December 11, 2020 • 30 mins
On this Back Story, Host and creator, Dana Lewis talks digital money.
In Covid19 paperless purchases are accelerated the digital revolution. China has launched a digital currency saying it will become an alternative to the U.S. dollar.
Crypto Currencies like BitCoin are soaring in value.
Dana talks to a leading digital coin trading Nickel Digital Asset Management , Europes leading digital asset management company, partners Anatoly Crachilov, and Michael Hall.
And, Max Kearnfelt, is an analyst with Merics in Berlin Germany. (Mercator Institute for China Studies.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
China's central bank on the brink of launching a
digital currency.
How will this revolutionize themonetary landscape in China and
abroad Bitcoin crossing at the$14,000 Cocteau currency
surpassing 15,000 for the firsttime ever.
Now it looks like we may hit the17,000 Mark Bitcoin's price has
been on a wild ride.
Speaker 2 (00:30):
Hi everyone.
And welcome to another editionof backstory.
I'm Dana Lewis in this edition,a digital revolution driven in
part by COVID-19, but there aremany other factors digital
because it's not a coin or abill that you carry in your
wallet or your purse, but anelectronic holding, maybe on
your phone or your computer, youalready may use payment
(00:54):
applications for some of yourshopping and bill pay.
But at lightning speedgovernments are adopting
electronic currencies.
They can track and control andoff the government grid.
Cryptocurrencies like Bitcoinare soaring in value on this
backstory.
Can you trust it?
Will you use it?
I have no doubt.
(01:16):
And we talked to digitalcurrency experts about the
future and the China analyst,because China is rolling out
digital currency.
As we speak in wild, they sayit's to get away from the U S
dollar.
It's probably more abouttracking every aspect of how its
citizens behave in the newdigital marketplace of the
(01:37):
world.
All right.
In London now nickel digitalasset management, uh, builds
itself as Europe's leadingdigital asset management
company.
And I'm joined by Anatoly[inaudible] and Michael Hall.
I guys, good morning.
How are you?
Good, good to be here.
(01:58):
Bloomberg recently wrote we'reliving through a monetary
revolution.
So multifaceted that few peoplecomprehend the full extent that
the technical technologicaltransformation of the internet
is driving the revolution.
The pandemic of 2020 hasaccelerated it.
What do they mean, Michael?
Do you want to take a shot atit?
Speaker 3 (02:17):
Well, I think we're seeing a new form of money.
If you look at the evolution ofmoney, we started off bartering,
sheep and cows.
We moved to coins and orseashells maybe before that
coin, some, we used to move topaper, money, and paper money
was tied to gold.
And then it was that link wascut.
And when paper, money departedfrom the gold standard, it
(02:39):
became fit money that centralbanks could conjure up with, uh,
you know, turning the printingprocess a bit faster, or now
they just put more zeros in adigital bank account.
And as a reaction to that, we'veseen digital currency starts off
with the com with limitedsupply.
So that I think what's really,what's really interesting.
(03:00):
COVID has kind of forced peopleaway from physical cash into
using contactless cash.
And the next evolution of thatis using a blockchain based cash
Speaker 4 (03:10):
And told you, why is it, uh, completely taken off
Bitcoin, you know, has risen.
I don't know what it is today.
You can give me the price today,but I mean, it's, it's
essentially gone up like 139%year to date.
Speaker 5 (03:21):
That's correct.
Yes.
It's uh, 18, 18,000 plusessentially I would say 2020,
the year of COVID to the grid,the entire kind of important
evolution in digital currenciesspecifically, there was a
sequence of events, uh, COVIDtriggers, mass unemployment,
mass unemployment triggers aresponse by central bank, which
(03:44):
can be summarized by floodmarket with money.
And that's exactly what centralbank did.
Speaker 4 (03:50):
Everybody's printing money, every nation that's
trying to get itself out of it.
The financial disaster they'rein are, are printing money,
correct?
Speaker 5 (03:58):
You have roughly$11 trillion printed over the last
10 months by a major economistsaround the world.
And certainly if you look atthat at the very least, you, by
the way, you appreciate whycentral banks do that.
But as holder of capital, youhave to preserve this capital,
right?
And your concern is how to avoidinflation, which started to loom
(04:21):
at some stage and currencydebasement, which inevitably
will hit.
And we all know that everysingle FIAR project in the world
being a kind of paper money,right, ultimately ends at zero.
So kind of intrinsic value iszero.
This paper and given the centralbank so easily can inflate this
(04:44):
people, investors are lookingfor hard assets and your
classical heart assets would bereal estate gold, will these
kind of overcrowded traits.
And then suddenly you come withBitcoin as a new form of hard
asset.
And specifically within BTC, youhave a scarcity element similar
(05:05):
to gold.
There is a certain number ofcoins ever to be printed.
And the schedule, the issue andschedule is very precise.
I can tell you exactly how manysay Bitcoin's going to be there
in the system in say March, uh,2042.
Can you tell me how many usdollars would have been
(05:26):
circulated?
Of course not because there isno,
Speaker 4 (05:29):
Probably probably a lot more than there are now
because they're just going tokeep printing them.
Speaker 5 (05:32):
So you can say directionality is clear.
They're going to be more dollarsaround with BTC.
You have this scarcity elementand that would drive the price
up.
And essentially we've seen thisunfolding demand, which to some
extent was triggered byforward-looking investors, such
as Paul Tudor Jones letter, uh,bill Miller and all of them.
(05:55):
They look for a new to protectcapital.
Bitcoin became one of the doors,
Speaker 4 (06:00):
Michael, the, uh, if I can get Michael to jump in
here.
So, you know, Nouriel, Roubini,Roubini, uh, the New York
university economist wrote in,um, 2018.
He told CNBC it's the biggestbubble in human history talking
about Bitcoin.
Uh, and that the price wouldcrush to zero.
Then eight months later incongressional testimony, he
(06:22):
said, Bitcoin's the mother ofall scams.
It's a quote shitcoin unquote,uh, and then fast forward to
2020.
And now he has changed hisstory.
Uh, and he's talking about while, you know, it's, it's not going
to be easily DC-based, uh, andthat there there's value there.
So I would say that's a prettybig step back, but, but just not
(06:46):
Roubini, but mainstream finance,mainstream banks, that would
kind of turn their nose up adigital currency.
Now, I guess just mainly becauseof demand also their customers
want to want to invest in it.
Speaker 3 (07:00):
Yes.
I mean, banks are customer ledand they follow the money.
And if people want to invest ina product, they will meet that
demand.
Speaker 4 (07:08):
And is that product now more credible than it was
even a year ago?
And why do you think?
So?
Speaker 3 (07:14):
I think it's attracting more institutional
interest of the names.
People mentioned.
They were the original, youknow, the, the, the leaders, uh,
the Pathfinders in the hedgefund industry.
And they started hedge funds.
People like Paul Tudor Jones andStanley Druckenmiller when hedge
funds weren't institutionalbusinesses and a pension fund
would never, they was pensionfunds were still in stocks and
(07:37):
bonds fast forward, 30 years,pension funds and insurance
companies invest in hedge fundsthat, which they didn't do 30
years ago.
So these people are innovative.
These people are leaders,they're innovators, and they are
investing in Bitcoin now.
And in 30 years time, maybesooner pension funds and
insurance companies will beinvesting in Bitcoin as well.
Speaker 4 (07:59):
Electronic payment platforms, I'm stunned.
I mean, you guys know thesenumbers quite well, but, uh, you
know,$40 trillion intransactions through Ali pay and
we chat pay, we're talking aboutChina now, uh, which is leading
in terms of the development ofdigital currency so far.
Um, so the, the amount oftransactions are huge.
(08:22):
Do you see a difference betweenthe boom in Bitcoin and, and
digital currency and thesecurrencies now that governments
are talking about bringing inand they've done so on an
experimental basis in China?
Speaker 5 (08:36):
Yep.
Well, uh, you're absolutelyright.
There is the whole evolution ofcentral bank digital currency.
So-called, uh, to some extent itwas triggered by a 2020.
And if you look in the us, thewhole model of, uh, distributing
certain, uh, financial aid toultimate population, right, goes
(08:58):
through commercial banks.
And it's not necessarily themost efficient way because in
the U S only 29% of thesefinancial aid ended up in
consumption and other four tofive and the top in saving and
in our 40 to five and up inrepaying, various form of debt,
like credit card debts, and soon.
(09:19):
So from the point of view ofstimulating the economy, it
wasn't really that efficientonly 29% when consumption now in
China or to the, to the, to incontrast, there has been an
experiment which was run earlierthis year.
And the idea was a certainnumber of people were given, uh,
(09:39):
what's called airdrop.
When you got certain amount ofcash, say a thousand dollars on
your equivalent of$30, eachperson, whatever is the amount,
the idea was kind of, you canspend this, uh, amount of free
cash given by the government inthe next three months on a
certain type of goods.
Can you fraud in stock exchange?
(10:01):
Nope.
There is no purpose of that.
Can you save them?
Nope, because you're going toexpand them three months and
essentially they forcedpopulation to stimulate certain
areas of the economy.
And that may be this precision,which kind of classical
monitoring system, ALEKS andcentral bank digital currencies
can provide Michael.
Speaker 3 (10:24):
So I think central bank currencies are very
interesting, but they sufferfrom like three basic flaws.
One is that, um, they don't stopthe central banks printing,
printing money in the same way.
They print physical money.
They can print digital money aswell.
They can just multiply the bitson the computer drive and they
print more, more money.
(10:44):
Secondly, they can, thesecurrencies enable the central
banks to do things they weren'table to do with paper money.
One of these is negativeinterest rates.
So are you seeing that, you know, interest rates on bonds have
gone negative, but it's verydifficult to have negative
interest rates.
Because if your bank's going tocharge you a negative interest
rate, you take all your moneyout and you just put that money
underneath the, uh, underneathyour mattress.
(11:06):
And it keeps the same value.
So that, that's how you getaround that issue.
Um, with, uh, the third flooris, is a privacy.
Now I'm not saying that everyoneshould be trading like privacy
coins like Monero, but I thinkpeople expect that they have a
level of privacy from thegovernment, and it's not big
brother where the government hasa television and your TV camera
(11:28):
in your living room.
And they're not looking overyour shoulder when you're using
a bank account, you may not bedoing illegal things, such, just
buying drugs, but you might bebuying a birthday present for
your girlfriend was a question,Michael.
Yeah, exactly.
So, so you might be buying aprocessor, a birthday present
for your girlfriend.
You might, might not want her toknow how much you've spent on it
and what, and where it waspurchased.
So people expect a level ofprivacy with their money and
(11:50):
cash gives them that privacy.
And the question is what shoulddigital cash gives them that?
And that we have to strike abalance between having people
being able to money on thedrugs, which we would not want
to have happen, but we alsoexpect to not personalize a
certain amount of money we canuse to spend without the
influence and knowledge.
Speaker 4 (12:09):
It's an interesting range of balance that you talk
about, right?
Because China, they areabsolutely tracking every single
purchase and they know exactlywhat everybody's doing.
And it's the ultimate bigbrother through the use of, of
their new digital currency.
And then, like for instance, theSoufan center came out today and
they said, cryptocurrencies arepotentially a cover for a lot of
(12:32):
elicit businesses.
It's not the first time we'veheard that.
Right.
But they talked about HamasQaeda, the Islamic state, uh,
the, the, the, uh, U Sintelligence agencies are trying
to track digital currencies andBitcoin and different coins that
have been used by illicitorganizations.
So what's the middle ground hereas this matures and develops and
(12:54):
more mainstream investors areinvolved in it.
What's the balance between, youknow, kind of big brother and
the bandit down the road thatuses cryptocurrency to, to do,
uh, to do bad things.
Speaker 3 (13:04):
Okay.
So, so we hit those arguments alot and the more money has been
laundered and used to financeterrorist activities using us
dollar bills, but no one isproposing banning the U S dollar
bill.
Speaker 4 (13:16):
No, but they are proposing tracking the accounts
and tracking the transfers,right.
Not proposing, but they do doit.
Speaker 3 (13:21):
Okay.
They should get rid of the ahundred dollar bill.
The Germany should get rid ofthe European union should get
rid of the 500 Euro bill.
I mean, if that's, if you wantto launder money, that's, that's
the place to go, right?
Your$500.
And then the Swiss have a 1000Frank bill.
I mean, those are the ultimatemoney laundering tools, Bitcoin
isn't, by the way, anyone whotries to launder money using
Bitcoin isn't for surprise,because every transaction is
(13:44):
publicly recorded and accessibleto anyone.
Who's got an internetconnection.
If you have a browser windowconnect to the internet, you can
put in a blockchain address andyou can see every single
transaction that's gone throughthat address.
Now there have, there have beensome digital currencies, uh,
designed for privacy, which wedon't treat him.
And the only real use case forthose is that.
(14:05):
So that's why we don't tradethem.
But it's a matter for theregulators.
It's a matter for the centralgovernment to figure that out.
The beauty is that if thegovernment acts with two heavier
hand, there are tools that existfor people to circumvent them.
And just as the people in Chinawho wants to use the internet,
they can use the VPN.
And so rather than have to readthe Google search results
(14:29):
filtered by the Chinesecommunist party, they can use
the VPN and find out what Googlereally thinks.
Speaker 4 (14:35):
And I totally would you just look, as we wrap this
up, guys, would you just lookdown the road, uh, and tell me,
where do you see this going now?
Because now you have governmentsthat are getting into digital
currency.
You have investment companiesthat, and, and very reputable
ones that before didn't wantanything to do with digital
currency.
Now they're slowly opening thedoor because their clients want
(14:59):
it.
Where are we?
Two and three and five years.
Speaker 5 (15:04):
Yep.
We're being asked.
Uh, one of the questions iswhether the central bank digital
currencies can distort to someextent or compete with, uh,
Bitcoin as the purecryptocurrency.
And in my view, they cannotbecause Bitcoin is an asset with
no monetary discretion, right?
Nobody can influence the patientschedule while central bank
(15:26):
currencies are there forcompletely different reasons.
One of them is increasedtransparency of all the
transactions, essentially you,as we discussed, eliminate any
remaining privacy, but thatallows States to create this
kind of extract, valuablebehavioral information about
every single client, a customer,and ultimately allows a 4g to
(15:47):
better manage the economy.
Because what they're gaining isthe real time spending updates
for the whole economy andbecomes what they're getting
this kind of on demand, monetarypolicy, which they in a very
precise manner now manage theeconomy by injecting money in
various sectors.
(16:07):
So for that purpose, it'scompletely different, uh, uh,
use cases, right?
From big investment point ofview, digital central bank,
digital currency are notattractive.
You cannot really preserve yourwealth.
Speaker 4 (16:21):
Why, why do it then, like, why are there calls?
I mean, I know like the, theformer national security advisor
of Britain has just come out andsaid that Britain should have
its own digital currency soon.
So
Speaker 5 (16:32):
From the government perspective, as I just
mentioned, that's a beautifulinstrument to control
micromanage the economy, right?
So you have these very, uh,finely tuned spending, which you
cannot observe on the individuallevel.
You can transfer to individualsrather than you give money to
commercial banks and thecommercial banks push them into
(16:54):
economy.
And as we discussed in a notvery efficient manner.
So from the state point of view,having digital currents makes
total sense.
Now from investor investors,point of view, investing in
digital currency makes no senseif you need store of value, you
have to revert to an independentcurrency, which is one of them
(17:16):
would be Bitcoin.
And from here,
Speaker 4 (17:18):
Just because it's more navigate, not navigable,
because there are limited assetslike in Bitcoin.
Speaker 5 (17:25):
Exactly.
As you know, there are 21 pointsever to be issued of which 88%
has already been issued.
The balance of 12% will beissued over the next 120 years
in a super predictable manner.
So that's why you want to getexposure to that hard asset.
What are we going to be foryears, five years from now?
I believe it will become part ofinstitutional allocations as we
(17:47):
have today, fixed incomeequities.
Speaker 4 (17:50):
So we'll be allocation, good digital assets.
It will not, it will be kind oftwo percentage points.
One, two[inaudible] fetal 5%,but there is a significant,
important role.
It's a diversifier of theportfolios and it creates
efficiency on the institutionalportfolio level improves your
(18:10):
returns.
We filed really boosting yourrisk, Michael, last word to you.
Speaker 3 (18:15):
So one of the issues that the central banks had when
they printed money is they gaveit to all the banks and the
banks went out and bought stocksand they Geoff basis a
billionaire or sorry, made himmore of a billionaire even
richer.
And it just increased wealthinequality.
One of the benefits of centralbank digital currencies is they,
as Anatolia says, they can bevery precise and targeting who
gets the money and what themoney gets spent on.
(18:37):
And that's a much more efficientway of doing quantitative
easing.
They're just giving it to bank.
So they have bigger balancesheets and the stock market goes
up.
So this is digital currencies,central bank, digital currencies
enable them to actually givemoney, spend money where they
want it and do that moneyprinting in the, in the right
way.
Speaker 4 (18:57):
You mean like for instance, like right now in this
crisis where they're saying topeople that, you know, people
who are not being employed orunemployed, or, or who need, uh,
some support during the COVID 19, they would be able to actually
send a directly to a family or aperson, and then they would
allocate it only for food rent,something like that.
Speaker 3 (19:18):
Exactly.
A lot of those, uh, furloughchecks that went out, went
directly into people's bankaccounts and that stimulated the
real economy.
It didn't make the stock marketgo higher in, in the first case,
but it did stimulate the realeconomy.
Speaker 4 (19:33):
All right, guys, from nickel digital asset management,
thank you so much.
And the Tony Graciela andMichael Hall,
Speaker 3 (19:39):
Thank you, Dana.
A real pleasure thing thismorning,
Speaker 4 (19:47):
Joining us now from Berlin.
Germany is max Karen Feld, whois an analyst with Merix in
Berlin and Merrick's is themarketure Institute for Chinese
study.
And they, uh, they analyzed sortof anything out of China and all
things.
And max, uh, has written abrilliant article in, uh, or
co-authored a brilliant articlein the diplomat, uh, on China
(20:07):
and its digital currency.
Hi max.
Hi.
So give us a background a littlebit here.
Some 5,000 people in Shenzen sawtheir phones light up in
October, and they got a read onenvelope digitally, which gave
him about$30.
Speaker 6 (20:24):
That's right.
So the Chinese government islaunching a new digital
currency, which is calleddigital currency, economic,
electronic payments, which isperhaps not the most exciting
name.
So the idea is to use something,something similar to Bitcoin to
create a virtual currency sothat the, the paper renminbi, it
(20:47):
has a digital, um,correspondence or a digital
version of itself.
And they've been testing thisproject in several different
cities like[inaudible], and itstarted with this lottery where
they're just giving money away,but some, uh, some government
employees in some cities havealso received the, uh, part of
(21:08):
their paycheck in this, in thisnew currency.
Speaker 4 (21:10):
So it's really look, this is a very interesting shift
for a lot of different reasons,right?
And I want to, you know, takeyou through some of that, but,
um, the people's bank of Chinasaid that this will make the,
the RMB more popular around theglobe.
Are they trying to replace the US dollar and trying to disengage
from using the U S dollar assafe Haven and push their own
(21:33):
currency?
Op?
Speaker 6 (21:35):
Um, yes and no.
Uh, this has been going on for along time, and there's nothing
new for th for Chinese officialsto say that, uh, they want to
replace the dollar or that theyneed to reduce the reliance on
the dollar.
So this is just the latest stepin a, in a long process or where
this has been talked about.
But I mean, if you look at theactual results instead, it's
(21:55):
pretty clear that the[inaudible]has not been growing in
popularity around the globe,particularly much the last say
10 years.
Um, it's, it's stable around twoto 2.5% of, uh, Swift messages
go are cleared in renminbi.
Um, the reason for this islargely that China prefers it
that way.
(22:16):
Um, a great amount of, uh,renminbi usage would probably
lead to appreciation of theircurrency.
So
Speaker 4 (22:23):
Just to talk about it for a second though, why does
Russian president VladimirPutin, why do other countries,
including China keep talkingabout not being reliant on the U
S dollar because that promotessort of American economic
domination, is that what they'retrying to get away from?
Speaker 6 (22:40):
I think there's two parts to this.
First of all, it's, it's apractical issue in the sense
that the us has sanctionedcountries in the past, uh, um,
yeah, like around they, they can, uh, even though Swift is a
Belgium company that can put alot of pressure on Swift and
banks to not do business withChinese party parties, if they
(23:02):
wanted to.
And in the case of Iran, this,this led to them having to
greatly devalue their currencyto, to protect their economy,
which was under enormouspressure.
Um, then there is of course, a,a question of a narrative as
well.
These, these, uh, countries, uh,Russia and China don't want to
(23:22):
see themselves as a part of theAmerican system, they want to be
respected equally.
And of course, part of thatmeans that anytime you have an
opportunity to talk about beingindependent, to being strong
individually, you have to takethat opportunity.
Speaker 4 (23:39):
All right.
So, so w when I took a look atsome of the statistics, I mean,
they jaw dropping in terms ofthe Chinese market on digital
payment systems, like 80% ofChina is 900 million mobile
internet users use their mobilephones for transactions, Chinese
(23:59):
shoppers and merchants representalmost half the world's digital
wallet users and Alibaba, andTencent control, 95% of the
market and cleared 50 trillionwith a T in transactions in
2019.
It is huge, the use of digitalcurrency.
Speaker 6 (24:17):
Absolutely.
Um, I think it's a little bitanalogist to the way airports
and subways were set up in Chinain the sense that if you look at
a air, if you look at theinfrastructure in the West, this
is rather old and oftentimesbuilt very long ago.
Well, if everything in China issort of new and fresh, and if I
(24:40):
wanted to launch a paymentsystem today, I wouldn't be
using these old things that weuse that we use in the West, but
in China to have, um, they have,um, it's an emerging market.
So they set up a new, freshthings.
Um, this digitalization has been, um, the way it's been rolled
out into the Chinese market hasbeen very successful.
I mean, everyone almost will usea, some form of online payment
(25:04):
system, even farmers and, andsurprise in the most surprising
places.
So you can go to the countrysidein China and see people use
these kinds of technologies tomake payments.
Speaker 4 (25:16):
All right.
So I've led you through this,and I've, we've kind of painted
a picture that, you know, Chinainnocently just wants to roll
out a digital currency forefficiency, uh, to make them
less reliant on the dollar.
And probably at the end of, atthe end of what we've talked
about so far is, is where youtake a turn in your article and
the diplomat is that really,it's not about that.
(25:38):
It's probably more aboutsurveillance and control, is
that right?
Speaker 6 (25:43):
Well, to some extent, yes.
Uh, the fact that it, so most ofthe digital payment systems in
China retinol are run bycompanies, Alibaba and Tencent.
Now, if the central banklaunches its own digital payment
system, then that gives themcontrol over the amount, the,
(26:04):
the, uh, the monetary base to alarge extent.
And they already have, they canissue as much currency or as
little currency as they want.
They will have completevisibility of overall
transactions that are madethrough their network.
And they also have great abilityto make users use their own
preferred payment system.
(26:26):
So it will undoubtedly result ina situation where, where the
central bank has much moreoversight of what's going on in
the economy and can controlthings more in various ways.
Speaker 4 (26:37):
This is the ultimate big brother tool,
Speaker 6 (26:42):
What could be.
But I think that something likethis has multiple uses,
obviously.
So on the one hand, you can usethis for things like this, but,
but I think there are also aquality of life things here, uh,
for the central bank sake, youcan have greater control of
inflation.
Uh, oversight can be very goodat, uh, at catching illicit
(27:04):
transactions, transactions, andall sorts of things.
So even though there is acontrol element, I don't want to
be saying that that's the onlyuse or the test, the main
purpose of, I think that thepolicy makers in China are, are
generally speaking, thinkingrather broadly.
And they are, uh, there aremultiple goals with most of the
(27:25):
policies they launch.
Speaker 4 (27:26):
You've obviously become a bit of a digital
currency expert in, right inwriting this piece and watching
it.
I mean, I guess because if youtake a look at what's happening
in digital currencies around theworld, I mean, Bitcoin is
punching through, you know,record levels.
Um, uh, as many other digitalcurrencies are cryptocurrencies
are, but the whole design ofthose were to have anonymity, um
(27:50):
, through blockchain technology.
So do we need to separate thetwo, you know, topics when we're
talking about China's digitalcurrency and other governments,
which are talking about movingtowards digital currency in the
original kind of cryptocurrencymodel, which was, you know, you
(28:10):
could move money between people,um, and you could do it w with,
with, you know, virtuallyanonymously.
Speaker 6 (28:19):
Yes.
I think you need to do need toseparate these two, because the
technology that you use for, um,for Bitcoin is the blockchain,
right?
Where you are having somethingunchangeable as the main
strength of the currency is thatyou have this, uh, you have this
ledger that cannot be altered,or at least not easily altered.
(28:40):
There are some blockchainexperts who do say that it could
potentially be hacked.
Not that I know very much aboutthat, but I think someone,
someone said once that thedistinction between, um, uh, an
authoritarian regime will tendto gravitate towards AI
solutions and a more democraticregime will tend to gravitate
(29:02):
towards the blockchain solution.
So this blockchain was, cannotbe altered by the government as
much.
Uh, there will be a constancy of, of, um, of units, or maybe
there is some sort of algorithmthat produces units at some set
pace.
Whilst in this case, the centralbank can of course issue as much
currency as they want.
(29:23):
Um, and I don't think it's verysurprising that a central bank
do they have control overinstead of a currency that
unalterable program Backstory onthe digital revolution.
Speaker 2 (29:43):
It was supposed to take about 10 years, but it's
been compressed and superchargedin the last year, mostly because
of the pandemic.
And it will change the way we dobusiness, the way our
governments operate remarkable.
And it's happening now.
I'm Dana Lewis.
Thanks for listening.
Please subscribe the backstoryand I'll talk to you again soon.
Speaker 7 (30:07):
[inaudible].
China's central bank on the brink of launching a
digital currency.
How will this revolutionize themonetary landscape in China and
abroad Bitcoin crossing at the$14,000 Cocteau currency
surpassing 15,000 for the firsttime ever.
Now it looks like we may hit the17,000 Mark Bitcoin's price has
been on a wild ride.
Speaker 2 (00:30):
Hi everyone.
And welcome to another editionof backstory.
I'm Dana Lewis in this edition,a digital revolution driven in
part by COVID-19, but there aremany other factors digital
because it's not a coin or abill that you carry in your
wallet or your purse, but anelectronic holding, maybe on
your phone or your computer, youalready may use payment
(00:54):
applications for some of yourshopping and bill pay.
But at lightning speedgovernments are adopting
electronic currencies.
They can track and control andoff the government grid.
Cryptocurrencies like Bitcoinare soaring in value on this
backstory.
Can you trust it?
Will you use it?
I have no doubt.
(01:16):
And we talked to digitalcurrency experts about the
future and the China analyst,because China is rolling out
digital currency.
As we speak in wild, they sayit's to get away from the U S
dollar.
It's probably more abouttracking every aspect of how its
citizens behave in the newdigital marketplace of the
(01:37):
world.
All right.
In London now nickel digitalasset management, uh, builds
itself as Europe's leadingdigital asset management
company.
And I'm joined by Anatoly[inaudible] and Michael Hall.
I guys, good morning.
How are you?
Good, good to be here.
(01:58):
Bloomberg recently wrote we'reliving through a monetary
revolution.
So multifaceted that few peoplecomprehend the full extent that
the technical technologicaltransformation of the internet
is driving the revolution.
The pandemic of 2020 hasaccelerated it.
What do they mean, Michael?
Do you want to take a shot atit?
Speaker 3 (02:17):
Well, I think we're seeing a new form of money.
If you look at the evolution ofmoney, we started off bartering,
sheep and cows.
We moved to coins and orseashells maybe before that
coin, some, we used to move topaper, money, and paper money
was tied to gold.
And then it was that link wascut.
And when paper, money departedfrom the gold standard, it
(02:39):
became fit money that centralbanks could conjure up with, uh,
you know, turning the printingprocess a bit faster, or now
they just put more zeros in adigital bank account.
And as a reaction to that, we'veseen digital currency starts off
with the com with limitedsupply.
So that I think what's really,what's really interesting.
(03:00):
COVID has kind of forced peopleaway from physical cash into
using contactless cash.
And the next evolution of thatis using a blockchain based cash
Speaker 4 (03:10):
And told you, why is it, uh, completely taken off
Bitcoin, you know, has risen.
I don't know what it is today.
You can give me the price today,but I mean, it's, it's
essentially gone up like 139%year to date.
Speaker 5 (03:21):
That's correct.
Yes.
It's uh, 18, 18,000 plusessentially I would say 2020,
the year of COVID to the grid,the entire kind of important
evolution in digital currenciesspecifically, there was a
sequence of events, uh, COVIDtriggers, mass unemployment,
mass unemployment triggers aresponse by central bank, which
(03:44):
can be summarized by floodmarket with money.
And that's exactly what centralbank did.
Speaker 4 (03:50):
Everybody's printing money, every nation that's
trying to get itself out of it.
The financial disaster they'rein are, are printing money,
correct?
Speaker 5 (03:58):
You have roughly$11 trillion printed over the last
10 months by a major economistsaround the world.
And certainly if you look atthat at the very least, you, by
the way, you appreciate whycentral banks do that.
But as holder of capital, youhave to preserve this capital,
right?
And your concern is how to avoidinflation, which started to loom
(04:21):
at some stage and currencydebasement, which inevitably
will hit.
And we all know that everysingle FIAR project in the world
being a kind of paper money,right, ultimately ends at zero.
So kind of intrinsic value iszero.
This paper and given the centralbank so easily can inflate this
(04:44):
people, investors are lookingfor hard assets and your
classical heart assets would bereal estate gold, will these
kind of overcrowded traits.
And then suddenly you come withBitcoin as a new form of hard
asset.
And specifically within BTC, youhave a scarcity element similar
(05:05):
to gold.
There is a certain number ofcoins ever to be printed.
And the schedule, the issue andschedule is very precise.
I can tell you exactly how manysay Bitcoin's going to be there
in the system in say March, uh,2042.
Can you tell me how many usdollars would have been
(05:26):
circulated?
Of course not because there isno,
Speaker 4 (05:29):
Probably probably a lot more than there are now
because they're just going tokeep printing them.
Speaker 5 (05:32):
So you can say directionality is clear.
They're going to be more dollarsaround with BTC.
You have this scarcity elementand that would drive the price
up.
And essentially we've seen thisunfolding demand, which to some
extent was triggered byforward-looking investors, such
as Paul Tudor Jones letter, uh,bill Miller and all of them.
(05:55):
They look for a new to protectcapital.
Bitcoin became one of the doors,
Speaker 4 (06:00):
Michael, the, uh, if I can get Michael to jump in
here.
So, you know, Nouriel, Roubini,Roubini, uh, the New York
university economist wrote in,um, 2018.
He told CNBC it's the biggestbubble in human history talking
about Bitcoin.
Uh, and that the price wouldcrush to zero.
Then eight months later incongressional testimony, he
(06:22):
said, Bitcoin's the mother ofall scams.
It's a quote shitcoin unquote,uh, and then fast forward to
2020.
And now he has changed hisstory.
Uh, and he's talking about while, you know, it's, it's not going
to be easily DC-based, uh, andthat there there's value there.
So I would say that's a prettybig step back, but, but just not
(06:46):
Roubini, but mainstream finance,mainstream banks, that would
kind of turn their nose up adigital currency.
Now, I guess just mainly becauseof demand also their customers
want to want to invest in it.
Speaker 3 (07:00):
Yes.
I mean, banks are customer ledand they follow the money.
And if people want to invest ina product, they will meet that
demand.
Speaker 4 (07:08):
And is that product now more credible than it was
even a year ago?
And why do you think?
So?
Speaker 3 (07:14):
I think it's attracting more institutional
interest of the names.
People mentioned.
They were the original, youknow, the, the, the leaders, uh,
the Pathfinders in the hedgefund industry.
And they started hedge funds.
People like Paul Tudor Jones andStanley Druckenmiller when hedge
funds weren't institutionalbusinesses and a pension fund
would never, they was pensionfunds were still in stocks and
(07:37):
bonds fast forward, 30 years,pension funds and insurance
companies invest in hedge fundsthat, which they didn't do 30
years ago.
So these people are innovative.
These people are leaders,they're innovators, and they are
investing in Bitcoin now.
And in 30 years time, maybesooner pension funds and
insurance companies will beinvesting in Bitcoin as well.
Speaker 4 (07:59):
Electronic payment platforms, I'm stunned.
I mean, you guys know thesenumbers quite well, but, uh, you
know,$40 trillion intransactions through Ali pay and
we chat pay, we're talking aboutChina now, uh, which is leading
in terms of the development ofdigital currency so far.
Um, so the, the amount oftransactions are huge.
(08:22):
Do you see a difference betweenthe boom in Bitcoin and, and
digital currency and thesecurrencies now that governments
are talking about bringing inand they've done so on an
experimental basis in China?
Speaker 5 (08:36):
Yep.
Well, uh, you're absolutelyright.
There is the whole evolution ofcentral bank digital currency.
So-called, uh, to some extent itwas triggered by a 2020.
And if you look in the us, thewhole model of, uh, distributing
certain, uh, financial aid toultimate population, right, goes
(08:58):
through commercial banks.
And it's not necessarily themost efficient way because in
the U S only 29% of thesefinancial aid ended up in
consumption and other four tofive and the top in saving and
in our 40 to five and up inrepaying, various form of debt,
like credit card debts, and soon.
(09:19):
So from the point of view ofstimulating the economy, it
wasn't really that efficientonly 29% when consumption now in
China or to the, to the, to incontrast, there has been an
experiment which was run earlierthis year.
And the idea was a certainnumber of people were given, uh,
(09:39):
what's called airdrop.
When you got certain amount ofcash, say a thousand dollars on
your equivalent of$30, eachperson, whatever is the amount,
the idea was kind of, you canspend this, uh, amount of free
cash given by the government inthe next three months on a
certain type of goods.
Can you fraud in stock exchange?
(10:01):
Nope.
There is no purpose of that.
Can you save them?
Nope, because you're going toexpand them three months and
essentially they forcedpopulation to stimulate certain
areas of the economy.
And that may be this precision,which kind of classical
monitoring system, ALEKS andcentral bank digital currencies
can provide Michael.
Speaker 3 (10:24):
So I think central bank currencies are very
interesting, but they sufferfrom like three basic flaws.
One is that, um, they don't stopthe central banks printing,
printing money in the same way.
They print physical money.
They can print digital money aswell.
They can just multiply the bitson the computer drive and they
print more, more money.
(10:44):
Secondly, they can, thesecurrencies enable the central
banks to do things they weren'table to do with paper money.
One of these is negativeinterest rates.
So are you seeing that, you know, interest rates on bonds have
gone negative, but it's verydifficult to have negative
interest rates.
Because if your bank's going tocharge you a negative interest
rate, you take all your moneyout and you just put that money
underneath the, uh, underneathyour mattress.
(11:06):
And it keeps the same value.
So that, that's how you getaround that issue.
Um, with, uh, the third flooris, is a privacy.
Now I'm not saying that everyoneshould be trading like privacy
coins like Monero, but I thinkpeople expect that they have a
level of privacy from thegovernment, and it's not big
brother where the government hasa television and your TV camera
(11:28):
in your living room.
And they're not looking overyour shoulder when you're using
a bank account, you may not bedoing illegal things, such, just
buying drugs, but you might bebuying a birthday present for
your girlfriend was a question,Michael.
Yeah, exactly.
So, so you might be buying aprocessor, a birthday present
for your girlfriend.
You might, might not want her toknow how much you've spent on it
and what, and where it waspurchased.
So people expect a level ofprivacy with their money and
(11:50):
cash gives them that privacy.
And the question is what shoulddigital cash gives them that?
And that we have to strike abalance between having people
being able to money on thedrugs, which we would not want
to have happen, but we alsoexpect to not personalize a
certain amount of money we canuse to spend without the
influence and knowledge.
Speaker 4 (12:09):
It's an interesting range of balance that you talk
about, right?
Because China, they areabsolutely tracking every single
purchase and they know exactlywhat everybody's doing.
And it's the ultimate bigbrother through the use of, of
their new digital currency.
And then, like for instance, theSoufan center came out today and
they said, cryptocurrencies arepotentially a cover for a lot of
(12:32):
elicit businesses.
It's not the first time we'veheard that.
Right.
But they talked about HamasQaeda, the Islamic state, uh,
the, the, the, uh, U Sintelligence agencies are trying
to track digital currencies andBitcoin and different coins that
have been used by illicitorganizations.
So what's the middle ground hereas this matures and develops and
(12:54):
more mainstream investors areinvolved in it.
What's the balance between, youknow, kind of big brother and
the bandit down the road thatuses cryptocurrency to, to do,
uh, to do bad things.
Speaker 3 (13:04):
Okay.
So, so we hit those arguments alot and the more money has been
laundered and used to financeterrorist activities using us
dollar bills, but no one isproposing banning the U S dollar
bill.
Speaker 4 (13:16):
No, but they are proposing tracking the accounts
and tracking the transfers,right.
Not proposing, but they do doit.
Speaker 3 (13:21):
Okay.
They should get rid of the ahundred dollar bill.
The Germany should get rid ofthe European union should get
rid of the 500 Euro bill.
I mean, if that's, if you wantto launder money, that's, that's
the place to go, right?
Your$500.
And then the Swiss have a 1000Frank bill.
I mean, those are the ultimatemoney laundering tools, Bitcoin
isn't, by the way, anyone whotries to launder money using
Bitcoin isn't for surprise,because every transaction is
(13:44):
publicly recorded and accessibleto anyone.
Who's got an internetconnection.
If you have a browser windowconnect to the internet, you can
put in a blockchain address andyou can see every single
transaction that's gone throughthat address.
Now there have, there have beensome digital currencies, uh,
designed for privacy, which wedon't treat him.
And the only real use case forthose is that.
(14:05):
So that's why we don't tradethem.
But it's a matter for theregulators.
It's a matter for the centralgovernment to figure that out.
The beauty is that if thegovernment acts with two heavier
hand, there are tools that existfor people to circumvent them.
And just as the people in Chinawho wants to use the internet,
they can use the VPN.
And so rather than have to readthe Google search results
(14:29):
filtered by the Chinesecommunist party, they can use
the VPN and find out what Googlereally thinks.
Speaker 4 (14:35):
And I totally would you just look, as we wrap this
up, guys, would you just lookdown the road, uh, and tell me,
where do you see this going now?
Because now you have governmentsthat are getting into digital
currency.
You have investment companiesthat, and, and very reputable
ones that before didn't wantanything to do with digital
currency.
Now they're slowly opening thedoor because their clients want
(14:59):
it.
Where are we?
Two and three and five years.
Speaker 5 (15:04):
Yep.
We're being asked.
Uh, one of the questions iswhether the central bank digital
currencies can distort to someextent or compete with, uh,
Bitcoin as the purecryptocurrency.
And in my view, they cannotbecause Bitcoin is an asset with
no monetary discretion, right?
Nobody can influence the patientschedule while central bank
(15:26):
currencies are there forcompletely different reasons.
One of them is increasedtransparency of all the
transactions, essentially you,as we discussed, eliminate any
remaining privacy, but thatallows States to create this
kind of extract, valuablebehavioral information about
every single client, a customer,and ultimately allows a 4g to
(15:47):
better manage the economy.
Because what they're gaining isthe real time spending updates
for the whole economy andbecomes what they're getting
this kind of on demand, monetarypolicy, which they in a very
precise manner now manage theeconomy by injecting money in
various sectors.
(16:07):
So for that purpose, it'scompletely different, uh, uh,
use cases, right?
From big investment point ofview, digital central bank,
digital currency are notattractive.
You cannot really preserve yourwealth.
Speaker 4 (16:21):
Why, why do it then, like, why are there calls?
I mean, I know like the, theformer national security advisor
of Britain has just come out andsaid that Britain should have
its own digital currency soon.
So
Speaker 5 (16:32):
From the government perspective, as I just
mentioned, that's a beautifulinstrument to control
micromanage the economy, right?
So you have these very, uh,finely tuned spending, which you
cannot observe on the individuallevel.
You can transfer to individualsrather than you give money to
commercial banks and thecommercial banks push them into
(16:54):
economy.
And as we discussed in a notvery efficient manner.
So from the state point of view,having digital currents makes
total sense.
Now from investor investors,point of view, investing in
digital currency makes no senseif you need store of value, you
have to revert to an independentcurrency, which is one of them
(17:16):
would be Bitcoin.
And from here,
Speaker 4 (17:18):
Just because it's more navigate, not navigable,
because there are limited assetslike in Bitcoin.
Speaker 5 (17:25):
Exactly.
As you know, there are 21 pointsever to be issued of which 88%
has already been issued.
The balance of 12% will beissued over the next 120 years
in a super predictable manner.
So that's why you want to getexposure to that hard asset.
What are we going to be foryears, five years from now?
I believe it will become part ofinstitutional allocations as we
(17:47):
have today, fixed incomeequities.
Speaker 4 (17:50):
So we'll be allocation, good digital assets.
It will not, it will be kind oftwo percentage points.
One, two[inaudible] fetal 5%,but there is a significant,
important role.
It's a diversifier of theportfolios and it creates
efficiency on the institutionalportfolio level improves your
(18:10):
returns.
We filed really boosting yourrisk, Michael, last word to you.
Speaker 3 (18:15):
So one of the issues that the central banks had when
they printed money is they gaveit to all the banks and the
banks went out and bought stocksand they Geoff basis a
billionaire or sorry, made himmore of a billionaire even
richer.
And it just increased wealthinequality.
One of the benefits of centralbank digital currencies is they,
as Anatolia says, they can bevery precise and targeting who
gets the money and what themoney gets spent on.
(18:37):
And that's a much more efficientway of doing quantitative
easing.
They're just giving it to bank.
So they have bigger balancesheets and the stock market goes
up.
So this is digital currencies,central bank, digital currencies
enable them to actually givemoney, spend money where they
want it and do that moneyprinting in the, in the right
way.
Speaker 4 (18:57):
You mean like for instance, like right now in this
crisis where they're saying topeople that, you know, people
who are not being employed orunemployed, or, or who need, uh,
some support during the COVID 19, they would be able to actually
send a directly to a family or aperson, and then they would
allocate it only for food rent,something like that.
Speaker 3 (19:18):
Exactly.
A lot of those, uh, furloughchecks that went out, went
directly into people's bankaccounts and that stimulated the
real economy.
It didn't make the stock marketgo higher in, in the first case,
but it did stimulate the realeconomy.
Speaker 4 (19:33):
All right, guys, from nickel digital asset management,
thank you so much.
And the Tony Graciela andMichael Hall,
Speaker 3 (19:39):
Thank you, Dana.
A real pleasure thing thismorning,
Speaker 4 (19:47):
Joining us now from Berlin.
Germany is max Karen Feld, whois an analyst with Merix in
Berlin and Merrick's is themarketure Institute for Chinese
study.
And they, uh, they analyzed sortof anything out of China and all
things.
And max, uh, has written abrilliant article in, uh, or
co-authored a brilliant articlein the diplomat, uh, on China
(20:07):
and its digital currency.
Hi max.
Hi.
So give us a background a littlebit here.
Some 5,000 people in Shenzen sawtheir phones light up in
October, and they got a read onenvelope digitally, which gave
him about$30.
Speaker 6 (20:24):
That's right.
So the Chinese government islaunching a new digital
currency, which is calleddigital currency, economic,
electronic payments, which isperhaps not the most exciting
name.
So the idea is to use something,something similar to Bitcoin to
create a virtual currency sothat the, the paper renminbi, it
(20:47):
has a digital, um,correspondence or a digital
version of itself.
And they've been testing thisproject in several different
cities like[inaudible], and itstarted with this lottery where
they're just giving money away,but some, uh, some government
employees in some cities havealso received the, uh, part of
(21:08):
their paycheck in this, in thisnew currency.
Speaker 4 (21:10):
So it's really look, this is a very interesting shift
for a lot of different reasons,right?
And I want to, you know, takeyou through some of that, but,
um, the people's bank of Chinasaid that this will make the,
the RMB more popular around theglobe.
Are they trying to replace the US dollar and trying to disengage
from using the U S dollar assafe Haven and push their own
(21:33):
currency?
Op?
Speaker 6 (21:35):
Um, yes and no.
Uh, this has been going on for along time, and there's nothing
new for th for Chinese officialsto say that, uh, they want to
replace the dollar or that theyneed to reduce the reliance on
the dollar.
So this is just the latest stepin a, in a long process or where
this has been talked about.
But I mean, if you look at theactual results instead, it's
(21:55):
pretty clear that the[inaudible]has not been growing in
popularity around the globe,particularly much the last say
10 years.
Um, it's, it's stable around twoto 2.5% of, uh, Swift messages
go are cleared in renminbi.
Um, the reason for this islargely that China prefers it
that way.
(22:16):
Um, a great amount of, uh,renminbi usage would probably
lead to appreciation of theircurrency.
So
Speaker 4 (22:23):
Just to talk about it for a second though, why does
Russian president VladimirPutin, why do other countries,
including China keep talkingabout not being reliant on the U
S dollar because that promotessort of American economic
domination, is that what they'retrying to get away from?
Speaker 6 (22:40):
I think there's two parts to this.
First of all, it's, it's apractical issue in the sense
that the us has sanctionedcountries in the past, uh, um,
yeah, like around they, they can, uh, even though Swift is a
Belgium company that can put alot of pressure on Swift and
banks to not do business withChinese party parties, if they
(23:02):
wanted to.
And in the case of Iran, this,this led to them having to
greatly devalue their currencyto, to protect their economy,
which was under enormouspressure.
Um, then there is of course, a,a question of a narrative as
well.
These, these, uh, countries, uh,Russia and China don't want to
(23:22):
see themselves as a part of theAmerican system, they want to be
respected equally.
And of course, part of thatmeans that anytime you have an
opportunity to talk about beingindependent, to being strong
individually, you have to takethat opportunity.
Speaker 4 (23:39):
All right.
So, so w when I took a look atsome of the statistics, I mean,
they jaw dropping in terms ofthe Chinese market on digital
payment systems, like 80% ofChina is 900 million mobile
internet users use their mobilephones for transactions, Chinese
(23:59):
shoppers and merchants representalmost half the world's digital
wallet users and Alibaba, andTencent control, 95% of the
market and cleared 50 trillionwith a T in transactions in
2019.
It is huge, the use of digitalcurrency.
Speaker 6 (24:17):
Absolutely.
Um, I think it's a little bitanalogist to the way airports
and subways were set up in Chinain the sense that if you look at
a air, if you look at theinfrastructure in the West, this
is rather old and oftentimesbuilt very long ago.
Well, if everything in China issort of new and fresh, and if I
(24:40):
wanted to launch a paymentsystem today, I wouldn't be
using these old things that weuse that we use in the West, but
in China to have, um, they have,um, it's an emerging market.
So they set up a new, freshthings.
Um, this digitalization has been, um, the way it's been rolled
out into the Chinese market hasbeen very successful.
I mean, everyone almost will usea, some form of online payment
(25:04):
system, even farmers and, andsurprise in the most surprising
places.
So you can go to the countrysidein China and see people use
these kinds of technologies tomake payments.
Speaker 4 (25:16):
All right.
So I've led you through this,and I've, we've kind of painted
a picture that, you know, Chinainnocently just wants to roll
out a digital currency forefficiency, uh, to make them
less reliant on the dollar.
And probably at the end of, atthe end of what we've talked
about so far is, is where youtake a turn in your article and
the diplomat is that really,it's not about that.
(25:38):
It's probably more aboutsurveillance and control, is
that right?
Speaker 6 (25:43):
Well, to some extent, yes.
Uh, the fact that it, so most ofthe digital payment systems in
China retinol are run bycompanies, Alibaba and Tencent.
Now, if the central banklaunches its own digital payment
system, then that gives themcontrol over the amount, the,
(26:04):
the, uh, the monetary base to alarge extent.
And they already have, they canissue as much currency or as
little currency as they want.
They will have completevisibility of overall
transactions that are madethrough their network.
And they also have great abilityto make users use their own
preferred payment system.
(26:26):
So it will undoubtedly result ina situation where, where the
central bank has much moreoversight of what's going on in
the economy and can controlthings more in various ways.
Speaker 4 (26:37):
This is the ultimate big brother tool,
Speaker 6 (26:42):
What could be.
But I think that something likethis has multiple uses,
obviously.
So on the one hand, you can usethis for things like this, but,
but I think there are also aquality of life things here, uh,
for the central bank sake, youcan have greater control of
inflation.
Uh, oversight can be very goodat, uh, at catching illicit
(27:04):
transactions, transactions, andall sorts of things.
So even though there is acontrol element, I don't want to
be saying that that's the onlyuse or the test, the main
purpose of, I think that thepolicy makers in China are, are
generally speaking, thinkingrather broadly.
And they are, uh, there aremultiple goals with most of the
(27:25):
policies they launch.
Speaker 4 (27:26):
You've obviously become a bit of a digital
currency expert in, right inwriting this piece and watching
it.
I mean, I guess because if youtake a look at what's happening
in digital currencies around theworld, I mean, Bitcoin is
punching through, you know,record levels.
Um, uh, as many other digitalcurrencies are cryptocurrencies
are, but the whole design ofthose were to have anonymity, um
(27:50):
, through blockchain technology.
So do we need to separate thetwo, you know, topics when we're
talking about China's digitalcurrency and other governments,
which are talking about movingtowards digital currency in the
original kind of cryptocurrencymodel, which was, you know, you
(28:10):
could move money between people,um, and you could do it w with,
with, you know, virtuallyanonymously.
Speaker 6 (28:19):
Yes.
I think you need to do need toseparate these two, because the
technology that you use for, um,for Bitcoin is the blockchain,
right?
Where you are having somethingunchangeable as the main
strength of the currency is thatyou have this, uh, you have this
ledger that cannot be altered,or at least not easily altered.
(28:40):
There are some blockchainexperts who do say that it could
potentially be hacked.
Not that I know very much aboutthat, but I think someone,
someone said once that thedistinction between, um, uh, an
authoritarian regime will tendto gravitate towards AI
solutions and a more democraticregime will tend to gravitate
(29:02):
towards the blockchain solution.
So this blockchain was, cannotbe altered by the government as
much.
Uh, there will be a constancy of, of, um, of units, or maybe
there is some sort of algorithmthat produces units at some set
pace.
Whilst in this case, the centralbank can of course issue as much
currency as they want.
(29:23):
Um, and I don't think it's verysurprising that a central bank
do they have control overinstead of a currency that
unalterable program Backstory onthe digital revolution.
Speaker 2 (29:43):
It was supposed to take about 10 years, but it's
been compressed and superchargedin the last year, mostly because
of the pandemic.
And it will change the way we dobusiness, the way our
governments operate remarkable.
And it's happening now.
I'm Dana Lewis.
Thanks for listening.
Please subscribe the backstoryand I'll talk to you again soon.
Speaker 7 (30:07):
[inaudible].
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