Silvergate fallout as BTC banking options dwindle – BitTalk #9

Bitcoin and the banking industry are two domains that have been experiencing tremendous growth in the last few years. However, their co-existence has not been free of challenges. In the latest episode of BitTalk, we explored the latest trends in the crypto and banking industry.

Xapo: A Bank with Lightning Support

Xapo, one of the OG companies in the crypto industry, recently rebranded and engineered itself into a bank regulated out of Gibraltar. Interestingly, it now supports Lightning, a move that has caught the attention of many in the industry. This is a significant milestone as it means that a regulated European bank is now supporting Lightning, which puts Lightning on the map.

Sovereign Roll-Ups: Storing or Hashing Transactions on Bitcoin Blockchain

There has been a lot of noise in the crypto industry about sovereign roll-ups, which go back to the Ordinal space. Ordinals have allowed the NFT crowd to put massive Jpegs in the Bitcoin blockchain. A company has now said that users can put roll-ups, which are essentially just rolling up a blob of transactions, subbing in Bitcoin. Some debates suggest that this is a good thing as we see different approaches to storing or hashing transactions on the Bitcoin blockchain.

Silvergate Fallout: Banking Options for Crypto Companies

Silvergate, a custodial bank that had a real-time settlement network of sand, recently experienced a 77% drop in deposits in Q4 and another 90% drop in deposits a few days later. No traditional bank could have survived such a stress test. This raises the question of how crypto companies can move funds, given that the asset class’s mobility is unlike any other asset class.

Microstrategy: A Sensible Equity Play for Bitcoin

Microstrategy has been in the news recently as one of the more sensible equity plays for Bitcoin. This is because it has a substantial amount of debt, and some of it is yielding interest rates of up to 6%. This high beta on Bitcoin seems like a good equity play, although there are many risks associated with equities.

Bitcoin Business and Banking: A Nightmare

Running a Bitcoin business has been a nightmare due to the lack of banking options. It is not improving in banking, and there seems to be no solution in sight. This is a significant concern as it may deter institutions from entering the crypto market.

Conclusion

The co-existence of cryptocurrency and the banking industry has not been free of challenges. However, the latest trends suggest that the two domains are beginning to find ways to work together. The banking industry is slowly accepting cryptocurrencies, and the crypto industry is finding ways to store and hash transactions on the Bitcoin blockchain. Despite the challenges, the future looks bright for both industries as they continue to grow and evolve.