Super Bowl LVI: “The Crypto Bowl”
Market Movers
The majority of the largest coins by market cap pumped mid-week, with Bitcoin reaching as high as $45K before ending the week in the red
Our large market cap/high moving coin for the week was XRP
XRP rose over 22 percent mid-week due to reports that the ongoing court case between the SEC and the coin’s parent company Ripple will include sealed documents containing expert testimony that Ripple did not violate the federal securities laws in question (via CoinDesk)
First Sip
Like the previous week, the first sip section will introduce you to a fundamental part of crypto. This week, Ari will be guiding you through the basics of crypto wallets. If you’re already a crypto native—feel free to skip ahead to the “Table Talk” section.
WHAT IS A CRYPTO WALLET?
In the crypto world, there needs to be some way to identify you, just like in the real world where you have your social security number, bank account number, etcetera. The equivalent for crypto is called a private key. It’s a long string of numbers that can also be represented as a string of words that grants you access to your crypto assets. No longer do you need a social security number or some other identity verification to access an entire ecosystem of financial and other decentralized applications, you just need your private key.
General Rule: NEVER, ever share your private key with anyone or lose your private key. It is quite literally your key to everything.
With the private key, there is also a public key that is generated. This is your visible identity on the blockchain. Unlike the private key, you CAN share your public key and all of the transactions on the blockchain are visibly recorded with your public key, which makes it pseudonymous. If you want to send assets to someone else, you will need to know their public key and then can input that to send assets from your wallet to theirs. For this transaction to be completed, your wallet will use its private key to validate that you own the assets on the blockchain you are trying to transfer. Simple as that.
Also.
There are three different kinds of wallets:
paper wallets
hardware wallets
online wallets
With paper wallets, you write your private key on a piece of paper and store it somewhere safe. However, in order to access the blockchain you typically have to enter your private key each time you transact.
Hardware wallets are often small plug-in devices that are specially designed to securely store your private key, but they are easier to use because you don’t have to type out your private key each time. Think of a flash drive you can take anywhere.
Finally, online wallets, which are the most popular, have your private key stored online as part of an application. This stored private key makes online wallets incredibly convenient to use as transacting is a simple set of button clicks on your smart-phone and your private key is automatically provided for each transaction.
The biggest advantage of using a hardware wallet or paper wallet, also known as cold storage devices, over an online one is that they are much more difficult to hack. Hardware wallets and paper wallets are unconnected to a broader ecosystem, while online wallets are the most vulnerable.
Currently, there is no universal wallet as different blockchains are set up in different ways so, you may need more than one wallet to store all of your assets. Some popular online wallets are MetaMask, Coinbase Wallet, Trust Wallet, and Phantom Wallet, while popular hardware wallets include the Ledger Nano X and the Trezor Model One.
Table Talk
Quick Note: the main crypto story of the week was the $3.6B worth of stolen crypto linked to the 2016 Bitfinex hack that was seized from a couple’s wallet, which marked the largest asset seizure in the Department of Justice’s history. If you have not looked into the case and the person partially responsible for it, please do so here. (hint: she’s a part-time rapper who has also written over 50 articles for Forbes). That news was everywhere, so we decided to write about something else.
BITCOIN GROWING AS FAST AS THE INTERNET
A few weeks ago, we wrote about the similarities between Bitcoin and the Internet. They are both revolutionary technologies that disrupted traditional methods when introduced to the world.
Twitter Co-Founder Jack Dorsey emphasized this sentiment back in July when he spoke about BTC and said, “It’s deeply principled, it’s weird as hell [and] it’s always evolving. It just reminded me of the internet as a kid” (via CNBC).
Cryptocurrency is currently in that pre-2001 .com bubble stage of the Internet. Crypto is still trying to become widely accepted, and there’s an ocean of companies and opportunities in the space because of that. A mid-week report from crypto research company, Cane Island, suggests Bitcoin’s price, an easy growth metric, is following an eerily similar trajectory to that of the Internet’s adoption rate (as seen in the graph below).
Bitcoin’s price change per year is growing even faster in some instances than the Internet’s adoption rate when it was the same age.
The regulatory roadblocks and widespread criticism that Bitcoin and other cryptocurrencies are constantly exposed to don’t seem as daunting when you realize how fast they are growing. Adversity is normal. We learn, fix, adapt, and push right through it.
NFT Buzz
GARY VAYNERCHUK SAYS 98% OF NFT PROJECTS WILL FAIL
We definitely agree that Gary V (the founder of the VeeFriends NFT collection) should not be the first person you go to for crypto/NFT advice. Although a widely successful entrepreneur, Gary seems to sway more towards the fantastic salesman/great public speaker side than towards being a beacon of Web3 knowledge. This is likely in large part due to his wide range of business ventures.
That being said, we agree with Vaynerchuk’s claim in a recent CNBC interview when he said that he believes that 98% of NFT projects will fail (via Business Insider).
It's simple. Here’s why:
People see the money that is being made in the NFT space → FOMO → more collections come out and more money is made → more FOMO → the market becomes more saturated → it becomes harder and harder to make money either flipping NFTs or selling your own collection.
We strongly believe that NFTs are here to stay for the long run. However, it is likely that the bubble will eventually “pop,” and some sort of market correction will occur.
No speculative asset goes up forever. There was $535M in NFTs sales over the past week alone (via Business Insider). Take advantage while you can and keep your eyes peeled for legit,high-growth potential projects.
DeFi Demographic
SUPER BOWL LVI: “THE CRYPTO BOWL”
We tuned in to watch Super Bowl LVI, which many referred to early in the week as the “Crypto Bowl” with the crypto exchanges: Coinbase, EToro, Crypto.com, and FTX all running advertisements during the Super Bowl (via NYT).
These advertisements are particularly bullish as it indicates that crypto has cemented itself in popular culture by being part of one of the largest recurring television events. In addition, the Super Bowl ads should have broadened the audience that begins to consider cryptocurrency as a viable investment.
Coinbase’s advertisement, for example, was so popular that it crashed the app (via SI). We’ll be tracking Coinbase’s user growth and trading volume coming into Q1 earnings and expect to see a significant boost that will likely be attributed to the effectiveness of the advertising campaign, though, the app crash may have discouraged some current and potential users.
Final Cup
Bitcoin’s trajectory shares many similarities to that of the Internet when it was first released
98% of NFT projects will likely fail. There’s still alpha now, though, so keep seeking it
$3.6B worth of stolen crypto from the 2016 Bitfinex hack was seized by the DoJ, which appreciated significantly from the ~$70M it was worth at the time of the hack (via WSJ)
The FBI San Francisco Office warned the public about the rise in romance scams, specifically crypto, with Valentine's Day on the horizon. Crypto-based romance scams are when people try to get someone to send them crypto under the pretext of getting romantic. The specific FBI sector saw romance-based victims lose 82% more money in 2021 than in 2020 (via CoinTelegraph). Stay strong, kings and queens.
Meme of the Week
If you know, you know.
Pat + Ari ✌️
Disclaimer: None of this is investment advice, financial advice, or trading advice. CRYPTOPONG does not endorse any of the cryptocurrencies, DeFi applications, or NFT collections mentioned in this article. Perform your own due diligence and/or consult a financial advisor before investing.