Crypto does not replace the US dollar, says Bitfury CEO Brian Brooks

Crypto-prices should be seen more on Internet stocks than currencies, said Brian Brooks, the former US acting controller of the currency under the Trump administration.

The biggest misconception about cryptocurrencies is that if they “do not do a good job of replacing the US dollar, then crypto will fail in its mission,” Brooks, now CEO of bitcoin mining and crypto-technology company Bitfury Group, told CNBC’s Ylan. Muii at the Aspen Ideas Festival on Monday.

“Most of the crypto is about replacing the centralized banking system with networks that allow user control versus bank control … cryptocurrencies that have prices are more like internet stocks,” Brooks said. “It’s more like you’re betting on Google if you think there’s going to be high internet traffic; if you shorten it, it’s people going back to the post office, isn ‘t it? But it’s not ethereum or Ripple or “Something else is trying to replace the US dollar, it is trying to replace the value transfer system,” he said.

The entire crypto market has fallen in 2022, which has led to fears of another “crypto winter”. Several crypto and technology companies have quickly reversed employment plans, while many, including the leading exchange Coinbase, have laid off workers in the midst of the fall in crypto prices and trading.

It has also led many in the industry to predict that potentially thousands of digital tokens could collapse, a concern that only grew after the recent collapse of so-called algorithmic stablecoin terraUSD and its associated digital token luna. There are more than 19,000 cryptocurrencies and dozens of blockchain platforms in existence, according to CNBC surveys.

The Terra question showed “we are at the stage where there are basically too many blockchains out there, too many tokens. And that confuses the users. And it also carries some risks for the users,” Bertrand Perez, CEO of Web3 Foundation, said CNBC at the World Economic Forum in Davos last month.

“Like in the beginning of the internet, you had a lot of dotcom companies, and a lot of them were scams, and gave no value and all that was cleaned up. And now we have very useful and legitimate companies,” said Perez.

Brooks said it is worth noting that even in the midst of falling prices, bitcoin has still surpassed the S&P 500 by 5x in the last 12 months, and that there is no “future of US equities” session at the Aspen Ideas Festival. Bitcoin is down more than 56% so far this year.

But even in the midst of these sharp changes in valuation, the pricing of cryptocurrencies “is no more relevant than Google’s volatility,” he said.

“The value of these tokens you receive is related to the adoption rate of the underlying [technology]”Tens of millions of people trade in bitcoin, the value of bitcoin goes up a lot,” he said. “That’s why bitcoin is not going to stay at $ 20,000 because more and more people are using it. “The same with many other things,” Brooks said. “The value of the network is what drives the value of the token,” he added.

Brooks, who signed the first regulatory guide that defined what a stablecoin was and how it would be allowed in the US banking system, said that “stablecoins will be what people think about bank deposits today.”

“These will be bank deposits that do not have a minimum balance fee, that do not have a monthly maintenance fee, that do not have a transaction fee,” Brooks said, noting that he believes stack coins will have a significant impact on lower-income Americans as a result.

Disclosure: NBCUniversal News Group is the media partner for the Aspen Ideas Festival.