KEY POINTS
- During a discussion at the Aspen Ideas Festival, Brian Brooks, CEO of Bitfury Group and a former leader of the federal government's Office of the Comptroller of the Currency, argued that the value of cryptocurrencies shouldn't be linked to the notion that they may displace the U.S. dollar.
- Cryptocurrencies should be seen as replacing the mechanism of communicating value, according to Brooks.
- Brooks expressed optimism about the idea of stablecoins playing a stronger role in the banking sector in the future despite the recent collapse of TerraUSD.
According to Brian Brooks, the former U.S. Acting Comptroller of the Currency under the Trump Administration, cryptocurrency prices should be treated more like internet stocks than money.
The most common misconception about cryptocurrencies is that if they aren't "doing a great job of replacing the U.S. dollar, then crypto is failing in its mission," Brooks, who is now the CEO of bitcoin mining and crypto tech company Bitfury Group, told CNBC's Ylan Muii on Monday at the Aspen Ideas Festival.
2022 has seen a general decline in the crypto market, raising concerns about a potential second "crypto winter." While many companies, including leading exchange Coinbase, have laid off employees in the wake of the decline in cryptocurrency prices and trading, a number of tech and crypto companies have swiftly reversed hiring plans.
The recent collapse of the so-called algorithmic stablecoin terraUSD and the associated digital token luna has only increased concerns about the potential collapse of thousands of other digital tokens. According to CNBC research, there are dozens of blockchain platforms and more than 19,000 cryptocurrencies in use.
The fact that bitcoin has outperformed the S&P 500 by 5 times over the past 12 months, despite the price crash, and that there isn't a session at the Aspen Ideas Festival devoted to "the future of U.S. equities," according to Brooks, are both noteworthy. The annual decline in Bitcoin is greater than 56%.
The pricing of cryptocurrencies is "not that relevant any more than google ads volatility," he claimed, even in the face of such abrupt changes in valuation.
According to him, when tens of millions of people use the underlying [technology], such as bitcoin, the value of the tokens you are receiving rises significantly. As a result of increasing usage, bitcoin won't remain at $20,000 forever. The same is true of numerous other things, Brooks said. He continued, "What drives the value of the token is the value of the network."
Stablecoins will change how people perceive bank deposits, according to Brooks, who signed the first regulatory guidance defining what a stablecoin was and how it would be accepted inside the U.S. banking system.
According to Brooks, stablecoins will have a big impact on lower-income Americans because "these will be bank deposits that don't have a minimum balance fee, don't have a monthly maintenance fee, don't have a transaction fee."