 Hey guys, it's MJ the student act tree and what I want to do in this video is talk about something called an infinite reserve So it's a new idea Essentially, it is a combination of Actual science With regards to reserve management It it takes up a lot of stuff from blockchain Bitcoin smart cash masternodes those things and as well as a little bit of economics with regards to monetary supply and this thing known as quantitative easing so these are the three Ideas or topics that I've used to create an infinite reserve But I think before we we go into and we see why it's so wonderful Let's just take a step back for those of us who might be saying why what are reserves in the first place? Okay, now reserves are critical for insurance Insurance works as you know, hi, I can be the sky over here I have this farm with a whole bunch of crops and I go to an insurance company and I say I'm gonna pay you a premium every month and this could be say ten dollars and If anything happens to my farm gets burned down gets attacked by wasps or whatever it is the company is gonna pay me a Thousand dollars as a Benefit so we've got the premium that the farmer pays to the company to the insurer and the insurer is gonna pay a Thousand back to the farmer In order to make their benefit now how this relationship works is that this isn't the only Farm, you know, they are there are lots of farms Lots of farms that can be in this area. They can be a whole bunch of farms in this area a lot of farms over here You kind of get that each with their own farmer doing these little farming thing and Each one of these farmers are going to be paying if they're insured with insurance company They're gonna be paying a premium and they will only get the benefit if something Happens to their farm Now because they only getting 10 10 10 10 10 10 10 10 in this case, it's you know, their total premiums are only 60 dollars And we know that a farm could get infected it could spread and hit In multiple farms in the region these claims can exceed the premium. So In other words, let's try to try that stick to the jargon we're using Benefits can exceed premiums In bad gears badges for the insurance company so in order to to handle these situations what the insurance company does is they will set up something known as a reserve and To build up a reserve you have the the wealthy investors They are going to Maybe say okay cool here is one million US dollars to set up the reserve Then each part of the premium. So you see how we saw these premiums of being How much is our premiums $10 of that premium $10 a portion of that also goes into the reserve So the premium Becomes a little bit more expensive in order to just create a bit of a buffer for the reserve Now what happens if total Claims or total benefits pay are greater than premiums plus reserves then what we say is a insurance company has failed and That ruin has occurred We don't want to occur because what ruin means not only does it wipe out your insurance company But and wipe up your investors But it also wipes up the poor farmers because they don't actually have the money needed to Replant their crops and and to get their show back on the road So if your reserves die the insurance company dies So reserves are very very important and because of this because of reserves are so very very important There is a lot of Regulation, which I don't like. I just don't like I understand we need regulation in the market but but at the moment everything is just Over overly regulated and it just takes away a lot of the fun in doing business So regulations will say you need to have you know enough capital at any amount of time and an Actory is actually spent a lot of time It's actually because of regulation that actually have jobs Because there's so much models and stress testing and scenario analysis And there's a lot of work that needs to be done to keep the insurer The regulates are happy that the reserves are enough So I was thinking I was thinking seeing that We're not a big fan of regulation Seeing that regulation is all about preserves and it's because of reserves that we need massive investors We need what we are at this risk of probability and it makes our premiums a little bit higher Is there not a way to get rid of the need for reserves all together? and I think There is well, I'm hoping so I'm actually making this video so that you get this is a bad idea You guys let me know in the comment section, but you you just be like MJ. This is bad Don't don't do it. Don't do it. You you've completely been blindsided by this but I'm gonna show you how we can take a reserve that whole mechanism of a reserve and make it infinite okay, and that means step two of the things that we need to look at and that is Blockchain and hopefully you guys have been following my channel for a while now so that you are comfortable with how blockchain works Bitcoin, Ethereum, all those lovely things but essentially blockchain it is a Chain of blocks. It's exactly what its name says not a lot of imagination in that name But essentially you have these blocks with their transactions. They chain together with some crypto You know just to make it all nice and secure, but what happens is there are these things known as block rewards and block rewards are used to inject coins into the system and What they do is they use it to reward the miners and Miners are the guys who have got their computers that are actually Building the blockchain doing the hash functions making sure that the whole network is secure But how blockchain works is that these coins are injected into the system And one thing I've always had an issue with is this word called mining because mining You know, I'm from South Africa mining is a very big part of our economy So most of the children here have a little idea of what mining is and mining for those of you Who don't know is going to you know a bunch of rocks Smashing them up and extracting the ore Extracting the the metal that already is inside the rock With blockchain That's that's not the case There wasn't like all of these coins were like embedded in the in the computer programs and we're now Extracting those coins that that's a bad bad mess for what's what's happening when these coins are being injected into the system They are being Created they're being minted Yes, they are being minted according to a strict formula There is this algorithm that's in place and and it's incredibly difficult to alter it You'd need to do some sort of hard for but going way of topic But the idea is that these coins are created. They are minted They are and they're coming out of thin air According to what the algorithm says they're not being mined or discovered or unlocked or anything like that And that's an important concept to bear in mind when I bring in my idea because I'm now thinking instead of releasing coins into my my system by Rewarding the miners We can have that we can have like a little bit of a block reward to incentivize people to maintain the integrity of the chain But what we can also do is we can also put in at the Genesis block or into a smart contract or into this the crypto code a bunch of other rules a bunch of other rules for coins to be Created into the ecosystem and this is where This part of it is fine I know some people will they'll feel upset with the philosophy of this because it does seem a bit weird But and that's why we are going to talk about quantitative easing and monetary supply at the end That's more to just justify why why we can get away with doing this, but essentially the idea would be That we let's say we have a blockchain up and running and we have this guy comes with his farm and He wants insurance what he will do is he will pay a premium Okay To create something known as a smart contract Please read up more about that if you don't know what it is He'll pay a smart contract and he'll pay ten dollars in my crypto coin. Let's call them crop point So see with a little light Okay, so He pays Ten crop coin into the smart contract think of these coins as being destroyed It because there's no insurance company. Yes, it's decentralized. There isn't a a central authority All these ICOs we are you pay coins in the coins, you know the central coins go to the central fund I'm like, you know, you know Although in all honesty, we're gonna see there is a little bit of centralization in this but you know We can forgive that But we'll talk about it when we get there We've got the farmer he pays his premium to the smart contract and these coins are destroyed Any smart contract can be, you know, how long he wants the contract to be The the location of his farm the size of the farm the type of crops and the currents Because what we will do is we'll link it to to the UHD or whatever stable currency Because that's one of the big big things that people don't like about crypto is that the price is variable I'll show you how the infinite reserve can handle that so that there's no longer a problem But essentially you come into the smart contract you input all your details and it's gonna tell you okay The premium you need to pay based on the current USD price the length locate the length of the contract one year one month Whatever location the size the crops all those other respectors It's 10 10 crop points Then what happens? Okay, and this is why it kind of has to be done with crops and this is where the little bit of the centralization comes There's gonna be a Satellite in the sky. I'm not making this up. This isn't like Mike was going to sci-fi stalls Okay, there actually is this technology. It was part of the inspiration of this idea what the satellite does is it will check out the spectrum Okay The spectrum of the crops Now what do I mean by the spectrum of the crops? Well think about it. You can use this in Like let's say you check out a leaf, okay Yeah, it was cool little leaf if it's green, you know, it's healthy if it's brown You know that it doesn't have a long way to go now what a satellite can do is not only just look at the visible Spectrum of light, you know from green to brown, but it can also start looking into the infrared You know, these are wavelengths that are beyond our visible spectrum And what it can start doing not just say if the leaf is green or brown. He can also say whether It's brown because it's got a lack of water a lack of care a lack of nitrogen Or if it's being attacked by a pesticide or if it was a fire or whatever, whatever, whatever So much so that when it comes to our smart contract, we can actually include will what what risk events? Do you want to ensure for do you want to show for yellow wasp? Do you want to show for lack of water? and what this can do because Let's say you ensure crop failure against black wasps but then you just decide you're not going to pay for the water to irrigate your farm and The farm dies and you say, oh look the black wasp might have eaten eaten everything and that's why everything's dead The satellite in the sky is going to be like no your crop failed because you failed to irrigate it And there isn't a drought in your area So it's due to your negligence that your crop failed and we're not going to cover it But the satellites can also have the power to say oh look the crops are dying because Because of the black wasp, which is written in the the contract and therefore What we're going to do is we're going to send information to the smart contract and give it the authority to send out the benefit Okay, and this is where this is where a lot of things happen. So so listen carefully So the satellite is a little bit centralized We could have multiple satellites and they all need to have some sort of consensus. You can do that But that does increase the cost But I the idea is that you have the satellite in the sky that Sees when the crops are failing and then automatically makes that payout. So I'm a farmer I don't have time to go into the city To contact the insurance company wait for them to send their person to validate the claim do an entire Exception, you know have the investigation always this forward was this fraud and you know drag their their feet in the ground No, what's happening to this? What's happening right here is as soon as my crops fail or even these things might pick it up Just before I send the payment and I've got the money and I can take Measures to either prevent it or start re-growing or doing whatever farmers do now This is where the cool pot comes in we have the smart contract We have this farmer We have the satellite Okay Farmer sends in the premium If the satellite gives the go-ahead by looking at the farmer, it pays a smart contract pays out this benefit But this benefit the coins the coins that it creates Okay to make this benefit never existed Before which means no matter how large the claim is if the claim is so if I've got a premium and it's for One million or I've got a premium and it's for ten trillion Okay, okay, theoretically. I don't think anybody's got a farm with ten trillion dollars But anyway, just just for for illustrative purposes if I send up my farm and I've got ten trillion Then tada the smart contract can create the coins according This is will be one of the rules part of our blockchain is that the smart contract has the authority To create coins and pay the farmer when the premium happens now I Know I know a lot of you are uncomfortable with the idea of just creating coins Thin air, you know don't coins have to be mined You know all this computer power needs to be you know put into the system in order to get the coins Like I said, I don't like the mining analogy. I know mining. It's a cool words. It sounds cool I like me a mining, you know one of the seven dwarfs who are going to get extract some gold bitcoins digital gold It does it's a nice metaphor, but in fact the coins are being created. They're being minted and They're just being minted in quite a block reward way What we're doing is we're essentially creating the coins as a ghost now the best part Well, this is where even better is Imagine if when they a premium is paid and this contract is set up The smart contract also can pay the satellite owners in the coin So the satellite owners get the coin okay from the so the premium can be let's say it's 10 bucks The satellite company could get paid a hundred depending on what the cost is and this is the cool thing Is that your expenses can exceed your premium? Which you've never been able to do before in insurance You pay the satellites and then what is lovely is that? The premium actually can be quite it can be significantly low It can be five because you don't have to worry about expenses profit loading and reserve management and the benefit can be the actual benefit and Like we were talking about the current ussd Let's say you pay for your farm and this coin crashes just because you know cryptocurrencies crash and The the value of this coin goes from being you know one dollar equals one crop coin to now one dollar equals 100 crop coin, you know, while this coins absolutely plummeted the smart contract before it releases the benefit It checks the price of the ussd. So if you were supposed to get say A hundred dollars for your claim, which was a hundred crop coin And it sees that this difference in price fluctuation has occurred before it makes that benefit It will adjust it so that your hundred dollars is equal to 10,000 crop coins and so that the farmer is getting paid out in usd And I know some crypto enthusiasts will probably want to kill me for you know pegging it to To a fiat currency, it's not part of the whole philosophy But it's something we just need to do in the interim before crypto completely takes over the world Maybe in the future we could link it to Bitcoin But for now what what can happen is your infinite reserve Where the smart cash is you know getting the money from? it has the ability to Price in or not price in it's able to to make up that difference because it's pulling from an infinite reserve Because coins are being created when benefits are paid Okay, then you might be saying Wow who on earth is gonna want to have the crop coin? I mean this coin sounds like it's gonna get inflated to death You know Bitcoin Bitcoin has a limited supply and Bitcoin is that's why it's got deflation happening I always get upset when people say Bitcoin has deflation. I'm like that's absolute rubbish This total supply of 21 million coins Has not been exhausted yet It is only when the full supply has been exhausted as in all the block rewards have been given up That we will start to see deflation But by then I don't know what's going to maybe the miners are going to have to increase transaction cost And we could see the chain as a the whole thing the pro project could could fail that could could continue somehow But we will only see deflation occurring after the 21 million coins have been printed At the moment where Bitcoin is now it is still in an inflation It's it's going through inflation coins are getting Mined or minted created out of thin air every was 20 minutes or so and getting released to to the miners So at the moment Bitcoin is just ejecting money into the system And it's giving the the money to to the miner The miner then goes to the exchange Um, and then we've got us Who come and we say yeah, we'll buy the Bitcoin off the exchange and the miners gets Nice and rich. Well, they have to pay the government for the electricity And they out our screening of the environment. Um, but that's kind of what's what's happening And if there are more people here who want to buy Bitcoin from the miners, then we're going to see the price go go up How crop coin would work is that you have the farmers? Okay, you still have the miners doing these actually still have your little miners here But you have your miners and you have your farmers Okay, they're coming to sell the coin on the exchange Okay, and again, we have The people the people like you and me you come here and we are going to buy from the exchange Now, why would we want to buy crop coin? Okay First of all this inflation myth that oh by the smart contracts keep releasing money to the crop miners The crop farmers is going to inflate the coin and make it worthless That isn't going to happen. Um, I actually should have spoken more about it But I am wary of time, but if you are interested, please check us out known as quantitative easing And monetary supply how injecting more money into an environment Into an economy can increase circulation and it can actually It can kickstart the whole the whole coin getting people trading it And what's happening is when you're coming to buy crop coin, okay When you bought bitcoin, you were basically funding miners or drug dealers or assassins or who are the early users of bitcoin? You know, you're those those kind of dodgy people. I think isis as well. You can see I'm using I'm using emotive Emotional language up. Sorry being me. But when you buy crop coin, who are you buying the coin from? You're buying it from the guy in India Who's got that little farm in a rural park black wasps attacked his crops. It's failed He needs this money to feed his family to feed his community to to regrow his livelihood to the people here in Africa Maybe a drought has plagued the area and and an area is susceptible to large amounts of drought And insurance companies just aren't prepared to take on that amount of concentration risk or they feel that You know Africa is too remote to send in their brokers to to try price the risk properly and to make sure that there's no fraud So so they just leave Africa after all together But the farmers in Africa are able to use this coin to create a sort of risk management technique to protect their livelihood to protect their food source And by buying into this coin what you're doing and that's where that's where it does become quite interesting This is more of I don't want to use the word but it's it's more of a charity Than a business it seems a business is for profit The charity here is for social good And therefore by you buying this coin Okay, buying this coin. It is a bit of a social good You're you're enabling people not only to just rebuild their farm But you're enabling farmers all around the world to protect their livelihood to Activate risk management and then you know you can use this coin Exactly how you would use bitcoin Which today is you know, you you can hold it You can brag about it on facebook when the price goes up and you can Okay, that's basically all you can do with bitcoin at the moment But more and more merchants are slowly starting to adopt cryptocurrency and we are going to be seeing You know, I do think cryptocurrency is going to power the internet economy And I do think we might see Some areas becoming crypto friendly, especially tourist destinations Where people from other countries can come they don't have to worry about changing into The fiat currency in order to to buy stay at hotels and all that sort of stuff So there the use case for the coin is yes at the moment It's it's as pathetic as as bitcoin, but in the future We could see something as amazing and that's what people will be encouraged to to hold on to the coin Because despite the fact that coins are getting pumped into the system every time a claim Is made and it is validated by the satellite Even though more coins are getting pumped into the system There will be a lot of people buying the coin because not only can it be used as a cryptocurrency But in a sense it is a form of charity It's a social good It's not one of those charities where you give the person money and you know 50 percent of it disappears by administration costs What's happening here is this entire ecosystem is designed to be self-sustainable And that is of course the big cherry is to try and get the Satellite company to accept the crop coin as as payment because then like I said this thing does become Very much self substantial But that basically is the idea. I mean I could talk about this for for a long time But let me know what your thoughts are. Please let me know if I am Having a blonde moment and have totally forgotten like something huge and critical when it comes to to actuarial science Please please let me know in the comment section below Or let me know if you think this idea is dumb or if you've got ways to improve this idea Or you think you know what this idea actually has legs. Let's um, no set up an ICO ICO is a bad Let's let's do some sort of project to try and and get this thing get this thing started But yeah, let me let me stop talking. I've been talking for a very long time. So let me end it off there Thanks guys so much for listening and keep well. Cheers