0:05 spk_0
Welcome to Stocks and Translation, Yahoo Finance’s video podcast that cuts through the market mayhem, the noisy numbers, and the hyperbole to give you the information you need to make the right trade for your portfolio. I’m Jared Blicky, your host, and with me is Yahoo Finance senior reporter Ali Cannell, who’s here to keep us on track and away from too much jargon. Today we are going to be talking about the next wave of the internet and why itstarting to show up in markets. Our phrase of the day nicely folds in Web 3. How ownership now plays into the intersection of the internet and blockchain. We break it down. And this episode is brought to you by the number 19. That is the number of record closing eyes in the NASDAQ Composite Index this year. Forget tariffs, how long can the bullish party continue? And today we areWelcoming back Keith Bliss, who is a markets veteran bridging old school trading with the new rails of digital finance. He spent decades on the floor of the New York Stock Exchange, giving him deep market structure chops and institutional know-how. Today he helps build cross-border payments and digital asset infrastructure at blocks which he helped found and where he is head of global market strategy.So Keith, we are doing, uh, we’re gonna dig into web 3 in a minute here, but just give us your overview of where crypto is right now, the markets, anything goes.
1:22 spk_1
So, so crypto is shortly behind AI and becoming the next market dynamic that everybody needs to get involved in because after years, I mean, it’s remarkable to think that the Bitcoin white paper was just published in 2009, right? So we’re not even 20 years into what everybody considered an experiment, but we finally got to the point where we understand the use cases for cryptographic assets, digital technologies, web 3, blockchain.Um, you know, when I was doing investment banking a few years ago, especially around digital asset companies, I used to keep tape to my desk of saying that said, do I need a blockchain for this and a lot of projects, you know, back, back in 2015. How
2:00 spk_0
was the rarely,
2:03 spk_1
quite frankly.would try to create these projects where they would, they were trying to do a blockchain play on it because that’s what was the trend was. And I used to say, OK, why do we even need a blockchain for that? The existing technology works. But when it comes to payments, money movement, remittances, banking services,And then other financial products off of that, the blockchain makes a lot of sense because it reduces the friction, reduces the cost, and makes it easier to actually transact business. And we’re starting to see that now, especially in payments, um, around the globe.
2:33 spk_0
What we call the use cases and we want to dive right into that because our word phrase of the day is web 3. It is an internet layer where blockchains let people and businesses own and move digital value, money, identity.Assets directly without a central gatekeeper, at least in theory, and it’s useful to place web 3 in context. Web 1 way back in the day, 25+ years ago, was just about reading static pages. Web 2 is reading and writing, think social and apps and platforms. Web 3 goes a step further. You can read and write and you can also own. It’s for tokens, wallets, smart contracts move value natively around the internet.So how far are we into web 3 right now? I remember the promises from 5 years ago. It seems like we’re starting
3:17 spk_1
to
3:18 spk_0
get there,
3:18 spk_1
just scratching the surface, quite frankly, yeah, I mean, uh, when you, when you, and, and thanks for doing that. A lot of people ask me like, OK, what is all this web 123, what’s blockchain? A lot of people conflate Bitcoin because that’s the most popular asset in the world right now that conflate Bitcoin with what’s actually happening in the blockchain and web 3.So web 3 as you’re pointing out is the value layer on the internet, and there will be a web 4 and a web 5 as we continue to advance the technology. But again, when it comes to payments using stablecoins or using some of the other altcoins to actually move money, transfer value from one part of the globe to the other part of the globe, we’re just scratching the surface and people are now realizing what to do with that. The next iteration then will be for all of us as consumers to walk into our.You know, convenience store or grocery store and actually pay with stablecoins or other digital assets, and that’s coming rapidly. Um,
4:15 spk_0
prophecy true.
4:16 spk_1
Well, when you think about, so you, you guys know Moore’s law,
4:20 spk_0
right? The the number of transistors on a, on a chip double every 18 months, which means processing power doubles roughly every 18 months.
4:27 spk_1
That’s correct. So you take that same theory and apply it to what we’re doing with digital assets and how we’re conveying that across the use cases with payments and remittances.And we are in our own digital asset Moore’s law. Things are moving that rapidly, where the number of use cases, the number of uses overall are are doubling or tripling in a very short amount of time. And that’s why we started Blocks, you know, 4 years ago. We could actually look out into the, into the future and see what was gonna happen. My partner who started it with me, we were at the old night trading group 25 years ago, and we lived through, we lived through the dot-com bubble and burst.And we felt like in 2020 and 2021, we were in an alternative universe with digital assets. We’re seeing the same thing happen. And when the dotcom bubble burst, a lot of people said, see, it’s what we know now is web one. They’re like, yeah, let’s just getting back to finding the Knicks score, the Red Sox score, whatever your favorite team is, andYeah, maybe we’ll pass messages back and forth. We were sitting at night trading group. We knew that these technologies don’t uninvent themselves. You just got to find the proper use cases in the, in, in that instance back then 25 years ago, the problem was is that a lot of the business cases were faulty, but a lot of them were still good. We just need to put broadband into the homes. We didn’t have it yet. Nobody was going to wait 3 hours to download a receipt of some crappy shirt that you bought over the internet, right?The same thing is happening in digital assets. So while we’ll see, um, you know, peaks and valleys and how they’re adopted and as well as the asset values which we’ve seen in the so-called crypto winters, we’re now at a stage where our company and other companies, partner companies that we have, we’ve figured out the use cases and how you convey that value to not only other businesses but also consumers.
6:10 spk_2
So stablecoins, tokenization, crypto treasuries, the trend, theFlavor of the year, it feels like, but I remember the NFT boom and bust not that long ago, metaverse boom and bust. What makes, you know, where we’re at now with stable coin regulation and everything that we’re seeing, how is that going to stick?
6:31 spk_0
Stable, be stable.
6:33 spk_1
So it’s good that you, it’s good that you give us the contrast between NFTs and metaverse and those types of ideas, those types of ideas in my own opinion, I would be the first one to tell you that.Creating an NFT over some, you know, cartoon that a 3 year old wrote on a napkin has no value. Yeah, it’s fine. Maybe it would be a valuable piece of art later on. I mean, how many Gauguin paintings did he, did he create and people like, oh yeah, that’s nice, but, you know, 20 or 300 years later, they’re worth millions. But anyway, we may get there, but the point being is thatThe issue with those was those were easy extensions off of the technology to do, but they didn’t really create any economic value between participants. Stablecoins create that grease to facilitate economic value transfer, commerce facilitation, so that’s what stablecoins are used for, they’re really payment mechanisms.So you’re on ramp in a local fiat, you transfer the value through the stablecoin and then you off-ramp through the local fiat. You do it easier and more seamless than you can with banking rails today and and banks are in a difficult position, by the way, simply because the regulatory regime and how they operate has not caught up to the newer technology, and they’re running as fast as they can to catch up to a company like Blocks.Um, so that’s, that’s the primary difference. We actually know the value of what these assets can do. You’re still gonna have creation, in my opinion, creation of assets that won’t have a use case, and they will fall off the map.But stablecoins and what we do with stablecoins to transfer value, make payments, make remittances, they’re here to stay. In fact, we created our own gold back stablecoin at blocks to facilitate those sorts of things and act as a universal translator amongst the various fiat currencies around the globe.
8:17 spk_2
Yeah, investors are clearly bullish too with the circle.IPO, and a lot of these other companies creating their own stablecoins. I’m curious what you make of a company like Strategy, for example, that holds a heck of a lot of Bitcoin on their balance sheet. What are the risks rewards for doing that? And as an investor, how do you need to protect yourself against some of the volatility that we can see in crypto?
8:36 spk_1
Yeah, so to be determined with the Bitcoin treasury, and I’m very familiar with a couple of them that have done.You know, reverse takeovers, RTOs as they’re known in the market, and now you’re starting to see in Ethereum, in Ethereum, you’re starting to see RTOs with other, with other assets as well. In fact, I had a conversation with a good friend of mine yesterday where they’re doing an RTO on a, on a, on a relatively unknown digital asset, but they have other financial engineering that they’re doing underneath a really interesting ideas.From an investor standpoint, I think you need to be very careful. Like, like any, like any investment, you know, it’s the next hot topic. It’s not too dissimilar from trying to pick out the greatest AI company, you know, 12 months ago. Um,You will see in any kind of mania, you will see some companies just trying to capitalize on the trend, but if there’s not a well thought out strategy, which you should certainly investigate, you know, when they do the RTO well thought out strategy about what they’re doing with Bitcoin or the other digital assets, I’m not sure that would be the place to go into at this point in time. But you’re going to see more of these. We’ve been offered at blocks. We’ve been because we have the know-how, the digital know-how, we’ve been offered to do an RTO andAnd become the treasuryoperators.
9:48 spk_0
I definitely want to get into that gold bag coin in a minute, um, and we will, we will have time for that, even if it’s after the break. But I want to ask you, you said we’re in the early innings of Web 3. Does that mean that we can just kind of dollar cost to add Bitcoin, Ethereum and major, maybe some of the major coins right now and not be too concerned about price? Number one question I get, is it too late for me to get in right now to Bitcoin either?
10:10 spk_1
So, uh, total disclaimer, this is not investment advice, but, uh, but, but I am, uh, I am very bullish on the top coins, including Bitcoin. Um, and in fact, when Bitcoin took its, uh, was taking its dip at the beginning of the spring, late winter at the beginning of the spring, yeah, I was putting, uh, limit orders in, buy limit orders in at 80,000 and then 70,000, not to take down on one Bitcoin at a piece, but, you know, to buy pieces of it.And I was just getting hit and I was thinking to myself, oh my God, this is, this is the greatest trade in the world. And in fact, uh, the last limit, which is still sitting out there that I have was at 70,000 and it got all the way down to 71 and changed and I was watching. I was like, come on,
10:52 spk_0
keep moving. I was looking for 68, but yeah,
10:54 spk_1
yeah,so anyway, so that’s turned out to be a really, really nice trade. I again.One of the, one of the issues I think that scared people away certainly back in the 2017, 2018 time frame is you had all these meme coins coming out. You had ICOs that were being
11:12 spk_0
so sketchy back then.
11:16 spk_2
It’s sketch that it
11:18 spk_1
did, it did, um, and those.There were cases where again, do I need a blockchain for that? Do I need a meme coin for that? You know, a lot of those, I’d be the first one to tell you that a lot of them, the projects don’t make sense. And, and a lot of people don’t realize, by the way, Ali, I’ll tell you this, a lot of people don’t realize why a stellar or an avalanche or a Cardano or Salana, one of those, why they trade.And value. The reason is, is that there’s a supply and demand dynamic. Those tokens are the keys that people need to build applications on that blockchain, OK? So if you’re going to build an application or service on Salon or even Ripple, you’ve got to acquire those assets which give you the payment mechanism to.Build on there. A lot of people don’t understand that. They think it’s just I
12:02 spk_0
appreciate you clearing a,
12:04 spk_1
uh, you know, a speculation.
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And we got to take a short break here, but coming up we’re gonna be talking about stocks at record highs, all kinds of stuff coming up in a soccer-themed runway showdown. Break out your club credentials. Stay tuned.This episode is brought to you by the number 1919 record closing highs this year for both the NASDAQ Composite and the NASDAQ 100. And Keith, this is a proverbial wall of worry that investors must be willing to climb here. A new wave of tariffs, they couldn’t hold the markets down.And it reminded me of like a balloon held underwater. They just popped back up with near record speed. Um, and now that we’re at these record highs, you know, there’s some headwinds for sure. The jobs report that we had recently was a little scary, um, maybe some headwinds there, but how are you making sense of the markets right now?
13:00 spk_1
Bullish bullish on the US markets as I am on digital assets.
13:04 spk_0
So short term, medium term, long term,
13:06 spk_1
yeah, I mean, and what you’ve seen in the market is, um, I haven’t looked at the figures lately, but a lot of the shorts were getting their faces ripped off, you know, throughout this year. So they’ve basically been cleared out. So you don’t have that natural downward pressure of holding the balloon, correct, right. So, so yeah, so the balloon was underwater. The shorties got their faces ripped off and then all of a sudden the balloon popped above the water. I think.When you look across the global landscape, um, it was Walter Riston. I wasn’t, I started my career at Citibank, but I wasn’t there when Walter Riston was there. John Reid was the chairman, but Walter Riston famously quipped is that, and I’m paraphrasing that capital goes where capital gets rewarded. It’s just, it’s a natural aspect of financial markets and right now that is still the US market.So if you look at some of the things that are happening, you mentioned a, a weaker jobs number. I actually think that’s bullish for the market because the market’s been waiting for an interest rate pulled back by the FOMC for a long time that’s probably going to give it that, and the inflation number seems to be tame. I think westill need to
14:09 spk_0
that just gives the, uh, Chair Powell and the Fed to greenlight a rate cut maybe a little bit sooner because of that weakness.
14:15 spk_1
Should, uh, in the, when you look at financial fundamentals, yeah, I, I, I would agree with that, um.And if they start, you know, reducing, uh, the Fed funds rate 25, 50, 75 basis points, again, capital will have to go where it’s rewarded. And if it’s not going towards paying down debt or doing other things with that, then it’s gonna flow into equity markets, it’s gonna flow into businesses. So you take that, you also have the tax, um.The tax law that was just codified, which will have lower rates for longer until the new administration gets in there, a new Congress, and they try to repeal that back if they want to do that. I think that would be a mistake personally. And then also you have, I don’t know if you’ve noticed, but there is a massive, massive regulatory rollback across all industries right now, and that’s just unleashing the, the dynamic capitalist power that the US economy has. And then the last thing.Self-serving as this may sound, is that the move by the administration into digital assets will beI mean, it will be rocket fuel on top of top of.
15:19 spk_2
So do you think that we are underpricing some of these potential headwinds? For example, Trump and Putin said to me on Friday, it feels like geopolitics not a concern to investors, but we’ve seen before how quickly that could come up, like the Israel-Iran tensions not too long ago. We saw what that did to oil, the ripple effect for equities. So are those types of risks underappreciated within this market right now?
15:44 spk_1
I don’t think so. I think investors and traders and investors alike have have already priced those in. They assume that there’s going to be resolution across all of those. The market trend for me is higher. Now, having said that,Some of the data and other tools that I look at still have the markets in aggregate in a neutral position to slightly oversold. So what, what, what does that mean for, for your listeners and your viewers is that there’s a market dynamic that always happens where markets either get oversold or overbought. I won’t go into all the technical mumbo jumbo around that, but right now we’re in a neutral position. So neither overbought, neither oversold. The, the.The bias in the behavior for me is that it will move higher, and the reason it will move higher is that we’ve got things like if there’s a resolution with the Ukraine war, if interest rates will pull back, the FOMC will just have no choice but to actually reduce at least 25%, maybe at the September meeting. Um, the tax cuts will start to filter their way through. And listen, the tariffs haven’t done whatThe, you know, the doom and gloom sect thought they would do. They may later on, but I really don’t see it. I think, I think Bessett and his team will get all of these tariff, um, these tariff deals done before the end of the year.
17:03 spk_2
Quick, quick follow up there. Do you think the markets care that much about a Fed rate cut at this point? It feels like the rally is being driven by other things,
17:10 spk_0
or is it just implicit, like, OK, what’s going to happen? Yeah,
17:12 spk_1
so I thinkthey’ve priced in the Fed rate cut, but theMarkets always have knee-jerk reactions, you know, when the, when the news, when the headlines actually hit. I, it’s going to be how deeply they cut, how far they pull back. So not just September, but yeah, yeah, I think if the data continues to be instructive towards more cuts.Say what you will about the, you know, about the acrimonious relationship between Donald Trump and Jay Powell, but the FOMC in aggregate will, will have to pull back. And we’ve already saw that in the last meeting, right? You had 22 FOMC members already vote to cut rates. So I think the pressure will continue to maintain and therefore the market reacting and it will trade higher.
17:52 spk_0
We got about a minute before our next segment. Tell us about the gold back token. Why did you decide to do it? Why now?
17:59 spk_1
So what we’re doing is we’re maneuvering around the globe and we’ve done payments, facilitate payments, and we’re only a business to business company, but we facilitate payments approaching 50 different countries right now. One of the problems that we solve for is the on-ramp and the off-ramp, so.In today’s world, you’ve still got, you’ve still got off ramp into the local currency for people so that they can pay their employees, you know, buy supplies and things like that.But when we got into these really obscure areas of the world, um, in Africa, still in Latin America, which is where a lot of our businesses, Southeast Asia, you still have that translation problem. You couldn’t find a market for dollar Vietnamese dang, for example. You could certainly couldn’t find a market for Vietnamese dang into stablecoins or if you did, it was too expensive.So we created the Goldback stablecoin for, for really two main use cases. Number one is the store value, you know, provide access to people if you wanted to own gold.Uh, particularly in far flung places you could do it very easily, but then the other one was, uh, to create that universal money translator between obscure currencies so you can make a hop into gold. Everybody can find a market and a reference point for their currency in gold, and then take it from gold and make the hop back out the offramp.
19:13 spk_0
Very, very interesting. We’re gonna switch now to our runway showdown because on today’s Who We Better, we are featuring a football club theme, stateside.We call it soccer, but we are pitting the homegrown academy against the big money talent transfers. On stage left, we have the homegrown academy, teams built on organic EPS growth, talent graduates from within, uh, think product cycles, pricing power and cost discipline. They score with upward earnings revisions and a steady press, lots of possession, few turnovers. On stage right, we have the big money transfers, paying up for aPricey star from another team. Stocks are lifted by multiple expansion, and the crowd roars on hype and liquidity, but the price tag demands goals sooner, not later. If delivery stalls, sentiment turns quickly to the south side. So here’s a critical question, Keith, which kit is best suited to the current market environment, the homegrown academy built from the inside, or the big money transfer team that pays up for star power?
20:11 spk_1
Well,What an interesting question. Be
20:14 spk_0
a Chelsea,
20:15 spk_1
well, I’m, I’m not Chelsea. I’m I’m Arsenal supporter. That’s where the gunner comes from. Um, so it’s always the obvious question. Do you go for the quick success and the glory, or do you actually build a long sustaining model that’s always been the problem? And if you read a book called Socronomics.You actually get to the heart of the matter between professional sports personally and as a sports fan, go ahead and do the big money transfer and go and take the immediate glory, um, and we’ll worry about the rest later. And that seems to be professional sports. That’s what I do.
20:45 spk_0
Yeah.
20:46 spk_2
Yeah, and I guess that’s what we’re seeing in the stock market in a certain way like you were just talking about knee jerk reactions and and you were listing some of the reasons why stocks have continued to move higher. Where do you see the tech?AI trade and all of that, because it feels like markets, of course love certainty. There’s a lot of uncertainty in this environment. However, one thing that is certain is that AI is just going to keep on chugging along, at least that’s what it seems like right now.
21:11 spk_1
Yeah, I don’t think that’s a trend that’s it’s funny you mentioned that we use AI tools to actually build out our platform and our and our and our apps that we put on the phones and you can build.You can build an app on a phone, a complicated app like we do in payments in about 2 weeks with AI, which would have taken months and 20 developers to do. So that’s a trend that’s not going to end. I think if people have a balanced approach though, we still have to go buy food, we still have to buy clothes, we still have to power our homes. So a balanced approach around those traditional industries and what we do, um, with those and then putting money into AI and.Obviously digital assets from my standpoint. I actually would diminish a little bit traditional financial structures until they get their act together, the oldbanks,
22:01 spk_0
and we have to leave it there, Keith, and that is almost a wrap, but I just want to review a few things. It was really interesting to talk about web 3 still beginning in the early innings, and that’s where we are. There’s a huge juggernaut of AI that we’re all talking about every day.But crypto, crypto has come to the forefront with this administration. There are a lot of favorable laws, and just to reiterate Keith’s point, there are a lot of people on the street who are very bullish right now, the short, medium and long term, you know, check your risk, always, uh, always manage your risk, but that’s where we stand right now. So that is, that is the end of this show of stocks and translation. We will see you next time.
