Crypto to $0: The Fed's NEW Crypto *Replacement.*

could the Federal Reserve end one of the

most important use cases for

cryptocurrency instantaneous

transactions with the utmost security

we've got to talk about that and a new

system the Federal Reserve is launching

in 2023 in this video but first we need

to understand the fundamental value of

an investment and understand the

difference between fundamentals and

intangible see one of the intangibles

that we'll be talking about is wait a

minute how can the FED replace something

when crypto is designed to replace the

FED after all crypto is tired and the

crypto Community is tired of the fact

the Federal Reserve can essentially

accelerate boom and bust Cycles by the

use of a money printer or the inverse

money printer and maybe we should just

stop printing money and paper currency

or Fiat is just totally worthless those

are going to be some of the intangibles

that we talk about in this video but

first what are some fundamental values

that go into anything that we spend

money on well they're generally two

there's the fundamental value of how

much we expect to receive in return for

an investment and then there's the

fundamental intangible value of

something that we can receive in return

so for example if you put a hundred

dollars into an investment and you have

ten dollars back every year you might

look and say okay well fundamentally I'm

getting a 10 cash on cash return you go

put a hundred dollars a month into a

payment on an iPhone you're gonna get

some intangibles like well the camera's

better right we don't really measure

that by a dollar we go yeah it's it's

better it's faster that helps me

intangibly we don't really value that

it's kind of like oh well we like the

idea that we're supporting A system that

puts an end to the centralization of

central banks that's an intangible

fundamental is how much cash flow are we

going to get back and when we look at

fundamentals there are really two forms

of cash flow there's the preservation of

value and then there's actually getting

money back with cryptocurrency the

pressure preservation of cash flow might

Simply Be

keeping a stable value kind of like

being a digital gold the second form of

a fundamental value would be a cash flow

so when we look at the first form we

generally look at Bitcoin gold is worth

about 12 trillion dollars and Bitcoin is

worth about 1 40th of that at just under

400 million dollars and so some folks

say Bitcoin should be worth as much as

Gold's market cap which could put the

price of Bitcoin somewhere in excess of

five hundred thousand dollars per coin

which is pretty dang remarkable in fact

some folks say that Bitcoin is just much

more useful than gold because see with

gold even though gold might be better

than treasuries because it's harder to

sanction gold than it is to sanction

treasuries for example if you're like

Iran and you buy U.S treasuries with

your dollars or you're Russia and you

buy us treasuries and then all of a

sudden you do something the United

States doesn't like the US says we're

freezing all of your assets and now you

don't have access to your treasuries or

money anymore right that is a risk that

you have with centralized currencies and

treasuries but one that you don't really

have with gold because gold is

universally accepted except the problem

with gold is it's heavy to transport

it's difficult to sell quickly it tends

to have a relatively stable price but

it's expensive to secure and maintain

and that's kind of where bitcoin's

digital gold comes in pretty

aggressively where you look and say hey

well Bitcoin might be better than

treasuries due to well it's immunity to

sanctions Harvard actually suggested

that central banks hold treasuries for

exactly this purpose they put together a

piece that I broke down about a week and

a half ago on the channel but the piece

is entitled hedging sanctions risk

cryptocurrency in Central Bank Reserves

pretty good piece into the idea that hey

you know crypto could make a very good

hedge against the risks you have with

central banks or governments because

it's decentralized right Bitcoin is also

universally accepted it's inexpensive to

secure and maintain and it's pretty easy

to liquidate but the problem with

Bitcoin much like what Harvard suggested

is that you have a really big danger in

price volatility see bitcoin's price

instability may go away over time but at

least over the last year it's dropped 75

percent through the bankruptcies of 3ac

a hedge fund the brokerages like block

five Voyager FTX and more all of these

don't really give reason for Price

stability so it makes it a really hard

digital goal and gold became known as

gold because it had relative stability

over the rise and Falls of many

different Empires over thousands of

years for Bitcoin to really be known as

something that has price stability and

be a digital gold probably going to have

to see price stability with Bitcoin for

decades before it really has that

fundamental preservation value that then

brings us to the potential other value

for cryptocurrencies which all

cryptocurrencies really try to fight for

and share and that has to do with

transactions see transactions create a

potential for fees and a potential for

fees means a potential for revenue and

then there's a fundamental value because

if you own Bitcoin or ethereum you have

a voting stake along with many other

erc20 tokens you know tokens built on

top of ethereum or other blockchains in

general like the cardano network or

whatever these other chains ultimately

have this fundamental premise of hey

we'll provide better transactions and

more secure transactions for some form

of nominal fee which of course the goal

is that some of that residual Revenue

flows through to stakeholders like the

underlying coin holders because they

control the voting shares of that that

blockchain

well the problem here is the fan see

blockchain right now has a transaction

cost of about a dollar 56 per

transaction ethereum 2.0 came out and

promises that 100 000 transactions per

second and the average transaction has

come down to about a similar range as

Bitcoin somewhere between a buck fifty

to four dollars which is on the more

expensive side that's way down from

about forty to fifty dollars a year ago

but it could be because trading volumes

are lower right now because crypto has

kind of gone through a crypto winter so

if trading volumes rise again we could

see ethereum 2.0 transactions be a bit

expensive as well so when you pick

Bitcoin and ethereum into a space of

transactions they're still relatively

expensive for the value that they

provide especially since right now you

have a lot of fear over how people

should even remotely consider

transacting with cryptocurrencies most

people say the best thing to do is do it

obviously off exchange and a transact

with your own wallets but the risk here

is it takes at least a little bit of

tech technical skill to operate your own

wallet that you can keep in Cold Storage

when you want to transact more easily

generally you'd go to a coinbase or

something or maybe use a metamask but

then again you're paying fees and you're

potentially thinking to yourself hey

look this is great if I'm trying to

transfer money cross Borders or maybe in

a way where I don't want the government

to see what I'm doing but on the flip

side it's a whole lot easier to just

PayPal somebody for pizza or dinner or

99 of the things that we do in our daily

lives and so this is actually where the

FED comes in see many banks especially

local Community Banks have gotten

frustrated that companies like PayPal

Zell venmo and cash app have taken a lot

of uh of of customer deposits because

they're much more convenient to use than

writing checks to people which can take

like 10 days to clear ACH which could

take three to four days to clear and

it's complicated and wires which usually

come with wire fees and can take up to

24 hours to process even though they're

supposed to be instant they're fed cut

off Windows and and it's really

frustrating if you miss the window and

then the money doesn't show up until the

next morning it's all a headache to be

clear Zell is a feature that has been

trying to make this easier for banks

because it's kind of supposed to be like

a service that many different banks can

offer so it's not One Bank like sort of

a PayPal depository institution or a

venmo or a Sofi which is have gotten its

banking Charter right it's supposed to

be able to be used by most banks to

provide instant peer-to-peer payments

but it doesn't work for everything it

doesn't work for bill pay it doesn't

work for large amounts you have to break

up amounts into like five thousand

dollar increments and so it's not as

ideal

well enter the Federal Reserve the

Federal Reserve is actually looking to

launch in May to June of 2023 a service

called fed now and the FED now service

could actually be something that

replaces the vast majority of the need

for instantaneous and free transactions

now it will never replace what the

cryptocurrency ecosystem is really

designed for which is an escape from the

Federal Reserve after all the FED now

system would be provided by the Federal

Reserve so it's it's like you're not

going to get away uh from that uh

centralized aspect with fed now so if a

big priority for you is not to be

exposed to the government or to be

exposed to the FED system well then

you're not going to want to be exposed

to Fed now but unfortunately if the

fundamental value of blockchain is hey

how many transactions can we conduct we

have to ask how many people actually

need to escape the Federal Reserve and

the odds are probably less than one

percent of people want to avoid being

exposed to the Federal Reserve and just

want quick and fast instantaneous bill

pay instantaneous payments around any

kind of network that they're using and

that's what fed now does in fact I'm

going to just play you a video clip here

we'll go about a minute into where you

could see how the FED now system works

and it's kind of eerie how similar it

looks to cryptocurrency except it's

cleared by the fed and so this is

leaving a lot of people wondering wow is

the Fed basically trying to eliminate

the fundamental value of cryptocurrency

and this is where some folks say yeah

because basically now you're pushing the

only potential use case left for

cryptocurrency into this Niche corner of

the ecosystem of where governments like

Russia and Iran or illicit actors may

want to have that ultimate privacy and

security that blockchain offers that

just isn't necessary for people on a

day-to-day basis especially since most

consumer apps and almost certainly apps

that that are approved by centralized

organizations like the Apple App Store

are probably going to prefer using

something like a fednow system then they

will encourage something like an FTX

again in the future right

so it's unfortunate that all this crisis

has come to to crypto but it's probably

going to require a lot of regulation for

crypto to really be trusted again like

some kind of actually

safe platforms that people can use other

than just more complicated Cold Storage

which is really not that difficult but

any kind of single level of barrier is

going to shut people down and that means

less use and less fundamental value for

cryptocurrency look at how similar

though this fednow system feels to how

cryptocurrency should work minus that

centralized aspect I mean they're even

using tokens in their example here let's

go work imagine the owner of a coffee

shop is running low on coffee beans it

needs to schedule a quick delivery she

places an order and the Coffee Bean

company sends her a request for payment

she responds to the request for payment

and pays for the coffee beans right then

and there through an app from her credit

union which uses the FED now service

once she initiates the payment her

credit union screens the payment and

sends an ISO 20022 compliant payment

message either directly or through a

service provider to the federal service

over the federal reserve's fed line

Network the FED now service instantly

validates the payment message and passes

it along to the Coffee Bean suppliers

Bank in real time the suppliers Bank

confirms to the FED now service that it

intends to accept the payment and the

federal service debits and credits to

master accounts of both the shop owners

and the Coffee Bean suppliers financial

institutions or the master accounts of

their correspondence the FED now service

also immediately sends a payment message

with an advice of credit to the

suppliers bank and notifies the shop

owner's Credit Union the settlement is

complete finally the suppliers Bank

credits the supplier's account in near

real time making the funds available the

suppliers bank will have the option of

sending a confirmation to the shop

owner's Credit Union that the payment

has been posted to the supplier's

account providing the coffee shop owner

with certainty that the payment was

received

the FED now service will be all right so

there you go there's an intro to

instantaneous payments through the FED

now system which is expected again to be

launched in the middle of 2023 and

amongst all this crypto crisis really is

giving a lot of folks in the crypto

Community some fear that

how do we fundamentally value crypto if

a lot of the use cases are being

questioned that is think about the use

cases if you're looking for

instantaneous transactions fed now might

now have you covered next year right

instantaneous transactions 24 7 nearly

instantaneous at least is what they say

but it has the centralization aspect of

the FED which means there could be some

uh privacy risks here right we don't

solve that with the FED that remains uh

in the cryptocam but along with the

crypto Camp comes with the uncertainty

with hey well where do we transact how

do we easily transact this is like the

pain of paying is high and ultimately

there's still a fee it still costing you

a buck to four bucks whether using

Bitcoin or ethereum per transaction when

the FED now system is free and so when

you look at instantaneous transaction

crypto versus instantaneous transaction

of the FED you've got to ask is it worth

paying a buck 50 every single time for

that potential for privacy although as

soon as the IRS figures out what your

wallet address is there goes your

potential for privacy so you really have

to be clever with how you handle your

potential for privacy right because as

soon as they start requesting your

wallet address on your tax returns it's

like all right well now all your

transactions are actually more

transparent than they would be uh if if

you weren't using crypto because you'd

have to be audited for them to see your

transactions whereas you can open audit

anyone's crypto wallet right so you've

got a little bit of a mix here in terms

of like ah how do you balance this again

you're never going to get away from

essentially the government as the uh

with banks taking the loss essentially

on these instantaneous transactions

because they want customers so they'll

pay for the transactions to be free

right they'll be the ones implementing

the system at their cost they make sure

that it's free and so does the FED bear

some of this cost uh but ultimately for

the user it's free whereas with

blockchain there is no centralized

entity or Bank taking control of that

cost so therefore the user has to pay

and so this is where you have to

fundamentally compare the value okay

well in order for crypto to have

fundamental value it either needs to be

digital gold which could be decades away

or it needs to actually generate

revenues by transacting but the problem

is if your selling feature is

instantaneous transactions well the

fed's doing that for free so your cost

per transactions needs to approach zero

at ethereum or the other currencies uh

or Bitcoin to be competitive and even if

that transaction cost goes down to a few

pennies per transaction you actually

have so have to have so many more

transactions to actually have any money

left to distribute to anybody as a

fundamental valuation as a utility

basically right think about it kind of

like blockchain becoming your third

utility or fourth utility right you've

got water gas and electricity now you've

got blockchain technology well great but

what if fed now starts implementing

blockchain technology to process their

transactions instantaneously and maybe

take themselves out of the clearing

process which they could do and now they

step back from a blockchain based uh

cryptocurrency Network that again is

still centralized because the banks are

the one subsidizing it so that way users

have free payments well then you really

have little reason to suggest that

Bitcoin ethereum or any other

cryptocurrency should have any

fundamental value for the basis of

transactions really the only fundamental

value you could provide to

cryptocurrency is digital gold at this

point which means means the only

fundamental value you could give to any

cryptocurrency exists only in Bitcoin

but that could take decades for Bitcoin

to actually prove itself as a digital

gold through the volatility that is

cryptocurrency so really what then is

the value of crypto

well it's not much the actual

fundamental value of crypto was very

very little it's the future value of

whatever you think Bitcoin as digital

gold is worth because unfortunately as

it means for transactions

that value in my opinion is approaching

zero and will always approach zero

because Banks want to remain competitive

so if blockchain works very well they'll

implement it they'll operate their own

blockchains at zero cost

so if you so you're really only

segmenting the super security focused

and privacy focused individuals which

probably represents less than one

percent of all transactions who would be

left using cryptocurrency so again the

real wide use case for cryptocurrency is

digital gold and the only one that would

ever probably meet that criteria is

Bitcoin so bottom line out of all this

my opinion not Financial advice even

though I'm a licensed financial advisor

this is not personalized Financial

advice for you

my bottom line opinion is the only

cryptocurrency that really makes

investing in outside of speculation is

Bitcoin but even then you're making a

bet on the future value of

cryptocurrency decades out in the future

because whether it's the fed or whether

it's Banks transaction costs will

probably always approach zero and that's

a very difficult investment to make you

generally don't want to invest in

something in my opinion that has a value

that approaches zero that means you

literally have no pricing power I like

investing in things that have pricing

power this is what I talk about to

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the next one thanks so much goodbye and

good luck