Decrypt writer Scott Chipolina joins Yahoo Finance to discuss Coinbase earnings and the latest in cryptocurrency hacking concerns.
– Let’s talk more about crypto and what’s going on, especially after the Coinbase earnings. We bring in journalist from Decrypt, Scott Chipolina. And Scott, it’s good to have you here. I mean, let’s reiterate here. With Coinbase, they had trading volume rose to $462 billion. No surprise at the stock after hours is trading higher when you consider they make, you know, fees from the transactions.
Is it sustainable, if we know in the infrastructure bill, they didn’t change the language that there could be a crackdown on all of these different cryptocurrency providers having to provide [? tax– ?] the transactions, and the tax consequences. It seems like there’s something that could be a hiccup in the future.
SCOTT CHIPOLINA: Absolutely, that could very well happen. I think that one of the things that we always make a point of saying at Decrypt is never really pay attention to somebody who says they know exactly whether stuff is going to go up or go down, where the price of Bitcoin may be in the future, in a week, or in a month, or anything of that sort.
I do recall when Coinbase went public on the NASDAQ, there was a lot of positive sentiment around the crypto industry. Generally speaking, a lot of people felt that that translated into successful Coinbase in the near and in the distant future as well.
And if we [? send ?] it back to the infrastructure bill, of course, the crypto community is not necessarily very pleased with the results that we’ve seen in the Senate. And we know, obviously, that the bill is now going to go to the House to be reviewed in the autumn.
So it’s pretty much up for debate, still, I would say. I think that these things are fundamentally tied to sentiment in the industry, and right now it’s been a bit of a controversial week in crypto, no doubt.
– Scott, one of the things that stuck out to me in this report from Coinbase was the fact that Ethereum trading activity, it surpassed Bitcoin. And this is something that I think may have caught some people by surprise, but it actually makes sense when you take a look at the price action of the two over the last three months.
But from your perspective, how significant is this?
SCOTT CHIPOLINA: I think it’s symptomatic of some of the things that we’ve seen within the crypto industry more generally and obviously throughout the last couple of quarters, especially quarter two, we’ve seen this big boom in the NFT space, which a lot of that just, obviously, runs off of the Ethereum network. And I that the price of Ethereum has essentially benefited from that.
There’s also been a bit of a conversation that folks have been saying that maybe the NFT market is slowing down. I don’t really think that’s quite true. In just the last few days and last few weeks, we’ve seen Pet Rock NFTs trading at very high value. We’ve also seen [? Bold ?] [? Ape ?] NFTs selling for over $100 million.
And there’s also a big, I’d say, a partnership as well between the NFC industry, which is very much reliant on Ethereum, and sports. And we’ve seen Tom Brady, Tiger Woods, Wayne Gretzky, Naomi Osaka, these are all names that are either about to enter the NFT industry or names that already have.
So I think you’re quite right in saying that this is not necessarily very surprising. I think it’s symptomatic of where a lot of subcultures in the crypto industry have gone in recent months, and that’s not just NFTs, it’s also Ether.
– OK, my ignorance will come through in this question, but help us understand why we should or should not be worried about– and this is a story on Decrypt– about hackers breaking into Poly Network. And what was it? It was a $600.3 million hack. What should we worry about, or what should we not worry about?
SCOTT CHIPOLINA: Well, I mean, this is definitely a big story. I mean, this is by far the biggest hack that we’ve seen in still the very young decentralized finance market. As you mentioned, the hackers stole about $600 million. And really, what this does is, it portrays, I think, in my humble opinion, a bit of the very young point that the DeFi industry is in.
The Poly Network team have said that they’ve identified the vulnerability that the hacker exploited, and a lot of people on Twitter also just, like, pointing to the fact that the Poly Network team has just essentially pleaded with the hacker to return funds. This is perhaps part and parcel of the anatomy of DeFi and decentralized finance, there is obviously an absence of third parties by design.
And with that, perhaps, comes risks like this. But it is still a very, very young industry. It’s hard to say where it’s going to go in the future. But I think, like most young industries, there are very challenging flaws or problems that need to be ironed out, and I think that the DeFi industry is still definitely wrestling with some of those.
– You know, I would quote my favorite TV show Peaky Blinders with a holy F-word, but who gets made whole in this kind of situation when $600 million is hacked? What does the firm do?
SCOTT CHIPOLINA: Well, there’s a few things that have happened before. Right now, there’s conversation, predominantly on social media, I would say, where some folks are suggesting that there should be an autonomous organization that gets created essentially within the world of crypto that would have voting rights and decide where that money could be returned to, or how it could be used. That is, of course, provided the hacker returns it.
– Like a Finra?
SCOTT CHIPOLINA: Yeah, in a sense, I suppose. Yeah. And to not be too negative about this sort of thing, sometimes when a vulnerability is exploited in one of these decentralized finance protocols, there isn’t very much a lot of these teams can do. And sometimes we see the problems that we’ve seen today with Poly Network where millions have been lost, and potentially forever.
– Do you think this is going to deter some people from getting involved in cryptocurrency going forward?
SCOTT CHIPOLINA: Absolutely. I can understand why would. I think that there’s been a lot of conversation, as well, by some very high-profile individuals within the wider world of finance, obviously I’m referring to the FCC Char Gary Gensler. He actually said just last week, he had an interview on CNBC, and I think he also spoke at an address where he mentioned that the decentralized finance community or subculture could very well be selling unregistered securities.
That is a concern. I think that a lot of people– not to speak specifically about this, but that’s definitely a concern a lot of people talk about frequently. But again, there is a very serious ideological pull for people to get interested in decentralized finance in the first place. If you’re maybe interested in libertarian political ideology, and you don’t like the idea of an overbearing government, sort of third parties, naturally this kind of subculture will appeal to you.
So I think it’s the kind of thing that we’re just going to see evolve in front of our eyes, and it’s hard to speculate really of where it’s going to be in the next few months or years. But for sure, I think you’re right in saying some people will definitely be turned off by something like this.
– Scott Chipolina from Decrypt, thank you so much. We look forward to your coming back.