Amid the ongoing development of blockchain technologies, layer-2 solutions are coming to the fore as a catalyst for the transformation of the crypto economy. Speaking during Coinbase’s Q1 earnings report, CEO Brian Armstrong said that he is optimistic about L2 scaling solutions. However, these are not the only statements made by Armstrong that are worth paying attention to. What does the future hold for blockchain technology, and what do other influencers think about it?
Layer-2 Scaling Solutions Will Transform The Crypto Economy
Speaking during Coinbase’s first-quarter earnings report, exchange CEO Brian Armstrong said he is optimistic about Layer-2 scaling solutions. He says that they will facilitate the growth of cryptocurrency use cases with lower fees and faster transaction times.
“As a reminder, layer 2 solutions help blockchains scale, similar to when the Internet moved from dial-up to broadband. And we believe this scaling will drive many new use cases in the crypto economy.”
Blockchain technologies have long been used in various fields of activity, but, according to Armstrong, scaling to Level 2 will create many new applications. According to Volodymyr Nosov, CEO of WhiteBIT:
“Blockchain technology will transform not only the financial sector, but also the areas of government, trade, transportation, healthcare, media and many others. The impact on efficiency, cost savings, and integrity of business processes makes it a key tool for the future.”
In addition, Brian Armstrong focused on the Ethereum (ETH)-based Level 2 Base blockchain.
“Base has helped dramatically reduce transaction fees and confirmation times, getting us closer to our goal of having the average crypto transaction take less than one second and cost less than $0.01 anywhere in the world. Developer activity on Base increased eightfold in Q1”
Armstrong assures that such a transaction fee is important not only for Global Payments, but also for many other applications that can be built on the blockchain.
He also noted that there are plans to integrate USDC on Base into all Coinbase products. “This is a really, really big deal, as we now have direct line of sight to update the global financial system.” he says.
ETFs revitalize the crypto market
During his speech, he also paid attention to spot ETFs. In his opinion, spot market exchange-traded funds have helped revitalize the cryptocurrency sector.
“I think the ETFs got a lot of attention. But what we’re seeing is that when there’s a tension on crypto in general, I think it creates energy and interest across all kinds of products in the industry.”
Later, he also mentions the possibility of other ETFs like Ethereum and similar ones in the future. The creation of a spot ETF on Ethereum is a highly speculative topic among the cryptocurrency community. Some are optimistic, while others, such as MicroStrategy founder Michael Saylor, believe that the SEC will classify Ethereum as a security this summer and reject the corresponding applications for spot ETFs.
He made this prediction in his post on social media on May 2 during a speech at the MicroStrategy World 2024 conference. In addition, he believes that other cryptocurrencies “lower on the list” will also receive unregistered status, including BNB, Solana (SOL), XRP, and Cardano (ADA).
“None of them will be wrapped by a spot ETF, none of them will ever be accepted by Wall Street…” he says.
However, in his opinion, only BTC has full institutional recognition, calling it the “only universal” institutional-level crypto asset.
Armstrong also took the time to discuss the current crypto cycle and compare it to the past.
“In past cycles, people started building things like DeFi and NFTs, these are things which you might periodically do a transaction, and it’s OK, you’re OK paying kind of a higher fee for that because how often are you going to do a trade or a purchase”
Summary
L2 solutions and the introduction of spot ETFs are changing the cryptocurrency industry, making it more accessible and efficient for users. By creating opportunities for new applications in various spheres of life and increasing investor interest, they are shaping the future of the crypto economy, where speed, efficiency, and innovation are becoming the new standard.