Im zoe thomas for the wall street journal, Music, crypto investors and spectators have watched as the market has taken blow after blow in recent weeks and its caused a lot of people to ask not just whats going on with cryptocurrencies, but also if this is really how The markets are supposed to work and if anyone is in charge, those are just some of the questions we got about the sector and our crypto reporter paul vina is here to answer them. Hey paul thanks for coming back on the show hi. I am happy to be on the show so a lot going on in the market. I want to start with something a few people asked about and thats how regulators are reacting hi. My name is noah shahinyan. What do our lawmakers and regulatory agency directors think about cryptocurrencies, increasing presence in our financial markets? Are we going to see them quote unquote, get hip to the times, or are we going to see them wait for a global or national event to trigger a push or pull from the status quo? I dont know if we can ever say that any of our elected and uh employed government officials are going to get hip to anything, but to the extent that they are, i i think it doesnt take a lot to see that there is a ton of attention On cryptocurrencies in washington and in state houses around the country, and indeed in capitals and other countries too, i mean all the federal agencies are looking at this.

There are a number of bills floating around congress that would regulate cryptocurrencies in various forms and guises. How soon youre going to get any comprehensive government regulation in the united states is a pretty open question id be you know. Congress has a lot on its plate right now, so as much as they might be interested in this and its a hot topic, i dont know that theyre going to really get anything done too quickly, which means that until then, you will probably have what you have Right now, which is a hodgepodge of regulations and agencies trying to control different parts of the cryptocurrency markets, i think thats probably going to be the case for some time, but at some point without a doubt, i do believe that we will get a comprehensive set of Regulations in the u.s concerning cryptocurrencies all right so thats. The regulatory front now lets take some questions on how these systems, i guess, are supposed to work. My name is jesse mcginnis and im curious. Is the blockchain truly anonymous and why or why not? Yeah thats an interesting one. I think a lot of people over the last year or so saw this for the first time and were surprised that bitcoin especially, is much more traceable than people thought and look. We could spend you know an hour on this, but very briefly, bitcoin is pseudonymous. You dont have to attach an identity to some types of digital wallets and that allows people to operate kind of anonymously kind of anonymously.

The reality is, though, that because bitcoin and all cryptocurrencies really operate on an open ledger, the transaction history is all public. So if you can trace that transaction history and if at any point you can then attach an identity to it, you then know everything that that person has ever done on that blockchain. Okay, i want to bring up another question about how digital currencies are are meant to work and kind of their purpose. My name is rafael almanzar. My question is: whats happened to the stable coins that were supposed to bring against stability that will pay to the us dollar. How come recently in the last month, or so some of them took a dive substantially below a dollar. Yes, that is a good one. Rafael uh, look the overarching thing about stable coins, you have to realize is, and it gets back to the question of regulations. There are really no standards for how a stable coin needs to be operated. There are certainly no legal standards for how a stable coin needs to be operated. So what youve got is there are a couple of very large ones now, but there are dozens of other ones and they are constructed. However, the people building them think is the most clever way to go about it. So some of the ones that have come under pressure lately have been what they call algorithmic stable coins. They are not backed by hard assets. They are basically backed by a program that is designed to keep trading in line to keep it pegged one to one with the national currency, as we saw under extreme duress.

Those models broke. The ones that have not really broken have been the ones that are backed by assets and that has been more stable so far, but even then, like i said there is no real law, theres, no legal basis for how these things are supposed supposed to operate. So until you get that you will probably have quest, youll definitely have questions about all of these stable coins. Paul. Can you just tell us quickly kind of why stable coins were created? What sort of role they play in the crypto market? Sure, very, very briefly: stable coins were created and the first one was called tether. Tether was really created because exchanges were having problems getting dollars. I mean that thats, really all it came down to crypto companies. Banks didnt want to do business with crypto companies and they couldnt access the dollar system and they needed to come up with a substitute and the substitute was basically a synthetic dollar that they called a stable coin, thats. What theyre, really for theyre really for liquidity in the markets and their advantage is over the dollar essentially, is that they allow you to trade 24, 7. uh. If youre doing your business through a bank banks close at night, banks close at weekends, crypto exchanges dont ever close, so they need that constant source of liquidity, so thats, really what stable coins were created to do? Okay. So our last question is a bit more broad, but its also on how crypto is being used.

Hi. My name is logan grasby. My question about cryptocurrencies is how theyre actually being utilized as a currency today and how people are thinking about that they might be utilized in the future. You know what logan this allows me to to make one of my favorite points about the crypto markets and, and what you have to remember about the crypto markets and cryptocurrencies is that everything in them is really one giant live experiment. What could these things be used for? What are they being used for? Will they be used for in the future? The entire crypto market is designed to answer those questions at some point. Bitcoin was designed as a form of electronic cash, and it was designed to operate as a form of electronic cash that wouldnt be controlled by central banks, so is it being used as electronic cash? Now, a little bit mostly, it really is just being used for speculation, but i mean there are people out there trying to make bitcoin work as a currency, and you will see more efforts like that in the future. But whats really going on is that this is just a lot of experimentation, theyre just kind of launched, and then people are trying to figure out what to do with them. All right, paul well have to leave it there. For now we did get a lot of questions on this and well definitely be watching uh, the crypto market for them, but thanks so much for answering these for us yep, thanks for having me on and thats it for todays tech news briefing.

If you want more tech stories check out our website wsj.