What happened
Investors in layer-1 blockchain network Hedera (CRYPTO: HBAR) are certainly cheering today's price action. As of 2:15 p.m. ET, Hedera has soared 16.4% over the past 24 hours, making this token one of the best-performing cryptocurrencies in the market today. As the 30th-largest crypto project by market capitalization, that's certainly quite the daily move.
Today's surge in value appears to be tied to a move from the U.S. Federal Reserve to add Hedera Hashgraph-based Dropp to its FedNow platform as a service provider.
So what
This is undoubtedly a massive deal for investors in Hedera, and all cryptocurrencies, for that matter.
Hedera's underlying technology is now supporting the FedNow instant payments for large depository institutions in the U.S. This move provides Hedera's investor base with validation that the project's underlying technology works (well enough to handle large-scale transfers from massive financial institutions) and also validates the core thesis many crypto investors have long held -- that innovation in decentralized blockchain technology would one day disrupt the world of traditional finance.
Now what
It's unclear to what extent Dropp will be utilized relative to the other service providers on the FedNow platform. It's also unclear whether users will choose to transact using HBAR or Circle (CRYPTO: USDC) tokens, as Dropp currently provides functionality for both.
However, today's price action with Hedera's HBAR token does signal that investors aren't really considering how widely Dropp will be used, just that it can be used. This is undoubtedly a breakthrough for crypto enthusiasts, who have long believed that decentralized blockchain technology will be the future.
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Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Hedera Hashgraph. The Motley Fool has a disclosure policy.
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