David Hollerith of Yahoo Finance joined Yahoo Finance Live to discuss the crypto and Visa partnership with ConsenSys.
Zach Guzman: Well, adoption with some of the big players in the financial field continues to grow when it comes to cryptocurrencies. Visa has announced that it will partner with major blockchain players to help build the technology for what we have all been waiting for in terms of central bank digital currencies, and central bank digital currencies, while we await the latest update from the Federal Reserve on what they think about these and how they can compete with the stablecoins out there.
And for more information on that, I’d like to bring in David Hollerith of Yahoo Finance. And David, of all the stories I believe in cryptocurrency, this one really does get into the inner plumbing of some of the concepts presented here. But it does include some very big names. And anytime we talk about Visa, we have to learn more.
David Hollerith: Certainly yes. So Visa has partnered with the blockchain software company, Consensus. And kind of the idea of the partnership is to create a beta program kind of a platform where CBDCs can kind of be trialled by central banks. So this is similar to what MasterCard introduced about a year ago now. It is scheduled to be launched in the spring. The idea behind it, sort of, is that it sheds a little more light on how digital central bank coins, or central bank digital currencies, enter or are distributed in the existing financial system.
So the idea, I think, Zack, is, you know, the key is that everybody — I say everybody — 87 different countries are kind of talking about issuing these digital currencies. They follow a wide variety of methods. And money in general can mean many different things. And so, maybe this is an idea of the private sector being involved in the procedure and also kind of creating an easier way for them to work with our current system so that, you know, I think, maybe the cut-off financial intermediaries are not thinking.
Zach Guzman: Yeah, and I think, you know, too, I mean, as we’ve covered, really, where it kind of grew in terms of maybe an issue to watch, you know, tether has been the biggest stablecoin for a long time. Then questions about what exactly the deposits look like led to the emergence of USDC, a circle-shaped stablecoin that really works closely with Coinbase.
And you think about the cliffs, really, for people that cross, I mean, that’s generally the way most people would probably think of getting into the crypto space, which is buying a stablecoin since it’s only supposed to be $1 all the time versus maybe Bitcoin. I mean, what do you think some of these changes might do to maybe make the climb easier for people to maybe finally get to encryption?
David Hollerith: Yes, it is hard to imagine how CBDCs would fit into this. We heard at his hearing earlier this week that the Fed chair kind of indicated, you know, that digital central bank currencies, stablecoins, can sort of co-exist in the financial system. And that’s clearly what Visa has in mind as well. They settle transactions in USDC, the stablecoin. So they are clearly optimistic about their opening overall.
One of the interesting facts is that most of these – this type of project is assumed sort of via a consensus protocol, which is called Quorum, and it’s basically designed by Ehtereum in a way that allows central banks to sort of design the way they want money to function. But they have similarities with Ethereum, and there is the possibility of a bridge, which is an interesting kind. Whether or not the central bank will want to create something like this for its currency remains to be seen.
Zach Guzman: Yeah, from a sandbox, I think, where they have complete control to another where they don’t, we’ll see if some kind of crossover continues. But David Hollerith brought us the latest —