Cryptocurrency: The Future of Money?

Are Bitcoin and other types of cryptocurrency really the future of money, or just hype?

There's been a lot of hype recently about Bitcoin and other types of cryptocurrency. So, are they really the future of money, or just a lot of digital hype?

ABOVE THE NOISE is a show that cuts through the hype and investigates the research behind controversial and trending topics in the news. Hosted by Myles Bess.

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Since 2017, when its value skyrocketed and turned a bunch lucky folks into overnight millionaires, there's been a lot of buzz about Bitcoin and other types of cryptocurrencies. Millions of people around the world own some form of cryptocurrency, and entire new industries have sprung up around them. Some believers think that cryptocurrencies could even replace traditional monetary systems. But a good number of skeptics say that this new type of digital cash is just a short-term fad that won't last long.

What is Bitcoin?

Bitcoin was the first cryptocurrency, introduced by an anonymous programmer(s) in 2009 (under the alias Satoshi Nakamoto). Like the other cryptocurrencies that followed it, Bitcoin is a peer-to-peer digital cash network that was created to allow users to make financial transactions without the need for a bank or other trusted third party. Transactions are validated autonomously by computers on the network that compete to solve complex math problems. Cryptocurrencies are not tied to any national government or currency, and are therefore largely unregulated. Also, their value is extremely volatile and unpredictable, based entirely on speculation.

What is the blockchain?

Bitcoin and other cryptocurrencies operate on open-source software that facilitates transactions between users and ensures the transactions are valid. A group of transactions is known as a block. When that block is validated by other computers on the network, it gets added to a ongoing list of transactions called the chain. All users in the network can see this growing list of transactions (which is called a ledger), although the identify of the buyer and seller and what they're actually exchanging remains anonymous.

Why are so many people so skeptical about cryptocurrencies?

Many traditional economists argue that Bitcoin and other cryptocurrencies are just bubbles waiting to pop. They note that their value is based on nothing but speculation - the confidence people have in them at any given moment for whatever reason. And unlike dollars and other traditional currencies, they are not backed by any government, so their value doesn't come with any guarantee. Skeptics also note that because the value of cryptocurrencies is so erratic and so few businesses accept them, that they've largely failed to be functional alternative forms of payment.

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[springboard]

Behind government regulations US dollars are still dependant on public faith.

[lukaskrtek]

Bitcoin is not optimal as currency, its mainly goal is store of value, for now. Later, when ever so decreasing volatility will be similar to forex fiat, then it will be world currency backed by DECENTRALIZED network run by consensus.

Bitcoin is here to stay, only because you dont understand it doesnt mean that generations who grown on full digital world will have issue with its non-physical reprezentation.

Think about how crazy must have sounds the idea in 1990 that people will do shopping on the internet.

Love from Czech republic, birthplace of Trezor for your coins...

[vitormelomedeiros]

Who are those Two Cents folks? I can't find their channel :(

[charlesrosenbauer]

You really should have talked more about cryptocurrencies like Ethereum which support smart contracts, or the fact that cryptocurrencies use cryptography and game theory to make mostly trustless systems.

For those out of the loop:

Smart contracts are computer programs that run on a blockchain. Essentially, you can have digital assets aside from a currency that exist on a blockchain, and have them attached to a set of rules that determine what you are and aren't allowed to do with them. Unlike traditional laws, you can make it pretty much impossible for someone to break those rules in a way that isn't easily detected.

In terms of cryptography, while I'll avoid the math here, the gist is that cryptocurrencies are designed so that every transaction on the blockchain uses cryptography to verify that it wasn't forged. If someone wants to forge a transaction under your name (for example, if they want to steal money from you), they either need to steal your private cryptographic key (which works a little like a password, except that it's just a number with several hundred digits, chosen because of some nice cryptographic properties) or they need to crack the encryption, which wouldn't even be feasible if you could pack the entire observable universe tight with computers and let them run until the heat death of the universe. There is the concern that people could forge transactions and then just ignore the obvious fact that they're forged, but the incentive systems built into the network are designed to either harshly penalize it, or make it practically impossible.

[SupLuiKir]

Bitcoin won't, because there's too many design flaws in it due to it being the first of its kind. In particular, people only use it as a means of storing wealth instead of as a vector to buy things with, kinda of like gold. To be fair, this is because there aren't really any places that adopted bitcoin because no one took it seriously until it actually became valuble and at this point it's far too late to get into it. Next, mining it doesn't have any protections against ASICs, specialized hardware that can compute bitcoin hashes far faster than any general purpose computer of the same caliber. Since mining difficultly inflates so rapidly, if an ASIC doesn't get used constantly, it'll fall behind the curve and never earn even a return on investment, and at that point, it's as useful as a brick, since it isn't capable of doing anything else. Next, the transaction speed is incredibly slow, so it wouldn't be able to keep up with people actually using it for commerce anyways. Mining is still profitable if you have huge facilities to cool and run your ASIC hardware, to the point that bitcoin mining takes up about a percent of the world's energy consuption itself. That's probably not ideal for the environment.

As for cryptocurrency in general, there's still a ton of advancements in the field to be made, and a ton of use-cases to be explored. For example, if you were an artist, you could use an Etherium token to sell "signed and numbered copies" of your digital artwork. Using a business model such as this, you wouldn't have to care if people repost your art and you won't have to place a paywall over it such as through patreon. People would support you by buying a numbered copy, and could hold on to it and later resell that copy whenever. It could recreate the scarcity of the physical art marketplace, a feat that would've been otherwise impossible in the digital age.

In fact, The Rare Pepe market could be a real thing by utilizing a blockchain.

[tsuchan]

But... you hardly got hold of the title subject of the video :-(

[snartdingus]

shirin plz link where we can watch your work!!!

[JoshuaHillerup]

I think Bitcoin is a good experiment that has helped gain data that will help one day create a stable cryptocurrency.

[asbjo]

Blockchain currencies can be very useful. Yea, in its current state its values is based on speculation and it is very volatile. But lets say that the national bank of a country launches their own proprietary blockchain based currency. This would mean that banks no longer has the ability to create money through debt (Money supply in western countries are controlled mainly by private banks), and the banking industry would have to revert back to their original function: Brokering between lenders and investors. Every citizen would have an account in the national bank, and therefore, the bank would have to make direct deals between people who invest and people who lend. They would no longer have free access to a huge amount of money, that they can use as they please. They would have to let the people that has the money decide who will get their money as a loan.

Other than that the money supply would return to national hands making it more stable, easier to maintain and regulate. All huge bonuses for the free market, as the playing field would be more equal, fostering more startups as they would not have to fight as much against the big financial entities. And the big institutions would have a much harder time manipulating the financial markets through speculation.

Right now the only thing national banks can to do help monetary issues in society, is to change interest rates. This is a good tool, but very limited in its possible effects.

Yes, on paper it would mean a huge dip in the financial sector, but as it is now, it is wildly inflated. Just look at the housing bubble in 07-08.
All due to big financial institutions getting wild on speculation and leveraging. Taking society as hostage and casualties when it goes too far.
It would not remove the bubbles entirely, but it would make it harder for big financial institutions to spear-head these bubbles. The entire society of a nation would have to be in on a speculation bubble for them to be as big as the housing crisis.
All in all, trade of stocks and investments would return to more closely resemble real world value, in turn making more real growth and value per invested dollar in the financial markets. This is good for society and the common man, as well as business owners as the market is now equalized and more fair for everyone. The more stable and fair a market is, and it's money supply, the more people are willing to invest.

It would simplify a lot of financial trickery that banks and big financial institutions are doing at the moment, by making it impossible for them to mess with markets and stuff.

This might sound really progressive, left wing. But think about it. It's actually really conservative. Bringing the private financial sector away from control over the markets, bringing it back to a neutral entity (national banks), giving countries back the opportunity to control how their markets function. This might sound scary to some, but remember: Without rules and laws, there is anarchy.
That applies to the free markets as well. Free markets are only free as long as everyone plays by the same rules. National banks and governments are the source of these rules, and so it should be.

[IsYitzach]

Bitcoin and cryptocurrencies for the time being are tulips. They bubbled and popped. They also take a large amount of power to maintain, so they aren't green. The designers of these currencies need to think long term, 10, 000's transactions/min and consider power requirement to maintain. For now, the banks do all that better.

[epif]

how does this channel does not have more views!!!

[LiftedStarfish]

I wish they wouldn't talk to us like we're fucking children.

[nitishcarlin]

I feel like dancing watching her making cool moves.

[danielcristian]

Cripto is not an investiment, it is protection; like gold, but with easier tracking and transfer technology

Paper money is fake money, dive into some Hayek and Rothbard books to clear the noise

[zarboov]

So now it’s 55 likes, and 2 dislikes. Now wait till the bitcoin-circle sounds its horns... and get ready to “really get educated”... ;-)

[edgeeffect]

Let's not forget the climate change implications of bitcoin mining.

[adrianhcr]

1:29 hola amazing video lo disfrute necesito el nuevo video me voy les dejo besis muchas gracias

[marvelouslighting]

I love bitcoin, but I don't own any. I am more interested in his Grandchildren like XRP, ADA, TRX, XLM, VET and a few other Black sheep of the family.

[demyosec]

real dollars on bitcoin, joke of the year? :D

[nitishcarlin]

Warren Buffett, Bill Gates are not that into Bitcoin...