How and Why Cryptocurrencies Increase (and fall) in Value
What causes cryptocurrencies to see huge gains (and losses) in value? What’s going on over in Venezuela with their national cryptocurrency, the Petro? And has China really banned ALL cryptocurrency events? We answer all these questions and more in the latest episode of the Decrypting Crypto Podcast.
Matthew: Hello everyone and welcome to the Decrypting Crypto Podcast, a Castbox original Show. I’m Matthew Howells-Barby. And yet again, I’m joined by my co-host, Austin Knight.
Austin: Hey, Matt. Hello, everyone listening. It’s great to be here again.
Matthew: Oh, yeah. It’s wonderful to have you alongside me, Austin. In today’s episode, we’re actually going to take a slight break from some of the special guest interviews that we’ve been recording recently. You’ll have noticed if you follow the podcast, we’ve been bringing in a bunch of awesome guests, but me and Austin wanted to kind of kick it back a little bit to what we were doing in Series One of the podcast where we did a little bit of a deep dive into one topic, and also run through some of the latest happenings that have been going on in the blockchain space.
Austin: Yeah. And especially considering that we’ve been getting a bunch of questions over email and Twitter related to this stuff. We wanted to make sure that we just took a step back and spent some time actually going through these topics that keep coming up so often.
Matthew: Yeah, exactly. Just as a note here, we are going to be playing around with this format a little bit. So, as a listener, if you have any feedback, make sure you drop us an email, or you can even tweet us with how you think this has gone, and suggestions for how it might be improved to us. We’re always willing to listen.
Austin: Yeah, and as a reminder, if you want to email us, you can reach us at firstname.lastname@example.org.
Matthew: Yeah, and if you haven’t already, you can follow us and tweet us on Twitter. Our Twitter handle is @thecoinoffering. So, hit us up on Twitter. You can tweet us anytime, usually pretty responsive. Failing that, you can drop us an email, we’ll always come back to you.
Austin: Yeah, let us know what you want to hear about. If there’s any topics that you would like us to cover, anything that you think we’re doing really well. We want the show to continue to be built by you all our community. And if there’s anyone in the industry that you think is doing something interesting, has a cool story that they could share, let us know about it, and we can bring them on as a guest. We’re always looking for cool people to speak to.
Matthew: We certainly are. Before we get stuck into a main discussion today, it’s probably worth us chatting a little bit about some of the recent news and ongoings, as I mentioned we were going to in this space that’s happened in particular in the past few weeks.
Austin: Yeah, there’s been a lot of news particularly coming out of both Venezuela and China in relation to crypto right now.
Matthew: Yeah, these two countries seem to be at completely polar opposite ends of the spectrum in terms of their openness to cryptocurrency. I personally don’t know if it’s good news for either of them at this stage.
Austin: No. Yeah. On the one hand we have an announcement from China that they are completely banning all cryptocurrency and blockchain events. And this comes around a year after they banned cryptocurrency exchanges. And then on the other hand you have Nicolas Maduro the current president of Venezuela who is doing seemingly everything possible to get people buying and using his so called oil backed cryptocurrency.
Matthew: Completely legit cryptocurrency, I’m sure, yeah.
Austin: Just like everything else there.
Matthew: Yeah. But on a serious note though, I know we’ve talked about this a bunch off mic Austin and I really do feel for the Venezuelan people right now. The country seems to pretty much be in chaos. And we’re going to go into some of the reasons why this is, but just before we dig into that a little bit more, let’s start by having a brief discussion around China. There’s been a number of news reports that are saying that China has banned all crypto events specifically in Beijing. And from a government notice that was shared on Twitter, we’ll share out the link to the tweet in the show notes of this episode. It stated … This has been translated but, they’re saying that they are preventing the risk of money laundering and they’re doing it to protect the property rights of the public.
Matthew: I think one of the things that is definitely concerning here is they’re also banning any cryptocurrency related WeChat accounts. So, if you haven’t used WeChat before, WeChat is, if you use WhatsApp or Facebook Messenger, WeChat is the number one messaging platform for most of Asia to be honest. And they’re attempting to shut down cryptocurrency media outlets. It doesn’t sound overly optimistic for the future.
Austin: Yeah. Well, certainly I think that censorship and control are a core theme of Xi Jinping and the Chinese Communist Party’s MO. And that blockchain and cryptocurrency certainly presents a threat to that. On the one hand I don’t see this as a particularly surprising move, albeit something that’s terrifying to the open exchange of funds that is at the center of this technology.
Matthew: Yeah. And I will also point out we’ve made this point before that, it’s also really difficult to understand the validity of a lot of reports that are coming out of whether it’s China or just generally in the blockchain space. I think we talked about this a bit in the last episode. There are so many ulterior motives. The thing that I would say though, in China, the lion’s share … We talked about this in the end of Series One, the lion’s share of all of the mining power behind the Bitcoin network is housed largely within China. And one massive company that holds the lion’s share of Bitcoin cash is Bitmain, and they have a huge amount of power.
Matthew: I don’t know if you saw the recent stories, Austin, about Bitmain going after an IPO. And I actually, last night, this was, I was in bed checking Twitter and saw that there’s just basically been an explosion of news around their IPO, where they’d listed people as investors which was all false. They’d made somewhere in the losses in Q2 of 2018 of 600 to 700 million that projected to make losses even more. Now, they’ve been making substantial revenue, but I also think that with a lot of the bear market that’s been happening, the huge dips in crypto pricing a lot of that IPO valuation was based around the assets that they hold on Bitcoin cash, which is kind of crazy to me.
Austin: Yeah, that is nuts.
Matthew: Yeah. That really puts another huge question mark around China and cryptocurrency and the power that they’re holding. And it does seem that Xi Jinping and the rest of the government there don’t necessarily seem to be very open to the movement in general.
Austin: Yeah, I wouldn’t be surprised though, if their ultimate goal is to treat this technology and for that matter, introduce this technology to China in a similar way that they did with the internet, and the not so open web, at least in their context. Because I get the feeling that the Chinese administration sees value in blockchain and cryptocurrency tech, in the same way that they saw value in the web. But they see a threat, and the openness of it, and the lack of control that they would be able to exercise over that.
Austin: I would be interested to see if this is a step that they’re taking toward their own version of a reform and clean up in air quotes so that they could roll it out to China in the way that they did the internet, which is basically their own way, with their own rules, and total control over that exchange of information or exchange of currency in this case.
Matthew: Yeah, it seems like that is certainly the fear for a lot of people. Control, you mentioned that being very much the operative word in a lot of discussion around China. And actually, not just China. But a lot of even to a certain extent, actually some of the countries that have been really, some of the pioneers behind the blockchain movement. Even the likes of Korea have really tried to put in a lot more, let’s say control over in particular the cryptocurrency exchanges, to a certain extent the US as well. I think, you look at New York and the extra legislation that they’ve put on even being able to be set up with an exchange and the Bitcoin license that’s there.
Matthew: I don’t think that this is necessarily completely isolated to just China. I think that every country wants their slice of the pie, right?
Matthew: I just think that China would rather have the entire pie right now.
Austin: Yeah. I also think it’s worth delineating between regulation for protection of consumers and investors and fair play in the marketplace versus regulation for authoritarian control. And I certainly think that a lot of crazy things are happening in the blockchain space because there is so little regulation, there are basically no ground rules set to play here. And that people can get burned as a result of that. So, I imagine that some people would be open to the idea of basic regulations or rules to run an exchange, to perform an ICO, But not necessarily total exercise of control over the entire thing. Which is kind of the, if you think about it, the antithesis of the decentralized model, in the same way that censorship is the antithesis of the open web.
Matthew: 100%. I couldn’t agree more with that statement. And I think those two parts of you talked about is regulation to protect consumers, regulation to ultimately control consumers, right? Is two very different things. Polar ends of the scale, but they seem to get blurred into one in the crypto space for a lot of people that certainly have a lot more ideological views around blockchain, from what I found.
Matthew: Speaking of ideological views, why don’t we jump into Venezuela and the situation that’s erupting there, which actually seems like the opposite end of the spectrum here, and is getting crazier and crazier by the day. Why don’t we run through some of the facts that we know are happening to date, and what’s gone on right now?
Austin: Yeah. What we know as in just purely factually speaking, is that Maduro has devalued Venezuela’s national fiat currency, the Bolivar by around 95% by launching a new currency, which is not a cryptocurrency, which will be called the Sovereign Bolivar. The Sovereign Bolivar-
Matthew: Sounds so much more legitimate with that Sovereign behind it now.
Austin: But this is important to the story in that the Sovereign Bolivar will replace the Bolivar and will be tied to the, Petro which is Venezuela’s supposedly oil backed cryptocurrency that Maduro himself created. Him and a team of people in his administration. The Petro will be used to actually set the prices for goods, which is going to fluctuate a lot as is already occurring. They’ve also set a minimum wage to 1800 Sovereign Bolivars, which is roughly a 3000% increase, but only equates to around 30 USD per month. And that’s something that could certainly change by the day knowing the currency fluctuation patterns that we’ve seen there in the past.
Austin: But that is on a basic level, factually what we know.
Matthew: Yeah. And that seems to be more and more facts as well as allegations coming out in the media day by day. It is actually also worth noting here that the US in particular has banned US citizens from trading the Petro, that’s Venezuela’s cryptocurrency, and actually a number of countries have followed suit. A lot of people are actually simply calling this a giant scam. But what must it like to be in Venezuela right now? You mentioned there the Petro being used to set prices for goods. You imagine setting the prices for goods on Bitcoin? I can only just imagine the sheer amount of money spent on those little price labels that you’ll have to basically update every like three seconds with the big volatility jumps and dips that are going on. I can’t even fathom it right now.
Austin: Yeah. It makes me think of a story that my mother-in-law told me about when she was younger living in Brazil, my mother-in-law’s Brazilian, about how when their currency was fluctuating and inflation was going up and down and way, way up by the day, or perhaps by the hour. You would run to the supermarket and you would have to get in front of the man with the price gun so that you could get the old price before he walked past the goods and changed it, and what a terrifying situation that would have been to live in.
Austin: Personally, as someone who has lived in South America for a couple years and has friends who are either trapped in Venezuela or have made it out and have family members that are trapped in Venezuela, it’s very sobering but critical to remember that we’re not just talking about a cryptocurrency here. While that is an interesting proxy to this discussion, we’re talking about real human lives. People who are not only having their liberty and their livelihood taken from them, but are being directly oppressed and starving to death.
Austin: All of this discussion about this currency is simply another distraction from an administration that has continued to oppress its people. And so we can get caught up in the minutiae of this technology. But I see it very clear that regardless of what happens with this cryptocurrency, which I think the outcome would be fairly predictable. For the Venezuelan people and their livelihood, nothing will change until this administration and its ideology is fundamentally purged from that country. I think that the process through which that has to happen is going to be very painful.
Austin: It’s worth thinking about the cryptocurrency especially in the context of this show and the different ways that cryptocurrency can be used, but to think, oh, we could introduce a cryptocurrency to a fundamentally flawed economy and government, and that it could in some way help them, I think is simply naive. And that’s not how I would … I don’t view cryptocurrency as necessarily being something that could solve the world’s problems or should ever be expected to.
Matthew: Yeah, very, very put. I think that’s a very good point here. And to also add to this, with a lot of new technologies that come in and ultimately do possess capabilities with the right leadership, deployment, and let’s say ethics behind that, which is almost an even bigger part than the technology themselves can be used for extreme good and can solve enormous problems. But there’s also another end of the spectrum. And that is they can also be used for very, very evil means as well, for lack of a better term.
Matthew: I think this is one of many, Venezuela is one place in particular, occasions where blockchain technology and cryptocurrencies in particular with the Petro is being used as a vehicle for mass distraction, and also ultimately asserting more control over the people, ruining people’s livelihoods. I think the disappointing thing here is we’re talking about Venezuela right now, but I think this could be one of many situations in the future that we start to see erupt off the back of this as a tactic for ultimately a certain control on a group of people.
Austin: Yeah, I think you’re right on the money, Matt. Interestingly, Maduro has said that Petro sales have already raised $3.3 billion and that the coin is being used to pay for imports and all of this stuff and yet people on the ground and even people in the Maduro’s own administration say that the coin is still in development, that nobody has received any Petro. The people don’t understand how it works, or how they can buy it, or how they can use it there. There is a lot of smoke and mirrors coming out of this story and for that matter, of course, this government.
Austin: I was reading a story from Reuters, an in depth piece about this. And at the end of it, they were talking about a teacher, Rosa Alvarez, who said that around half of her first grade class had stopped showing up to school because they were hungry and the school no longer provided them with state sponsored meals. And she said that the government officials have ignored her complaints. But in May, the election ministry laid out a new mandate to her that she had to teach the students about the virtues of Venezuela’s new cryptocurrency.
Austin: So, sort of this interesting convergence of like our students are literally starving and can’t come to school because of that. And then we’ve got this cryptocurrency, which is actually built off of very free and open exchange principles being applied in an authorocratic way and she said that standing there before her students mandated to teach what is now less than half of her class about this cryptocurrency, she didn’t know what to do. Because she doesn’t know anything about it herself.
Matthew: Right? If you just read between that, that’s coming up to a homeless person in the street and telling them how wonderful money is. And just explaining the virtues of money. The irony behind all of this, I’m sure it’s not lost on the Venezuelan people, but also it does hit home quite a scary thought around just indoctrination of younger individuals into trying to ultimately get them bought into a giant facade that is being created.
Austin: Yeah, absolutely.
Matthew: But I think we’re going to shift gears a little bit here. I think we were all feeling for the Venezuelan people, and I really do hope that there is a happy ending here. But I think a lot of happy endings at the moment, there often has to be a much worse time to come before that. But we’ll see how that story develops.
Austin: Yeah, it’s also worth noting that if we have any Venezuelan listeners, which I know that we do, who have thoughts on this situation and would like to speak about it, write us an email, record yourself talking and we can work it into the show. We want to hear from you there on the ground.
Matthew: That would be-
Austin: What you think of crypto in general, but also what you think of crypto in the context of Venezuela because we know that it is so difficult to get accurate information on both of these topics, both China and Venezuela. So, anybody there that’s listening that has something to say, say it and we will share it.
Matthew: Absolutely. And in the show notes, what I’ll also do is, I read a really interesting Reddit thread that someone had posted who was living in Venezuela right now. And just sharing some honest facts about their day to day and how all of this is affecting them. And it really does hit home that the exact situation that people are in over there. So, we’ll share that out in the show notes. And absolutely, if there’s any of our Venezuelan listeners that are tuning in, we would love to hear from you. So, drop us an email, tweet us, whatever you can do, that’d be fantastic.
Matthew: So, to shift gears a little bit now, we are going to jump into our main feature section where we’re going to talk a little bit about a question that has probably come up the most since we’ve started doing the podcast from listeners and people within the community that have spoken to us. We touched a little bit about this in Series One, but I think it’s now nice for us to go back in and explore a little bit more about how cryptocurrencies gain and lose value.
Matthew: This is a bit of a complex topic to really go into, but what I thought we’d start by doing is giving a very brief recap actually of one of the things we talked about in Series One, the third episode of Series One. I would recommend if you’re interested in this topic, which if you’re at all interested in cryptocurrencies and blockchain, I’m sure this is a real problem area that you’re trying to get your head around, go dive into Episode Three and listen to it fully through. But Austin, why don’t you just run through briefly some of the different factors that actually have been recognized to form and make up a currency. Not just a cryptocurrency but this is what monetary theorists have came up with the different factors that make up a currency of any form.
Austin: Yes. The general consensus is that five principles are required in order to make something a currency. Those are; fungibility, scarcity, durability, transferability, and divisibility. Fungibility, we’ll start with that, is the ability to exchange one unit of a currency for another. So, direct exchange. And in order for this to happen, they have to be completely identical in value. Scarcity simply states that there should be a limited supply of whatever the currency is. This would both be the case for gold, because there is a finite amount of gold in the world, but also the case for Bitcoin because by the time that all Bitcoins are released, there will be a finite number of those.
Matthew: Yeah, so that’s 21 million, right?
Matthew: I think that was by the year 2140 I think, we’ll have all of those? So, exact amount of scarcity that you have with Bitcoin.
Austin: Yeah. This is also why you see currencies sometimes being backed up by scarce resources. Durability, the third principle, it simply states that the currency must stand the test of time and weather. With cryptocurrency, as long as the network survives, the currency itself survives. So, it’s actually very durable. Transferability states that one unit must be able to be transferred to another owner. This is a fundamental aspect of any currency. Crypto actually makes this easier than ever.
Austin: And then finally, divisibility states that the currency should be divisible into smaller fractions. So, you can break it down. Gold can be broken down into smaller pieces, dollars have cents, or even fractions of a cent if you’re transacting electronically, and Bitcoin has Satoshi’s, which are up to eight decimal points of a Bitcoin.
Matthew: Yeah, and I think we called this out in one of our other episodes as well, that with the divisibility of Bitcoin in particular, it can actually be with a simple change in the code, could be divided up to 10, 16, 25 decimal places if you want. It’s very easy to make that more divisible. I think that the key takeaway here is that, and when you compare this in particular to fiat currencies, let’s take the British Pound sterling, the US dollar, the Euro, et cetera, et cetera. Actually, the crypto currencies like Bitcoin, for example, take a lot of these boxes more effectively than most fiat currencies do.
Matthew: When we get past this stage of, okay, cryptocurrencies ultimately are a currency, and they operate in a very similar way, albeit they’re not government backed, like a fiat currency. So, they can’t be impacted by things like quantitative easing, where more money is printed, and can impact the price heavily. For example, in Venezuela, what we’re talking about with the Bolivar just all of a sudden being replaced with the Sovereign Bolivar and then the currency loses 95% of its value as a result. It’s very different in that respect.
Matthew: But one of the biggest things I would say, all that to one side, the cryptocurrency prices and one of the reasons why they’ve been incredibly volatile in particular over say, the past 18 to 24 months, is that they’re heavily influenced by speculation. This is not completely isolated to cryptocurrencies though. When big news breaks, you’ve got price will often sway one way or another. So, I think we talked a bit about this in one of our interviews that we had, Austin. I think just before one of them were a couple of weeks ago, the SCC rejected proposals for, I think it was like nine different Bitcoin ETFs or the exchange traded fund. I think I explained a bit about what an exchange traded fund was in that episode. And the price of most major cryptos actually dropped by around 30%.
Matthew: It’s purely people being worried, selling their cryptocurrency in anticipation of what might happen in the future. And it causes a knock on effect. This isn’t the first news story that we’ve had right?
Austin: Oh, not at all. In September of 2017 when China banned ICOS, A very similar thing happened. We saw a major drop due to speculation of the fallout that would be caused from that ban.
Matthew: Yeah. This is going to continue to happen similarly on the other way round as Bitcoin’s price started to rise upon people getting quite excited around some of the gains it had made especially in 2017, and we’re talking when it kind of probably breached the 5K mark I think in terms of USD value. All of a sudden there was a ton more news, Bitcoin reaching all-time highs, everyone’s like, “Invest now in Bitcoin.” And more people are buying and when more people purchase there creates a huge amount more demand, and that creates a rise in price. And then with that comes more speculation. And with that comes even greater amounts of demand for the cryptocurrency. People are willing to buy at higher prices not to lose out on ultimately a scarce amount of Bitcoin.
Matthew: So, this has a knock on effect both in a mass selloff, and a mass by up of these currencies. It’s worth mentioning here, me and Austin are not monetary theorists, neither are we financial advisors, but this is the fundamental parts behind why cryptocurrencies are jumping around, and it’s one of the things that people talk about is, well, it’s not backed by anything, it goes and makes crazy swings in price based on new speculation, but that is no different from the stock market.
Austin: Most NASDAQ, NYSE, LSE, whatever stocks will swing heavily one way or the other based on a single news article. Elon Musk recently tweeted about taking Tesla private and the stock climbed nearly 20%, even though nothing was confirmed. And of course, that caused a bunch of uproaring controversy.
Matthew: Yeah, I think he’s in a lot of trouble right now.
Matthew: Yeah, I think that was actually one of the biggest losses of all time. I think it may be the largest single day loss in valuation of all time. And people are going crazy about the likes of Bitcoin, Ethereum losing huge amounts of their value. Just to be clear, rightly so, that can be very scary, right? For a lot of people that in particular we talked about this off mic, Austin, but for a lot of people around Thanksgiving of 2017 when everyone was getting excited about cryptocurrency, and they were jumping in and purchasing at what were pretty much all-time highs. And now, here we sit three quarters of the way through 2018 and a lot of major cryptocurrencies have lost kind of as much as 70% of their value. I can understand it, but to say that just isolated to cryptocurrencies is just incorrect, right?
Austin: Oh, absolutely. With that said, of course, cryptocurrencies are much more nascent and less regulated than stock exchanges. What it takes to list a cryptocurrency or perform an ICO is very different. The barrier of entry is much lower than what it would take to IPO and get your company listed on a stock exchange. That’s something that we’ve talked about in previous episodes.
Austin: So, we do see huge swings, and of course, in the same way that cryptocurrencies are influenced by speculation and media and public companies are influenced by speculation and media, you can have people with intent to influence the price of a cryptocurrency or a stock purposefully seed misinformation or spin a media piece a certain way in their favor.
Austin: We’re all familiar with pump and dump schemes, and I think that realistically we see that type of behavior manifest itself at different levels and of course different amounts of legitimacy. Sometimes more legitimate or unintentional than others in the crypto space. And so, it’s also unsurprising in the same way that if a negative news piece could be seeded about a stock, it could cause that stock to go crazy, the same thing will happen with cryptocurrencies.
Matthew: Yeah, and I think that’s a good point that brings us back into one of the things we talked about at the start the episode, was around regulation and protecting consumers. I think one of the things that a lot of people have criticisms around cryptocurrencies for, is the lack of general regulation that’s in place, in particular around companies doing ICOs.
Matthew: You look at for example, EOS they raised, I think it was $4 billion in an ICO. And ICO is just a self-regulated fundraising mechanism ultimately. We talked about Elon Musk just then sharing out a tweet about how he may take Tesla private. That’s ultimately coming in complete conflict with the regulations in place with him having insider information in his company that could be used when shared publicly to manipulate stock price. He’s now going to face repercussions for that.
Matthew: The same thing isn’t necessarily being done in the blockchain space. And I think that’s why people are quite worried. I think we said in … Trying to remember the exact stat. I think this was in our last episode, we said, that of all the major cryptocurrencies, let’s say like the top 100 by market cap is something like 80% of them don’t actually have a live product right now.
Austin: Right? That’s scary.
Matthew: That’s why I think people get pretty scared. But one thing that is interesting, this is something that I was digging into a lot, especially into the start of this year is the birth of virtual currencies in general. I say virtual currencies versus cryptocurrencies. The main differentiation being a cryptocurrency is a cryptographically signed currency that lives on a blockchain or a form of distributed ledger technology. And I’m using a virtual currency is a broad, all-encompassing term.
Matthew: The reason I say that is this isn’t the first time that cryptocurrencies have been rolled out and one of my heat for examples here is with SecondLife, the virtual chat room. Are you familiar, Austin with SecondLife much?
Austin: Oh, yeah. Quite an interesting experiment, if you want to call it that.
Matthew: Were you a “resident“ yourself?
Austin: I thought about it, but the amount of time investment that it would take to make it anywhere in that virtual world would have been quite substantial.
Matthew: Well, here’s what’s interesting about SecondLife, right? And for anyone listening, if you haven’t heard of SecondLife, unfamiliar, and you just want a giant black hole to go down, go just start reading about the history of SecondLife. It was a virtual chat room. It kind of is a mixture between, if you’re familiar with the video game The Sims, and a social network. So, you would have your own virtual avatar. It launched in 2003. The interesting thing with that, the community had its own virtual currency. This wasn’t a cryptocurrency, but it was called the Linden Dollar. You could exchange US dollar for Linden Dollars, which you could spend on the platform.
Matthew: The way I compare this is if you’re using a mobile app like buying virtual goods on Clash of Clans or Candy Crush or Angry Birds or whatever. You are using and buying a virtual token of some sort. Kind of how we’ve talked about crypto currencies in the past. Now, you could actually go and buy virtual goods so you could create your own apartment on SecondLife, and you would use Linden Dollars, which ultimately you had to purchase with US dollars. You could get a virtual job. I shit you not. You could get a virtual job.
Matthew: One of my favorite facts about this was actually one SecondLife user, a woman named Anshe Chung actually became the first ever millionaire, as in US dollar millionaire from selling virtual goods on the SecondLife platform.
Matthew: It’s crazy. You should read up, for anyone listening about this because it’s honestly a super interesting story. The Linden Dollar still exists, right?
Austin: Yeah. It’s valued at around 252 Linden Dollars to one USD right now. Which means that throughout the existence of this currency, that impacted the value that SecondLife held. So, in 2006 SecondLife actually had a GDP of $64 million US dollars. And then in 2009 that grew to, I believe, $567 million US dollars. That’s 25% of the entire virtual goods market in the US. This was an absolute phenomenon.
Matthew: It’s insane. And people were really genuinely making a lot of money. SecondLife still exists right now. Definitely in a very different form. But I remember around the time of its peak, around 2008, 2009, and brands were going crazy for it. You had Adidas, I think, Reebok were in there, MTV had actually paid to build their own SecondLife stores. I remember that Adidas one from a video and it was like, you can go and check this out on YouTube, we’ll share some links to this. And you could go into this virtual store, and you could see that different range of clothing and footwear. You could buy stuff directly in there.
Matthew: These brands invested a fair amount into the SecondLife platform, which ultimately failed. And also guessed what their centralized virtual currency with very little security was hacked at one point multiple times. What we’re not saying is that the Linden Dollar is the next big investment of 2018. But it’s certainly interesting to research.
Matthew: We’re starting to see new platforms come up. I think we’ve talked a bit, Austin, about Decentraland before, which seems to be combining what SecondLife actually pioneered, in all fairness when better technology and also virtual reality and cryptocurrency for some greater security there.
Austin: Yeah, it’s going to be so interesting to see this space evolve over the next couple of years. I know that we’re excited about the next iteration of each of these experiments. As the tech matures and as we learn more about what works and what doesn’t work, we’re certainly sitting along the sidelines rooting for these pioneers.
Matthew: Absolutely. And on that note, I think we’ll bring this all to a wrap. But hopefully you’ve enjoyed the slightly new format. Again, we would love to have any of your feedback on questions you’d love for myself and Austin to dig into, guests to love to hear on the show. And I just want to call it back out again to any of our Venezuelan listeners, and if there’s anyone from China listening into the podcast, we’d also love to hear from you in terms of how you’re finding things within the rise of cryptocurrency in your country.
Matthew: But until next time, we’ll see you, and thanks again for listening.