 Peption asks, do we need to take a step back to go forward, letting the big banks store our crypto keys? In previous videos, you spoke about one of the most important next steps for the crypto world. Namely, to increase the liquidity of the market by increasing vendors of all kinds, making it easier to buy and sell crypto. How do you look at custodial banks allowing people to, in the future, store their crypto next to their fiat money on their bank? Do you think that taking this step back to the banks is necessary for increasing the liquidity? In fact, any step that adds an intermediary and a counterparty or custodial owner into the system, no matter what benefit it gives you in liquidity, maybe it even increases the price of cryptocurrencies, creates a rally in the market, and a few more people get lambos, is not something I would be interested in seeing. The reason is because it detracts from the most important principle of this technology, decentralization. If you are interested in seeing decentralization as the most important principle, and you are looking to remove intermediaries, remove trusted third parties from the world of finance and commerce, then you are willing to do so while not having a lambo. That is okay. When you say, what do you think about custodial banks allowing people in the future to store their crypto next to their fiat money in the bank? I would argue that it is not their crypto, it is also not their fiat. It is the bank's crypto and fiat. Part of the problem we have in our modern world is that when you use a custodial third party like a bank, you have to trust that they are going to give you that money back. In many cases, they don't. It is not your crypto anymore. It is not your fiat either. It is the bank's crypto and the bank's fiat. You have just introduced a giant security risk, a giant power concentration, a giant opportunity for corruption. If that is the way you increase liquidity, I am not interested in more liquidity. That is not a trade-off that is worth doing. I am much more interested in maintaining decentralization. There are some trade-offs that are worth making, and there are some trade-offs that are not worth making. This is not a step back. This is complete capitulation. You don't get a step forward because you increase liquidity of the banks. You don't increase liquidity of the crypto sector, because you no longer own any of it. Be very careful of people who try to persuade you that all you need to do in order to achieve your dreams is to capitulate on your principles. You were talking about financial institutions having caused many problems, that Bitcoin is combating. I am curious, as the blockchain ecosystem matures, these same institutions are hopping on the bandwagon. They are recreating a lot of the same financial instruments or have ambitions to. They haven't quite done it yet. I am curious what you think the implications are for when these guys hop on the bandwagon, and they are probably going to go a lot faster than the rest of us can, even if we, as individuals, have access to creating our own financial instruments on the blockchain. That is a great question. I get that question a lot, too. I am not particularly worried, because the fundamental issue here is that what most financial institutions are trying to do is take the fundamental idea and use it to do business as usual, without changing the fundamental practices. The most important thing to realize about this technology is that its main feature is a thing we call decentralization, which is this system's architecture, which says no one is in charge, no one is in control. Everyone participates. It is a collaborative project. The truth, the thing that gets recorded on the blockchain, is the result of a collaboration of hundreds of thousands of computers. It is not controlled by any single entity. They could adopt decentralization as a principle, and that would make the economy far more robust. They are not going to do that. They are going to try to pretend to do that while creating something which they control, because the nature of corporations is centralization. The nature of financial corporations is even more so centralization. As to the fact that they will be able to move faster, there is this pervasive idea that, just because financial services companies have all the money, quite literally, because they made it themselves, that they can simply buy their way into the future. Fortunately for us, unfortunately for them, there are a few things you can't buy. Innovation and creativity is one of them. You can't buy innovation and creativity. These large organizations, once they get beyond a certain size, if innovation arises within their company, they will strangle it within 72 hours, probably by deciding to create an innovation committee to study it. If they see innovation outside their industry, if it is not too disruptive, they are going to buy it, embrace it, ask it to get a haircut, wear a suit, and get into a 401k, at which point all of the creative and innovative people will leave. They will be left with a husk of a product. Unless it is a very disruptive innovation, in which case they won't even try to buy it, they will try to snuff it out. This technique has worked for them really well in the past, because in financial services, they could either buy the disruptive competitor, sue the disruptive competitor, or their favorite technique, have the government turn off their disruptive competitor for them, by making sure that there are enough regulations in the way that the smaller competitor can't compete. Then Bitcoin happens. You can't buy it because it is not an it. You can't sue it because there is nowhere to sue. The government can't regulate it out of existence because we forgot to ask their permission. Now they are faced in the first time in maybe 75 years of traditional financial services, with the one competitor they can't do any of those things. They haven't started panicking yet, because hubris is a pretty big mountain to overcome. At some point they will, and some of the smart bankers are already getting that. They are taking their Christmas bonus and their jumping ship at the end of the year, and then they are using their Christmas bonus to fund the blockchain startup in January. I have heard this story repeatedly from former Goldman Sachs bankers, JP Morgan Chase bankers, and others. The rats are already abandoning the ship, so not worried about that. Questions about blockchains for other industries. Why would a company use a permission-centralized blockchain to track supply chain procedures? What efficiencies are gained over using a traditional database or the cloud? Phil, that is a very astute question. If you ever find the answer to that, I would love to know it. Other than the fact that it allows you to stick every possible new buzzword into your marketing brochure, perhaps raise a whole ton of money in an underground ICO, from a non-ex-tradition tax haven country, and bamboozle a ton of investors, I'm not quite sure what the point of the centralized permission supply chain blockchains is. In fact, the very word centralized blockchain is an oxymoron. Permissions blockchains are almost equally an oxymoron. Blockchains are structures that are useful in creating decentralization and open access, making them centralized and permission completely removes the need for running a blockchain. In that case, it is simply a very inefficient database. You can imagine certain scenarios where a blockchain-type system could be useful for supply chain primarily, for organizing supply chain interaction between partners who do not trust each other, and who want a neutral, censorship-resistant, decentralized platform that serves their needs in a deterministic, predictable manner where no one is in control. That's what blockchains do. For that purpose, you can imagine a supply chain blockchain would be very useful. However, that implies that you're using the supply chain across multiple participants in an industry. The problem is they all have to agree to do that rather than try to jockey for position and massage the standards until they get relative advantage, as always happens when these things are designed by committee. That is exactly why successive efforts at standardizing IT infrastructure and systems in industry committees fail and fail again, and again, and again. It is exactly why things like the internet, the web that have emerged from neutral, research-oriented, scientific, open-source endeavors have succeeded again, and again, and again. So, let them try to create a supply chain. In fact, what we're going to see is every company tries to make their own. None of them are interoperable, all of them give too much power to the company that owns it. Therefore, none of the competitors will want to use it. Therefore, it's just an inefficient database. Millions and millions of dollars will be wasted on this bullshit. Phil has some more astute questions for us, all of which reveal some very interesting gaps in this idea of using blockchains for other industries. Would someone who uploads a hash of a music file on the blockchain prove that he, she, is the first creator? Yeah, exactly. That is precisely the problem with trying to use blockchains to do digital rights management, and provenance, and all of the other stuff, which is that garbage in gives you garbage out. If you have a blockchain that guarantees that information is recorded accurately forever, that doesn't mean that information is true. It's only true if you can validate it with consensus rules that remove centralized power. But if anybody can simply put a hash up, that doesn't prove anything. You can't prove identity, you can't prove provenance, and you cannot prove ownership. If you have a third-party proving identity, provenance, or ownership, then it's not a decentralized blockchain. It's simply a database for registering the decisions of a committee, registry, agency, etc. Again, an inefficient database. Furthermore, using hashes to identify unique pieces of content, like music or video, has been proven again, and again, and again to be completely pointless. All you need to do is change one bit, and the hash won't match anymore, so you can't verify that a piece of content is the same. All of this demolished the ICO pitch and white paper of at least 20 different startups that are playing around with this concept. But the truth is that there really isn't much of a use case for provenance of music and other things like that, simply by doing proof of existence. Okay, let's destroy industry number three. Phil asks, how would a patient holding his private key make the healthcare record management simpler? How could blockchain-based healthcare data be accessed if a patient who holds the private keys is in a coma? Fortunately, most of these things have been designed by startup people who seem to be in a coma when they were writing the white paper, because none of this makes any sense. The idea that you would put healthcare data, which is the ultimate most private data, on a public distributed ledger, is asinine at best. Healthcare is probably one of the most narrow applications for blockchain technology, despite the fact that millions are being raised by companies at the moment to do healthcare records management. Ask yourself this, which problem in healthcare records management do you solve by a global, neutral, censorship-resistant, decentralized system? Because that's what a blockchain is. Is someone trying to do censorship on records management? Is someone trying to introduce non-neutral data in healthcare records management? Is someone trying to artificially raise borders in healthcare records management? Is it a problem that the healthcare records management participants do not trust each other and cannot vest power in anyone? None of these things are really solved by a blockchain, because the problems in healthcare records management are not problems that relate to blockchains. So, again, be very skeptical about industry applications of blockchain. Stephen asks, could a blockchain be implemented to distribute credits to the elderly, who could use up the collected credits to pay their rent or social activities? For example, supposing the credits are validated by certain authorities, priests, city social service, clerks, etc. Can you see a blockchain platform be created for that application, or could an existing one be used to timestamp and validate the credits? Can a system be created where buying and selling of these credits is prohibited? Stephen, I am sorry to say that what you are saying is an admirable idea, and clearly I can see where you are coming from. What you are describing is money, and yes, you can create tokenized forms of money. But the problem is that when you create tokenized forms of money that you try to restrict the circulation, restrict the liquidity, restrict the places that they can be spent, and restrict who owns them, that reduces the value of that money. In the end, you cannot prohibit people from buying and selling these credits. You cannot prevent secondary markets from existing in anything that is perceived as valuable. If something is valuable, it is traded. That is just the law of economics, the natural rules of economics. You can't prohibit people from trading these tokens. They will trade them on secondary markets, even if it is illegal to trade them. If you try to prevent people from trading, all you are doing is discounting the value of that token. People will trade it at a discount, the less liquidity and circulation and velocity it has. The more of a discount it will trade at, the more you erode the value of that token. Effectively, what you have created is simply bad money. People will try to get rid of that bad money and replace it with good money. That is called Gresham's law. If people have two forms of money, and one of them is considered bad, and it is sold at a discount, they will use only that to do all of their spending, until they run out of it, while they hoard the good, real money that they perceive to have greater value. Unfortunately, these basic rules of economics can't be violated. We see these scenarios play out again and again. Again, we see them in places where you have hyperinflation, like Venezuela and Zimbabwe. You see it in places where you have demonetization, as we saw in India, where the demonetized notes flooded the market immediately at a heavy discount, as Gresham's law played out in reality. We also see the negative implications of using this kind of restricted script. These were very popular in company towns in the Old West. They still are in certain places where disadvantaged and disempowered workers live and work inside compounds. For example, mining companies, oil extraction companies, resource extraction companies, etc. Where the only credit they can spend is tokens that are issued by the company, spendable only at the company store, to buy food and basic amenities. These are used as systems of control, not a good system, and not a good outcome. They are used to control people for the most part. While I appreciate your approach to do this in order to help people, unfortunately, the laws of economics will work against you. In the end, it just becomes a poor substitute for money.