Speaker 1: you actually let your coin be used to help facilitate
Speaker 1: other transactions on the blockchain. So if you have some
Speaker 1: coins laying around, you might actually deposit them in a
Speaker 1: digital wallet, you lock it there, and then what you're
Speaker 1: hoping is just to get rewards in return or a yield.
Speaker 1: So it's almost like crypto screw. You agree to lock
Speaker 1: up your your crypto for some amount of time, which
Speaker 1: allows other people to make transactions on those things, and
Speaker 1: in return you get paid a yield of some kind.
Speaker 1: That's right. Yeah, you're hoping to get these rewards. You're
Speaker 1: hoping to get something in return. And one of the
Speaker 1: bigger areas of controversy as it relates to staking, which
Speaker 1: is a key element of DEFY is the idea that
Speaker 1: the yields that you're getting are just massive, right Like,
Speaker 1: if you have your money in a bank, and you
Speaker 1: have it there, and it means that the bank can
Speaker 1: lend your money to other people in the form of loans,
Speaker 1: you're getting you know what, like sub fractions of a
Speaker 1: percentage interest rates. There are folks in crypto that are
Speaker 1: offering you know, a thousand percent a p y or
Speaker 1: or even more like, how is that possible? It's it's
Speaker 1: only possible in defy, really, And this has been such
Speaker 1: a sort of like striking point of what's been happening
Speaker 1: in crypto markets over the last couple of years. So
Speaker 1: you had during the pandemic, you had really rock bottom
Speaker 1: low interest rates, and so if you had cash sitting
Speaker 1: around in your bank account, you really weren't earning very much.
Speaker 1: And so what was happening in the DeFi space was
Speaker 1: attracting a lot of attention because some of these yields,
Speaker 1: as you say, we're just astronomical, but really it's just
Speaker 1: it's a function. It's a characteristic of the DeFi space.
Speaker 1: Another characteristic of the DeFi space or something that describes
Speaker 1: the characteristic of the defied space is tv L. What
Speaker 1: does that stand for and what does it mean? Standsford
Speaker 1: Total value locked and this for first to how on
Speaker 1: DeFi platforms people will deposit crypto and the hopes of
Speaker 1: earning interest and yield. The processes like lending and TBL
Speaker 1: just basically refers to the total value of those deposited
Speaker 1: assets on a DeFi protocol. So it's almost like assets
Speaker 1: under management exactly. Another sort of big concept that gets
Speaker 1: thrown around the laws, especially by venture capitalists, is this
Speaker 1: whole idea of Web three. What I would love to
Speaker 1: hear from you is what web three is and what
Speaker 1: it isn't. Web three is just a brand new version
Speaker 1: of the Worldwide Web basically, but it's built on the blockchain.
Speaker 1: So if you think about the Internet that we have currently,
Speaker 1: a lot of people might argue that we have a
Speaker 1: lot of tech companies that have just taken so much
Speaker 1: ownership there and they just control so much of the Internet.
Speaker 1: Web three sort of shifts the power back to the
Speaker 1: user away from some of the tech come niece that
Speaker 1: have sort of been sucking up all of our data
Speaker 1: and selling all of our data and information to advertisers,
Speaker 1: so gives the ownership back to the users. How is
Speaker 1: that actually happening or is that like the sales pitch.
Speaker 1: It's very debatable. It's a super hot topic, um within
Speaker 1: you know, venture capital investing in crypto, especially, you know,
Speaker 1: when investors are putting a lot of money in platforms
Speaker 1: in exchange for tokens that give them control over how
Speaker 1: the platform is managed. So they're getting these massive amounts
Speaker 1: of tokens that give them voting rights in terms of
Speaker 1: how you know, a protocol is moving forward, and they
Speaker 1: help shape how it exists. Um And they can also
Speaker 1: stand to benefit enormously if the protocol takes off. So yes,
Speaker 1: this is an area of debate whether or not web
Speaker 1: threes actually decentralized space. Because in an actually decentralized space,
Speaker 1: like we could all quit our jobs and sell art
Speaker 1: on the blockchain and monetize that art directly and you
Speaker 1: know not need agents or brokers or or anything like that.
Speaker 1: But that's not so we are happening at scale yet,
Speaker 1: not yet. I mean we've seen attempts, We've seen you know,
Speaker 1: things pop up like decentralized social media networks, and you know,
Speaker 1: really interesting applications. But Web three is only of the
Speaker 1: way there, and I've heard that from people who are
Speaker 1: really gung how about the space? Okay, well, a thing
Speaker 1: that's happening today is yield farming. I am not allowed
Speaker 1: to yield farm because I am a reporter reposing on finance,
Speaker 1: but some people are and they're making money. You tell
Speaker 1: us how this works. Yeah, so yield farming. You make
Speaker 1: your crypto work for you. You want to earn interest
Speaker 1: through things like lending out your crypto. You might actually
Speaker 1: get a new coin in exchange for lending your own holdings.
Speaker 1: So this is like a pretty exciting area where people
Speaker 1: think that they can make a make a big buck on,
Speaker 1: you know, lending out their crypto. So one of the
Speaker 1: big I don't know, perhaps more fun parts of crypto
Speaker 1: is the idea that like there's literally a meme for everything,
Speaker 1: and you know, there's also some acronyms that people throw
Speaker 1: around a lot. You know, I will have um friends say, Okay,
Speaker 1: I keep seeing these people like typing on Twitter GM
Speaker 1: or w A g M I and I don't know
Speaker 1: what these things mean. Help me, So let's translate a
Speaker 1: couple of those two. This is one of the more
Speaker 1: fun parts of the crypto space. So you have a
Speaker 1: lot of the crypto dialogue and discourse taking place on Twitter.
Speaker 1: So you might see people log on in the morning
Speaker 1: they'll say GM, which means good morning, g N means
Speaker 1: good night. So you have a lot of people talking
Speaker 1: to each other through these memes or acronyms. So just
Speaker 1: to give you maybe a quick rundown of some of
Speaker 1: the more popular ones. Is just an aspirational meme that
Speaker 1: refers to Lamborghini's where a couple of years ago, during
Speaker 1: a huge crypto boom in two thousand seventeen, you've had
Speaker 1: people buying really fancy fancy sports cars and showing them
Speaker 1: off at different crypto conferences, and so you have people
Speaker 1: sort of saying when Lambo, as in, you know, when
Speaker 1: are we going to hit the riches. Lf G is
Speaker 1: another abbreviation. It means let's blank and yes. So it's
Speaker 1: just it's a rallying cry for people in the crypto space.
Speaker 1: H f SP means that actually it's a taunt. You'll
Speaker 1: see it on Twitter all the time. It's pretty derogatory.
Speaker 1: It's you know when somebody is sort of calling out
Speaker 1: crypto for whatever bad influence it's having, or for lack
Speaker 1: of regulation, or for prices crashing, or for anything that
Speaker 1: that's sort of been negative in the crypto space. Crypto
Speaker 1: fans might reply with h f SP, have fun staying poor,
Speaker 1: And I'm sure in the past couple of weeks those
Speaker 1: crypto critics are now replying to crypto fans with h
Speaker 1: f SP. They might be. There's a lot of interesting, fun,
Speaker 1: crazy stuff happening on Twitter in regards to a lot
Speaker 1: a lot of McDonald's applications being passed around. Oh man,
Speaker 1: what else should our listeners know? How can they go
Speaker 1: bravely forth into the crypto wonderlandes and know what people
Speaker 1: are talking about? Yeah? No, I mean, there's so much
Speaker 1: information online for people to sift through that it can
Speaker 1: be hard to cut through the noise. But there are
Speaker 1: some really good educational resources out there where you know,
Speaker 1: you can learn about these terms and you know, kind
Speaker 1: of figure out your own way within the space. And basically,
Speaker 1: I also think the new rule is if it exists
Speaker 1: in crypto, there's a meme a bit. Yeah, so you
Speaker 1: have to have a sense of humor when looking at
Speaker 1: this space. D y o R means do your own
Speaker 1: research exactly. That's a popular one and very linked to
Speaker 1: what Hannah was saying. Fact, there's always always a way
Speaker 1: to find something out. The problem is not everything that's
Speaker 1: out there is necessarily reliable. But hey, um, well this this,
Speaker 1: this is great. I'm going to just send this episode
Speaker 1: around any time anybody in my family sends me what's
Speaker 1: up and they're like, what does this mean? I'm like,
Speaker 1: here you go. Here's Hannah and hold on explaining this
Speaker 1: to you. So thank you so much both of you
Speaker 1: for joining us. It has been a real pleasure and
Speaker 1: look forward to having you back on again soon. Thank you,
Speaker 1: thanks for having us. You can find more of all
Speaker 1: Donna and Hannah's reporting on the Bloomberg Terminal, on Bloomberg
Speaker 1: dot com and on Twitter. Hannah is h G. Miller
Speaker 1: twenty nine and vil Donna is at Vildanna Hadrick on
Speaker 1: the next episode of Bloomberg. Crypto Fidelity, one of the
Speaker 1: largest investment managers in the world, made headlines when it
Speaker 1: announced its intention to offer clients the ability to invest
Speaker 1: in crypto through their four oh one Keve retirements accounts.
Speaker 1: In such a volatile environment, is it a risky bet
Speaker 1: to add digital assets to your retirement plan. I'll talk
Speaker 1: to Bloomberg reported Susann Woollie about the recent history of
Speaker 1: four O one, key investments in crypto, and why the
Speaker 1: US Labor Department is less than enthusiastic about fidelities move.
Speaker 1: I'm Stacy Marie Ishmael, and this is Bloomberg Crypto, a
Speaker 1: daily podcast from Bloomberg and I Heeart Radio. For more
Speaker 1: shows from I Heart Radio, visit the I Heart Radio app,
Speaker 1: Apple Podcasts, or wherever you get your podcas tests. Email
Speaker 1: your comments, questions or suggestions to Crypto at bloomberg dot net.
Speaker 1: Find us on Twitter at Crypto. The producer and editor
Speaker 1: of this episode is Vicky Vergolina. Our engineer is Blake Maples.
Speaker 1: Original music by Leo Sidron. Bloomberg's head of Podcasts is
Speaker 1: Francesco Levi.