Crypto In The Long History Of Private Money
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- เผยแพร่เมื่อ 7 ก.ค. 2024
- In the United States, the government is not the only entity legally allowed to issue money. Private citizens and businesses are allowed to do so, too, and throughout U.S. history, they have done this. This type of money is referred to as private money, and it had mostly disappeared from circulation until Bitcoin was created in 2009. Today more than eight thousand cryptocurrencies exist, and more are appearing every day.
Why were private currencies so popular, and why are they coming back today?
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Cryptos are much further along at this point than just bitcoin and eth. Bitcoin will probably be used like gold and eth will use it's blockchain for services that build on it's tech (like another Microsoft). There will be different currencies for different purposes, like Vchain for product verification. Also, smart contracts can automate the services done by credit cards (like rewards programs) much cheaper. They are even starting to do derivatives now. I dare say you really didn't do enough research for this video. Go back and take a look and I think you'll be surprised at what you see.
@@lamalien2276 Nobody is going to use shitty ponzi coins for anything, because they are fundamentally flawed - you either control the currency, and thus the price, by having the most coins, or you do it by having the most processing power.
I was under the impression (and I was young back then when bitcoin was created) that bitcoin was created to be a modern store of wealth and nothing more, really to hedge against inflation and market manipulation and crashes (like 08) so basically acting kinda like gold but with less market manipulation, but I think even bitcoin has mutated and become something even natoshi sakamoto and the development team couldn’t predict
Awesome video! I think there's a strong argument to be made that gift cards fit all the requirements of a private currency. I've actually ran into some folks who are selling Turkish gift to other countries cards at a markup since the price of some services can't keep up with the plummeting TL.
A wise man talk because he has something to say but a fool because he has to say something, so why all this talk anyone can google it no need for this BS
Patrick, I just wanted to say that in a world of social and media noise your videos are delivered in such a calm, considered manner cut through the craziness with clarity and intelligence. You’re a rare breed especially on the internet these days so, I just wanted to say thank you and for educating us viewers ☺️.
I couldn't have said it any better.
Perfectly said
Indeed, so much smoke and mirrors, says exactly what i would say if I knew what he knows! 😊
@@muokinzangi3067 -- could have been written better, though I think I understand what is trying to be conveyed!
Yes, commas* are key!
* - Void where prohibited. Your private money will vary.
I got two ads for "private currency" scams during this excellent video. It's like good and evil fighting for the screen.
I would say this is more on youtube for allowing scams
In 20 minutes, I learned more about the global, financial 'big picture' than 40 years of reading around. Thanks!
So did I, one of the best videos so far IMO
perhaps you should learn to read then?
I'm pretty sure that 20mins has turned into hundreds of hours of Patrick Boyle by now, innit? :)
One of my favorite bits of trivia is that wampum, originally a native invention, had some inherent value because its pretty and the process to produce it was very laborious so it wasn't an infinite supply. This changed when settlers built steel tools and a mechanized process for quickly making loads of it, causing wampum inflation at the expense of the natives.
I was unaware the settlers automated/accelerated the process and caused wampum inflation with native Americans.
But a logical route to go.
In Oceania, the stone money used on some islands - a "coin" being a rounded rock weighing several hundred pounds and more - saw a similar phenomenon when an Irishman used a European transport ship to bring in massive amounts of rocks from other islands in the 19th century.
And what the settlers did reminds me of childhood times when we collected bottle caps from a local bar and hammerded them into coins... 't was a good time.
@@michaelbizon444 when you have a gold coin in your hand you never know which part of the globe the atoms came from and what people did to others when acquiring them.
My now late grandmother sometimes told the story that as a young woman just as the second war had ended in Germany and its aftermath she walked home for some 200 kilometers from where she had been conscripted. She said that on her walk she met a woman, the wife of an SS officer, who had a small bag with her that contained gold teeth taken from the people, (I assume mainly jews), killed in then concentration camps.
I'm so glad that so far I haven't had to live through such a time...
Sorry to say, but that is not true. This did happen, however, in West Africa during European colonization with Akori beads. A glass bead used as currency dating as far back as 300 CE. Europeans were able to mass produce it in factories in Europe and shipped boatloads of it and caused hyper inflation.
Wampum was another story. Firstly, the indigenous people did not use it as "money" but as a ceremonial trade good and status symbol. When the English and Dutch arrived they saw its potential for use as currency. However it didn't fully satisfy the definition of money. For instance it was not a real store of value. It also was useless in international trade, only having any sort of value in the north east of the Americas. After the Pequot War in 1638, the tribes along the Long Island Sound, the makers of Wampum, who had been damaged by the war, had difficulty keeping up with Wampum production. Eventually Boston started minting their own coins, (in violation of their charter) and began replacing Wampum as money. It's a little more complicated than that, as things usually are, but that's the gist of it.
The same thing happened in reverse for the gold standard during the Industrial Revolution. It was a fluke of history that the technology being developed during that period (steam powered mining pumps and equipment) also increased the money supply.
My favorite semi-related trivia is that aluminum used to be more valuable than gold. Napoleon's most honored guests ate with aluminum cutlery instead of silver. The electrolytic extraction process eventually flooded the market and turned it into what we know today. In fact, it was only ~100 years ago that aluminum became cheaper than tin, which is why a lot of places still use the misnomers "tin can" and "tinfoil."
Clear as ever and without all the hype or hate. Thanks Patrick.
Nothing like an emotionless Irishman to really break down a market.
No, he simply didn't do enough research before making his conclusions on such a complex subject. That's his bad. The perspective he gives is based on extremely dated information. The truth is crypto is breaking into derivatives, product verification, and smart contracts (automated contract settlement). Also, many cryptos are MUCH faster than credit card networks. Patrick blew it this time.
@@lamalien2276 sounds like something a crypto investor would say.
@@haydendriscoll8474 you mean a crypto cultist. 🤓
@@TheRustyLM Fiat isn't really backed by anything. Crypto is backed by that guy on Craigslist kills people. What a joke and a waste of time! I wish Patrick would do a video on all the characters involved in crypto they are all relatives of Bernie Madoff.
Wampum to the moon!
Wammoonpumm 3x leveraged ETF stake your wampum for guaranteed 150% returns in 🌽
It's incredible how you mentioned M-PESA which forms critical part of currency exchange via mobile devices in Kenya. It has integrated very well with the banking sector in the country.
I can imagine this would be needed seriously in remote towns and small village. Even we in the Rockies don't have ALL the Canadian big five banks. My bank is two hours away. Not even a kiosk.
I really think the so-called developing countries are going to lead this, I mean when it comes to bringing this to being a means of paying for goods - trust, being willing to adopt - that that need will drive the tech forward. I hope so, then the rest of us can follow!
@@jfernandez76 I have horse why I need car???
I can see why you are a visiting professor. You have a great ability to explain concepts in a way that can be easily understood by someone without a great deal of insight in the topic without sacrificing the complexity or depth of the subject.
My God, what an avalanche of information! This was incredible. History, markets, human psychology, crypto...way to connect it all, just fantastic!
yourcheapdate: Agreed. What it does for me is increase my skepticism toward BTC, etc, and make me think that the old time wisdom of Buffett, Munger, et al that crypto becomes worthless over time, is likely correct.
Not enough to want to bet on that, however. I earned my money. Throwing it away isn't in my play book.
@@rogergeyer9851 my favorite Munger quote is crypto is rat poison squared!
Fascinating. I wasn't really aware of much of the history of private currencies, so I learned a lot today.
Interesting side-note; in Scotland, where I'm from originally, bank notes are issued by authorised retail banks rather than the government, so you have several different sets of notes in circulation. Technically, these notes aren't actually legal tender, and I guess they are really a form of private currency. However the banks are required by law to hold reserves equivalent to the value of notes they issue, to guarantee their value. So I guess Scottish currency is basically paper stablecoins.
I remember the two brothers that grew a huge business in Scotland in the railroad era building Pullman style cars. The bank "notes?" or "letters of credit"? were routinely discounted in process. the same thing occurred with these financial papers authorizing purchase overseas, especially of cotton from Egypt. It was just part of the financial process in those days to account for long travel and exchange of raw materials, to manufacturing in a country far, far away.
In Hong Kong the money is issued by 3 private banks.
THATS LEGAL TENDER!!!!!!
Interesting fact there are couple of reasons why Scotland has three banks but one of them has to do the fact that the first bank the Bank of Scotland was believed to have Jacobite ties.
So when a new company wanted to move into banking parliament agreed to allow them as a form of competition. Hence The Royal Bank of Scotland was born
Also another interesting fact when the Bank of Scotland was first established it allowed for foreign investors to legally become Scottish citizens
As an Ithacan, I can tell you that the Ithaca Hour's history is a wonderful and interesting story. Lovely to hear my city mentioned in your video. There are several wonderful lessons to be learned from the Ithaca Hour and it's history.
Can you please share some of the lessons? (If not, it's hard to gauge the value/relevancy of such glowing assertions.)
Some weeks ago I watched a video that explained that "airline miles/rewards" (from Delta/AA/Continental) effectively work as digital private currencies... (much like the railroad operators did before)...
Learned a great deal of history with this video. Thanks Patrick.
It's a travesty that this video doesn't mention the '1 Big Mac' coin.
And it's a missed opportunity that McDonalds doesn't issue coins denominated in units of Tendies.
Tammuz Kay:
So WHY is this a travesty (in your opinion)?
So I see with 1 minute of searching, that this was only redeemable through 2018 at some McDonald's stores. So now, it's WORTHLESS, except for those who want to collect them, and trade them on Ebay (apparently, included in my 1 minute of a quick search).
The McD Tendie would go straight to the moon.
@@rogergeyer9851 I was using hyperbole in an attempt at humor.
Love that my DCA into bitcoin and the stocks market cost me nothing, rather it did put me on the road to riches. Sh!t's paying higher than a paycheck.
Sell bitcoin? Why would anyone do that ? IMO always buy when you can afford it. Invest for future benefits, whether they be having the new money or selling for profit. Then, invest as if you might be wrong, The name of the game is to not lose wealth whatever form it may take.
@@Otis-the-III Its lucrative nature has never been doubted, but a higher %tage of investors lose rather than make fortunes off it. What's your system, sir?
How do you go about it for profitable outcomes ? I am thinking about buying a small amount, trying to get skin in the game.
Investing in stocks and crypto are no doubt one of the simplest forms of earning recurring passive incomes. I made my first million $ doing so! But their inherent complexity kinda makes it tough. I think it's more about knowing so much about investing in stocks and btc that you're able to note opportunities on any given day.
Prospective investor here and the last six months was undeniably miserable for, absolutely horrendous. I'd like to know how you guys throwing darts over the wall actually do it?
Out-f’ing-standing!
I was profitable both January and February, & with Btc currently on the rise, 2023 is really shaping up to be a good one. So getting rich in fiat is ok in my books using Btc. It's basically FOREX!
Your mention of the protection provided by the credit card system for is so true. Myself and all my relatives have had to use that protection due to criminals attempting to charge to our credit cards. Great commentary on private currencies.
Did it occurs to you that protection is required/provided because credit card is flawed in a way that it is easily susceptible to such fraud in the first place ?
@@Funktastico Not really, protection against social engineering scams is a value add. And this has nothing to do with the underlying transaction settlement technology and how secure it is from a purely technical standpoint. The fact that transactions are reversible is a feature.
It's weird that someone can just charge someone's credit card anyway instead of it being a payment request rather than a charge.
@@Funktastico you realize every system has flaws right? Go look up how people are being hacked and swindled with the flaws in the block chain. There is no way to reverse a charge on the chain either, so all victims are SOL.
a crypto piece researched, written and published by a 'non crypto' person that's not riddled with falsehoods and patent nonsense; a RARE find indeed. top job.
.... He is in crypto... I know I have heard him talk about waiting for a correction .
@@dollarcostbackpacker1226 he means he doesn't hype up crypto.
He seems clueless about bitcoin
So this channel is more like a collection of lectures than just some financial youtube videos. Great content!!!!!
Private printed money’s history is still easy to see in Scotland and Northern Ireland, though all those notes are backed by government eventually, though not directly.
Given all the Cryptos, NFTs, the Rise of the Metaverse, On-Line Sports Betting, and Lotteries is anybody in the US paying their bills?
I guess gift cards are a form of private currency then? Perhaps we should switch to the Target gift card standard
Excellent Patrick. Easily one of my top 10 channels on TH-cam
I would like to note that a bitcoin transaction costs between 0.15$ and 0.30$.
Sometimes as low as $0.02. Moved $10k for that much, on a Sunday, within an hour. Please show me a bank that can pull that off.
it got up to 40 dollars per transaction last spring. If more people actually used it, then it would be even higher because miners can pick and choose what transactions to do first
Extremely interesting video. I did not even know how much there is to know. Thank you, Patrick!
I thought I was going to get another video blindly attacking the blockchain industry based on how the technology stood years ago, not taking into account any of the improvements or issues that have already been solved (that most people not involved aren’t yet aware of). Instead I got a great overview on the history of paper money. Patrick is truly one of the best finance channels of all time.
My fears and relief/appreciation exactly!
You are missing the point. It's not paper vs digital. It's government backed currency vs private issuance of currency. Both have no intrinsic value but backed by faith. One is backed by taxation and in the case of digital currency has not been used for any major amount of transaction.
Not that I liked either. One will be inflated away and the other was growing due to the excess supply of currency and rampant speculation due to negative returns of currency.
@@zachzimmermann5209 The early banking industry and cashless society was covered pretty seriously in my American high school days. But you'd not know much about it if you didn't go to school in the USA. The Founding Fathers "concerns" is also covered extensively, IF the kids going to school paid any attention.
"HOUSE OF CARDS" - both the traditional Finance and Bitcoin too, sure it has value because of scarcity but its price always sits on the foundation of US dollars .
When the chips are down, Bitcoin and crypto will shit the bed faster than any currency ever.
@Hakim Habib Are Millions of people competing to get Kidney Stones ? Come on Bro.
Great overview! Patrick can pack a lot of info into an easily digested capsule. One pro is that some crypto seem to be pyramid schemes, so early "investors" make large rewards. Finding the "last fool" may be tough.
I missed the live chat, but wanted to suggest a video idea to hear more about digital versions of sovereign currencies eg digital yuan. The problems they solve, the problems they don't solve, the complications they raise, their potential effects on existing cryptocurrencies a la Bitcoin, Ethereum. Prospects of US digital dollar (seems unlikely from what you say in the video), the reasons for this etc. Thanks and please keep up the excellent content; lots of very smart academics I know (in areas outside of finance) watch your stuff. I think the combination of solid information and subtle humor in an unexcited format is gold.
@Hakim Habib how is dollar a cbdc? not talking about fee based payment systems like paypal etc.
Love your content. Thanks for putting all this work into educating youtube.
Crypto is not as private as most people think.
BTC is literally wide open. If you can connect a waller with a person, even a child could look at the history.
Monero on the other hand is literally an enigma. And that's why it's kept down low. Nobody can tell what's happening on the chain
Really enjoy your videos sir, very much appreciated - thank you!
Thank you for making this stuff. You always say its boring but its fascinating to me to see how history repeats itself in new forms. I wish we learned more of this in finance school. Maybe there was a class called history of finance but I didn't take it.
"Money only backed by faith".. Reminds me of something.. Oh right the US dollar! Anyway you should check the huge amount of use cases offered by defi Patrick. Its not just private money, its decentralized programmable money. Its the difference between a smartphone and an old phone ;)
the dollar is backed by the US government, a government with the longest lasting Constitution ever written in the history of mankind. There is a reason why so many currencies peg their currencies to the dollar, because it is stable and widely used. Cryptos can be duplicated at the drop of a hat (BTC to BTC cash) and are backed by nothing.
@@ryanpatrick4920 "backed by" = manupilated by. No reason for foreign coutries to peg their currencies anymore if us keeps on printing dollars to save its freefalling economy and wrecking foreign countries. If they are expecting 2020/2021 levels of money printery im sure foreign countries would rather their currencies be backed by "nothing"
@Hakim Habib
Yes, US citizens can only pay their taxes in USD. Anyone who wants to buy US Treasuries or equities also does it via USD.
@@kkkkkkkb9945 well I’m not sure about the “no reason…” argument. You realize the US provides defense for many of these foreign countries both individually and de facto en masse by its empire. I’m not justifying it, just pointing out the reality. And of course, the US hegemony is being challenged and successfully. When that changes, then the dollar as the world’s reserve currency status will follow.
All currency are backed by faith. They are called FIAT for a reason. Before, the dollar was pegged to gold at a fix amount $35 for 1 oz of gold.
All currencies then took dollar with that understanding but then the French discovered that the US wax printing more dollars for wars and social programs than they have gold.
Since then, the dollar has lost much of its purchasing power. And we are about to see this again with another dose of Inflation now globally.
It's not how much paper you have. It's what you can buy with it. And governments can only try to print their way out of a problem instead of shrinking itself.
Great video, interesting topic. Sheds some new perspective on how to view cryptos when having a bit of history on private currency. Very thoughtful topic if you ask me.
great video Patrick!
Another great video.
All this should show just how fragmented the US economy was in the 19th century along regional and local lines
Would have been interesting if you had looked bit closer on the functionality and use case for the top 50 cryptocurrencies and tokens and comparing them with the old private currencies.
Excellent video. Thanks for this
Great Explanation
The pros of crypto: Pump and dump, baby!!
The cons of crypto: I was on the wrong side of the pump and Dump.
The early history of US money reminds me of Bitcoin and Lightning now. Whereby paper money was used for general trade (lightning), and was redeemable for gold (bitcoin). Except in Bitcoin and Lightning the currency is the same, and is equally redeemable and divisible on either platform.
Agree, with the observation BTC is a finite supply whereas banknotes are infinitely printable therby devaluing them over time.
@@ianparr5899 Nope. BTC is inflated by tether, which is already insolvent.
Nice one. Thanks a lot. Very interesting🙏
Fantastic video
Hi Patrick,
Another proof that your channel is very underrated 🙂
By who ?
Bringing the big brain energy. Love ur work 👍🏼
Very interesting and well-presented talk on these topic. Second time watching......
Thank you BTC fans for your recent $400 billion donation to the world's anti-inflation efforts!
It'll be back.
?
Turned out to be a trillion. We appreciate it!
Will BTC ever see 60K+ again? Folks that bought high might be left holding a large bag of nothing.
I remember when people said something about bags when BTC was 1K…
Nice job.
Amazing "edutainment" value. Inching closer to patreon. Love, love, love that distinguished suit. But love, love, love, love, the content of this particular production. I really admire you professor Boyle keep these high-quality videos coming please.
Hi Patrick, great video. I've done a few blockchain projects and from my experience, almost every blockchain application issue their own token/currencies, just because the fundamentals of the blockchain application encourage developer to issue their own token to build a clean usage environment. The government issued digital currency actually can be used to replace all the funky stable coins in the market, and work as a medium to help user exchange their private issued coins to fiat currency back and forth. Since most of the token/currency run on blockchain by design is to disclose transactions, so I don't think the central bank digital currency raises more privacy problems than any other private token/currencies.
What's the point of it. If you get paid via banking, so electric generated balance and you never take out the money in cash and just pay with your card...one would say then your money is indeed vitual just like any cryptocurrency is. The issue with crypto is that if you want to take it out, you can't. For some people having physical bills in their hands is valuable.
my power went out yesterday. a stable power grid is an afterthought.
@@tavirosu25 you are actually questioning the current monetary system, which is reasonable. And if you go a little further, you will find out the physical bill is just as worthless as any crypto in the market.
@@user-ti8oj4vd7q : Did you think about that before writing it ?
@@tavirosu25
Yes, cash is useful when there is a power cut, after a hurricane for instance. You could be a crypto millionaire but if there is no electricity or internet connection etc what use is your crypto in the real world?
Patrick you're slowly saving me from causing my own financial ruin thank you I love you.
That's great Brian :)
What did or didn't you do that's saved you from financial ruin based on Patrick's teachings?
History, yo! Thanks, PB, for your always interesting (and often hilarious!) big-picture perspective.
Great as usual! On a similar topic, would love to see your take on the economics of airline mile/reward schemes!
17:39 This is not the case anymore. Lightning Network transactions are instant and cost fractions of a penny.
Wonderful. Is there a link to one of your college lectures? Would love to listen to a class. I find you very interesting and appreciate your channel.
There are several lectures in his TH-cam channel.
@@MrAsteba I will have to look for them. Thanks
Extremely educative video, thanks!
As an Structural Engineer I find your educational videos very informative and consider myself to be your student.
There isn't a good video on how and which sectors/assets to invest in inflationary environment and in deflationary investment. Liked. Subscribed.
"faith" is a crucial term. Can we say the subject of our faith is subjective? Value of gold is essentially subjective too.
The silver run of the last two days is a short squeeze against the position of Bank of America
I’m enjoying every minute of it!
ohhhhhhhhhhhhhhhh that's what the silver run is about
Excellent explanation as usual. Thank very much.
This channel is amazing. Great work!
Actually, currencies have been competing as long as currencies have existed. Athens made their tetradrachms the trading standard over the whole Mediterranian. The denarius took over in the 2nd century BC. Then came the sterling penny, etc. History is full of examples of attemtps and successes in monopolizing the money standard. Alternative currencies have popped up to either take over, or at least keep the leading currency honest. It is as it should be.
Well, we still have Canadian Tire money lol
Thank you for this video! I learned so many things I didn't know about alternative money in the past!
Wow! You are incredible. I have learned so much. Thank you.
Love you Patrick - these well research, well explained videos make my day :)
Patrick doesn't know very much about the space. This information is extremely dated, the tech is much further along now. Patrick didn't do enough research.
@@lamalien2276 yeah I don’t follow him to learn about blockchain or crypto or advances on the trilemma- just a good overall look on the past and objective similarities with the present and in that sense this was very complete though, this guy knows his stuff and better he shares in an organized clear way .
@@lamalien2276 looks like you know how to copy and paste your comments. Congrats!
No Patrick YOU have a good day
Great moment of the day, when you get notification about new video of Patrick. Great thing to watch before sleep.
Very interesting topic! I’m halfway through the video
Private currencies are not illegal in the United States, but they are effectively illegal because of the laws related to capital gains taxes. Gold, for example, is a very good currency, however the bookkeeping required to use it as a day-to-day currency is extremely onerous... practically impossible.
Imagine having to keep a record of each time that you receive or spend money, plus a record of an exchange rate with each transaction.
I contend that private money has fallen out of use because capital gains taxes were introduced in the early 1900s, not because government money is inherently better.
Gold and silver are not a good currency regardless of tax law. It is too scarce for a large country like the US to meet the needs of its huge economy and large populous. Even if the government coined it, people would hoard it instead of using it to purchase things. It is also not easy to transport.
@@ryanpatrick4920 Too scarce? If demand goes up and it becomes more valuable, right? Do you contend that it'd become so valuable that it couldn't be denominated in small enough amounts? If so, you could use something less scarce like silver for small transactions.
Also, you can buy a house (a mansion?) with a brick of gold. How much do you need to transport?
(Edit: I do think electronic currency is easier to transport than gold, and thus it's probably better money. But, gold isn't bad money by any means.)
@@chrishubley7849 yes, that is exactly the concern. What the person in this video said about silver coins is true. They were not good denominations of coins because the silver that the coin was made out of was worth more than the denomination on the coin. So people stopped using it as a currency. Currencies need to circulate in order for an economy to grow. And that is more so a concern if it were gold. You would literally need to have a person weigh your gold and consult the market price before any transaction. I am not against the accumulation of gold and silver as a storage of wealth, but gold bugs make all these crazy suggestions about its being useful as a currency or as a standard reserve to back the dollar. None of it is realistic. Any true patriot would put their hope and faith in the US dollar, rather than trying to diminish its standing with these useless crypto's or scarce precious metals.
@@ryanpatrick4920 the problem of coins being worth more than their denominations comes from the government decree that, for example, a quarter is 1/4 of a dollar. If the value of the silver in the coin is worth more than the declared value the coin, the government has a big problem because the coins can be bought from the mint for the stated value melted down and sold for the market price.
As for everyone weighing coins, in the past coins were often weighed, but historically coins are created in standard weights and sizes to make transactions easier.
The fact that crypto isn't used more like a currency and less like a speculative asset honestly saddens me, I try to encourage use of it as a currency by offering it as a payment option for my own services, but ofc rarely anyone actually takes me up on it xD
Qwerty: In the real world, high fees matter. Also MASSIVE volatility for a "currency" matters a LOT.
@@rogergeyer9851 Only ETH has crazy high fees. That massive volatility you are talking about is not something a lot of people around the world have a problem with because their countries currencies are worthless do to government mismanagement
@@terrymoose7273 You know, people don't have to use cryptocurrency to solve the volatility problem. They can for example use... dollars. People in Turkey routinely keep their savings in dollars or euros due to lira's volatility and general weakening over time. Using crypto to solve currency volatility problem is like killing a fly with a tank. It's completely unnecessary and wasteful in all sorts of ways. People don't use crypto as a currency because it's not a particularly good currency. People use it for speculation because it is great for that. It has high volatility and a lot of dumb money invested in it (a lot of smart money too, of course) which actually makes it possible for some people to outsmart the market once in a while.
Thank you for your videos!
I didn’t know there were so many Cripto currencies in existence,
I admire the way you explain it, I’m just an average person and I’m learning so much from all of your videos,
Excellent!!👍🏻
This is most excellent. You're an artist, Patrick. Just -- well-crafted.
Really great video Patrick. I am trying to explain to my hyped friends what madness it would be to have a "Bitcoin standard", but unfortunately, I am not that convincing nor educated.
From now on I'll show them this video. Thank you!
If they are too far into it, they would just ignore this video too.
It would cause monetary policy problems like in the Eurozone, except 100 times worse.
Patrick doesn't know very much about the space. This information is extremely dated, the tech is much further ahead now. Patrick didn't do enough research.
It would make infinitely more sense to have a decentralized standard that wasn't subject to inflation. That's why the Fed doesn't want the monetary system to be independent of human control, (and _their_ control) because then they can't manipulate the economy and produce money supply out of thin air. The Fed would have to buy currency to dole out, just like everyone else.
@@lamalien2276 okay Mikey Saylor calm down and go back to El Salvador the greatest country ever!
Very detailed and well researched. Thank you.
Thank you for taking the time to compress all of this information and compress it into a well orated video!
Dude. This is an amazing video . Bravo
Didn't know that microtransaction stores and currencies have almost 150 year history
Great video as always, very interesting history on American private currency. An important thing to note on the thousands of cryptocurrencies though (ignoring the trash meme coins), is that the majority of them are not trying to be currencies. The term cryptocurrency has become a bit of a misnomer in the present. They should be called digital assets now, as many coins have various functions for different decentralized services that can make them more like a commodity like oil/gas, or equity instrument like stocks/bonds, and some have new functions that they will need new classifications made as they don't compare to any existing thing.
I'm not sure that's correct. The majority of crypto tokens aren't really useful for anything other than trading. There are some exceptions like Filecoin (which after years of waiting actually launched its storage service). Most tokens however are only promising some sort of usefulness in the future. Oil, gas, gold - these assets can be actually used for things other than trading - creating jewelry, electronics, production of plastics, energy production. I cannot use BTC hashes for anything by themselves. If the ability for trading crypto went away, most of it would become worthless, no?
I think "asset" is a bit of a stretch as these are simply entrys in digital ledgers - perhaps someday they can represent or be a record of an asset but not seeing that right now.
Agreed. I think crypto is here to stay and could over take the stock market. Imho, the market is plagued with corruption (AMC/Gamestop), insider trading, inflation, manipulation, etc.... Where crypto only seems to suffer from volatility & manipulation.
@@diehard7832 decentralized cryptocurrencies are not immune to manipulation, corruption or insider trading. It being decentralized will actually make it much harder to identify, stop and prevent such problems already existing in traditional financial systems.
@@TheMineCool Decentralization ensures that the rules enshrined in the crypto protocol are not broken. The problem is, there are very few rules enshrined there (or even rules that could theoretically be enshrined). For instance it would be very challenging to implement a feature as simple as chargeback.
This channel is so great, so instructive with so much fun
Crypto currencies can be imbued with different properties. They can be frozen, locked, burned etc. I almost imagine the usecase for crypto being more like Nectar points or shop specific tokens a bit like the lumber mills.
In a globalized economy, the sovereign currencies look somewhat like local private currencies used to look back in the days. One of the problems cryptocurrencies solve is eliminating the concept of the geographical borders.
Another problem they solve is the reliance on foreign currencies by countries with weak local currencies. Countries that use US$ as a de-facto local currency don't want to be affected by US fiscal policies. A cryptocurrency may provide a way out for them.
As for the trust issue, that's exactly why decentralized, distributed ledgers are a solution, not a problem. There is no single entity that can fail, causing the cryptocurrency to fall. You only need to trust the source code that powers the project. And that source code is open source, and undergoes academic, private, and commercial scrutiny.
The largest crypto by value, BTC, has already duplicated itself by hardforks at least three times, such as it duplicating into BTC Cash. That is not a good indicator of trust. It is an excellent example of why cryptos are susceptible to inflation if they were ever to become actual circulating currencies.
@@ryanpatrick4920 BTC did not duplicate itself. The forks are separate projects, and they have nothing to do with BTC other than originating from the same source code. Anyone can fork any open source project. It's like saying that Monopoly dollars undermine trust into US dollar. They are completely separate entities. Are you saying that existence of forked projects constitutes inflation of BTC? How?
Anyone can fork Linux kernel. I can do it by typing one command. Will me doing that undermine trust in the Linux project? Not even by an epsilon. My forked copy will have absolutely nothing to do with the main project.
@@antipode_ghost How is it not a duplication when the first coin was mined to be used as a single circulating currency, while the second coin broke off, and in an instant has the same exact number of mined coins as the first? At that point, the holders of the first coin, suddenly has the exact number of the second, (even though only one coin was mined) and whatever the arbitrary value of that second coin comes with this duplicated holding. It literally creates supposed value out of thin air. BTC Cash did not have to expend all the electricity to create their coins. And what is more dubious to the equation is that the many holders of bitcoin who have died or lost access to their wallets, also have these conjured up BTC Cash coins. But neither of their coins can circulate, because the holder is dead. I have actually coined the term "dead coins" to define these forever lost coins of both the original cryptocurrency and the duplicated one. Also these forks create a competitor to the first coin, which is not good for a currency.
@@ryanpatrick4920 Duplication and inflation is when you create more of the same. BTC cash is not BTC at all, it is an independent project. So this is neither inflation or duplication. They gave coins to the addresses on the BTC blockchain in order to distribute the liquidity, in hopes that the coin will catch on. It did not catch on, and is dying a slow death. Existence of BTC Cash has nothing to do with the main BTC project, and does not undermine or inflate it in any way.
I agree that some altcoins compete with Bitcoin. Why is that bad? Competition is good. USD competes with Euro.
As for the wallets of dead people, this is why BTC is becoming a deflationary asset. Every year some bitcoin gets lost, because of technical issues or human error. According to some estimates, about 17M of Bitcoin will actually be in circulation (as opposed to 21M that will be formally mined). Again, a deflationary non-sovereign currency is a good thing.
@@antipode_ghost What is the point of small countries switching to BTC when they cannot control it's supply
Very informative as always. Keep up doing what you are doing :)
Thanks for video
I like how you didn't use a click bait title for this video. I really appreciate your focus on meaningful content.
Great stuff Patrick, the 2 cryptocurrencies that you mentioned in BTC and ETH are in no position to be used as everyday cash as you mentioned due to tech constraints but with the huge community of cypherpunks that they have garnered those technological constraints are being worked on, they're value proposition as of now is anti-censorship, the transparency in how they function and how they are issued, and of course decentralization.
What's the benefit of decentralization? It just seems like people just use the word as an argument. Can you give me a tangible benefit? The USA already has decentralized finance, PayPal, Visa, Amex, Mastercard, all with interchange fees much cheaper than crypto, but it seems we'd actually benefit from a centralized system with no interchange fees and instant deposits, I could be wrong but I think some countries do this already, but the USA to me already seems decentralized and it's a problem imo.
There are better ways for decentralized money
Decentralized does not mean governments just censorship or privateship. Cash paper is the best if you want your transaction not to be tracked. Any transaction on a card can be traced.
No what Decentralized here means is the quantity of issuance is outside of Central banks issuance and to some extent its traceability too.
As an over leveraged society crumbles what the government cannot find they cannot grab. And what they cannot print to oblivion will have value. That's Decentralized....
@@Oscar-vd4cv The three Bitcoin "mines" within walking distance of me are owned by locals that ALREADY HAVE cash flow, millions, properties, and many project son the go. They're normal. And if Bitcoin tanks, it's no big loss for them. BUT the advocates and conspiracy idiots thinking this is going to make them rich, or solve all their OTHER problems (like having no money and not REALLY wanting to work a normal way) simply have no exit door...that isn't going to hurt on the way out.
@@Oscar-vd4cv One attractor is to get the benefit of monetary policy like bailing out an economic sector or curbing inflation without bearing the dilution of wealth by increased traditional currency in circulation. Another attractor is anonymity, which also attracts a shady crowd.
Thank You Patrick, you Sir are an educator . Your content is always well organized, filled with historical facts, and just good. Respect !!
Informative. 👍
Commenting to support.
Exceptionnel comme d’habitude.
When (not if) the next severe stock market crash happens then it will become very interesting what happens to BTC and ETH.
I've read about banking wars in Canada in the 1800s, where banks would quietly buy up the bills of a competitor, then redeem them all at once in order to cause a bank run and drive their competitor into bankruptcy. It was obviously ruinous for the system as a whole. I wonder if the same thing happened in the US. I'm only halfway through the video, so perhaps it'll come up.
That’s a great tidbit 😆 and vintage practice from the crooks in suits. Ty
@@danb1618 My guess is the USA crowd would not want to miss that opportunity.
This is actually a great way to keep banks honest and drive out of business dishonest bank. As long as the bank kept in reserves enough gold to redeem the notes - as they should - then a bank run would not affect the bank.
On the other hand, banks that would cheat customers and issue more paper than the gold they have - they would be exposed to these bank runs.
@@mariusciobanu4254 unfortunately that doesn't work with the biggest crypto stablecoin USDT (Tether), since once you've given them your USD for USDT you can't redeem USDT for USD as per their user agreements.
I assume most people in crypto that buy/use USDT don't know that.
If it was possible to force them to convert their tokens back to real dollars the party would have been over for them for years since they would have had to show the real reserves they had then.
Thank you Patrick 👍
Thank you for this great lesson in currency history..
I wouldn't call it private money, cryptocurrencies are mutable assets. What gives bitcoin its strength is consensus (in a non-technical sense).The dollar is getting stronger right now, even though so much has been printed, I don't have to be in a financial master class to sense something is fishy. I want to have a say in what the fiscal policy should be, it should not be inflatable.
BTC has been duplicated several times, so it seems pretty susceptible to inflation. Ever heard of BTC Cash, just the instantaneous duplication of BTC. The only thing giving BTC value right now is that it costs 38k to mine just a single coin. Of course a miner would only sell it for that much.
@@ryanpatrick4920 It has been decided by consensus that BTC Cash is not real BTC, if such fork happens you "account" has the same amount of asset on both chains. Easy solution, sell the wrong chain. Buy the right one. Even you can duplicate BTC with the right equipment, but questionable if you can pay me out, cause i will buy real bitcoin from this money ;). That's the beauty of consensus.
@@ryanpatrick4920 it's dipping around that price now
So the conclusion of the story seems to be that the value of cryptocurrencies today depends just as much if not more on the centralized crypto exchanges, as it does on the decentralized network itself. If the centralized crypto exchanges went away or become inaccessible to a large group of people, that would severely affect the valuation of crypto tokens. This would be in line with the history of private currencies.
Exactly. That is the point, crypto decentralised nothing when you still need exchanges to get fiat. It is not the future it is more a niche which is filling i.e. speculative trading and funding illegal activities.
I love how many auxiliary info bits these vids cover
Fascinating, thank you!
Scrips are still a thing. Especially Amazon Gift Cards are pretty valuable.