Elon Musk Plays the Crypto Curious
Momentum for “crypto curious” is on the rise.
If reading about the volatility of crypto currencies this week has made you curious about the space… this Up & Down is for you.
Before you read this week’s Up & Down, there are 3 pro-tips you need to know:
- Crypto Curious: The “crypto-curious audience” is defined as people who don’t own cryptocurrency today but indicate either wanting to learn more about it and/or are planning to buy it soon. About 13% of adults in the US plan to buy cryptocurrency in the next 12 months (about 19.3 million people). That amount of Americans picking up cryptocurrencies would nearly double the current population of investors.
- Dogecoin: A “meme coin” that was started in 2013 as a lighthearted riff on bitcoin. It was named after the “doge” meme — a Shiba Inu dog. It was originally meant to mock the self-serious cryptocurrency community at the time. The joke rallied a new community of enthusiasts. It was a relatively niche inside joke until January 2021 when sub reddit SatoshiStreetBets talked about making it the cryptocurrency equivalent of GameStop. Then Elon Musk started tweeting about it showing his support for the coin.
- Crypto exchanges: A cryptocurrency exchange (digital currency exchange) is a business that allows customers to trade cryptocurrencies or digital currencies for other assets. The two exchanges we’ll focus on in this Up & Down: Coinbase and Gemini.
- Coinbase was founded in 2012 by Brian Armstrong and Fred Ehrsam. As of March 2021 it was the largest cryptocurrency exchange in the United States by trading volume. On April 14, 2021, Coinbase went public on the Nasdaq exchange via a direct listing.
- Gemini Trust Company, LLC (Gemini) is a digital currency exchange that allows customers to buy, sell, and store digital assets. It is a New York trust company that is regulated by the New York State Department of Financial Services (NYDFS). It was founded in 2014 by Cameron and Tyler Winklevoss. In November 2019, the Gemini Trust Co. bought Nifty Gateway — a marketplace for NFTs. Gemini says it remains the only regulated exchange in the U.S. where you can trade and earn interest on dogecoin in all 50 states.
ON THE UP: The Crypto Curious
The latest surge in momentum for the crypto-curious was driven by Elon Musk hosting SNL and taking a contradictory & polarizing stance on Bitcoin.
Ahead of his hosting SNL, Dogecoin investors and the crypto-curious were hopeful the “Technoking” would sing Dogecoin’s praises and pump its value.
“Fawning” over dogecoin would have been too obvious. In typical Elon Musk and SNL fashion, they did this through tongue & cheek humor on the popular segment the Weekend Update. Some thought he was confusing with his explanations of what the meme coin Dogecoin actually is. Others were annoyed he joked that Dogecoin is just a “hustle”. The genius of Elon is that he was intentionally provocative and polarizing. He made the masses even more crypto curious.
What happened next? Many were hoping Dogecoin’s value would surge. Instead Dogecoin’s value crashed from it’s all time high then started to rise again with a new tweet on May 13 that Musk is “working with Doge devs to improve the system transaction efficiency”. Like all momentum masters, Elon Musk knows how to control what goes Up & Down. The value for Dogecoin might not be back to its all time high but the momentum is continuing to surge because of continued curiosity.
In the same week Musk announced that Tesla would no longer accept Bitcoin as a form of payment for the cars. His contradictory stance on Bitcoin caused the price to fluctuate: A cryptocurrency with a $1 trillion market cap — down as much as 17% with a tweet noting that he now believes Bitcoin is bad for the environment and that Tesla will not be accepting Bitcoin payments for its cars after all. On May 19, Musk re-affirmed his support for Bitcoin by tweeting: “Tesla has [diamond hands].”
Where do the crypto-curious go from here? Elon Musk helped fuel mass awareness and generate excitement / intrigue for crypto. What will it take to convert the crypto-curious to crypto-adopters? Crypto exchanges like Gemini and Coinbase are bringing in a new wave of investors by building trust through education, transparency and a simple user-friendly product.
DEEP DIVE
Now for a deep dive into Gemini, the crypto exchange starting to gain momentum. Here’s how Gemini is leveraging all 5 drivers of momentum to bring the “crypto-curious” into the fold.
DISRUPTION: Crypto investors have been investing in various coins as an asset class for years. Now Gemini is helping users actually spend it as a currency at retailers with Apple Pay and Google Pay.
- Digital currency exchange and custodian Gemini recently announced that its users can now purchase crypto with Apple Pay and Google Pay. To use this feature, users can connect a debit card to Apple Pay or Google Pay and then buy the cryptocurrency of their choice from within the Gemini mobile app.
- The new feature supports over 30 cryptocurrencies including Bitcoin, Ether, Litecoin, Filecoin, and Bitcoin Cash. Gemini is currently available in over 50 countries globally — any country that supports Apple Pay and Google Pay.
- “The introduction of this feature lowers barriers to entry in the crypto industry by further streamlining the payment process, allowing consumers to buy crypto even more immediately — in the case of Gemini, with as little as two clicks… The accessibility that advanced crypto platforms are bringing to the table plays a major part in opening up the digital asset market.” said Blair Halliday, head of U.K. at Gemini.
- This feature is one in a series of steps that will incrementally help cryptocurrencies reach a much wider audience over time, according to Jason Wu, founder and CEO of crypto lending platform DeFiner. “This news in particular is not the ‘watershed moment’ for our industry per se, but a culmination of good news events helping push the cryptocurrency industry toward mainstream adoption,” said Wu.
INNOVATION: Gemini is leaning into gamification to help educate the crypto curious on how it works.
- Gemini x Esports: Global esports organization, Gen.G and Gemini launched GEMINI AMONG US — a live-stream event aimed at educating viewers on the world of Cryptocurrency.
- In Gemini’s first-ever esports activation, they distributed $20 worth of bitcoin to viewers of the stream that signed up and traded $100 worth of crypto within the first 30 days as registered users. Throughout the livestream, users also had the opportunity to chat with gamers and crypto experts via Twitch and have all of their crypto questions answered.
- “With the NFT space on the rise, the worlds of crypto and gaming are converging faster than ever. Crypto holders are more than twice as likely to have a gaming subscription so we are excited to partner with Gen.G on this fun event, while we learn about the gaming universe and explore topics like crypto, NFTs, and how all these ecosystems overlap,” said Tyler Winklevoss, CEO of Gemini.
- We wanted to take an approach that created the right opportunity for the gaming community to learn about cryptocurrency and ask questions to some of the most knowledgeable people within the space. There’s still a lot of misunderstanding about how this stuff actually works, so we are launching this activation to engage both the gaming and cryptocurrency community.
- Tyler Winklevoss hinted that patrons would be able to convert fiat currency into crypto at the resort, meaning that casino goers may be able to invest their winnings directly into a digital cryptocurrency.
- Major slot machine manufacturer International Game Technology was granted a patent earlier this year for a system that would enable gamblers to transfer crypto from their accounts into a “gaming establishment account.”
POLARIZATION: One of the great debates among the crypto curious is the benefits of centralized vs. decentralized cryptocurrencies.
Gemini is the only regulated exchange where users can earn interest on dogecoin. Many platforms offer the ability to earn interest on crypto generally but Gemini is the first to put a stake in the ground that they support dogecoin to this extent.
- The Gemini app lets clients move their holdings in dogecoin into interest-bearing accounts through its Gemini Earn service. Cryptocurrencies are made to be DeFi (decentralized finance). Partnering with borrowers complicates the ethos of many cryptocurrencies, decentralizing financial markets and currency.
- On the flip side: the benefit of centralizing via Gemini is the ability to earn interest on an investment. This makes crypto more tangible and understandable for the crypto curious because it feels closer to what they have traditionally experienced with finances and investing.
STICKINESS: The Winklevoss twins are making a memorable name for themselves as pioneers and leaders in the crypto-world. In an industry known for being inherently volatile, the Winklevoss twins and Gemini promote stability and investing in Crypto for the long game.
“Gemini is the bridge where people can migrate from centralized finance, from their current bank and into this new world… Our business model is not based on information or the monetization of privacy. It is based on markets and commercial rates” Says Cameron Winklevoss.
SOCIAL IMPACT: Elon Musk drove yet another polarizing conversation about Crypto when he tweeted about the damaging effects of crypto mining on the environment. Other cryptocurrency industry leaders jumped in to counter his argument.
Gemini founders Tyler and Cameron Winklevoss fired back saying “bitcoin mining is actually pushing the renewable energy industry forward… Bitcoin mining is a massive subsidy for renewable energy.” Barstool founder David Portnoy called Musk out, saying he “flip-flops every second about Bitcoin.”
The cryptocurrency and blockchain industry is evolving at a rapid rate — blockchain’s environmental impact is already changing. Like the evolution from full diesel to hybrid to electric in the automobile industry, crypto is making a similar evolution and at a faster pace.
When we wrote about NFTs in February 2021, we mentioned creating “a single NFT’s carbon footprint overall, is on average equivalent to an American’s total electric power consumption for nearly two weeks.” This may still be true for Ethereum (the most popularly used coin for trading NFTs) but there are many other cryptocurrencies using the blockchain in new ways to reduce environmental impact. These coins have been nicknamed — “green crypto”.
One company leading the way in “green crypto”: Chia, an Andreessen Horowitz backed cryptocurrency founded by the inventor of torrenting, Bram Cohen. Chia is the energy-saving rival to Bitcoin. It launched its first coin $XCH on May 3rd, 2021. Momentum for Chia has already surged from an MFactor score of 1 in mid-April 2021 to a score of 19 on May 10th, 2021 because it is flipping the industry on its head — challenging previous methods and changing perceptions about the industry to make crypto more green and sustainable.
What is Chia doing differently? They use a less energy-intensive method for mining new coins called Proof-of-Space-and-Time (PoST) as opposed to Bitcoin’s Proof-of-Work (PoW). Both methods have a similar objective and outcome: confirm transactions and produce new blocks with the blockchain.
ON THE DOWN: Private permission blockchains for enterprises.
Why? Contrary to intuitive thinking, private blockchains suffer from a lack of security and updating. Companies are leaning into DeFi and utilizing public chains. They are finding ways to trade in private chains for the public blockchain. Accepting public chains over private chains will enable more enterprises to adopt blockchains because updating chains is easier, more frequent because of collaboration, and more secure.
Just like The Internet — instead of companies deciding to make their own “private” internet because of security concerns, they adopted the “public” world wide web.
