“Cryptocurrency is digital money. And it’s actually gaining momentum and gaining value as more people learn about it. I like to call it the future of money.”
“Individuals who do not use banks actually have an opportunity to create sovereignty and wealth.”
“Right now banks are catching on to the technology and creating Central Bank Digital Currencies and you may see them being called CBDCs.”
- Cryptocurrency is digital money and it was created from a digital program.
- The central bank’s digital currency brings in a sense of stability for the individual.
- Cryptocurrency was created during times of recession, when people found that their reliance on banks or their reliance on another party to handle their money was not so reliable.
- Bitcoin offers a decentralized way, a decentralized finance for individuals to not have to rely on an intermediary.
- Individuals who do not use banks actually have an opportunity to create sovereignty and wealth.
- The total amount of Bitcoin that can ever be produced in this algorithm, in this blockchain is 21 million Bitcoin. The next bitcoin won’t be produced until 2040.
- The value of Bitcoin right now comes from the limited supply
- The main concern in India is creating regulations around blockchain technology.
Today we are looking at cryptocurrencies, the future of money. You may be wondering what are cryptocurrencies? Well, you have probably heard of Bitcoin. It was the first cryptocurrency introduced in 2009, as a response to the global financial and economic meltdown of 2008. The original philosophy behind it was that the banking system was no longer reliable and people needed an independent digital form of money.
Today we have the honor of welcoming Lori Souza, a leading expert to talk about this complex but interesting topic. I ask Lori to describe cryptocurrency in a simpler form. “Think of digital money. Cryptocurrency is digital money and it was created from a digital program. It’s an encrypted program that has an algorithm that cannot be hacked. When you are using this technology which is called ‘Blockchain technology’ you have a store of value. The largest store of value we have today in cryptocurrency is called Bitcoin. There’s a lot of ‘technology’ words there, but if we just keep it simple – it’s digital money. And it’s actually gaining momentum and gaining value as more people learn about it. I like to call it the future of money.”
During the pandemic, the price of Bitcoin has really surged, at times a whopping US $20,000. Some analysts have called it a safe haven asset, like gold. What was Lori’s take on the current developments with Bitcoin and other currencies? “I believe that Bitcoin is global,” answered Lori. “No nation, no country, no central authority. When we look at central banks they are actually an intermediary. With Bitcoin, right now you hold your money. Even though it’s not cash or a physical coin, it’s in a digital program that is reliable. The program cannot be hacked, it cannot be changed. It’s a digital ledger.”
It seems that Bitcoin was to create money without reliance on central banks. But today there are multiple Central Bank Digital Currencies or CBDC projects out there now. What were her views on the role of CBDC and how does it really work, I want to know. “Right now banks are catching on to the technology and creating Central Bank Digital Currencies and you may see them being called CBDCs.”
Today Bitcoins and other cryptocurrencies are issued privately, through algorithms of computers. What happens to those when these nations start issuing stable coins? “We don’t really know that yet,” admits Lori. ”But we know that Bitcoin offers a decentralized way, a decentralized finance for individuals to not have to rely on an intermediary.”
The entire world wants some kind of guarantee of the value that we are exchanging. Where did that guarantee come from? “The value of Bitcoin right now comes from the limited supply,” reasons Lori, and adds, “The total amount of Bitcoin that can ever be produced in this algorithm, in this blockchain is 21 million Bitcoin. That’s the maximum. The next bitcoin won’t be produced until 2040. The nice thing about it is now I can go to 0.0006 Bitcoin and purchase that much. We actually have a name for that already. It’s a Satoshi. Satoshi’s are the smaller fractions of Bitcoin.”
How did cryptocurrency start? And how did the term Bitcoin come into existence? “The idea of creating digital cash came about when the internet was created, back in the late 80s, early 90s,” Lori reveals. “It was created during times of recession, when people found that their reliance on banks or their reliance on another party to handle their money was not so reliable.”
I asked Lori to explain in simpler terms with an example as to how does one get cryptocurrency? How does one open an account and how does one transact on Bitcoin? “One would use an unauthorized exchange in one’s country, or you may know somebody that has Bitcoin already in a digital wallet, and that digital wallet can be held on your phone or on your computer. Once you have the cryptocurrency can you purchase anything with it? Absolutely yes, you can. There are two ways to go about it, you would buy directly from your digital wallet and the transaction only takes 10 minutes. There are checks and balances built within the technology that make sure that the transaction is valid and real.”
Who is controlling or managing this whole technology platform? “The people are. The people who are using the system are the ones who are the verifiers. So we have an opportunity to become what you call a node. Node is a checkpoint. These checkpoints can be set up on anybody’s computer anywhere in the world and the transaction is not complete until we have at least the nodes verifying that the transaction is a valid transaction. It’s basically a self-generated program that checks itself.”
What opportunities did she see for Indian startups for example in the crypto space? “I’m a certified international blockchain advisor and this was held with the organization IOGA which is the Indian Online Global Academy. The main concern in India is creating regulations around blockchain technology. So we had a lot of attorneys and law associations in the course. They can actually help create the framework around the regulations. So the startups that we’re seeing are individuals creating with the technology, with blockchain technology, and these are called smart contracts. A smart contract is a digital contract. So with COVID, a lot of people are working their businesses from home and or computerizing their processes and we can computerize the processes using this blockchain technology that Bitcoin runs off. There are a lot of those startups happening.”
Are there no standard rules and regulations globally around cryptocurrencies? “Right now they are all being built. The world economic forum is talking about what they’re going to do, how they’re going to regulate, if they are able to regulate.”
One of the arguments in favor of cryptocurrencies is the speed and the low cost of transactions. This includes transactions between people without bank accounts. What were her views on the potential of greater financial inclusions through crypto? “I think that the opportunity exists here that countries and individuals without access to banks have a possibility by transacting in Bitcoin. Only 0.5 % of the population worldwide uses Bitcoin. Somebody purchasing it now and holding on to it now it can create future value. This is an opportunity right now within the next two years for individuals to create wealth for their future and for their family’s future.”
How far away are we from seeing crypto going mainstream and what according to Lori needs to be done to support the process? “I think that people are waking up and we’re seeing Bitcoins on a public ledger. You can go to Blockchain.com and you can see the purchases and there are millions of dollars being moved over into Bitcoin and we have some large institutions starting to purchase Bitcoin for their investors. It’s just like the advent of the computer in the early 90s. When we got mass adoption it happened very quickly and it happened over a period of two to five years. So that’s what we’re looking at. We’re at the very beginning of the two to five years of mass adoption. You don’t need to buy a whole Bitcoin. You can buy a fraction.”
My final question to Lori is what is her boldest vision for the future of cryptocurrencies? “I believe that we’re absolutely going to be able to use the decentralized system to the benefit of the people and so we do have the two systems running in parallel, a decentralized system and a centralized system. I would say that’s going to be over the next decade until people start to understand that they can take control of their own finances and create a sort of sovereignty within their own family. So the mindset does have to shift. Ultimately, it’s the adoption. Individuals who do not use banks actually have an opportunity to create sovereignty and wealth.”