Cryptocurrency: Coinbase Offers Interest to Park Cash
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What is the main topic discussed in this episode?
With your money briefing, I'm J.R. Whalen at The Wall Street Journal in New York.
What quick market headlines set the scene for Coinbase's staking move?
With Bitcoin and other cryptocurrencies at their lowest levels in 10 years in some cases, generating revenue is priority number one for some companies in that space. We'll take a look at what Coinbase is doing in a moment. First, these money and market stories you should know. The personal saving rate, that's the difference between disposable income and spending, was 7.5% in January.
How is the personal saving and consumer spending picture described for January?
That's down slightly from a month earlier, still relatively high compared to past decades. And consumers modestly increased spending in January. The Commerce Department says that spending rose 0.1%. though Americans reined in spending on durable or long-lasting goods. That's the second straight month of pullback on such goods. Also in January, inflation fell 0.1% and was up 1.4% from a year earlier. That's a sharp pullback from annual growth of 1.8% in December. The Federal Reserve's target rate for annual inflation, by the way, is 2%. And it's getting harder and harder for high school students to get into top colleges. Several top schools, including Ivy League institutions, reported record low acceptance rates after sending out acceptance letters late last week.
What evidence is given that college acceptance rates are shrinking?
Harvard, for one, posted a 4.5% acceptance rate this year, inviting 1,950 of 43,330 applicants to enroll. Dartmouth College also hit a record low with 7.9%. Cornell accepted 10.6% of applicants, up slightly from last year. It's the only Ivy League figure in the double digits. And the Journal's Melissa Korn reports the shrinking rates have pushed many high school students to apply to more colleges, thereby pushing the admit rates lower and the caliber of students higher for a wider pool of schools. Brown University, for instance, said that 94% of admitted students are in the top 10% of their high school classes, while New York University said the median SAT score for admitted students this year was 1480 out of a possible 1600.
Bitcoin is in the longest slump in its 10-year history, and that has many companies in the cryptocurrency space scrambling to make money just to stay afloat. Well, now Coinbase has a way it hopes to bring customers on board, and the journal's cryptocurrency reporter Paul Vigna is here with details. So, Paul, Coinbase hopes it has incentive for customers to bring their money there and essentially park it. It's called staking?
Why is the prolonged Bitcoin slump prompting new business strategies?
yeah so coinbase has coinbase started out as a trading site an exchange for for cryptocurrencies and they've expanded over the years they've become several things one thing that they launched within the last year was a dedicated custody service regulated insured custody service where people institutional investors really could park could invest in cryptocurrencies and park the money there you know literally just a custody service And what they are adding now is a feature that allows you to earn money on that custody service, assuming that you invest in specific cryptocurrencies. And that's a very key point. It's interesting because what I'm seeing now is another trend in the cryptocurrency markets.
And the trend now is people trying to figure out ways to essentially pay cryptocurrency investors what looks almost identical to an interest rate. In other words, if you buy a bond, obviously you get an interest rate. Buy a corporate debt, you get an interest rate.
What exactly is Coinbase offering with its new 'staking' custody feature?
This is basically, if you invest in cryptocurrencies, you get what is essentially an interest rate. The process is called staking. So what staking is, without getting too dense into the weeds on this, because we could do a whole podcast just on staking, Essentially, when a cryptocurrency starts up, one of the many things they're trying to do is come up with a way to keep the network secure. And one of the ways you do that is by putting a cost on anybody who wants to participate in the network. So in other words, if you want to become one of the independent... Look, every cryptocurrency is run on a network of connected but independent computers.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:05–0:09
2
What quick market headlines set the scene for Coinbase's staking move?
0:09–0:30
3
How is the personal saving and consumer spending picture described for January?
0:30–1:19
4
What evidence is given that college acceptance rates are shrinking?
1:19–2:44
5
Why is the prolonged Bitcoin slump prompting new business strategies?
2:44–3:44
6
What exactly is Coinbase offering with its new 'staking' custody feature?
3:44–5:04
7
How does staking work and why does it resemble earning interest?
5:04–7:17
8
Why can't Bitcoin be used for staking the way Tezos can?
7:17–11:30
Speakers
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