Ethereum, while outperforming Bitcoin in 2020, has been living in the larger cryptocurrency's shadow, but it's only a matter of time before prices double again from here, said Brian Norton, COO of MyEtherWallet.
We're talking all things to do with the Ethereum. One of the most popular coins besides Bitcoin joining me today to discuss this is Brian Norton, COO of my ether wallet, Brian, it's your first time on the show. Welcome to kickoff. Thank you. It's a pleasure to be here, Brian, before we talk about my ether wallet and your platform, let's talk about the use cases of Ethereum.
For those of the, uh, those of us who may not be familiar with the technology. Can you just in layman's terms, describe the technology behind 3m, why it was created and what the major use cases are today? Sure. So the, uh, Those are your, of your, of your viewers who kind of understand what Bitcoin is Bitcoin was designed for the purposes of transferring Bitcoin?
Um, the. Uh, Ethereum project was designed more for the creation of building applications, building an ecosystem, a technological ecosystem on top of it beyond simple value transfer. So the theory works with something called smart contracts, which some of your viewers may be at, uh, Familiar with, and these can power different types of applications, such as, um, popular defy applications.
DFI applications are, uh, it's short for Dem decentralized finance. Um, and this allows, uh, uh, people to interact with financial primitives in a trustless and permissionless way on the Ethereum network. So theory them as an asset class. Uh, uh, as an asset itself is actually used to power the, these, uh, these interactions on the Ethereum network.
So, uh, so the asset is actually used something, uh, uh, like a fuel in order to power transactions, whether those transactions be in, uh, in the Ethereum itself or in these other assets that are built on top of it theory. Um, so that's kind of what we've seen over the last year is this sort of explosion is decentralized finance, um, and, uh, and a theater, and that is driven.
Uh, new investors to, uh, purchasing the native app assets so they can power those applications. Okay. Brian, can you, um, elucidate on some of these defy products that we're seeing emerge? So for example, I spoke to an exchange recently and they're offering these yields on, uh, DFI products. So these yield products are pretty interesting to me.
Can you talk about this new trend that we're seeing? Okay. Uh, of course so many of the, uh, so there's different types of. Of DFI products that are available in Ethereum, um, automated market makers, uh, lending and borrowing protocols. Uh, these, uh, protocols, uh, work in a way that, where they work with liquidity pools, users, users often, uh, uh, contribute assets to these liquidity pools, uh, in exchange for, uh, an interest bearing token.
So they earn interest on their contributions. In addition to that, um, the, uh, yield farming was sort of introduced this year, which is an interesting, uh, uh, addition to, uh, uh, additional way, uh, of seeking yield on Ethereum in which, uh, governance tokens are issued to liquidity providers and those, uh, those, uh, tokens while.
Not really don't having any, uh, monetary value creates, uh, create. Uh, there is a great deal of demand for these, uh, uh, for these tokens. And they've seen, uh, they've seen an increase in value in secondary markets. And what this allows you to, uh, lead you to do is they, uh, essentially vote on major changes to any of these defy protocols.
Um, and some of these are quite valuable because they've, uh, we've seen an exponential increase in defy engagement over the last year, last year. Uh, just before this time in February. Defy had, uh, about a billion dollars of total value locked, um, across the entire ecosystem. Now that's North of $12 billion.
I believe. Uh, the last time I checked it was North of $12 billion. So a small fraction of the overall financial market, but huge growth just in a short period of time. I wonder if any of this, what we've just discussed has anything to do with Ethereum's price growth over the last 12 to 18 months. If you look at just a price chart here, uh, you know, Bitcoin has kind of taken the spotlight in 2020 as a huge growth instrument, but actually a theory has outperformed by several times.
So, uh, why, why do you think this outperformance happened? Right. Well, I think that one of the things that we can kind of look. Where Bitcoin and Ethereum sit in the overall digital active asset ecosystem is a big queen is primarily viewed as a store of value. Now, Ethereum, the asset has a lot of, uh, sort of value, uh, uh, qualities to it, but it also serves to.
To run the applications across the Ethereum network. So what we're kind of seeing is, and there was an article in CoinDesk just today about the, uh, the interest of institutionals in, uh, Ethereum, because they see this exponential growth in defy. And while, while perhaps wanting to hedge against the direct risks of those particular protocols, they acknowledge the.
Uh, the incredible value that's added by these protocols. And so holding a theory in itself, um, that the native asset to pro uh, power, these transactions on the Ethereum network, uh, serves as sort of a, sort of a hedge against that risk while taking a while, um, benefiting from the greater demand for the Ethereum token.
Um, Because of the increased, uh, uh, the increased interest in default. Okay. Now there was an article, um, uh, about an interview that you did recently in which you said that you're doubling down on Ethereum this year. Can you elaborate on what that means and why? Um, I, I think that we're just seeing the beginning of Ethereum's growth, um, with the launch of the beacon chain, uh, in December, which is the, uh, The first move towards Ethereum's, uh, move to proof of S uh, to a proof of stake network.
We've seen, uh, incredible interest in and people putting down, putting down a theory, uh, 32 in order to stake on the theory, uh, to, uh, beacon chain that shows an incredible amount of investor. Uh, confidence in the longterm viability of the Ethereum blockchain. And because of the fact that overwhelmingly that the developer community is behind a theory.
Um, the default, uh, defy activity is on a theory that we're only just beginning to see the, uh, the law, uh, the start of long-term growth for this ecosystem. Okay. Brian is somebody who is probably interested in buying theory or wants to invest in Ethereum the way I look at it. And please correct me if I'm wrong, is that if theory is sort of an asset that has leveraged to Bitcoin, so Bitcoin goes up by 1% theory might go up by two to 3%.
If it goes down by 1% vice versa. So it has a higher beta. It's a higher beta instrument of Bitcoin. So if I'm bullish on Bitcoin and crypto currencies, as a, as a, as a whole asset class, That I should be buying Ethereum as a leverage play. Is that, is that the correct way to look at this? You think? I think that that's, uh, I think that's one way of looking at it.
I, I tend to steer away from looking at the assets is entirely tied overall market center that might, uh, show historically what overall market sentiment has been over the last year, year and a half. Um, I think that when you get down to fundamentals, Bitcoin Bitcoin is a deflation, a deflationary currency.
That's what it's designed to do. It's theory is a value generating currency. And so at some point, at some point, the valuation, uh, the value being generated on a theorem is going to break out from Bitcoin. And it's going to move in, uh, it's going to move independently that isn't to say that they're not, there's not always going to.
Be a correlation between the two. Um, I can see that happening for a long time to come, but when evaluating Ethereum's long-term prospects, um, I think that, uh, people who are interested really need to look at the value being generated on the Ethereum blockchain through these other appliques. Okay. What do you mean by Bitcoin is a deflationary asset.
What do you mean by that? So Ethereum works at a cap supply. So at some point in the future, no more Bitcoin will be mined. And, and so, uh, it's designed, it's designed to resist and retain its value and increase its value over time by Gregg, by the happenings, gradually reducing, um, the distributed supply and eventually.
Having no supply at all. Now that pose it. Now that poses a long-term security question after the last Bitcoin is mined what's to incentivize people to secure the network, knowing that they will earn no more Bitcoin for mining it. So with, uh, with Ethereum, it works on a, uh, minimum viable issuance. Uh, model, which means to say we, uh, the network only distributes, uh, or mints new Ethereum based on what is minimally viable to keep nodes incentivized, to keep, uh, keep securing the network.
And as we move to a proof of stake model, that that will be distributed amongst independent validators, who are. We're staking, staking a theory rather than mining it. We're doing computational computational. My next question, Brian, one of the things I've read about Ethereum and it concerns that investors have is that if theory M's supply is technically.
In unlimited or infinite. And so that might be a worrisome, uh, value proposition as something that has a limited supply directly, should go down and value. First of all, is that a myth that it has infinite supply? And second, do you agree with that proposition? So the, it is a mint. I think the, the, the, the term infinite supply is, is, uh, is misleading.
The. Like I said, the, it works on a minimal viable issuance, meaning that yes, it will continue to, uh, issue. Uh, Ethereum tokens will still be issued as long as the Ethereum blockchain exists and is up and running. Um, but it's, uh, it's. Issuance will gradually decrease over the course of a course of time. It will only issue enough to incentivize P uh, uh, validators to continue to secure the network.
So that ensures the long term viability of the theory and theory. So a theory gums scarcity is actually driven by its use. Rather than its issuance. So, so what DRA, what will drive the price up? What would you drove to drive? Demand up is actual value creation on the network. The more things that are built on Ethereum, the more demand there will be for the, uh, for the supply of Ethereum and, uh, and as issuance slope, uh, drops over time.
That, uh, that the value of Ethereum as a token, um, should increase. Obviously, obviously it depends, uh, uh, on our ability to continue, uh, buyable development and to increase activity on the net. So there is a theoretical cap is what you're saying to the supply. Um, theoretically, there could, uh, theoretically there could be.
Okay. Well, it's not a definite Cabot sounds like, so maybe the demand supply fundamentals are different for Ethereum and for Bitcoin. Right. Can you describe, um, and they've in terms of differences in this, in the fundamentals? Of course, let's hope so. I think I touched on it a little bit. So value creation on a theory of them.
Um, drives demand. So you need a theory to process any transaction on the Ethereum blockchain. That's what, um, so that's what drives demand. DRA Bitcoin Beck Bitcoin doesn't have any inherent utility. So it requires that supply cap in order to retain its value. Without that there's nothing inherent to Bitcoin that drives its demand.
What drives demand. On on Ethereum is usage, uh, is actual usage of the network for, uh, for the building and, uh, executing transactions on these other applications. So what, what technological innovations do you see being built on Ethereum going into the future? I think a few years ago there was talk of a world computer being built on Ethereum and perhaps a new internet that kind of fizzled out.
Uh, first of all, what happened to that? I think that, uh, I don't think it's gone away, but I do think that, um, at this stage in our development, we are, we understand that we're, uh, we're, we're definitely a ways out. Um, but I think that what we're seeing now is a lot of. Innovations in terms of cross chain composability, there's a lot of, uh, alongside Ethereum.
There's also Ethereum based chains and side chains, um, to do all sorts of, um, uh, augmented, uh, uh, introduced augmented functionality and increasing transaction throughput. So things move faster, um, cheaper with lower fees, um, then on the Ethereum main chain. And so I think that what we're going to see is.
Use cases popping up alongside other chains that are compatible with the Ethereum main chain, um, that will allow, um, new use cases to be, uh, uh, to be introduced, uh, over the course of the next year. Um, so I don't think that the world computer idea is, is tired, is entirely dead, but it's, it's evolving to, uh, to, uh, evolve these other cross chain.
Possibilities. And just in relation to price now, given these technological developments at your foresee, what's a reasonable price that you think a theme could evolve into. We're seeing 1278, 1280 right now, as we speak what's next. Um, so typically speaking, I don't like to speculate on, uh, on actual prices, but, uh, uh, so, but I do see, I, I think it's entirely reasonable for us to be seeing this price, you know, doubled by mid-year.
Um, just, you know, if. Uh, if demand continues the way it has. And finally, why don't we talk a little bit about my ether wallet now, can you tell us a bit about your platform? Of course. So, um, my ether wallet is a non-con custodial wallet solution that allows users to, uh, interact with Ethereum based applications, such as defy applications while maintaining custody.
Of their assets. Um, we have a number of different products that allow users to do this. We have, um, a web based product, which is our flagship product that was launched in 2015. Uh, just about a month after Ethereum itself launched a main net. Um, we have a fully fledged mobile app that interacts with the web and has augmented functionality with the web.
And we also have a browser extension. So. We, uh, uh, we really give a whole host of, uh, key management options for users who want to maintain their own funds and interact with these different applications, um, in a, in a trustless and permissionless and privacy oriented way. Very good. Brian, thanks so much for coming on the show.
It's great. Speaking with you. I look forward to talking again. Thank you so much for having me appreciate it. And thank you for watching Kitco news. Stay tuned for more. .