 what about exchange rates please what about exchange rates yeah because I'm not familiar with big coins okay so Bitcoin works exactly the same way as every other currency works which means that Bitcoin is traded on international markets it's traded at the moment against probably 35 to 40 different national currencies in real time and directly but it's also affected by fluctuations between those currencies indirectly so it's pretty much exchangeable for anything if you can trade into 34 currencies you can trade those into anything else the exchange rate is defined by market dynamics supply demand just like you know one day you wake up and the British pound is six percent lower well sometimes that happens in Bitcoin too actually this year it's been the most successful and stable currency so it's it depends on the time of year you find it you have to understand that Bitcoin is still a very small currency in terms of the fact that Bitcoin is a global currency from day one but it's only ten billion dollars in size so as a result it has more volatility than many of the currencies you are used to so more volatility than a euro but what we've seen over the last seven years is that gradually the volatility is reduced over time as it gets bigger it gets bigger more stable very good question thank you so cryptocurrencies are volatile right and the reason they're volatile has to do with some very simple physics think of a cryptocurrency as a boat right you want a stable boat you get on the big boat you get on the small boat it's gonna be bouncy every wave in the market and the little boat bounces up and down right yeah the ocean liner doesn't move it takes a very big wave to make that move the US dollar there ain't gets any other currency you're looking at an economic base an economic activity that is in the order of 15 trillion dollars for the US dollar I don't know how many you know hundreds of billions of dollars for the ring it with the daily activity in the multiple billion or sometimes some trillion dollars of velocity what that is is a giant ocean liner and no way is gonna make that international currencies if they move one percent in a day every newspaper in the world is talking about it the next day right and Bitcoin moves 15% in a day and we go it's Wednesday let's see how Thursday works this is interesting right so but the reason is because it's small and the bigger it gets the less volatile it gets in fact you can see the statistics if you look at the rate of volatility there's two rates of volatility you can look at unfiltered volatility which shows both up and down or you can look just at negative volatility which is periods where it drops too much because quite honestly you know most of the people in this room were not worried about the last month of volatility which was like that right when the volatility is going like that nobody's complaining about volatility right they're too busy sitting on their calculator and going 2300 times right so the point is the volatility has two sides we look economically at negative volatility is being all damaging to people and you can see if you look at the last eight years of Bitcoin over time volatility has been going down and negative volatility is going down even more so so what does that mean if you follow that line and you assume that Bitcoin grows and becomes more popular and more mainstream it has more daily activity and more people invested in more liquidity and more payments and more transactions and higher value it gets more solid more stable and eventually it starts competing right now it's better than 20 currencies in the world out of the 194 currencies probably 2025 have higher volatility than Bitcoin that's hard to imagine right especially when that's the only currency you can use and that's very damaging so over time it's going to get more and more stable here's the problem with tying it to an external asset and central banks have tried this for decades in various ways the Argentinians tried it with the peso right the Brazilians tried it with four different currencies that no longer exist that should give you an idea the Swiss tried to keep it the euro tried to keep a peg to the dollar for a while the yuan is still pretending to try to keep a peg to the dollar and what happens is if the market wants to go that way and you want to stay here you start spending money to keep the price stable and the more the market wants to move the more difference there is between what you're trying to do in reality the more expensive the market makes it for you to ignore reality so the problem with currency pegs is that they can stretch stretch stretch and then one day they snap and then you get a 20% 30% devaluation in a day when you're doing a peg against us ballers or gold but the currency you're doing the peg to is tiny people who know what they're doing going to take advantage of that and when they see that the market wants to devalue it and you're trying not to devalue it they're going to pour money into that and if you're dumb enough to try to support the value of your currency you're going to lose a lot of money so it's not actually possible to go against market forces pegs don't work in the long run the other thing you can do is you can have a reserve so you can say okay I'm going to take 20 kilograms of gold I'm going to park them in this vault and then I'm going to issue currency against those 20 kilograms of gold we used to have that the gold standard here's the problem whatever that's being done in many while in market eventually someone goes and does an audit of the vault and they discover that either the gold isn't there whether the goal has been sold three times to three different owners who all think they own it but none of them own it or they drill into it and it's tungsten painted with gold right and I'm not joking these are all specific examples from the gold market just in the last year that you can see it's called hypofication look at what's happening in China right now where you have all of these loans that are collateralized against deposits of steel and copper and platinum and the aluminum and gold and they go and do the audit in the warehouse and the warehouse is empty or they ask for the owners to show their certificates and they found that three people own the single bar of gold right that's the problem the advantage of cryptocurrencies if you own Bitcoin it's all the ledger everybody knows you own Bitcoin nobody else can make a claim to it and it's not going anywhere the problem with time over the physical asset is never have a counter party risk problem counter party risk meaning the person holding the asset on your behalf can run away with the asset remember how I said our entire financial system consists of two parties the parties who own your money and the party's watching the parties who hold you money to make sure they don't run away that's what we're trying to get away from