Bloomberg Línea — The cryptocurrency pioneer and founder of the stablecoin (cryptocurrencies pegged to the dollar) Tether Brock Pierce said the vast majority of NFTs are going to fail because the barrier to creating a new NFT is so low that everyone is trying to make it. “The community is making projects and a lot of them are not very good. A lot of them are like the speculating IPO market in the 99′s, except not everyone can take it public,” said Pierce, at the Bloomberg New Economy Gateway held in Panama this Thursday.
According to Pierce, who is also the chairman of the Bitcoin foundation, people who buy NFTs should do so to be part of a group or a community, but shouldn’t expect liquidity. “Whenever is the moment you buy it, make sure your digital canvas is on the wall and you’re in the world and community you want to spend time with. But I wouldn’t invest heavily in this space [of NFTs],” he said.
With the recent collapse of the stablecoins Terra USD and Luna, the father of Tether - who left the business and now intends to become a politician - says these cryptocurrencies were experimental algorithm stablecoins.
The problem with their meltdown, according to Pierce, is that people bet to much on something experimental. “There were no negative intentions behind them, it was an experience that got too big too fast”, he said. “Don’t put that much confidence in something that is that new, but the fact that the retail public is learning how to access financial markets is a good thing. One of the lessons from it is to manage your assets, don’t have them all in one basket.”
For Pierce, these stablecoins got so big so fast because they were paying the highest yields. But he says it wasn’t a Ponzi scheme. “The market subsidized Terra and Luna the same way VCs subsidized Uber and DoorDash, betting equity in the enterprise value. The same thing happened here, naturally the yield was subsidized by the underlying business operators,” he said.
While Tether also went into meltdown when these cryptos collapsed, Pierce says it has already recovered. “That happened immediately when Terra and Luna sent a very bad message to the market.”
When will crypto fulfill its promise to not be cyclical?
Pierce thinks the only way crypto could fulfill its original pledge to be anti-cyclical and break free from the correlation with the old economy is if more inflation was added. “For that to happen, probably something very bad would have to happen. At this point, the direct correlation with the old economy and the new economy for large cryptos like Ether and Bitcoin is likely to continue to be the pattern.” If traditional markets are doing well, crypto is doing even better. And if they go bad, crypto goes even worse.
According to the crypto specialist, identity solutions through Web 3.0 will be a great topic of conversation for the next few years. “We’re seeing large numbers of people in Latin America using this tech for remittances, the identity fundamentals are there,” he said.
Pierce believes Web 3.0 promises what the Internet can do for people. While Web 2.0 was big tech monopolized, Web 3.0 pledges to demonopolize this business, to make data available and anyone could create an interface.
“Most valuable commodities went from gold to oil. Today data is the most valuable commodity. The idea is that you can take your identity and, if today you have to provide consent for the use of it, with Web 3.0 you can be a financial beneficiary from your data use.”