Friday, May 20, 2022

Gregg Braden – Cryptocurrency Regulation vs Control, and the Mass Investor Psychology

hello friends greg braden here and i want to welcome you to this edition of our questions and answers you know not long ago i did a special video for you uh in response to many questions we had about cryptocurrencies in general bitcoin specifically and uh wow did we get comments uh all .

Kinds of comments so i want to first just thank everyone for commenting even some of the comments that we're pushing back a little bit we appreciate all the comments because even the pushback it tells us number one it tells us you're reading or watching watching the videos and that you care enough to .

To communicate with me number two the pushback that i saw on some of the comments reflected the narrative that is being perpetuated in the mainstream when it comes to cryptocurrency in general and bitcoin specifically a lot of it is what is called fud fud .

Fear uncertainty and doubt and if you look at the people who are really bashing this phenomenon this technological solution to to the money problems that we see today what you find is they have vested interest in the status quo they don't want to see the change .

That is necessary in my opinion that is necessary for our world to move forward in a peaceful way because ultimately what we're talking about is the first currency in the history in the 5 000 plus year history of money in humankind the first currency that is not tied to a government .

It's not state sponsored currency it is a peer-to-peer currency we've never had that before and as i mentioned in the video if you didn't see the video the value of a currency that is not linked to a state is it cannot be weaponized it can't be used against another country who's adopted .

That currency if the hosting country doesn't like the way that that country is acting and we see this we've seen this for for years because when when those sanctions are placed against another country based on their actions the .

The leaders and the elite they don't feel those sanctions so much the ones that feel it are the ones that can least afford to feel it the ones that suffer the most are the everyday people just trying to take care of their families just trying to keep a job sometimes living paycheck to paycheck often they have the the least ability .

And the least resilience to those those kind of sanctions so they don't have the buffer to withstand the big price jumps and things like that and we've seen this in many countries in the past this isn't just now this is many countries in the past a .

A digital peer-to-peer based currency not run by central banks and not linked to a government that cannot happen when your money is peer-to-peer that money cannot be used to fund war you know we put our money in a savings account in a bank in the banks it's called fractionalized .

Reserve system a fraction of that money is kept on hand and a big part of it is used for other things including uh funding wars and if that's something that you have strong feelings about you may want to look into the the kinds of cryptocurrencies that .

We're going to talk about here so the people that are really down talking bitcoin i mean who are j uh jamie dimon all right uh ceo of jp morgan obviously he has a vested interest elizabeth warren uh in congressional testimony there are congressional hearings that are happening in the united states right now .

To determine what to do with quote the problem of cryptocurrency and what i know just from the hearings and what i've heard elizabeth warren's testimony she doesn't understand uh and i would invite her to take the time to understand what it is that she's talking about she's treating it like a .

Stock she's treating like a bubble she's concerned about uh about thugs and gangsters using this and nothing could be further from the truth here's the truth bitcoin is the first transparent and traceable form of currency it's every transaction is available .

Transparently on the public ledger if you want to do something illegal the us dollar or the euro is what you want to use the physical money you don't want to use the the crypto uh security she's worried about security and i just want to say the bitcoin blockchain itself is the most secure blockchain that this .

World has ever seen we've never seen this kind of security and i want to talk to you as a computer programmer i'm fascinated by this my my former job i was a senior computer systems designer uh in the defense industry during the cold war years and we had a lot of opportunity to look into secure systems .

Bitcoin is using a protocol now it's the sha-256 algorithm and let me just tell you what this means when you look at the number of atoms in the universe scientists estimate that the number of atoms in the universe is approximately 10 to the 80th power number of atoms in the .

Universe all right the number of potential keys uh or attempts to break the code the keys on bitcoin that number is 22 to the 56th so in other words it would take more attempts to break this code for the security system of of the bitcoin blockchain than .

It would than there are atoms in the universe all right so that gives you a sense now anything that's programmed can be hacked at some point and as a computer programmer i'll tell you that the idea is to make it less attractive and more difficult to hack the bitcoin blockchain has never been hacked not the blockchain .

And it uh when we develop the quantum computers maybe at some point it could but at that point then the algorithm will change to to reflect that so the bottom line is it is extremely secure and it is a what is called a hard currency it's a hard currency because it is .

Backed by something it is backed by the transparent ledger that gives its intrinsic value the us dollar since 1971 is backed by nothing except the faith and trust in the us government and there's a lot of controversy around that right now so these are the things that people like elizabeth warren is .

Saying and jamie dimon and others it's a perspective and and i think all of this and i'm not bashing the people this isn't about the the people this is about their perspective all of this i think is because this is so new this is a new technology that caught many people off guard when it first .

Emerged 10 years ago they thought it was a fad a flash in the pan they didn't pay any attention to it it now has bitcoin itself is a pretty close to a trillion dollar market cap market capitalization our cryptocurrency uh along with bitcoin has about a two trillion dollar market cap and when you start talking about those numbers people .

Say well we better take this seriously we better control it and this is the whole point now now it needs to be regulated there do need to be regulations and i'm happy to see some forms of regulation but not controlling the currency itself and we talk about security i just want to go back just for a moment the .

Blockchain of bitcoin wasn't hacked it hasn't been hacked what when you hear about the hacks of cryptocurrency in the media what you're hearing about is the platform that the currency is hosted upon so it would be like the bank uh the platform you can think of like the bank and there have been hacks in some of the .

The platforms but it's not in the currency itself so i just want to be really clear on that so let me get to the questions a couple of questions here uh and by the way i'm right in the comments let me know how you feel about this if you'd like on the .

One hand i'd like to give you a shout out and honor the fact that you asked a question and let you know when i'm answering yours and on the other hand i don't want to embarrass anyone or call anyone out so i don't know if i should use the full name that is in the comments so what i'm doing i'm using the first name and the .

First name and the first question is jackie and jackie asked a really good question she says it seems weird that it meaning bitcoin is a form of money or exchange but we still have to buy it but then interesting we still have to buy it so jack if you're watching this and for anyone that .

Has a similar question i had the same question years ago before there was any cryptocurrency when it came to precious metals when it came to gold and silver for example which is often used as a as a hedge in currencies uh for inflation runaway inflation uh you know and things like .

That let me share with you my perspective on it maybe this will help you as well when i buy a cryptocurrency token or when i buy precious metals for example i don't think of it as buying precious metals if i want to buy .

A u.s eagle one ounce silver coin i don't think that i'm buying that coin what i what i think that i'm doing and this is this is actually uh in truth what is happening is i'm exchanging one form of currency for another form of currency that for whatever reason i feel good about .

So i'm exchanging a fiat currency the us dollar is fiat that means it's by agreement only there's nothing backing it right now nothing there's there's no gold there's nothing backing it right now i'm exchanging that for uh if i'm buying an ounce of silver for a physical piece of silver that has had value .

Uh that has been acknowledged or an ounce of gold value that's been acknowledged for over 5000 years so rather than me buying that what i say to myself and i say it to the dealer that i'm working with i say is i'm exchanging one form of money for another form of money a harder form of money hard asset so when you buy a bitcoin you're buying .

A hard asset in this sense the definition of a hard asset is it is limited in supply right now us dollars are unlimited they're printing them 120 trillion dollars a month is what we were printing up until just recently you can't do that very long you're diluting the currency so .

When you buy that bitcoin only 21 million will ever be minted it is transparent it is secure and that is the the intrinsic value so you are exchanging your u.s dollar or your euro or whatever that is uh for a for another form of currency that you feel good about so i hope that that helps with that question the second .

One also from jackie's two-part question she said why is it so volatile i addressed this a little bit in the video because this is a new asset class and it is now deemed an asset class uh bitcoin and ethereum are both assets uh they're not securities because they are assets they are and .

They are new they're going through a process that is called price discovery they're not being regulated nobody can say this is what the price is the price is being determined by a peer-to-peer network because it's new and there are still uh about .

Let's see there are 18 only 21 million will ever be created 18 million have already been created 18 million plus uh and because there's still some left there is a volatility that i want to speak to in a moment when those 21 million .

Are are uh uh fully created and we won't be creating you cannot create bitcoin anymore after that 21 million and as adoption happens on a greater and greater scale that volatility will decrease you're already seeing it happen a little bit .

Now uh the the extremes what look like extremes to us that we saw you know two years ago are fewer and further between now day to day you can have maybe one or two thousand dollar swing in in the price but that is happening on on uh unless .

It's happening less frequently but here's what i want to say and the reason i hesitated i was going to talk about this later i'll just talk about it now when you look at the science of human psychology any any currency .

And the value that we give to currency or any stocks for that matter those values are a reflection of human psychology of mass investor psychology mass investor psychology is not random those volatile swings aren't random they are happening within ranges that can be known and predicted and charted through what's called ta technical analysis .

And using tools uh and principles like the fibonacci sequence so when you see a volatile spike and you say man how high is this going to go well if you're if you read the charts you'll know exactly how high it will go it will go up to a point where it will encounter some kind of resistance if there's no .

Resistance the sky's the limit when it encounters that resistance typically what happens is it will uh move along that resistance it'll be rejected and it will fall and you'll say man how far is this thing going to drop it's not like free fall forever it's free fall until it hits the bottom levels of support and those .

Often now it's not 100 but it's 99 you can see actually i'll tell you the the odds are 70 30. uh when you see certain patterns that these uh assets including bitcoin will follow or precious metals or stocks or anything when you see certain patterns there's a .

70 percent chance that it will break the upside 30 percent to the downside of certain parameters in place if other parameters in place those numbers reverse so uh what i'm saying is it's not random it's not a crap shoot if you understand mass investor human psychology and how to chart that using fibonacci sequences .

Fibonacci sequences are what governs so much of the natural world the proportions of the human body the proportions of the way that plants grow and animals and and then you probably are aware of all of that so the volatility all to say that as we find more adoption the volatility will become less and as as fewer bitcoin .

Are available to be created you will see less volatility when i talk about mass adoption uh this is who's using it and what is the use case bitcoin is oh man it is such an extreme example of mass adoption right now it took it took 10 years i .

Believe between 1990 and 2000 for for the internet where the internet was after 10 years of adoption uh we have doubled that in terms of where we are with bitcoin adoption it's being adopted by uh big uh finance funds some of the biggest on the planet vanguard blackrock .

Their investors want uh exposure to bitcoin it's being adopted by insurance companies by businesses entire nations el salvador as i mentioned was the first that has adopted it as a is their their currency other nations are doing the same so as we have more adoption and as we go .

Further in the process it will become less less volatile however let me say this now even about the volatility if you look at what happened let me just give you an example uh march of 2020 we had our coveted crisis all the markets took a hit stock market took a hit bitcoin took a hit but what happened was as the markets .

Climbed out of this bitcoin recovered faster and it retained its recovery stock markets s p 500 for example they were slower to recover then they went to these all-time highs and then they sold off now they're 50 of what they were uh in march of of 20 bitcoin has gone up it's come down but .

It is still higher than where it was in march of 20. so it is it is seen as a store of value from that perspective over time not on the daily make it crazy it's like a whip saw if you watch it day in and day out and the reason for that is because some people are not investing in the long term they are day traders or swing traders .

So or or minute traders in many many instances so these are the people that are taking they know how to read those charts they're taking advantages of those of that volatility and they're making a lot of money doing that uh if you believe in the thesis .

That we are healthier in our world with a currency that's not tied to a government that is peer-to-peer currency that is transparent cannot be weaponized against our brothers and sisters it cannot be manipulated with interest rates the way that our currency is right now or inflation then that is the the use case in the thesis .

Long term for bitcoin i don't think it was ever and i'm gonna answer this next question i don't think it's going to be a day-to-day currency i don't think you're going to go buy a cup of starbucks with with a bitcoin you can but it's not really designed for that so uh jackie i hope that helps with the two .

Questions that you ans asked i hope i helped to answer the two questions that you asked next question i'm going to use the the first name vitamin c i love your name i don't know if it's male or female brother or sister but whoever you are i love your name i felt that you were pushing back a .

Little bit and i appreciate the fact that you were and why you were and i want to tell you and i actually think very much alike when it comes to the way that you ask this question so it was kind of a two-part question first of all you .

You wrote in the comments bitcoin most advanced question mark so what i interpret that to be is you you're questioning whether or not i believe that bitcoin is the most advanced i i believe i never said it was the most advanced what i did say and i'll stand by this .

Is that bitcoin is a technological solution to the problem of money and it is a highly advanced technological solution to that problem uh because it meets the criteria of money that the uh that the .

The cr we're called fiat currencies that we've talked about are not meeting and i don't think you're questioning that i don't think you're in the fiat currency so you're just saying most advanced and the next part of the question i think is is how you're elaborating on that you are asking me most advanced what .

About the other 10 000 coins like xrp i'm right there with you i'm totally with you by the way i like xrp a lot so for those who are not familiar xrp is a is a protocol as well as a coin that will be used by the banking systems it's already being adopted by the banking systems it is threatening the status quo .

It is in the courts well it's been tied up legally i'm going to say that it's been tied up legally and friday of last week the ruling came down that it would be allowed to go to trial i think the sec security exchange commission was hoping to settle out of court .

Xrp wants to go to court to make their case because they've got a really strong case and uh because it's going to court it's probably going to be tied up for a while even even longer now but i like the xrp protocol but here here's the point i don't think it has to be either or and this is what i'm hearing from your .

Comment vitamin c uh i don't think it has to be either or this is a new it's a whole new world this is an entirely new asset class and each of these protocols is being designed for the most part for a specific purpose that doesn't .

Necessarily negate another purpose it's like saying it's like if you go to your toolbox and say a hammer is better than a pair of pliers well it depends on what you're going to use it for there's some things a hammer is going to do really well that pliers may not but you could take a pair of .

Pliers and i've done it hammer and nail with a pair of pliers you can do that but it's not really designed to do that so when you talk about the other 10 000 coins there are a lot of other coins out there uh and it's kind of a crap shoot to be very honest and let me share with you why because .

The statistics now show that between well for the last 10 years of the coins that have been created the average coin the average lifespan of a coin is about 1.22 years yeah it's about 1.22 years and that about 90 of coins that are produced will fail .

So only 10 percent may be viable if you're an investor that means you have to look really really closely at what you're investing in you need to look at and for me this is important because i i believe .

That this is where the world is going and i believe the whole world's going digital it makes sense that our money would go digital in in some way bitcoin uh many people are calling a dinosaur and vitamin c i don't know if that's the name that you use but you implied that it's already obsolete you did imply that .

I'm going to push back on that for this reason it may be obsolete if you try to project an expectation onto bitcoin based upon what other coins do that's like projecting an expectation onto a hammer that you're going to be able to to drive a phillips screw .

Bitcoin was designed to be very simple and to not have a lot of bells and whistles and to do one thing really well and it has fulfilled that promise it uh it is a stripped down blockchain the most secure blockchain that we have ever known and as i mentioned earlier in this .

Program won't go any further into that it is designed to be a peer-to-peer uh system of of currency exchange if we want or a store of value xrp does something completely different this xrp is in the world of decentralized finance defy and uh people will try to compare ethereum .

To to bitcoin ethereum is up its own platform up on which uh this tremendous ecosystem of community is is now developing so many applications that run on ethereum bitcoin wasn't designed to do that the code in bitcoin i'll just share with you a little bit i mentioned i was a senior computer .

Systems designer uh in the late 70s early 80s well this was in the 80s in the defense industry and i was in the group that was porting the first code from the the mainframe computers used to take up a whole room we didn't have laptops and desktops and i was in the group of uh working for .

The united states air force taking that big code and putting it on to small machines and we learned very quickly we needed a new way to do that and at that time a software called lattice c plus plus came out and i i learned a program in lattice c plus .

Plus that was my my forte so i recognize what it is what its potential is i'm saying this because bitcoin was the blockchain was programmed in c plus and there are a lot of good reasons uh for satachi nakamoto to have done that whoever he or they are a whole different .

Conversation uh so it was it wasn't designed to do a lot of the other things so i i think there's room for for all for for bitcoin and it's leading the industry bitcoin has nearly a one trillion dollar market cap it's not going to go away uh and the rate of adoption is following .

Something called metcalfe's law if you're familiar with metcalfe's law it essentially says the value of the power of a network is is equal to the square of the nodes that are being used so if you've got 10 nodes just for an example if you had 10 nodes and you square that that's a hundred well you look at the nodes that are .

Using bitcoin and you square that and the rate of adoption in the use this is the the most rapid adoption of a technology that's ever been seen in human history doubling the adoption of the internet so uh so i think the the bitcoin is really good for what it was designed to do .

And it doesn't do a lot of other things well it's slow and that's why other protocols are developed to offload some of this information uh and same with ethereum ethereum is relatively slow and expensive so you've got things like uh matic polygon matic to take care of the the .

Um you know the business transactions so so ethereum will offload it into polygon and do do the crunching and then put the information back into ethereum and that's what it's called a scaling solution and this is one of the ways that uh that these problems are being .

Addressed this is a new technology and there may be a time there may be a time that bitcoin is obsolete i don't see that time happening in the near future because of adoption metcalfe's law the network effect and because it is simply so really good at what it does .

And the important thing is to bear in mind what it was designed to do and not try to make it do other things it wasn't designed to do so vitamin c i hope that helps and i really appreciate you uh checking in with me and i appreciate your perspective um .

I don't want to go too long here but i have another topic there were so many people i'm not going to address one question because there were so many people that asked the same question and and elizabeth warren actually helped to perpetuate this that bitcoin is is bad for the .

Environment and you're hearing this a lot let me just say this that may have been true 10 years ago because it was a new technology and we didn't know for sure how it was going to be used right now what the studies are showing and i'm just going to give you the .

Bottom line right now there was a study it was done and i will put the link to the study in the comments section so that you can see it it was done by if you want to go so this isn't this is uh an equities research company researching bitcoin so they're not biased to .

Cryptocurrency they would rather have have you know securities and here's what they found just the bottom line there was a study that was done and they looked at traditional banking system what does that mean and i talked about this a little bit in the video before it means if you look at the number of .

Traditional banks and then you take the brick and mortar structures and you take how much electricity it takes for all the lights and all the computers and the air conditioners of all of those in the traditional banking system all over the world and you take into account the atms and the cooling systems in the atms and all of that it .

Doesn't even take into account the gas that's used or the petrol depending on what part of the world you're in for the employees to get back and forth to work it didn't even take into account that if you take into account all the information the amount of energy used per year for .

Traditional banking is 263.72 terawatt hours per year a terawatt hour is just a whole heck of a lot of electricity okay compared to bitcoin bitcoin is about half bitcoin is 113.89 terawatt hours bitcoin .

Right now we're 50 well or 50 of bitcoin is being mined through renewables and uh and a lot of that is coming from especially here in the u.s in the oil fields when an oil company is drilling for oil they're not set up often to accommodate sometimes they hit .

Hydrogen a hydrogen pocket natural hydrogen in the earth sometimes they hit natural gas they're not set up for that they don't have the pipelines to offload it they don't want that all they want is the oil so what they do their answer for decades has been to burn the hydrogen or to burn .

The uh the natural gas it's called flaring and you'll see this you go to an oil field and they'll see the the big stacks and that you'll see flaring going off these i wonder why they're doing that well this is why what is happening now is that unexpected gas or now maybe it is expected they know they're going to hit .

That at the top of the formation it's a geologist i love to talk about these things that now is being siphoned off and used uh to to drive the bitcoin okay so the machines to create the electricity for the machines that are mining the bitcoin i want to be accurate here so they're they're using what has been uh .

In the past called stranded energy it was energy was there but there wasn't any way to use it so a lot of bitcoins using that love it's using solar a lot of it's using hydro in el salvador that i mentioned earlier they're volcanoes in el salvador and .

They're using their drilling geothermal wells and running the the bitcoin mining on uh on geothermal and they just announced about two weeks ago uh this is mid-march now they just announced two weeks ago what are called .

Volcano bonds so these are bonds that are being issued based on cryptocurrency and the energy is being driven by volcanoes so volcano bonds so the bottom line is it is less energy intensive for what it produces but i'm going to take it even this step i'm going to go a couple minutes longer i want to take it a step .

Step further i think it's a good use of energy it may be the best use of energy that we've ever seen because if you think about it this way we are spiritual beings all right and our energetic beings and the work that we do in the world is expending that spiritual energy to .

Produce goods or services or information or share knowledge and when we're rewarded with that to be rewarded with another form of energy that was produced the way that it is that is not tied to a government that cannot be weaponized to use to hurt or create suffering in another nation that .

Cannot be used to make weapons to perpetuate war that cannot be manipulated the way that the dollar is manipulated right now that can uh not be inflated to the point where it loses its value which means your energy is not being honored if all of that can be accomplished .

Through 113.89 terawatt hours of energy i'm all for that our world has got to change and there was a time when the leaders of the nations could have gotten together and they could have said this is the best thing to do for the people of our nations and our brothers and sisters on .

The planet let's make all these changes in a good way with less suffering and move into the world that we know as possible that could happen with our leaders can you imagine the beautiful world of china and russia and iran north korea europe america .

Australia canada if we all worked together and said how can we create the best world possible for our people wow what there would be no stopping us unfortunately that's not the world that we live in in this moment i believe it's possible so now what is happening is it's all happening incrementally .

All right so incrementally our world is going it's already gone digital all of our music is digital a lot of our reading is digital you know our business is digital our contracts are digital it makes sense that our money would be digital as well and this is the best solution that we have right now it's a good solution .

It's a good solution if it's given the chance to work because not only does it level the playing field of disparity among uh the elite and the non-elite the rich and the poor but it offers us a path to peace because now money is no longer the reason for the fighting no longer the reason for the .

Wars i can't think of a better use for our time so is bitcoin energy intensive it takes energy it takes a lot of energy to to run the machines to mine the bitcoins that will be over when the 21 million bitcoins are mined number one number two that energy more and more is coming from .

Renewables and i personally believe it's a good use of energy so i'm going to stop this session right now i hope this answers some of your questions thank you all again for taking the time to let me know your thoughts and you know i offered this program it's not the focus in my life because .

There are so many other things but we had so many inquiries about this and i wanted from my perspective to share with you how i see this revolution unfolding and what it means to us both on the physical as well as is on a deeply spiritual level so i hope that i've helped with that i want to thank .

You for sharing part of your day with me today i look forward to our next q a you


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