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No. There were about 431 million crypto users globally at the beginning of 2023, representing ~5.36% of the world population. The level of crypto adoption today is equivalent to internet adoption in 2000. In other words, if crypto is set to rebuild the fabric of the internet to allow anyone to transact as easily as we send information, then we are still quite early. The best moment to invest is now.

No. Crypto has real-world use cases that are disrupting the world. To name a few examples:

Bitcoin: the international hedge against wealth confiscation and counterparty risk
USD stablecoins: near-instant and cheap cross-border payments with digital dollars
Data storage: an immutable hard drive for preserving humanity’s knowledge
Digital identity: protecting online authenticity
NFTs: democratizing revenue for artists and musicians

It depends on what you define as “risky,” and varies dramatically between various cryptoassets. It’s crucial to remember that crypto is not just one thing but an entire asset class. Bitcoin, the oldest and largest cryptoasset, has become increasingly institutionalized, which speaks of its legitimacy as an emergent store of value asset outside of central banks’ control. Ethereum, of course, has also become increasingly isntitutionalized, which is a sign of network success. In financial terms, risk = volatility. By this definition, then crypto is riskier than investments such as gold, bonds, and many stocks. However, as the asset class matures, liquidity increases and volatility decreases. For example, Bitcoin’s annualized volatility has decreased from over 100% ten years ago to ~30% today, which is about 1.5x that of the S&P 500, while registering significantly higher multiple in returns. In other words, in terms of risk-adjusted returns, BTC has outperformed any other asset class over the past ten years.

Blockchains represent a significant technical breakthroughs in cryptography that have given rise to previously unimaginable use cases. Some examples: Bitcoin solved the “double-spend” problem via a permissionless network. Thus, it was the first successful attempt at a sovereign form of money outside of central banks’ control, all while being internet-native. Ethereum expanded on Bitcoin’s limited programmability by adding smart contracts, enabling anyone to launch decentralized applications that serve the end-user without an intermediary. Solana achieved a technical breakthrough in speed and scalability thanks to its Proof-of-History (PoH) architecture, enabling new applications to come to life.

Crypto is legal in over 60 countries around the world and the world’s largest economies are all proposing frameworks to regulate the industry. From a game theory perspective, it’s not in the best interest of a government to ban crypto as it would create regulatory arbitrage, prompting talent and capital to flee to a more favorable jurisdiction. Attempting to ban crypto will be seen as silly as attempting to ban the internet in the late 1990s and early 2000s. All it would do is drive capital offshore. The technology itself cannot be shut down as its open-source code and anyone can run it.

There would be no one to blame as they are both decentralized networks not controlled by a single entity. In this regard, BTC and ETH have achieved product-market fit and the probability of going to zero is minimal, especially as time passes (Lindy Effect).

No. There are two broad types of valuation approaches: (1) Fundamental or Intrinsic valuation composed of the Discounted Cash Flow (DCF) method and Mining Production Cost. (2) Relative valuation composed of Multiples and Market Sizing. Both fundamental and relative valuations can be applied to all cryptoassets but should differ and adapt to the type of consensus mechanism: Proof-of-Work (like Bitcoin) versus Proof-of-Stake (like Ethereum). See our State of Crypto on Valuation to understand how to value each type.

No – blockchains are the key to combating AI-driven identity risks. Also, there is a clear convergence between crypto and AI. “As the cost of producing artificial intelligence models decreases, the population of AI agents will grow exponentially. Agents will soon outnumber humans online, creating, consuming, and exchanging multitudes more information than we ever could. [...] To fully harness the potential of AI, we need a vast population of specialized agents that can talk to and transact with each other. They must be free to roam the internet and be able to have and spend money to execute tasks on our — or their own — behalf. We also need ways to identify, control, and audit their actions.” – Joel Monegro

False. There are over 900k validators worldwide securing the Ethereum network. Regarding Lido centralization concerns: Although Lido has 32% market share of all staked ETH, the pool is composed by 35 node operators, with not a single node operator holding more than 1.11%. Moreover, Lido keeps adding new node operators to increase geographic resiliency. Regarding Lido governance concerns: Lido is pushing a dual governance model that provides a practical way for Ethereum stakers to have a say in Lido protocol changes. The main goal is to prevent LDO holders from changing the social contract between the protocol and stETH holders without their consent. Dual governance essentially allows stETH holders to veto any undesirable changes to the Lido protocol.

Ethereum is a proof-of-stake network, which means it is secured by validators who commit a portion of their capital (the “stake”) to be eligible to confirm transactions in return for a constant stream of value flows. Revenues derive from two sources:

Issuance: validators have the right to new ETH issuance.
Transaction fees: users pay transaction fees every time they interact with the network.

This is a false dichotomy. By far, the most successful application of crypto thus far are stablecoins – that is, digital or crypto-dollars, as they enable anyone to send value over the internet, almost instantly and cost-efficiently. On the other hand, “free-floating” cryptos like BTC, ETH, and SOL have their place too. BTC represents an international, neutral, and censorship-resistant asset and a hedge against coutnerparty risk. ETH and SOL are both the coordination layers for the crypto-economies they have developed.

This is a short-sighted view. Bitcoin is the oldest and largest cryptoasset. It solved the “double-spend” problem via a permissionless network, the first successful attempt at a sovereign form of money outside of central banks’ control, all while being internet-native. Thus, Bitcoin has consolidated as an emergent store of value. However, other cryptoassets have innovated beyond Bitcoin’s breakthrough. For instance: Ethereum expanded on Bitcoin’s limited programmability by adding smart contracts, enabling anyone to launch decentralized applications that serve the end-user without an intermediary. Solana achieved a technical breakthrough in terms of speed and scalability thanks to its Proof-of-History (PoH) architecture, enabling new applications to come to life.

In 2140, Bitcoin is projected to reach its maximum supply of 21 million units. Assuming Bitcoin remains steadfast in its monetary policy, then when converges upon 21 million units with 0% annual supply inflation it will have achieved “perfect hardness”, which is only possible in the digital world. Some investors are concerned about the potential lack of incentives miners will have by then and its implications for Bitcoin’s security. However, it’s crucial to remember miners derive revenue not only from issuance, but from transaction fees as well. In December 2023, Bitcoin registered over $340 million in transaction fees, surpassing Ethereum as the network with most revenue. As new applications emerge around the Bitcoin economy (e.g., Ordinals, DeFi with Stacks, etc.), demand for Bitcoin’s block space will increase, leading to an increase in fees and miner profitability. By 2140, miners will be profitable by transaction fees alone.

Anyone who claims to know what Bicoin, Ethereum, or any other cryptoasset’s limit is, is lying. All we can do is conduct relative valuation approaches based on market sizing to estimate the potential Total Addressable Market (TAM) this networks may capture. For instance, we can price Bitcoin assuming it will capture a given percentage of gold’s market cap. However, this is just taking into account one use case. The beauty of these assets is they are open-source software, meaning that new use cases emerge continually and thus, so does their TAM.

Depends on the time horizon and the circumstances. Over long-term horizons, BTC and ETH’s correlation to tech stocks is very low (below 0.25). In addition, crypto has its own set of value drivers. This makes cryptoassets a vital diversification tool.

If the Internet shuts down crypto will be the least of anyone concerns. The damage it would cause in terms of electricity, commerce, communication, security, etc. would be catastrophic.

Investors have many ways to get exposure and store cryptoassets, depending on their risk profile, tech savviness, and regulatory constraints.

Self Custody:
- Hot wallet
- Cold storage

Third-party Custody:
- Custody via centralized exchanges
- Segregated storage via regulated custodians (ETPs) The safest way to store Bitcoin or other cryptoassets is via cold storage or hardware wallet, as it operates in an offline environment, away from the internet and its associated threats. However, self-custody is not for everyone. Regulated custodians have the operational expertise to store cryptoassets securely in cold storage. They also offer insurance from theft, and assets are ring-fenced away from the ETP’s issuer and the custodian.

Bitcoin may be considered the “safest” cryptoasset in the sense it’s the oldest and largest one and has consolidated itself as an emergent store of value assets. On the other hand, smart contract platforms like Ethereum and Solana face fierce competition from each other and new up-and-coming platforms. This being said, we couldn’t say one cryptoasset is the “best”. This is entirely subjective and conceptually a mistake, as they are not all serving the same use case.

Bitcoin’s volatility has decreased significantly over time as the asset has matured. Also, it’s important to consider the Sharpe ratio, which shows that on a risk-adjusted basis (returns adjusted for volatility), BTC has outperformed a basket of stocks like the SPY of Gold over the past decade.

The exact speed at which encrypted communications will become vulnerable to quantum computing remains hard to determine and the likelihood of a sudden breakthrough resulting in the design of such a computer remains minimal. In this regard, most experts agree that quantum computing will emerge within the next 15 years Fortunately, solutions, including post-quantum cryptography, are available to address the threat, although the crypto industry has yet to see the urgency in investing in these measures. Thus, it’s crucial for the crypto research and security communityt to closely monitor quantum developments.

No. According to Chainalysis, illicit activity constituted less than 0.30% of crypto's total volume in 2022. While it's true that there are a handful of protocols focused on privacy-enhancing features, Bitcoin, Ethereum, and the majority of cryptoassets today rely on a public blockchain that allows every transaction to be traced to a degree that isn't possible in traditional finance.

No. Public blockchains like Bitcoin and Ethereum are inherently transparent and allow every transaction to be traced to a degree that isn’t possible in traditional finance. A more accurate statement would be that blockchain addresses are pseudonymous.

Ethereum is an open-source blockchain platform built by hundreds of thousands of developers from around the world. Since Ethereum is a decentralized network, no single entity controls or owns it. Currently, there are over 900,000 validators worldwide securing the Ethereum network.

At genesis, ~72 million ETH, representing 60% of today’s circulating supply, was distributed to early project contributors and investors in Ethereum’s ICO.This fact has long been a source of controversy and criticism against Ethereum. However, it’s important to break down the numbers and understand this was necessary for bootstrapping the network economically. First, 60 million ETH, representing 50% of current total ETH supply, was distributed at the network’s genesis to participants in Ethereum’s initial coin offering (ICO). The ICO sale, which took place a year before Ethereum’s launch, sold coins to the general public at a ratio of 1 ETH:0.0005 BTC for the first 2 weeks and declined linearly to a rate of 1 ETH:0.0007479 BTC for the duration of the rest of the sale. The sale concluded on September 2, 2014 and ran in total for 42 days. In other words, anyone could participate. Second, 12,009,990.50 ETH, representing ~10% of current network supply, was also generated at genesis and set aside for early project contributors to Ethereum and the non-profit organization set up to oversee Ethereum development, known as the Ethereum Foundation (EF). This allocation is significantly lower than what other smart contract platforms have allocated to the teams and early investors.

False. Both intrinsic and relative valuation methods can be applied to digital assets, but the specific method should differ based on the type of asset. For Proof-of-Work Assets like Bitcoin, we can estimate a price floor using the mining cost of production. For Proof-of-Stake Assets like Ethereum, we can conduct an intrinsic valuation based on a discounted cash flow (DCF) method.

Bitcoin mining is a possible catalyst for accelerating the global shift towards clean energy and effective power grid management. For Proof-of-Work Assets like Bitcoin, we can estimate a price floor using the mining cost of production. For Proof-of-Stake Assets like Ethereum, we can conduct an intrinsic valuation based on a discounted cash flow (DCF) method.

No. High electricity consumption is unique to Proof-of-Work Cryptoassets like Bitcoin only. Still, Bitcoin mining is a possible catalyst for accelerating the global shift toward clean energy and effective power grid management. Most blockchains rely on a Proof-of-Stake consensus mechanism, which is capital-intensive but very energy-efficient.

False. This statement is assuming a false dichotomy between crypto and traditional finance. In reality, the convergence between crypto and traditional asset classes, including fiat currencies, equities, government bonds, and real estate, is experiencing an unprecedented growth. Gradually, blockchains will become the backend infrastructure for every asset class. As an example, over $850 million U.S. Treasuries have been tokenized.

It's important to ask the question, what is a backed currency? A currency that can always be exchanged for another asset at a predefined ratio. For instance, the U.S. dollar under the gold standard. However, fiat currency today isn’t backed by anything but the faith of the government that issues them. Crucially, all fiat currencies have devalued over long enough time horizons. Bitcoin is an emergent store of value asset with digitally-proven scarcity. Similar to gold, its value is based on the subjective belief of many individuals and it represents a sovereign money outside central banks’ control. Importantly, it’s not made out of thin air – miners worldwide have to spend millions of dollars in computational power to be able to confirm transactions and produce new blocks. Ethereum is a smart contract platform where developers can launch decentralized applications. Consider the followin analogy: Ethereum, Solana, and other networks are digital nations with their own native currency driving economic activity within their respective economies. If you want to participate in the U.S. economy, you need U.S. dollars – if you want to participate in the Ethereum economy, you need ETH.

At the risk of overgeneralizing, private blockchains are backed by incumbents in their respective industries, while public blockchains (what we generally refer to as “crypto”) are backed by the disruptors. What the Internet did for the exchange of information, crypto will do to the exchange of value. Put in another way, crypto will allow anyone to transact the same way they send information – as easily as sending an email. What we call “crypto” or the digital asset is a necessary coordination layer for this to take place in a decentralized manner.

No. Miners have two sources of revenue: (1) BTC issuance and (2) transaction fees. Even though the block reward is cut in half every four years until Bitcoin reaches its max supply of 21 million units, transaction fees have risen significantly over the past months and will become miners’ primary source of revenue over time as Bitcoin expands its use cases and gains more adoption.

No. Bitcoin critics claim that Bitcoin’s rules can be easily changed by alterin Bitcoin’s source code. However, Bitcoin is governed by the software run by nodes, not by the source code. In other words, even if a developer wrote the code to change Bitcoin’s supply, changing the supply would necessitate a hard fork, and it’s extremely unlikely the community would support it. Why? Removing the strict limit on the number of bitcoin would damage the primary value proposition of Bitcoin as a store of value and alienate investors.

No. Bitcoin Core is the open-source software that powers the Bitcoin network. This means that anyone is able to view, comment, or propose changes to the code. However, not all proposed changes are integrated. It is up to the community to carefully review changes and accept or reject them. At the blockchain level, consensus is maintained once a change is implemented by all nodes running compatible code.

No. When Satoshi Nakamoto created Bitcoin, he installed a strict limit on the number of Bitcoin that could ever exist – 21 million BTC. This limit, known as the hard cap, is encoded in Bitcoin’s source code and enforced by nodes on the network. Every 210,000 blocks or roughly 4 years, the amount of new BTC miners can mint per block is cut in half until it reaches the 21 million cap.

No. Satoshi Nakamoto, the creator of Bitcoin, still remains anonymous. There have been many attempts to identify the man/woman/group behind the pseudonym, but none have been successful. One of the greatest strengths of Bitcoin has been the absence of a leader or founder associated with it.

No. Over 50% of Bitcoin’s energy consumption is coming from renewables as of September 2023. Furthermore, the Bitcoin network functions as a unique energy buyer that could enable society to deploy substantially more solar, wind, and nuclear generation capacity.

No. Bitcoin was not pre-mined. When Satoshi mined the Genesis block on January 9, 2009, the first 50 BTC came into existence. A “pre-mine” occurs when assets are mined before a network is launched to the public.

No. Blockchains are inherently transparent, which allow anyone to review the code and use on-chain analysis to prove the circulating supply of a network. For instance, in August 2010 Bitcoin core developer Jeff Garzik identified an inflation bug that led to 184 billion BTC created out of thin air. Within two hours of reporting the bug, core developers Gavin Andresen and Satoshi Nakamoto were on the case, and the 184 billion BTC transaction was purged from block 74638