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THE GREAT RESET Financial Documentary

THE GREAT RESET Financial Documentary

A Look At The Possible Global Financial Future

A documentary that explores the current state of our economy and the impact a new monetary system like Bitcoin can have on the world

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The Great Reset and the Rise of Bitcoin

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The Great Reset and the Rise of Bitcoin – a documentary that explores the current state of our economy and the impact a new monetary system like Bitcoin can have on the world. Learn about our economy, the long and short term cycles, inflation and Bitcoin. Make sure to subscribe to this Youtube channel to see new content and to follow us on Twitter: https://twitter.com/TheGreatReseta1 Visit our website for the article that is at the base of the film: www.thegreatresetfilm.com We want to make this film as open to the community as possible through subtitles in different languages. Since this is a community made film, we hope that the community will be willing to help. DM us on Twitter or @cierreporbin (also on Twitter) directly if you want to help!

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00:06
The governing council decided the following:
00:10
First – We will continue to conduct net asset purchases
00:15
under the pandemic emergency purchase program with a total envelope
00:21
of €1,800 billion, until at least the end of March 22
00:28
and in any case until the governing council judges
00:32
that the coronavirus crisis phase is over.
00:39
Morning Joe, you have the European Central Bank
00:42
doing what economists thought they were going to do.
00:45
They added to their pandemic emergency purchase fund by €500 billion.
00:49
By my count, that takes it up to 1.85 trillion total.
00:58
It is an absolutely historic,
00:59
both in terms of the speed of FED purchases
01:02
and of course, the magnitude.
01:04
Here’s a chart that shows
01:05
what’s happened since March, the last three weeks
01:08
have seen this huge ramp up in a ways that you’ve never seen before.
01:13
And let’s look at what’s changed here
01:15
since the FED last met, we got to $1.9 trillion in relief
01:19
enacted by Congress, signed by the president.
01:20
Senate Democrats have just released the text of their $3.5 trillion budget resolution.
01:26
Can you characterize everything that the FED has done this past week
01:30
as essentially flooding the system with money?
01:33
Yes, exactly.
01:34
And there’s no end to your ability to do that.
01:37
There is no end to our ability to do that.
01:39
Simply flooded the system with money.
01:43
Yes, we did.
01:44
That’s another way to think about it.
01:46
We did.
01:46
Where does it come from, do you just print it?
01:49
We print it digitally.
01:51
So we, you know, we as a central bank, we have the ability to create money digitally.
01:56
And we do that by buying treasury bills or bonds
02:01
or other government guaranteed securities
02:03
and that actually increases the money supply.
02:05
We do believe that inflation numbers in 21, which we will see rising.
02:11
I can’t find any period in history
02:14
where monetary and fiscal policy were this out of step
02:18
with the economic circumstances, not one.
02:20
In six weeks last spring.
02:25
We did more QE, more purchasing of treasuries
02:29
than we did the entire time in a 9 year period from 2009 to 2018.
02:34
And if we ever get into inflationary psychology, like for instance,
02:38
we did when I was in my twenties
02:41
back in the seventies, if we ever get that again.
02:45
And if you ever got retail actually nervous about inflation,
02:50
then the one thing that leads inflation, which is commodity prices,
02:54
it’s the easiest tautology there is,
02:56
those things can literally scream double or triple with no problem whatsoever.
03:02
And valuations for both interest rates and stocks are at,
03:08
if you combine the two, they’re so overvalued,
03:11
they’re at 100 year highs.
03:13
I don’t know what you do.
03:14
I am so afraid of democracy
03:18
getting the idea that you can just print money to solve all problems.
03:23
And eventually I know that will fail.
03:25
In the end, if you print too much, you end up in something like Venezuela.
03:31
It’s mathematics.
03:32
The fiat currency is now the error term that solves
03:36
the growth in the numerator, which is your total global debt
03:41
versus the denominator, which is total global GDP.
03:45
And we have reached a point of no return where the numerator
03:49
is going to outstrip the growth of the denominator
03:53
under any plausible scenario, which means you need to print money
03:58
to solve that debt spiral.
04:13
We’ve all heard of our economic cycles and how according to most modern economy books,
04:17
it is normal to have a period of very quick growth and expansion,
04:21
followed by a period of contraction and economical crisis,
04:25
as described in 1946 by Arthur F. Burns, former counselor to the president
04:29
of the United States, and Wesley C. Mitchell, American economist.
04:34
Business cycles are a type of fluctuation found
04:36
in the aggregate economic activity of nations.
04:39
A cycle consists of expansions occurring at about the same time
04:43
in many economic activities, followed by similarly general recessions.
04:47
This sequence of changes is recurrent, but not periodic.
04:51
History, though, shows us that before the 20th century,
04:54
financial crisis arrived because of external events.
04:58
The most popular being war.
05:15
There had been only one financial crisis
05:17
not attributable to external events, and this was the panic of 1825,
05:21
where around 70 banks went bankrupt due to risky investments.
05:25
And because of this man, Gregor McGregor,
05:27
that had pulled big investments
05:29
into colonizing a country, that didn’t exist – Poyais.
05:35
If we look at history, what turns out, what we find out is the fact that
05:41
this cycle really started about 100 years ago,
05:45
and there’s an important factor to that.
05:47
It’s the fact that in the year in 1914, every big nation in the world
05:53
just started leaving the gold standard.
05:56
Now, the gold standard is the fact that all of the money
05:59
that a central bank has, controls or produces
06:04
is only based on the amount of gold that they hold and the price of gold.
06:09
Therefore, the amount of money
06:12
supply available is relative to the gold that is held.
06:15
This was dropped.
06:17
And this is what led to a lot of financing for the first World War
06:21
and even following the second World War,
06:23
because governments realize that they have this huge power
06:28
that is, get rid of the gold standard and we can just print money
06:32
as much as we want.
06:33
And in fact, this happened many times in history and was often the reason
06:38
why governments, countries or civilizations were simply dropping.
06:43
The Roman Empire is a great example of that.
06:45
From the moment we dropped this gold standard,
06:48
so around the year of 1914, the UK was the first country to do that.
06:52
This is the moment where we started seeing
06:55
these short term and long term cycles, particularly the short term cycles.
07:01
We are now over 100 years after leaving the gold standard,
07:04
and it is a fairly accepted fact that our economy works in cycles,
07:08
based on a period of inflation, followed by a period of deflation.
07:12
The fact this only started 100 years ago
07:14
should tell you that our monetary system has flaws
07:17
all while being the reason for the unmatched growth we had as a species
07:20
in the 20th century.
07:30
This inflation is due to our reliance on debt and credit.
07:33
According to modern monetary theory,
07:36
debt is the driver of economic growth, not productivity.
07:39
Ray Dalio explains this well in his video –
07:42
How The Economic Machine Works.
07:43
Over time we learn and that accumulated knowledge raises our living standards,
07:48
we call this productivity growth.
07:52
Those who are inventive and hard working raise their productivity
07:55
and their living standards faster than those who are complacent and lazy.
08:00
But that isn’t necessarily true over the short run.
08:03
Productivity matters most in the long run,
08:06
but credit matters most in the short run.
08:09
This is because productivity growth doesn’t fluctuate much,
08:12
so it’s not a big driver of economic swings.
08:15
Debt is, because it allows us to consume more than we produce
08:19
when we acquire it,
08:21
and it forces us to consume less than we produce
08:23
when we have to pay it back.
08:25
And as stated by Dylan LeClair in his great article –
08:28
The Conclusion of the Long Term Debt Cycle and the Rise of Bitcoin.
08:32
Although productivity is the most important aspect
08:35
of any economic system over the long term, not productivity
08:39
but the forces of debt
08:40
are the main driving forces in volatile economic swings.
08:44
Coming back to the cycles, Ray Dalio describes the long term and the short
08:48
term debt cycle and how they relate to human productivity.
08:51
Debt swings occur in two big cycles.
08:55
One takes about five to eight years and the other takes about 75 to 100 years.
09:00
While most people feel the swings, they typically don’t
09:03
see them as cycles because they see them too close up.
09:06
Day by day, week by week.
09:09
The short term debt cycle can be observed
09:11
by looking at different metrics, including the debt to income
09:14
ratios and interest rates set by the central bank.
09:17
Yes, the central bank essentially sets the rules that allow our economy
09:21
to expand into unreasonable debt and later decides when it can break down.
09:26
This is the so-called boom and bust cycle.
09:28
The most recent ones being the global financial crisis of 2008
09:32
and the dot com bubble of the year 2000.
09:35
The long term debt cycle is made of multiple short term cycles.
09:40
While our economy goes up and down during each of these cycles,
09:44
it does bring growth in the long run.
09:46
And with each cycle, our economy continues accumulating debt
09:50
indefinitely because we prefer borrowing than repaying debt.
09:55
There reaches a moment when there is more debt to pay than income.
09:59
Historically, this is when the long term debt cycle shifts,
10:02
people stop spending and start repaying debt.
10:05
And instead of growing, we go down.
10:08
We see recessions, increase government support,
10:10
devaluation of currencies, social unrest and so on.
10:14
There comes a time when our economy has sufficiently de-leveraged
10:17
and the economy starts growing again
10:19
following the short term debt cycle again.
10:23
During these de-leveraging events,
10:24
three strategies are adopted by central banks.
10:27
First – Lower the interest rates.
10:30
Interest rates are set by central banks and they set the
10:35
rules as to what is the cost of borrowing money.
10:39
If they lower it, then it’s cheaper to borrow money.
10:43
Therefore, people will be more inclined to borrow this money
10:47
This leads to the spiral of just wanting to borrow more
10:50
and more and more because it’s just easier to borrow.
10:53
And right now, if you look at the numbers the central bank,
10:57
central banks all over the world have been doing this for years now
11:01
because we work on a standard that is mostly based on the US dollar.
11:03
What matters is what the U.S. central bank does, and if they lower interest rates,
11:10
then everyone else will also lower their interest rates.
11:13
This increases the value of assets and makes it easier to get credits.
11:17
This is the first strategy used.
11:19
Today, these interest rates have already dropped drastically
11:23
for the main economies and have turned negative in many.
11:26
If interest rates drop to zero,
11:28
then there is no logical financial incentive to lend money.
11:32
It can continue for a while until it doesn’t.
11:37
Second – There’s quantitative easing, also called money printing.
11:41
What this guy was talking about, it allows the central
11:44
bank to buy debt securities and financial assets.
11:47
It places cash in the hands of investors but doesn’t help citizens,
11:51
asset prices skyrocket, usually creating inflation,
11:54
which makes asset holders that tend to be the wealthy, richer
11:58
and the poor, poorer as their savings lose value.
12:02
This is the case today, with real estate skyrocketing globally
12:05
and other raw materials skyrocketing too.
12:10
Third and last, is increased welfare spending
12:12
or other instruments, such as stimulus payments.
12:15
If there is any kind of crisis, well the people that bought their house,
12:19
they’re not going to try and do any more financial
12:24
schemes and things that would allow them to
12:26
to protect their investment
12:27
because they just don’t have the knowledge or the skills
12:30
and even the instruments to be able to do that.
12:32
So they’re the ones that lose the most right
12:34
because investment banks think they know what’s coming,
12:36
they know how to deal with it and they’ll get out of it.
12:39
But this creates basically a gap between the rich and the poor.
12:44
And this is a lot due to money printing because this money
12:48
gets distributed into the economy,
12:52
but it doesn’t get distributed into the hands of people.
12:55
It gets paid to banks, it gets paid to investors,
13:00
and it just gives them another business.
13:01
And it gives them more cash to be able to take on more positions
13:05
and themselves invest in to many different assets, whether it’s the stock exchange,
13:09
it can be gold, anything.
13:10
The poorer people don’t have these options and they don’t have this money
13:14
directly attributed to them.
13:16
So it means that like, while
13:17
all of this is happening and people are getting rich,
13:19
others are getting poorer
13:20
because the savings that they have in the bank are losing value
13:24
because of this money printing and because of that,
13:27
what governments need to do is they need to help their citizens more.
13:31
Because of course, no one wants the wealth gap.
13:32
I mean, it’s not because you’re, you know, part of this elite,
13:36
let’s say, that is in a better position financially,
13:40
that you want the poor people to be in a bad situation
13:44
like everyone has to be elevated in society and these people need
13:47
to be helped directly through financing, whatever form it takes.
13:53
And in fact, if you look at the numbers, it’s
13:55
since the crisis of 1929, which was the first big financial crisis
14:00
after getting off the gold standard that I was mentioning at the beginning
14:04
that this welfare spending has increased so much.
14:07
And now in France, for example, there’s about 30% of GDP
14:11
that goes to welfare spending.
14:13
France is quite famous for that.
14:14
It has one of the best medical systems,
14:16
but it also goes with how you support people that are unemployed.
14:20
Different stimulus payments help for home allowances and this kind of thing,
14:26
that is, of course, good for people that need it, but is only necessary
14:29
because of these actions that are taken beforehand.
14:32
More recently,
14:33
we know social spending has increased due to the COVID crisis,
14:37
so we can only presume that the chart now looks more like this.
14:43
We are seeing another measure increasing quickly – the monetary supply.
14:47
Monetary supply is the total amount of one currency
14:51
that is currently available in the economy.
14:54
The more government creates new money, the more the supply increases.
14:58
This money supply is directly correlated to the devaluation of our currencies.
15:03
Many like to inverse these charts in order to show this devaluation.
15:07
Because the more a currency is produced, the less it is scarce.
15:11
Therefore, the more it loses value.
15:14
We have all heard stories from our elders
15:16
saying, money had a different value back then
15:19
and have seen archive images illustrating this.
15:22
Like this McDonald’s menu from 1972 that had a Big Mac for $0.65.
15:28
The increase in money supply is the reason why this happens.
15:32
In 2020 alone, the money supply has had a big jump.
15:36
This is the money that was printed in order to finance the war against COVID.
15:40
And in the U.S. since the beginning of 2020,
15:43
we have seen an increase of over 30% in the amount of U.S. dollars in circulation.
15:49
Although this isn’t felt instantly in the economy, the long term
15:53
effects will be felt by the population that have zero allocation in assets
15:57
such as real estate, stocks and so on.
16:01
The long term consequences of this are very wide.
16:04
To illustrate, take technology
16:07
by definition, technology should drop in price
16:10
because it becomes more efficient and easier to produce.
16:14
Yet, due to inflation, prices are not going down,
16:18
essentially making it harder to develop new technologies.
16:22
Governments use many reasons,
16:24
including climate change, as an excuse to print trillions.
16:27
But down the road,
16:28
this printing can lead to adverse results
16:30
because of the effects this new monetary
16:32
supply can have on the development of the right technologies
16:36
that could help us transition to a more renewable energy consuming world.
16:40
But the central banks will have a different message.
16:42
This is in order to avoid the spread of panic
16:44
concerning the financial markets and their currencies,
16:47
which could lead people to rush to banks to withdraw their money.
16:50
This obviously would be unsustainable for the economy.
16:53
A nation in which faith in a currency is lost will see recessions
16:57
and will take decades to recover.
16:59
Instead, central banks use the consumer price index,
17:02
also called the CPI.
17:04
The CPI is a flawed indicator, yet is the most
17:08
commonly accepted indicator to measure inflation and its effects on prices.
17:13
The CPI follows the price
17:15
of a basket of products that are consumed by people.
17:18
This, in essence, is the way an indicator like this one should work.
17:22
But the CPI is flawed because of the way
17:24
this basket of products is selected.
17:27
It is selected based on what people choose to buy.
17:30
So every year, new products will be added to this basket
17:33
while others will be removed.
17:37
But what they choose to buy depends on the price of the product.
17:40
If inflation goes up, people will change their basket
17:43
of products in order to accommodate for the price increase.
17:46
This essentially makes it a new basket of products.
17:50
The CPI will not track the price of the previous basket of products.
17:53
It will track the price of the new basket of products after
17:57
the consumer decision has been made in response to price increases.
18:01
Saifedean Ammous illustrates this properly in the Fiat standard.
18:05
Imagine you earn $10 a day and spend them all on eating a delicious rib-eye steak
18:10
that gives you all the nutrients you need for the day.
18:13
In this simple consumer basket of goods, the CPI is $10.
18:18
Now imagine one day hyperinflation strikes the economy,
18:21
and the price of your rib-eye increases to $100
18:24
while your daily wage remains $10.
18:27
What happens to the price of your basket of goods?
18:30
It cannot rise tenfold because you cannot afford the $100 rib-eye
18:35
Instead, you make do with the chemical shitstorm
18:37
that is a soy burger for $10.
18:40
The CPI magically shows zero inflation.
18:44
Remember that governments will never show us the true
18:46
inflation numbers, and they will not attribute it
18:49
to the increase in our monetary supply because of their management.
18:53
If people actually understood this, they would never be re-elected.
19:00
We’ve talked about debt so much, it is time to look at these numbers, too.
19:04
We can see the sharp increase of the global debt even in just the most recent years.
19:09
To add more context,
19:10
here is what this debt represents as share of global GDP.
19:14
356%.
19:17
We have 3.5 times more debt than actual created value.
19:22
Now, this debt bubble could be stopped or at least be slowed down
19:26
if the central banks were to increase interest rates,
19:29
making it more expensive to borrow.
19:31
Giving a breather to the entire system.
19:33
But today it’s likely too late.
19:36
The U.S. central bank (the FED) attempted this in 2018
19:40
because they believe the economy looked
19:41
to have recovered from the global financial crisis of 2007.
19:46
Ten years have now passed since the depths of the financial crisis,
19:50
a painful part of our history that cost many Americans their jobs,
19:54
their homes and for some, their hopes and dreams.
19:57
In addition to holding interest rates low to support the recovery,
20:01
we have also taken many steps to make the financial system safer.
20:05
I’m confident that the system today is stronger
20:07
and in a far better position to support the financial needs
20:10
of households and businesses through good times and bad.
20:14
They decided to increase these interest rates, and because of that,
20:18
the entire market dropped in the space of a couple of weeks, and NASDAQ
20:24
and the S&P 500 dropped over 20% in just a couple of weeks.
20:29
Only because the markets were reacting to these actions that were done by the central bank.
20:34
The DOW is moving back towards the lows of the day.
20:37
All 30 DOW stocks are now in the red,
20:41
and the DOW’s gains for the year are gone, a distant memory.
20:45
The S&P 500 has fallen into correction.
20:48
That’s a drop of 10% or more from recent highs.
20:52
All sectors and this is key, are in the red at this moment,
20:55
and the NASDAQ is now at a seven month low.
20:58
Look at the CNN Business Fear and Greed Index.
21:03
I know you don’t want to see it, we got to give it to you.
21:04
It measures volatility, momentum and demand for safe havens.
21:08
It’s pointing to extreme fear.
21:11
So as soon as it started dropping, the central bank
21:15
came publicly and said, OK, we’re going to stop this.
21:19
We’re going to go back to normal level of interest rates.
21:23
And from that moment on, by the end, in 2019,
21:28
they started again offering these interest rates
21:30
and they lowered them from all the way 2.5% to 0.25%,
21:36
according to a lot of finance books and what people study at university;
21:40
the scenario we’re in today with negative interest rates
21:43
is impossible, right?
21:45
So what happens then?
21:46
It’s hard to say, no one really knows.
21:49
We’ll have to find out because anyway, central banks have no other option.
21:53
The only thing they can do is print more money.
21:58
In reality, the only thing that the central banks can do is print
22:02
more money and cover for all this debt that is never being paid back.
22:06
They will work with governments to continue increasing taxes,
22:09
welfare spending and de-valuating currency.
22:12
This isn’t to say that these people are ill intended.
22:15
They use the tools that are available to them
22:17
and have simply reached the point where their backs are against the wall
22:20
and they’re forced to abuse these tools.
22:29
And they’re looking for solutions to take the entire economy out of this situation.
22:34
Although these solutions are not necessarily in the best interests
22:37
of citizens and their personal freedom.
22:40
It isn’t without reason that the World Economic Forums initiative is called
22:44
the Great Reset, the name that inspired this documentary.
23:02
Part of their plan is the creation of central bank digital currencies – CBDCs.
23:07
This would allow central banks to have a new monetary system
23:10
that they can detach from the current one,
23:12
allowing people to transition into this new debt free system
23:16
and slowly de-leveraging and dropping the debt from the previous one
23:20
without adding risk to their currencies.
23:23
So central bank digital currency is coming alive.
23:27
It’s not going to happen today.
23:29
I think they have a twelve month experimental period that
23:32
they want to go through before they actually launch for good.
23:36
The status of it is we’re working hard on it right now.
23:39
But let me tell you what it is, really.
23:40
We’re going to address digital payments broadly.
23:45
So that means stablecoins, it means it means crypto assets,
23:48
it means a CBDC.
23:49
That whole group of issues
23:52
and payment mechanisms, which we think are
23:56
really at a critical point.
23:58
Would you say that the corona crisis has even revealed more
24:04
the need to have a digital central bank currency or currencies?
24:10
Well, yes, I think the corona crisis has accelerated very much technical change
24:19
and use of digital innovations across the board.
24:24
I mean, it’s not only in financial transactions,
24:27
but in e-commerce and the show business.
24:32
I mean, there are so many examples that, you know, bu yest, it is a fact.
24:37
Pretty much all central banks are thinking about this.
24:41
In the last few weeks of 2020, the People’s Bank of China
24:45
rolled out a pilot program in the eastern Chinese city of Suzhou.
24:48
They had to download an app and have it on the phone.
24:52
In a macro way, you have a sense of how money flows through the economy.
24:56
On a micro scale, and this is something
24:58
that many in the West would probably not be comfortable with
25:00
and many in China frankly, would not be comfortable with
25:02
is that it would allow authorities
25:04
to be able to track precisely how you or my neighbor
25:08
or the person down the street is spending the money on.
25:10
They’re spending the money on buying things they shouldn’t be buying.
25:12
Whatever, however you define that.
25:14
Are they gambling with their money?
25:15
Are they doing this or that with the money?
25:17
They say it’s just to replace physical cash,
25:19
but of course, this could just be the first step.
25:23
Adoption will come for these CBDC’s.
25:25
In fact, it will be forced adoption.
25:28
The government will start supporting citizens in need by only giving them stimulus payments
25:32
through a wallet controlled directly by the central bank.
25:37
The central bank will essentially be able
25:39
to eliminate commercial banks that are currently the middleman
25:42
between the central bank and the citizens.
25:45
For governments, it will simplify many things.
25:47
If they decide to change interest rates,
25:49
they will be able to act on it directly rather than wait
25:52
the several months needed for commercial banks
25:54
to implement this in their systems.
25:56
They will also be able to control directly
25:58
the interest rates based on a person’s profile or a business’s profile,
26:02
and will be able to set expiry dates on people’s money,
26:06
forcing them to spend and not allowing them to save.
26:10
Raoul Pal describes this well.
26:12
You see, central banks want to be able to give people money directly.
26:17
Direct monetization.
26:19
They can’t do that right now.
26:21
Right now, they print money,
26:22
it goes into the banking system, the banks hoarde it
26:24
because we’re going through a credit crunch.
26:26
It’s also a way for them to kickstart universal basic income
26:30
because the central bank can underpin
26:34
the poorer parts of society by giving them money directly.
26:37
It doesn’t go on the government balance sheet.
26:40
Now, central banks now believe they’re omnipotent,
26:43
that they can continue to expand balance sheets forever.
26:46
MMT seems to be the prevalent thought,
26:49
and this is just an extension of this.
26:51
This is kind of Keynesianism gone mad.
26:55
Central banks can also change entirely
26:59
the structure of how money and monetary policy works and fiscal policy
27:05
because they can give it to different people in different ways.
27:09
So they can credit the restauranteur, but then penalize
27:12
with negative interest rates.
27:14
The Baby Boomer Saver because they want to release their
27:17
money back into the economy.
27:19
They can give students a positive interest rate to help them save.
27:23
They can change everything.
27:26
This is the rise of behavioral economics and incentive systems.
27:30
So, governments essentially using big data
27:33
can find who they need to stimulate at any time and adjust accordingly.
27:37
They can do it dynamically.
27:38
This is a structural, massive shift to everything
27:43
we understand about economics, particularly macro-economics.
27:47
Nobody’s prepared for this.
27:49
None of us know what this means.
27:51
It means and it will be sold on a lot of good things.
27:55
And I think there’s a lot of good things that come from this.
27:57
I think it is an elegant solution to some of our problems.
28:01
But elegant solutions in governments and central banks
28:05
lead to unintended consequences.
28:08
The issue is here, is to have this new system,
28:11
you’re going to give up your freedom.
28:14
You are going to have every transaction you’ve ever done and ever will do recorded,
28:20
There is no cash, there is no way of tipping the gardener
28:24
unless it goes by cash.
28:26
It means that they can tax you at every transaction level.
28:29
Now that’s great.
28:30
We could get rid of the IRS
28:32
and all of the tax collection agencies because it could be done directly.
28:37
That’s good.
28:38
But again, you’ve lost your freedom to transact in anonymity that cash gives you.
28:55
These central bank digital currencies, as I said, they’re not,
28:59
they’re not an invention from governments and central banks.
29:03
In fact, they’re inspired by other digital currencies like bitcoin being the original one.
29:09
And other altcoins that have been created after that.
29:13
In reality, they’re more similar to other altcoins
29:17
such as Ethereum or others that simply allow the addition
29:21
of programing that allows you to add functionality to them,
29:24
whereas bitcoin is only there for these monetary transfers.
29:29
Bitcoin is a payment network, right?
29:33
Where this is… think of it as a log of transactions,
29:37
a transaction that I can do to you.
29:38
The Bitcoin network will take some information.
29:40
So my address, your address,
29:42
the amount of bitcoin that I’m sending to you.
29:44
And with this information it’s going to create a hash.
29:47
It just goes through a simple hashing algorithm
29:49
that makes the code out of this information.
29:51
And this is added to this log.
29:53
Whatever amounts that happen
29:54
within these ten minutes, it basically is considered a block
29:58
and there will be miners, so, computers, that are connected
30:00
to the network to verify these transactions.
30:04
So they’re just going to be there really to confirm
30:06
that I do have this bitcoin, and yes, I can send it to you.
30:10
And then after that,
30:11
I no longer have this bitcoin and you have the bitcoin.
30:14
So very simple kind of work.
30:16
But all of these computers are connected to the network
30:19
and they’re in competition fighting for who confirms the block
30:25
because whoever confirms the block and verifies these transactions
30:29
will be rewarded in bitcoin
30:31
from two sources,
30:32
There will be a transaction cost;
30:34
simply, if I send your bitcoin, then I pay a certain fee,
30:38
to the network, this fee will be redistributed to miners.
30:41
And also, right now there is an emission of new bitcoin.
30:48
Today it’s at 6.25 bitcoins per block.
30:51
And if I as a miner, I’m able to confirm this block,
30:55
I will receive 6.25 bitcoins.
30:57
It won’t happen every time because there is
30:58
a big competition of miners.
31:00
6.25 bitcoin per block every ten minutes.
31:03
That’s quite a bit, especially if you think of the price of bitcoin today.
31:06
Bitcoin is built in a way there is an entire incentive scheme that has been thought out
31:10
by the creator of bitcoin that goes all the way to the year 2140 or so,
31:16
which is that the amount of bitcoins
31:19
that are produced will be divided every four years by two.
31:22
So if I’m a miner today, I make 6.25 bitcoin per block
31:26
that I confirm; four years from now after the next halving,
31:30
it’ll be half that – so, 3.12 bitcoin.
31:34
This is an incentive for people to be as efficient as possible
31:40
when running their bitcoin mining business,
31:43
and also an incentive for the price to stay above a certain certain level.
31:47
Because miners simply will either run out of business if the price is too low
31:53
or will decide not to sell bitcoin because he’s not covering
31:56
for his operating expenses.
32:01
In the bitcoin protocol, changes can be made in two ways.
32:05
There’s a simple way called a hard fork,
32:07
where someone essentially makes a copy of bitcoin,
32:10
makes changes to the protocol and releases it to the world.
32:14
Miners need to connect to this new network and choose
32:16
to use this new network over the original Bitcoin network.
32:20
This was done by projects such as Bitcoin Cash
32:23
and Bitcoin Satoshi Vision.
32:24
That were trying to solve what the founders
32:26
thought to be problems in the bitcoin network.
32:29
But there was a scaling attempt
32:31
to allow bitcoin to continue to be money for the world.
32:33
And it was called the SegWit2x agreement, where SegWit,
32:36
which is if you’re deep into crypto, you already know what that is,
32:38
if not, don’t worry about it.
32:40
And the block size were going to be upgraded
32:42
from one megabyte to two megabytes, which would,
32:45
if you do both those things you’re going to get more
32:46
than double as many transactions available on the Bitcoin network.
32:49
If you do just the 1 megabyte to 2 megabyte, you double.
32:52
At SegWit t’s a little bit more on top of that anyhow.
32:55
For whatever reason,
32:56
the SegWit portion of that agreement was activated first.
32:59
When that 2 megabyte upgrade eventually was aborted,
33:03
I had to look around the world and say, OK, well, if I want a tool
33:06
that can enable every human being on the planet to be able to send
33:08
and receive any amount of money with any other human being on the planet,
33:12
bitcoin can’t do that.
33:13
It’s not going to do that with one megabyte blocks.
33:15
It’s impossible for bitcoin to do that.
33:17
So there’s a whole bunch of other cryptocurrencies out there.
33:19
Which one do I think is the most likely
33:21
to bring the most economic freedom to the most people
33:23
around the world in the shortest amount of time?
33:25
And I looked at all the different cryptocurrencies out
33:27
there, and Bitcoin Cash was the one that was at the top of my list.
33:31
Since their launch,
33:32
these projects have failed compared to bitcoin
33:34
losing value against the first cryptocurrency
33:37
because the people that are positioned in bitcoin didn’t want to transition.
33:41
This reluctance was mostly due to one reason – decentralization.
33:46
Decentralization in bitcoin is the fact that no one controls the network.
33:51
It is an open, secure network,
33:54
controlled and improved by every participant.
33:57
In projects like Bitcoin Cash, the number of participants
34:00
being much lower than in bitcoin lowered the security.
34:04
Bitcoin satoshi vision is a great example, as it was the victim of a 51% attack in 2021.
34:10
A miners performance is based on the amount
34:12
of computational power they have,
34:14
and this is usually referred to as hash rate or hashing power.
34:18
The mining power is distributed over different nodes across the world,
34:22
which means it is not in the hands of a single entity.
34:25
At least it is not supposed to be.
34:28
But what happens when the hashrate is no longer distributed well enough?
34:31
What happens if one single entity is able to obtain more than 50% of the hashing power?
34:37
One possible consequence of that is what we call a 51% attack.
34:41
Also known as a majority attack,
34:44
a 51% attack is a potential attack on a blockchain network
34:48
where a single entity or organization is able to control the majority
34:52
of the hash rate, potentially causing a network disruption.
34:55
In such a scenario, the attacker would have enough mining power
34:58
to intentionally exclude or modify the ordering of transactions.
35:02
They could also reverse transactions they made while being in control,
35:06
leading to a double spending problem.
35:09
A successful majority attack could also allow the attacker
35:12
to prevent some or all transactions from being confirmed or to prevent
35:16
miners from mining, resulting in what is known as mining monopoly.
35:20
The second method to make changes is called a soft fork.
35:24
In a soft fork, changes are made to the protocol and need to be accepted
35:27
by the majority of miners.
35:30
To do so, miners simply decide whether they want to upgrade
35:33
to the new protocol and update their machines,
35:36
and eventually, if approved by the majority of miners
35:39
at a predetermined block number, the changes will be made official.
35:43
And this is how miners will verify blocks from that point on.
35:47
Unlike many other protocols, every change
35:50
that is made to the bitcoin network needs to be backwards compatible.
35:54
This means that if someone holds bitcoin,
35:56
their bitcoin will still be valid after the changes.
35:59
Other networks may be easier to change,
36:02
but won’t be backwards compatible and will often require holders of the coin
36:06
to transfer their coins to platforms that will accept the changes
36:09
before a certain date or risk losing everything.
36:13
There will be a maximum
36:15
and this is hardcoded, a maximum of 21 million bitcoin
36:19
produced by the year 2140,
36:22
and there will never be more of it.
36:24
So we can’t afford to lose some bitcoin simply based on a bug fix,
36:33
functionality implementation, it’s just something that cannot work.
36:37
Therefore, every change has to be backwards compatible,
36:39
and this makes it so much more difficult to change
36:43
as opposed to other projects that don’t care much
36:45
because they have a management team that is there that will decide
36:49
what new vision they have for this coin
36:51
and will make updates regardless of what the community thinks,
36:56
because they think it’s what’s in the best interest of the community.
37:00
The fact bitcoin is so difficult to change
37:02
is one of the reasons that make it a great asset for the long run.
37:05
Buyers know what they’re buying, and they know that the asset will
37:08
remain the same.
37:10
No other assets in the world provides this level of security.
37:14
Other cryptocurrencies have been created,
37:16
but were created by a group of people that still control
37:19
the network and will make changes to profit themselves.
37:23
Ethereum, for example, the second biggest cryptocurrency
37:26
by market cap, is still controlled by the same team that created it.
37:31
These people control the network and promote the network
37:34
in order to bring inexperienced and non-technical investors
37:38
that don’t understand what a lack of decentralization means
37:41
for the future of cryptocurrencies.
37:45
The Ethereum network aims to change the way the protocol works.
37:48
These changes will allow miners to mine
37:51
only if they have logged 32 ether beforehand.
37:55
Anyone can mine bitcoin, but to mine ethereum
37:58
you will soon need to be part
37:59
of the few in the world that can afford to buy 32 ether.
38:03
This will make Ethereum just as good a currency as a fiat currency
38:07
because the decisions of the few will impact the masses.
38:48
If you think of bitcoin, the asset and the network as the layer one,
38:53
the other layers that are being built around it,
38:55
they’re called layer two’s and also layer three’s.
38:58
But the the fastest growing layer to for bitcoin is called the Lightning Network
39:03
and it’s a different payment system
39:06
that to use it, basically, I need to take some of my bitcoin and,
39:10
you know, actually put it on to the Lightning Network
39:15
and I need to open channels.
39:17
If I open a tunnel with you, for example,
39:18
it means I can transfer money to you.
39:20
And the fact that I have this channel open with you
39:22
means that I have access to the channels that you have open yourself.
39:27
And it scales very quickly in the sense that if we both use the Lightning Network
39:30
and we have a channel open between the two of us,
39:32
then you have access to all of my contacts and you can pay them.
39:35
And I have access to all of yours and can pay them.
39:37
Payments that I do
39:38
will go through the channels of maybe multiple people
39:42
in order to reach its destination.
39:45
And this allows for payments to actually be instant.
39:50
Instant settlement.
39:51
This doesn’t exist in finance until now.
39:54
And they’re free or almost free in most cases
39:58
just because of how the network is built and only once.
40:03
I would bring this money out of the Lightning Network
40:06
and back into the Bitcoin Main Network
40:08
is a transaction actually done inside of this main network,
40:12
which means that you can do
40:14
a lot more transactions, much faster and cheaper,
40:19
but still having bitcoin as the settlement layer
40:22
that will confirm that all of this happened basically.
41:06
The adverse environmental impacts of the computing activity used to mint
41:13
many of these digital currencies in the first place.
41:17
Bitcoin consumes more energy than entire countries
41:22
and it is projected to consume as much energy
41:27
as all the data centers in the whole world this year!
41:33
One bitcoin transaction.
41:35
A single purchase, sale or transfer
41:39
uses the same amount of electricity as the typical U.S.
41:43
household uses in more than a month.
41:46
Bitcoin’s main layer is described as being very energy consuming,
41:51
and it is a fact that at its highest in May 2021, the bitcoin network
41:55
was using as much energy as what the entire country of Sweden uses.
42:01
Although this seems like a lot, we need to break down what this energy is
42:05
where it comes from and how this trend is evolving,
42:08
including where the big miners
42:10
are transferring to in order to lower their cost and environmental impact.
42:15
first of all, it is important to understand
42:17
how a miner business is set up.
42:20
These miners are businesses.
42:22
The more important ones today,
42:24
being international companies listed on stock exchanges,
42:28
setting up a mining business requires the purchase of hardware.
42:31
The ASIC computers needed to tap into the bitcoin network and start mining,
42:35
as well as real estate to store all of the miners.
42:38
Wherever miners are around the world, the prices for these two elements will often be similar.
42:43
Of course, better deals can be negotiated.
42:46
But given the price of electrical components and supply chain costs,
42:50
this isn’t where miners will often gain an edge over their competition.
42:53
What matters most to miners is energy.
42:57
The third factor and this is the most important one is the energy
43:01
that they spend in order to make their mining rigs turn.
43:05
The prices vary between countries,
43:07
they vary between region and they vary on the source of energy that they choose.
43:11
The cheapest source is right now, always renewable energies or nuclear, but nuclear is a bit
43:18
killed by governments.
43:20
So these companies, by default, they have to direct themselves
43:26
and push for the development of these more renewable
43:31
energies because it will cost them cheaper in the long term.
43:34
Cheap energy can be found from two sources;
43:37
green energy and wasted energy.
43:41
The energy we produce is always in excess.
43:44
We never consume 100% of the energy produced by power plants
43:48
because it would put communities at risk of having blackouts.
43:52
In the US, it is estimated that 5-6% of the energy produced is lost when it is in transit,
43:59
which is around 211 terawatt hours.
44:03
This amount alone is close to double
44:05
what Bitcoin was consuming at its all time high.
44:11
Nowadays, governments are pushing for the adoption of solar and wind power
44:16
and decide to crack down on nuclear.
44:19
Unfortunately, although on paper this sounds positive, there are adverse effects to this.
44:25
With our current technologies, the energy produced cannot be stocked.
44:30
Therefore, the energy from solar and wind
44:33
can only be produced when it is sunny or windy.
44:36
This makes it very unreliable and requires backup power plants to be
44:40
present and active on a daily basis to cover for this lack of energy.
44:45
This really is an adverse effect because Germany, for example,
44:49
the biggest adopter of solar and wind in Europe,
44:52
is now back to producing the same amount of CO2 levels
44:56
as it was producing 20 years ago.
45:00
Green policies around the world have stopped the adoption
45:03
of nuclear power plants and have indirectly forced the world
45:06
to consume more natural gas than it used to.
45:10
Natural gas comes with its own set of problems,
45:14
just like other energy sources.
45:16
Natural gas is produced more than that is consumed, which leads to flaring.
45:21
Flaring is simply the excess gas that is extracted that needs to be burned.
45:27
It is a standard and a necessary habit in the industry.
45:31
In 2019 alone, it is estimated that 150 billion
45:36
cubic meters of natural gas was flared in the world.
45:40
This is the same amount as Japan and Korea imported that same year,
45:45
all gone, in the air, producing approximately 300 million
45:49
tons of CO2, the same as the total annual emissions of Italy.
45:57
In order to lower their cost and energy, miners are directly connecting
46:01
to these sources of energy that until now were inaccessible.
46:06
Because bitcoin miners can be placed anywhere in the world
46:09
without the need of being close to communities,
46:12
they are already tapping directly into this energy
46:15
because of the attractive prices they can negotiate with the producers
46:19
using energy that would otherwise be flared
46:22
or would be lost due to transit.
46:25
They also have access to more distant natural
46:27
sources of energy that cannot be used by communities.
46:31
This is the case of hydropower plants,
46:33
geothermal energy and even new ideas that are being studied,
46:37
like getting energy from volcanoes.
46:40
The more time passes and the more these businesses grow,
46:43
the more likely they will transition to these sources of energy
46:47
in order to increase their profits.
46:50
Other businesses are working on innovating our energy production
46:54
to service miners, allowing them to have clean and cheap energy.
47:00
The long term positive effects the adoption of bitcoin could have on
47:03
our energy production is largely underestimated
47:07
and even silenced by governments and other mainstream medias.
47:11
They may use this as an argument, but it is so little if you compare it to
47:17
what energy is actually used around the world,
47:19
and if you compare it also to the energy used by our traditional
47:24
financial services, banks and so on, they use way more energy
47:29
because each of them need to create their own settlement infrastructure
47:36
separately, of course, because they don’t
47:37
share this information with anyone.
47:39
Whereas bitcoin is just one place where all of this happens,
47:43
in an uncontrolled and so on.
47:45
So it’s a little bit of energy consumed for
47:49
huge impact in terms of
47:53
financial freedom and freedom in general, actually.
47:58
Bitcoin was created by a person or a group of people
48:01
under the alias Satoshi Nakamoto.
48:05
They wrote the white paper, built the network, released it
48:09
and exchanged in discussions on many forums before one day disappearing.
48:15
A genius, unknown person
48:17
put together technologies and encryption protocols in a new way,
48:21
forming the ultimate currency, and then did the most noble
48:25
and important step of all – disappeared.
48:28
After creating it, talking about it publicly on forums,
48:33
promoting the idea, discussing it, making improvements,
48:36
setting up the original miners, there is just a point in time
48:40
when the community also started to take over it;
48:43
that this person, Satoshi Nakamoto, just disappeared,
48:47
stopped answering on any kind of forums, stopped writing anything
48:51
and even since that point, the creation of bitcoin never touched
48:56
the bitcoin that were on these original wallet addresses
48:59
that were created by him.
49:01
So completely let it go to the community
49:04
because the whole point of it was to get rid
49:06
of the control of our current financial monetary system
49:10
and let it be opened to the people.
49:13
So bitcoin is said to have been created by the people for the people.
49:18
Because of that, because it’s controlled by a community, not by a central authority.
49:23
Anyone can participate in improving the network,
49:26
whether it is through translations, code reviews or by building
49:29
applications that add functionality to bitcoin.
49:33
But only the bitcoin core team can actually make changes
49:36
to the bitcoin network.
49:38
And I think a huge part of governance in the bitcoin ecosystem
49:43
are the bitcoin core developers.
49:46
Now before I met them and I’ve had the pleasure and the honor of meeting many of them.
49:56
You know, that was a part of this ecosystem
49:59
I didn’t understand, but actually getting to sit down and talk to them;
50:04
If I have a learning curve need, it certainly is on the technology side.
50:10
But in terms of talking to them about economics, economic theory,
50:15
failed monetary regimes historically, they know economic history,
50:21
many of them, better than anyone I’ve ever met.
50:25
So that gives me a great degree of confidence that,
50:29
you know, they do believe that they’re on a noble mission.
50:33
They could be paid a lot more than they’re being paid right now
50:37
if they worked at Google or Facebook
50:39
or some of these other areas. But they’ve chosen.
50:41
But they’ve chosen, you know, this sense of purpose for a noble goal,
50:47
and they have incredibly strong technology backgrounds.
50:52
So as well as a good understanding
50:56
of economic history, especially monetary history,
51:00
and it gives me a great deal of comfort
51:03
as I think about the governance of the ecosystem, much, much more so
51:08
than I think we would find in other financial ecosystems.
51:14
Gold was considered always the what is called hard money.
51:18
In fact, the word hard money comes from the fact that gold is physical and hard.
51:23
Just like sound money comes from the fact that if you hit gold
51:26
There’s sound, right.
51:27
So it was always considered the hardest money.
51:31
Now, bitcoin follows the same rules, but they are strictly enforced by the protocol,
51:38
which makes it a better form of gold.
51:40
So not only a better form of money, but a better form of gold.
51:43
Gold has been controlled by governments.
51:46
I’ve mentioned this at the beginning
51:47
when it comes to removing the gold standard,
51:50
but gold also then and during the second World War,
51:54
for example, in the UK, people were not allowed to hold gold personally.
51:59
The same happened in the US in the seventies.
52:03
You had to sell your gold to the government
52:04
because the government needed to increase its reserves.
52:06
This has happened historically and if any bad situation
52:09
were to happen like it has happened in the past;
52:11
the same thing would happen.
52:13
I mean, we’re here today in Poland.
52:15
Whatever purchase of gold you do in Poland,
52:19
your personal information has to be given to the government
52:22
saying how much gold you own, so that they know where they can come.
52:25
knock at your door, if ever they just need to increase their gold reserves
52:30
and don’t have the cash to buy it themselves, it’s so much easier
52:33
to confiscate it.
52:34
In the past seven years
52:36
there have been an average of one international monetary crisis every year.
52:40
Now who gains from these crises?
52:42
Not the working man, not the investor, not the real producers of wealth.
52:47
The gainers are the international money speculators
52:52
because they drive on crises they help to create them.
52:55
In recent weeks, the speculators have been waging
52:59
an all out war on the American dollar.
53:03
The strength of a nation’s currency is based on the strength
53:06
of that nation’s economy, and the American economy is
53:09
by far the strongest in the world.
53:12
Accordingly, I have directed the secretary of the Treasury
53:15
to take the action necessary to defend the dollar against the speculators.
53:21
I have directed Secretary Connally to suspend temporarily
53:24
the convertibility of the dollar into gold or other reserve assets,
53:29
except in amounts and conditions determined to be in the interest of
53:32
monetary stability and in the best interest of the United States.
53:37
Bretton Woods established an arrangement whereby
53:40
supposedly from 1945 and the end of the war onward,
53:44
all currencies were convertible to the dollar and the dollar to gold.
53:49
At that time gold reserves were the final mechanism for settling
53:55
balance of payments deficits, but Bretton Woods forestall this process
53:59
by permitting the sole reserve currency, the main reserve currency,
54:04
to be considered as official reserves for foreign central banks.
54:11
Such that they could settle all their deficits in dollars as opposed to gold.
54:16
That’s the fundamental difference between the classical gold standard
54:20
and what is called the gold exchange standard,
54:23
which Bretton Woods enshrined in law and in treaty.
54:27
In 1971, both Britain and several other countries decided to in-cash
54:32
their huge accumulations of dollar reserves under the Bretton Woods system for gold.
54:38
And of course, President Nixon, in his own way decided to trump them.
54:48
George says as long as we do not have convertibility,
54:52
he says the Europeans can’t do all that much to us.
54:55
They can’t, because he says when we have convertibility,
54:57
then they had a right to lecture us about what we ought to do.
55:00
But without convertibility, that is not the case.
55:05
If these countries had the right to claim gold,
55:08
to redeem their dollar reserves.
55:11
It would put the United States in a position of insolvency.
55:14
We just shouldn’t get all that excited about
55:16
the fact that they worry about our budget, is that your view?
55:19
– That’s exactly right.
55:20
They can’t do one cock-eyed thing.
55:21
and they’ll say, “Oh, we’ve got to maintain our relations”
55:25
We’ve asked them to hold dollars.
55:26
And I said, no, we didn’t ask them to hold dollars.
55:28
They’ve held dollars.
55:29
It’s been in their interest to hold dollars.
55:31
And I said to hell with them, I’m not worried about them,
55:34
I’m worried about us.
55:36
1960s was filled with financial crises
55:39
that involve the dollar, but the total collapse came in 1971.
55:43
He issued an executive order on August 15th, 1971,
55:46
and said, I’m sorry, we’re not paying our debts.
55:50
We’re certainly not paying our debts in gold.
55:52
To our friends abroad, including the many responsible members
55:56
of the international banking community who are dedicated to the stability
55:59
and the flow of trade.
56:00
I give this to assure, the United States has always been
56:05
and will continue to be a forward-looking and trustworthy trading partner.
56:11
In full cooperation with the International Monetary Fund and those who trade with us.
56:16
We will press for the necessary reforms to set up an urgently needed
56:20
new International Monetary system.
56:24
To this day, gold can only be traded on the markets during weekdays
56:28
because some people have decided this.
56:31
With bitcoin, no one can make such decisions.
56:35
Individual exchanges could, but would be losing against their competition.
56:40
Governments have no way of knowing whether people own any.
56:44
It is the safest way to hold wealth that is native to the internet.
56:49
Therefore, it is available always, everywhere.
56:53
No assets in history has ever been this easy to acquire.
56:57
Allowing anyone with an internet connection to tap into the network anonymously
57:02
and be able to access their assets
57:04
the same way, regardless of their geographic location,
57:08
again anonymously.
57:12
This is scary to governments.
57:13
They understand that if people step away from fiat currencies,
57:17
new debt, that is necessary to generate inflation and to devaluate
57:21
currency’s won’t be created following the same rules.
57:26
This puts their and their elite friends entire status quo at risk.
57:31
That’s why they’re afraid of it, and that’s why they try to kill it.
57:34
In fact, in China just this year, they banned any bitcoin mining,
57:39
and they closed any kind of exchange.
57:42
which is, if you think as a totalitarian government
57:46
is a great strategy, if you think of freedom for people,
57:50
it is not, and they’re not the only ones.
57:51
This year, also the UK has been attacking hard.
57:56
They’ve banned a lot of bitcoin ads on buses or on the subway.
58:02
Just all of these ads that were promoting bitcoin
58:04
have been straight off banned by the government.
58:07
They have put pressure on commercial banks as well
58:10
to block transfers from UK citizens, UK bank accounts to crypto exchanges
58:18
so that they cannot basically leave the British pounds and buy bitcoin instead.
58:24
So not only are they scared, but they’re actually taking action
58:28
to later implement their own central bank digital currencies.
58:31
If you don’t have bitcoin, they give you this alternative.
58:35
Well, you go for this alternative. You have no choice.
58:37
The reason they want to ban bitcoin
58:39
is because they know the power that it has,
58:41
and they know that it would take this power away from governments.
58:45
As long as governments control the money, they can make decisions
58:48
that citizens don’t agree with or don’t realize
58:51
will have an impact on them, whether direct or indirect.
58:55
As long as governments control the money, they can continue their monopoly on violence.
59:00
Bitcoin was created twelve years ago after the global financial crisis
59:04
as a solution to the financial problems
59:06
that exist in our economy and to eliminate entirely
59:10
the abuse people can have on our monetary system.
59:13
Saifedean Ammous says it –
59:15
It’s important to understand
59:17
that the fiat system was not a carefully, consciously
59:21
or deliberately designed financial operating system like bitcoin.
59:25
Rather, it evolved through a complex process of compromise
59:28
between political constraints and expedience.
59:32
Bitcoin is a real asset, and it is here to stay.
59:36
And its maximum cap of 21 million makes it the scarcest
59:39
asset on Earth and ultimately the most attractive asset.
59:44
Listen to all the money managers that praise it.
59:47
If we’re right and companies continue to diversify their cash
59:55
into something like bitcoin and institutions,
60:00
institutional investors start allocating 5% of their funds.
60:07
We believe that the price will be ten fold of where it is today.
60:14
So instead of 45,000, over 500,000.
60:17
I think it’s an asset that should be in every investor’s portfolio
60:25
The number one thing that I would recommend to people is
60:27
have some defensive things in there.
60:29
I personally think bitcoin is a long term hold.
60:32
I have a certain amount of money in bitcoin.
60:35
It’s a small percentage of that which I have it in gold,
60:38
which is a relatively small percentage
60:40
of what I have in my other asset classes and so on.
60:44
And I think that that has the merit.
60:46
I like bitcoin as a portfolio diversifier.
60:50
Everyone always asked me – What should I do with my portfolio?
60:52
My employees say, I say, OK, listen, the only thing that I know for certain
60:56
is I want to have 5% in gold, 5% in bitcoin,
61:01
5% in cash, 5% in commodities at this point in time.
61:06
I don’t know what I want to do with the other 80%.
61:11
I do own some of it, it’s gone up a lot since I bought it.
61:15
Obviously, the tone of this asset class is changing.
61:18
Well, I think it’s worth considering all the alternatives
61:22
to cash and all the alternatives to some of the financial assets .
61:27
And so bitcoin has, is a possibility.
61:32
We had 26% more dollars in circulation than over the past 244 years.
61:38
If you put the whole stimulus in, which it will happen,
61:42
that’s another 16% more dollar formation.
61:45
So you’ve got a 40% increase in dollar volume
61:49
that’s going to show up in asset prices.
61:51
I started my professional career in 1981
61:54
The peso was at 20:1, today we are at 20,000:1
62:02
Don’t tell me about it
62:05
And this is here in Mexico but if we do it in Venezuela
62:09
or in Argentina or Zimbabwe, numbers loose all proportions
62:13
So, the fraud of fiat is an inherent thing to the system
62:19
And we are seeing it happen right now in the USA.
62:22
The monetary emission is gone to the moon, you understand?
62:25
The US dollar as hard money is a joke
62:29
When facts change, I change.
62:30
I mean, you know, I’m an investor.
62:33
The environment is changing.
62:34
And what really turned me was moves made by regulators in Switzerland,
62:39
where I’m an investor.
62:40
France, Germany, England and then Canada opened up.
62:44
They now have seven different financial instruments
62:46
trading on their exchanges that holds crypto
62:49
as the underlying, which is a complete reversal of what’s occurred.
62:53
If you really understand bitcoin, you’ll recognize
62:56
why places like Morgan Stanley are coming into the space.
62:59
It’s a scarce asset,
63:01
and as we were talking about last time, I was on the show
63:04
that supply demand imbalance, plus the impregnability of the blockchain
63:09
is going to make that asset very attractive in a world
63:12
printing money like this.
63:13
It’s an amazing accomplishment to have brought it from where that programing occurred
63:18
to where it is and take the test of time.
63:21
They’ve done this unbelievable marketing job, it’s been around 13 years
63:26
and particularly younger millennials, look at it the way I’ve always looked at gold.
63:31
I like bitcoin, right?
63:33
Bitcon is math and math has been around for thousands of years,
63:39
and two plus two is going to equal four and it will for the next 2000 years.
63:44
So I like the idea of investing in something that’s reliable,
63:49
consistent, honest and 100% certain.
63:53
For me, the finite of Bitcoin, the 21 million
63:56
Is the key to the whole topic.
63:59
That’s why I was saying this about Ethereum
64:00
because as long as they don’t have a finite amount of emission,
64:05
I don’t trust them.
64:06
They can emit more and your asset depreciates.
64:11
So bitcoin has appealed to me because it’s a way for me to invest in certainty.
64:19
There’s countries that use Bitcoin. There’s regions in Switzerland where you can pay for your taxes in bitcoin.
64:23
There’s just this, all of this adoption and acceptance
64:28
that is happening around the world now, even by governments,
64:31
which just changes the rules and makes it more and more robust,
64:37
the community makes it alive
64:40
regardless of political, geopolitical and so on situations.
64:45
The fact that governments are themselves
64:48
allowing the use of this in whatever form or way
64:52
confirms it.
64:57
My name is Nayib Bukele and I’m the President of El Salvador. Great ideas are beautiful and have great power.
64:59
But like most beautiful things, they can also be more fragile than we think.
65:04
When I was a kid, we thought about the future
65:06
and we were delighted by it’s possibilities.
65:07
We couldn’t wait for it to happen and be part of its creation.
65:11
But now ask almost anyone what they think about the future,
65:14
and they will say something along the lines of nuclear war,
65:17
climate catastrophe, hunger, pestilence, the death of life.
65:21
We didn’t took care of the beautiful idea that we create our own future,
65:25
that we, as humanity can do almost anything that we imagine.
65:29
Our ingenuity. What separates us from other species.
65:33
In El Salvador, we are trying to rescue this idea and have started the design of a country
65:37
for the future using the best ingredients that makes us who we are.
65:41
While using sensibility
65:42
to find the best examples of ideas from history and around the world.
65:47
I believe bitcoin could be one of these ideas.
65:49
That is why next week I will send to Congress a bill
65:52
that will make bitcoin a legal tender in El Salvador.
65:55
In the short term, this will generate jobs and help provide
65:58
financial inclusion to thousands outside the formal economy.
66:05
Lawmakers in El Salvador broke into applause
66:08
after voting to approve bitcoin as legal tender on Wednesday,
66:13
making the Central American country
66:14
the first in the world to fully adopt the cryptocurrency.
66:19
Bitcoiners around the world,
66:22
the time has come.
66:24
We are ready.
66:29
This is an important step for our country,
66:32
a step for technology, a step into the future
66:35
to bring us financial inclusion, investment, tourism, innovation
66:39
and economic development to our country.
66:42
Buchele has even more ambitious plans for bitcoin,
66:45
saying later on Wednesday that he wanted to use renewable energy
66:48
from the country’s volcanoes to offer bitcoin mining facilities,
66:52
which generate new units of the cryptocurrency and instructed
66:56
state owned geothermal energy firm LaGeo to come up with a plan
67:01
to make it happen.
67:02
The objective seems to be making using bitcoin as a actual medium
67:07
of payment, medium of exchange, much more frictionless in the country,
67:10
eliminating all capital gains taxes, which is, you know, of course,
67:14
a big impediment to actually using this thing as a currency,
67:17
you know, potentially in service of making, you know,
67:21
bitcoin based remittances cheaper and less frictional, for instance.
67:24
So that seems to be sort of the main thrust of the law.
67:27
What can we extrapolate then,
67:30
as far as what the future holds beyond El Salvador here?
67:33
Do you think we’ll see other, I guess, legitimate countries
67:36
like El Salvador embrace this and other larger countries?
67:39
We know that bitcoin cryptocurrency stablecoins
67:43
have very high penetration in places like Colombia and Argentina.
67:47
You know, Latin America is certainly no stranger to sovereign defaults
67:50
or, you know, periods of high inflation or monetary repression.
67:53
So we see high penetration there.
67:55
There’s certainly a class of policymakers
67:58
that see an opportunity to gain favor by signaling their affinity.
68:03
And, you know, we’ll see what happens.
68:05
But this is the first.
68:07
El Salvador is the first non pariah state to really legitimize
68:11
and legalize bitcoin usage in sort of its intended way.
68:16
So, you know, it seems like a big sea change, frankly.
68:19
Banks as opposed to governments, banks are businesses,
68:22
they sure have their own personal interest at hand,
68:25
but they will adapt to what their customers need.
68:27
They’re adapting now, actually.
68:29
They realize that they need to be able to offer some new financial services
68:34
that will be around crypto
68:36
because they’re going to be left behind completely
68:39
because a guy like me, a person like you, just won’t need their services anymore,
68:43
because all of this already exists
68:45
in a completely decentralized and uncontrolled way.
68:47
According to crypto firm NYDIG, hundreds of U.S. banks are asking for bitcoin
68:51
planning to allow customers to buy, hold and sell the digital currency
68:55
through their existing accounts as soon as this year.
68:58
For more details, let’s bring in CNBC.com banking reporter Hugh Son.
69:01
Hugh, what had to happen behind the scenes in order
69:05
for people to be able to access bitcoin in their banks?
69:09
Hey Kelly, nice to be with you.
69:11
So there’s a company called FIS,
69:13
and so FIS is one of these back end providers to banks
69:18
they actually have about 300 million
69:20
checking accounts through their thousands of bank clients.
69:24
And so they’re a tech vendor that serves a bunch of banks.
69:27
And then there’s also a crypto, a bitcoin custody company called NYDIG.
69:32
And they’re one of companies like sort of a Galaxy, so, NYDIG has a deal
69:36
with Morgan Stanley, for instance, to offer institutional funds
69:39
to their wealthy clients, so you have some nascent players
69:42
joining some established tech vendors, you know,
69:45
FIS is a $95 billion company, market cap.
69:48
And they basically said,
69:49
you know, we’re going to make it easy for people to actually own bitcoin.
69:53
It is, after all, a financial asset and they want,
69:56
they’ve done studies that said, basically,
69:58
if people have the ability to own bitcoin through their existing
70:02
financial relationships, through the portal that they deal
70:05
with their other money, you know, their fiat money,
70:09
if they’re able to do that, you’re going to have greater adoption.
70:11
So basically, what they’re going to have is
70:13
as they turn this on, you’re going to have access to
70:16
the clients, the customers of these community and regional banks that sign on for this;
70:20
They’re going to be able to go there via their bank app
70:22
and actually look inside their bank app and see crypto
70:26
right next to their other deposits and their savings.
70:29
Well, we want to be in the middle of any movement of funds,
70:32
and we don’t try to decide what’s going to take off or not take off
70:36
and we don’t pick winners and losers.
70:38
We just get ready to enable whatever could possibly happen.
70:41
And I think crypto is an exciting trend.
70:43
There’s crypto currencies, which are kind of the digital gold.
70:47
Think of bitcoin and there what we’re trying to do is create utility,
70:52
which first of all, making sure that our
70:54
visa cards are used to be able to purchase bitcoin.
70:57
And then when somebody wants to convert their bitcoin into a fiat currency,
71:01
to use a visa credential, to go shop at our 70 million merchants around the world,
71:07
so we’re trying to create that utility.
71:09
So we’re working with 35 of the biggest crypto wallets
71:15
around the world, making sure that these various digital currencies can be converted
71:21
into a fiat currency, and that money can then be spent
71:25
from a visa card in a wallet,
71:28
again at any one of our 70 million merchants around around the world.
71:34
We’re at a point where markets are at all time highs.
71:39
Any kind of ratio is screaming that we’re at the top of our cycle.
71:45
We have companies that are failing even now starting in China.
71:50
And what happens is that all of this money will have to exit
71:53
the financial market, where there’s huge amounts of money now, way more money
72:00
digitally in these assets than exists
72:03
in the pockets of every single person in the world, right.
72:06
So this money, what tends to happen when there is a, you know,
72:10
top in the market and the market is going to drop,
72:12
of course, there is loss of value.
72:13
So all of these investors, they need to get their money out, right?
72:17
They always do that because they don’t want to lose money.
72:19
Their job and their mandate towards their clients is to bring profits, not losses.
72:26
So they’re going to get their money out of the financial markets.
72:28
This, of course, will lead to an even sharper drop
72:31
but this is standard, it happens at every cycle.
72:34
Now what tends to happen, though, is that most investors
72:38
at that point will get into bonds, which are government obligations,
72:45
and these have interest rates that are paid by the governments.
72:49
But these interest rates follow
72:51
the interest rates that are set by the central bank, right?
72:54
So nowadays, a lot of these bonds are negative yielding,
72:58
which means that if me as an investor, I want to have a certain return
73:03
per year, even call it 1%, today if I buy a bond, a European bond,
73:09
I will not have that because it’s had a negative interest rate.
73:12
So in fact, it costs me to buy this bond, which until now was a secure
73:19
position for my money, but would at least bring me some returns.
73:23
Now, even this fact isn’t there, right?
73:25
So in a scenario where the money is pulled out,
73:29
it cannot go to bonds because it is not
73:32
logical for it to be there because there’s just this trust
73:34
that is gone from this value that governments used to be able
73:38
to hold in the long term.
73:40
With this being gone, this money, where is it going to go?
73:43
Right?
73:44
It can go into gold, but gold we’ve just seen,
73:48
can be controlled by government, has been controlled by government
73:51
and in the past ten years
73:53
hasn’t increased in price, it’s at the same price as ten years ago.
73:56
So, sure some money will go into gold because it’s a
74:00
typical kind of protection asset and money will transfer into gold.
74:06
But there is this entire new financial market
74:10
that is being built at the same time that is led by bitcoin.
74:13
But all of these other cryptocurrencies as well.
74:16
Bitcoin is the first time ever in history of finance,
74:19
That an asset reaches this level of valuation so quickly.
74:23
On top of that, it is the technology
74:26
that is the most quickly adopted in the world.
74:31
So before that, it was the internet that was adopted.
74:35
Just, I mean, we’ve never seen anything adopted so fast
74:38
in terms of adoption of technological progress.
74:41
Right now, the world of bitcoin and cryptocurrencies is accelerating
74:45
at a faster rate than the internet, which I think makes sense
74:49
because it speaks to so many people, particularly younger generations
74:54
and rather than the people that are in power that are of older generations.
74:58
And so this market of bitcoin and cryptocurrencies
75:01
and I want to really emphasize bitcoin here because bitcoin is
75:06
the safe one that has all of these applications
75:09
that are being built by other cryptocurrencies
75:12
now also built on the bitcoin network, meaning that for all of these funds
75:18
that have serious money and long term objectives,
75:21
buying bitcoin is one of the best trades that they can have.
75:24
And given the volatility that it has and the hedging options that
75:28
they can have represents a lower risk for them
75:32
than the traditional assets that they’re used to.
75:35
So this is why I think and I’m not the only one in thinking so,
75:39
bitcoin will be the black hole that will swallow a big part
75:44
of all of this money that will be escaping the traditional markets
75:48
because there will just be no more value there.
75:52
No other assets like this one has ever existed before,
75:55
that marries our technological progress with our financial systems.
75:59
It is time for people to have a currency
76:01
that is as open and anonymous as the internet.
76:05
With bitcoin, the control of money is taken away
76:08
from governments and given back to the people.
76:11
This removes huge power from governments and their leaders
76:14
that have had countless issues with corruption, abuse of power
76:18
or limiting our freedom.
76:20
We’ve seen that our financial system needs a reset.
76:23
And the only solution governments have is to print trillions more.
76:26
Devaluating our currencies in the process.
76:29
Along the way, they will continue to make people
76:32
more dependent on governments because welfare spending has
76:35
to increase to cover their irresponsible money management.
76:40
This provides governments with a snowball effect loop of inflation,
76:44
leading to a poorer population, leading to more welfare spending,
76:48
leading to increased government control.
76:51
Bitcoin is the way out of their controlled system
76:53
that favors only the wealthy and the elite.
76:56
It is also the first time due to incentives
76:59
these people have for bitcoin to never succeed as a currency,
77:02
that average people can front run them and grow
77:05
their personal wealth first before these people
77:09
that consider themselves the elite have a chance to do so.
77:13
Bitcoin is slowly taking over the world and will absorb
77:16
a large amount of the money currently stuck in our legacy financial system.
77:21
Do you really want to be left behind with them?