NEW IMF XRP / XLM Document - Comparing Blockchain Consensus Mechanisms for Global Supervisors

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hey citizens of the future citizen of  the future here i hope everyone's doing   fantastic uh today i got a  super regulated document uh   from our favorite the top of the world  the top of the regulated world to imf   the international monetary fund and uh this is a  very interesting document it's called blockchain   consensus mechanisms a primer for supervisors  this was released last week last week today is   february 2nd 2022 and a week ago this was launched  and here we are reading this so we are at the head   of the regulated revolution and here we  go so there's some good there's some bad   there's some good for carbon neutral utility  networks and there's a bad for proof of work   and proof of stake so before i get into this i  just want to read a disclaimer here so none of   this is financial advice i'm not paid to create  any of this but the reason i create my content   is because i see it a lack of good regulated  information out there around these uh blockchain   networks you know we see all this hype all this  opium all this pump and dump [ __ ] no i'm i'm   the regulated side i'm giving you the stuff that  i find through my research and through my studies   so we know uh mainstream media is doing an  awesome job at covering all this up and well   i'm uncovering it for you other citizens that are  interested in the fourth industrial revolution so   let's dive into this into this video okay guys  before i get into this document i want to explain   to you and show you how powerful the imf is  okay so what is the international monetary fund   so it's an organization of 190 countries  working to foster global monetary cooperation   secure financial stability and to connect all  these countries so we can have a globalized system   that's what they're doing so they  work with countries all over the world   this document is to supervisors all over the world  they also work together with the world bank group   hand in hand so this is how big this is  the top document i'm telling you guys okay   so now i'm going to show you guys  what their backlinks look like   so as a tool that you can use it's  called ahrefs and this allows you to see   how they're connected here now let's look they've  got 27 million backlinks that is massive as a   developer i that is huge now looking at this look  at how many educational backlinks and governmental   backlinks that they have governmental 679 that  is the most i've ever seen developing these   last for four years and educational content  like that's a lot of so that's other people's   websites talking about that that's huge okay so  we're about to get into a document coming from   the imf that's gonna break down the consensus  mechanisms of different blockchains and that is   what the supervisors around the world are  gonna read and this is how they're gonna   make their decisions or a part of it  anyways okay so let's go let's dive   so what does it go over it goes off  of different consensus mechanisms   uh proof of work proof of stake delegated  proof of stake so proof of stake you know   ethereum proof of work bitcoin uh delegated  proof of stake which would be like xtc network and then uh but byzantine fault tolerant so xrp xlm   okay let's dive so executive summary so i'm just  going to zoom up here there we go the increasing   use of distributed ledger technology and  financial services has the potential to generate   benefits for many stakeholders but can also  pose unique risks dlt including blockchains   is used in payments issuing debt and equity  trade finance and post-trade processes large-scale use of dlt and financial  services is currently limited   but use cases are increasing in some jurisdictions  dlt has the potential to just disintermediate   markets reduce costs and increase speed  and efficiency and create secure records   of transparent immutable and  auditable data and activity uh tlt can create democratization  of data as the data   are distributed and more control of the data is  decentralized it can improve the provision of   financial products and services including  financial inclusion so that would be like   mojo loop xrp uh connecting the unbanked to the  bank supply chain management and record keeping   for supervisors dlt can provide real-time  control and supervision of financial markets so that is huge that that brings  up a thing in my mind here of fna and how they can see the financial  markets and i'm going to put some pictures   here so you could see that they  could see all the the payment flows   around the world how much money is  moving where is it moving to they can   single it all out and they can have it all on  a beautiful infographic to see the statistics   so i'm just i went through this all i'm just  reading the highlighted parts that i thought were   important consensus mechanisms underpin the  effective operation of blockchains and ensure   a single consistent and honest ledger consensus  mechanisms and dlt systems guarantee that a state   value and a piece of information is correct and  agreed on by most nodes some consensus mechanisms   are designed to work invest in public networks  and others perform better in private networks different consensus mechanisms can  also deliver different outcomes which   require different regulatory considerations  for example some consensus mechanisms might   prioritize speed and efficiency while  others might prioritize security so within financial services proof of work  proof of stake and delegated proof of stake are   some of the most popular consensus mechanisms in  public blockchains well byzantine fault tolerance   and istanbul bft and federated bft  are popular in private blockchains   separately large technology entities  known as big techs also created   met consensus mechanisms that have the potential  to be used in products and services that could be   systematic quickly for example dmvft supporting  the bitcoin blockchain proof of work is the most   popular consensus mechanism but it suffers from  significant drawbacks proof of work is secure   silent method of forming consensus but it consumes  significant energy and can be slow and expensive   during times of high network traffic so they're  the imf is pointing out the energy consumption   needs to be solved and it's unscalable when  things get uh getting get get hot in the market   although innovations such as the lightning network  side chains and other consensus mechanisms like   proof of stake aim to solve some of proof-of-work  problems others issues such as problemist   probabilistic settlement can create friction  within with existing regulatory frameworks   these offer immediate settlement however they  re raise new regulatory concerns about areas   such as competition and they can run counter  to the core ideals of decentralized networks   to ensure they can embrace the promise  of fintech while migrating against any   risks authorities should consider the  pros and cons of different consensus   mechanisms so we should all send this to the sec  because they have not done the pros and cons for   different consensus mechanisms one they  haven't even give us regulatory clarity   and here's the imf the head of  all the countries around the world and yeah like come on guys so let's uh let's go down here authorities  should also consider whether a technology   neutral approach can continue delivering  mandates when diverse new technologies   deliver different outcomes and may consider  a more proactive approach to supporting or   restricting certain technologies  authorities could also consider upskilling   supervisors to better supervise new technologies  so they're talking about come on like let's get   these supervisors to understand these technologies  international organizations have a role in   sharing regulatory best practices particularly in  jurisdictions where there might be a skills gap   and finally approaches such as text sprints  and regulatory sandbox so we've all heard   of cbdc sandbox with r3 with project ubin um  there's so there's a lot of sandboxes out there   where it's just these big boys they all play  together they get their cbdc's they get they   try this stuff and it's all trial and error as  well as deeper public and private collaboration   via formal reviews can enable authorities to  understand the relative strengths and weaknesses   of different consensus mechanisms allowing  firms in financial services to leverages   leverage the benefits of dlt while ensuring  that risks are appropriately mitigated so public the private companies need to work  together they keep doing uh reviews sharing   uh thesis proof of concepts and then  that's how we're going to improve so introduction regular authorities general approach to financial  innovation is one of technology neutrality which is not the same as  tech technology agnosticism   as not all technologies are equal authorities  are open to use new technologies even as they   seek to understand and mitigate any unique  risks that the technologies might bring although regulatory authorities may be  technology neutral the concept of the   same business same activity same risk they might  shift to become technology agnostic as different   technologies might generate different risks  where new technology creates unacceptable risks   that could interfere in achieving the mandates  and objectives of the regulatory authorities   okay so the rest of this is just filler  there's nothing really special in there come down here so why consensus mechanisms matter   so here they show uh how consensus fits into  distributed systems there's an application   layer a contract layer an incentive layer the  consensus layer and then the network layer the design of blockchains matters and  different consensus mechanisms come   with their own advantages and disadvantages  blockchains can be public or private permissioned   or permission lists these designs bring with them  the unique regulatory opportunities and risks   and this note will focus on the most popular  consensus mechanisms that underpin blockchain   systems in financial services it is not an  exhaustive list of all consensus mechanisms   regulators must consider trade-offs  when looking to understand   the regulatory implications of certain blockchains  some consensus mechanisms provide a greater focus   on security and decentralization decentralization  good for record keeping while others encourage   greater speed and efficiency for example  supporting a large number of payments   transactions per second there are there is a  fundamental difference in how decisions are made   in a centralized and decentralized systems okay  so consensus aims to solve problems of how to   synchronize data across nodes so  remember this consensus is how   these nodes verify a block how they they you know  when a transaction is made these nodes across   the whole network go through these different  mechanisms just to verify the block is legit this   this block is certified it is real it is added  to the network that's updated across all nodes   so in decentralized systems distributed nodes need  to come to agreements or consensus as there is no   central authority to re assume responsibility  okay so here we go we're getting into it   consensus mechanisms aim to solve these problems  and ensure that there is one constant and honest   ledger that distribu distributed part participants  can come to an agreement distributed ledgers are   considered uh byzantine fault tolerant if they  can solve such problems and ensure agreement okay so here we go consensus mechanisms should  not harm or interfere with the global aim to   transition to a low carbon economy do you  hear this guys the narrative now is changing   for a global aim to transition to a low carbon  economy a transition to a greener economy supports   the goals of the imf as well as the goals of  many regulatory affairs authorities which seek   to ensure sustainable growth in their respective  markets while not harming the environment the imf   a week ago this was launched this is the start  of the narrative where they start attacking   the high energy using proof of  work and proof of stake networks   so if you're a bitcoiner you better start  debugging you better start being ready to fight   this because there's going to be a fight between  all the global regulators the imf and all partners   of the imf they're all going to start attacking  the high energy consumption this is a warning   the use of energy-intensive methods to  achieve consensus presents unacceptable   risks to financial stability in society as such  methods exacerbate the effects of climate change   here we go climate change recently to manage  the risks of climate change and mitigation   and mitigate environmental impacts  from crypto assets the swedish uh i'm canadian i can't pronounce that i'm  sorry guys uh called by the european   union to ban proof of work mining in 2021 so i  actually read this document i took notes on it   so give me two seconds here and i'm going to  pull it up a key consideration of authority   should be moving to less environmentally damaging  methods of operating blockchains so they're saying   blockchains can stay but everyone needs to get  away from the wasteful energy consumption okay   guys here it is this is from the sweden government  this is what i've seen this was uh november   5th 2021 so two three months ago crypto  assets are a threat to climate transition   energy intensive mining should be banned okay so  i hope you guys like that uh enthusiasm here we   clearly see that the more expensive bitcoin  becomes the more emissions it generates uh   they say at the current market value lead to the  release of up to 120 million tons of co2 in the   atmosphere per year to get a better sense of this  number using data from uh very smart people two   largest crypto assets today is equal to a hundred  million round trips between sweden and thailand   then it says uh there is good access to renewable  energy so once we see more bitcoin on renewable   energy sure they'll back down but until then it's  going to be a fight we're already seeing crypto   producers establish themselves in northern sweden  between april and august this year electricity   consumption for bitcoin mining has increased  by several hundred percent and now amounts to   one uh terawatt hours annually that is equal to  the electricity of 200 000 swedish households okay our conclusion is that policy policy  measures are required to address the harms caused   by proof-of-work mining method it is important  that both sweden and europe can use our renewable   energy where it provides the greatest benefit for  society as a whole for instance sweden and other   countries could introduce attacks on energy energy  energy intensive production of bitcoin here we are   they're going to start saying well we're going  to carbon tax you guys for mining bitcoin   we're going to tax the [ __ ] out to you until  you stop mining bitcoin because it's a waste of   energy and we have all control over the global  system the emissions need to stop here and now   and renewable energy needs to be used for  climate transition of essential services   therefore we call for the ue the eu to consider  an eu level ban on the energy intensive mining   method proof of work there are other  methods for mining crypto assets that   could be used for bitcoin and ethereum that  are estimated to reduce energy consumption by   99.95 percent with maintained functionality huh  wonder what networks run 99 less than bitcoin   and ethereum but could run the transactions  of bitcoin and ethereum on top of their ledger sweden to maintain meet sweden to  meanwhile introduce measures that halt   the continued establishment of crypto mining  production using energy intensive methods   the companies who trade and invest in crypto  assets that are mined using proof of work   method can not be allowed to describe or market  themselves or their activities as sustainable   so now they're attacking any company if  you're a company that's buying bitcoin   that uses proof of work you cannot   label your company as sustainable anymore could  you imagine what that would do to the market but it is important that sweden and the  eur european union lead the way and set   an example in order to maximize the our  chances of meeting the paris agreement   we should also strongly encourage other  countries and regions to follow suit   a ban on the proof-of-work mining method  within the eu could be an important first   step in a global move towards greater use of  our energy-efficient crypto mining methods   this is from the generals at the swedish financial  supe supervisory authority and an environmental   protection agency so you can see this was three  months ago now we're talking about the imf the imf   is now saying hey proof of work is a huge waste we  need to do something about it so be ready to see   what happens in these this next year these next  two years some crazy things are going to go down   some unexpected things because we're deep it's  literally the retail against the highest power   of regulatory advisors that are working  together with companies all around the world   carbon neutral networks are the future public  blockchains are considered the pure form of   blockchain envisaged by early developers and  so data are distributed widely in control   of that data can be decentralized  public blockchains are permissionless   and decentralized although there can be public  permission blockchains in which certain nodes are   given specific rights such blockchains can remove  reliance on single counterparties and authorities   and they aim to democratize the transfer  of data between network participants on the   blockchain from a regulatory perspective  public blockchains are in principle less   susceptible to cyber attacks operational  failures and malicious behavior by individuals   or entities although they bring unique risks  the key advantages of public blockchain   specifically larger public networks is the  decentralization of information which among   other things makes them less susceptible to  cyber attacks okay okay sweet they're saying   that public blockchain is decentralized  it is less susceptible to cyber attacks   and even public blockchains can have centralized  points of risk for example applications built   on those networks like wallets and exchanges  right because everything has a security risk furthermore it can be difficult to supervise  participants on a public blockchain because they   can be global or unknown and this challenge can  pose risks such as financial crime and there may   be a lack of recourse to end users or no no way  to fix market errors should any failure or fraud   occur so like if tether went corrupt what the [  __ ] are they gonna do who knows well i shouldn't   say if tether went corrupt they are corrupt  because they're printed money on a thin air   and they have no wallet to prove it so if there's ever a bank run where  you know they could their assets they   couldn't prove they owned all  that money that they printed   then there's going to be a bank run people  are going to be selling tether for 30 cents   to the dollar you know it's it's it'll be bad but  they can't do anything you guys got to remember   that the regulators can't do anything in these  when we're investing in these blockchain markets   you get hacked if you get uh something  happens you're [ __ ] they can't do anything   so private blockchains usually consist of a single  or small number of entities and tend to give   permissions to known and identifiable participants  in this way private blockchains run counter to the   intended ideals of the decentralized community  in that they shift risk from one centralized   entity or authority to another the network  administrators within the payment space these   blockchains are proposed for so called global  stablecoin arrangement as well as proposed cbdcs   so consensus mechanisms in public blockchains  no proof of work we know proof of stake and then   delegated proof of stake my main example  is xdc network that's what they run off so proof of work as the fundamental underpinning  of the bitcoin developed by satoshi Nakamoto   uh proof of work is the most frequently  used and well-known consensus mechanism don't need anything like that um so  right here this is this is where it is   you know let's let's see what the imf is  saying here so this is just wash up here   uh to solve the mathematical puzzles generated  by the bitcoin protocol nodes need to use   brute force which in turn consumes considerable  energy because brute force requires specialized   computing systems to run through all possible  solutions until the winning solution is found   an effort that uses significant  power the imf has set out that the financial sector has an important role to  play in the fight against climate change and seek   to support reductions in climate change risk and  mitigating the impact of adverse climate events   so here they are mentioning it again financial  industry needs to fight against climate events   so what is going to happen  from this this is the start   however the total energy uses of bitcoin mining  is compared to poland at 140 terawatt hours and   so runs counter to this aim regulators using  and supporting consensus mechanisms that rely   on large scale energy should you use should  pay attention to this energy consumption   most of them will likely find such damaging  impacts to the environment unacceptable so this is going out to supervisors around  the world from the IMF director so they're   going to be reading this and they're going to  be like wow maybe we should start considering   that proof of work is something we need to stop okay well let's go proof of work guarantees  eventual consistency in the blockchain   uh competing forks can impact the network by making it so expensive  and inefficient forks can lead to slower   settlement times making the usage of proof of work  inefficient in certain areas of financial services   currently the bitcoin blockchain  can process approximately a large   seven transactions per second huge and although  the development of the lightning networks offers   promise in this area uh with its own flaws  like how they i like how they put that uh its   transaction rate is currently much lower from the  than that of the traditional payment mechanisms   like visa which averages around 1700 transactions  per second inconsistencies can also lead to risks   to settle to settlement finality transactions  between counterparties carry risks including   credit liquidity operational and legal risks  all of which can trigger systematic hazards   rules around settlement finality  aim to mitigate these risks further proof of work is seen to be potentially  centralizing the imf is calling proof of work   centralizing which could negate the security  that proof of work offers as mathematical   puzzles become increasingly complex more  powerful computing is needed to solve them   given this large cost involved such technology is  available only to certain individuals or entities   where mining pools are formed this  scenario can rise to questions around   the powers tool and options available for the  regulator to fix an eventual market failure   for example an individual who or an  entity that becomes too big to fail so it says dlt based on proof of work  cons consensus mechanisms might not   be able to fit in the existing regulatory  frameworks focused on settlement finality supervisors should be aware that many blockchains  that use proof of work tend to be decentralized   which not all identities and nodes are  known and that can give rise to supervisory   difficulties okay so we just reviewed that  and they're attacking proof of work uh   for the energy usage it can't be used in the  payment systems because it's expensive slow um   what else um yeah so that's pretty crazy when  you start hearing this from the imf now so the   narrative is changing because now this is  going to trickle down society right like   you know supervisors are going to read  this they're going to start putting out   regulations rules they're going to start talking  about this and you know the house of commons   uh parliament governments worldwide banks  will then hop on the train to say oh   bitcoin is not going to three hundred thousand  dollars it's going to uh ten thousand dollars   because of uh energy wastage so now let's  move on to proof of stake ethereum my favorite   said nobody ever but fanboys  and people that love high fees   okay so proof of stake consensus mechanism  an algorithm randomly selects validators   for block creation based on the amount of token  holders stake from their crypto asset ownership okay so we're talking about the more tokens you  own the higher chance you can get for getting   uh rewards the first step in selecting a proposer  then a proposed block and then validation of the   proposed block holders with larger ownership of  the native token have a greater chance of being   selected like playing the lottery even though  everyone who buys a ticket has a chance of winning   and the selection is random those with the  most tickets have the greatest odds of winning huh let's think about that for a minute the  current banking system the ones with all the money   are making all the money the ones without the  money aren't making the money so now we see the   sec government they favored the ethereum network  and they gave it the free pass the eth free pass why is it because they all are heavy  bag holders of ethereum network   and it's moving to proof of stake and since it's  moving to proof of stake the the big bag holders   are good or become super low even more wealthy  because now they have the greatest odds of winning huh food for thought but  that's that's my perspective   uh by not requiring energy intensive mining  operations proof of stake improves on some   of the weaknesses not all of them and  some of the weaknesses of proof of work   such as large energy consumption while preserving  network security this lessened energy consumption   also means a lower need to issue many new coins to  incentivize nodes to participate in the network it   also limits the risks of 51 attacks which  which it would be difficult and expensive   for anyone to carry out a 51 attack well you did  a 51 attack on ethereum you're going broke because   you're at least paying 30 to 100 per transaction  because ownership directly correlates with   the chances of being selected proof of stake  consensus mechanisms can theoretically create   a community where richer individuals or  entities are more likely to be selected   holy [ __ ] this means those participants are more  likely to be rewarded fueling an environment where   the rich get richer the imf is saying ethereum's  proof of stake is going to enrich the rich   is there a problem with that i think there  is that's why i don't touch ethereum except   for quant i love quant but i don't love ethereum  okay so weaknesses within proof-of-stake consensus   mechanisms might impact st stability and integrity  such as centralization in smaller networks   and the inefficiency of staking in the long term   these flaws can lead to centralization  related issues which can particularly   problematic in smaller networks or networks in  their infancy and this can impact market integrity   authorities could also consider elements like  sandboxing to help protect nascent networks the potential for centralization is similar  of proof of work the where participants can   afford the most powerful machines that are able  to generate rewards however proof of work based   advantages in terms of centralization  are based on the different nature   of the capital used for  validation the friction to which   between the currency and the hardware and  electricity even in larger proof of state   networks the potential for validator cartels to  form can lead to concerns around centralization validator cartels write that down validator cartels the rich  getting richer proof of stake is also inefficient   in its use of network native resources uh we're talking about uh safeguarding the  integrity of financial systems an important   aspect of the bfa so regulators could  think about the appropriate network   security and fairness authorities should  consider these frameworks that incorporate   appropriate systems and controls to migrate  mitigate against cyber and operational risks such   as the bazel committee on banking supervision  and principles of operational resilience 2021   says uh in line the bfa elements on  improving financial inclusion and ensuring   open free and contestable markets authorities  should be able to consider how to work with market   participants developing these networks to ensure  that they are as inclusive and collaborative as   possible and that these networks do not work to  benefit a small privileged group and lead to areas   of financial markets that lack contestability so i  think we should take screenshots of some of these   pieces i'll write a thread on it and let's tag the  sec govern this let's tag jay clayton let's tag   those guys and let's show them what they're doing  because they're picking favorites to the proof of   stake so these bankers that hold all these fat  pockets that got into ethereum early are going   to get even richer than they already are okay  delegated proof of stake the dpos model operates   a voting system where the stakeholders chosen  to validate a block can outsource their work   to a third party these third parties are known  as witnesses and are responsible for achieving   consensus during the generation and validation of  new blocks benefits of dpos include energy savings   greater decentralization and positive participant  behaviors dpos promotes greater uh democratization   all token holders can play some role  in the operationalization of a network   uh it should be noted that in many models of  blockchains that use delegated proof of stake   voting is proportional to the amount of stake  that participants place dpos also aims to promote   positive behaviors from participants so  you know in the delegated proof of stake   they can uh they can shut down your account  they can do different things to penalize you   where you're not getting rewards etc etc dpos  is relatively new and uh provides opportunities   for firms to generate efficiencies through a  relatively fast transaction throughput and can   deliver in both permissioned and permissionless  networks developed and implemented in a compliant   manner dpos can create a positive outcome  for the markets and consumers by providing in   interesting use cases in regulate regulated  activities like payments like trade finance like   digital documents there's so many use cases out  there you just gotta dive this is because it can   create a truly decentralized environment with  the potential for quicker transaction rates that said because the mechanism has not been  tested as long as proof of worker proof of stake   has been regulators should consider  associated network security risks   cartel like behavior and boat parked  and limited voter participation okay consensus mechanisms in private blockchains  federated byzatine fault tolerance fbt fbft   so that is the consensus that xrp and xlm run off  of i don't know anything about these other ones   uh d dm dft or proof of elapsed time so i'm  not even going to go over them because it's   no sense to me it's not relative but these this  is the the exciting stuff here so one sec here   um so this one uh instable practical uh bft  this is like hyper ledger and consensus quorum   i like xrp and xlm so that's what i'm going over  hyperledger is uh an awesome regulated network   so but that's just out of my i'm more  public i'm a public guy here so right here fbt is a byzantine fault tolerant consensus  mechanism that aims to solve issues of   centralization with greater skill scalability bft  mechanic mechanisms described above identities   of all participants are known however in fbft  the identities of all nodes do not have to be   known so this is where you know x our xlm and  xrp nodes they're anonymous right there is uh   yeah so membership is open and control can be  decentralized so anyone that says xrp and xlm   is not decentralized they are straight  up potatoes because it's a decentralized   token ecosystem like xrp but it has  centralized holdings in the ripples escrow   but ripple can't sell all those right it's locked  in a smart contract of escrow that gets released   and slowly released so only a little bit gets  sold to the open market whatever doesn't sell gets   locked back into the thing so but i go over this  in the xrp video there that you guys can watch so it goes it uses a unique load unique node list  um which a subset of nodes is needed for agreement within financial services fFBT consensus  mechanisms can generate large efficiencies   for retail payments wholesale settlements so  retail payments xrp xlm wholesale settlements uh   xrp for their wholesale cbdc solutions on their  federated side chains and other back office   functions well what like foreign exchange like  debt equity you know there's different things   man it's it's a big there's a lot of money  out there that needs to be moved efficiently   because the current system is [ __ ]  broken part of my language but that's how   i hate this current system uh the bft works  best where network participants are known   the algorithms are built for speed  and have immediate block finality   the latter is particularly operationally flexible  and it allows groups of validators to be modified   over time with increasing scale speed blah  blah blah but here it is right here as well   known use cases as ripple and stellar the IMF is  calling ripple and stellar decentralized use cases and uh authorities might consider how   fbft consensus mechanisms can balance  a decentralized and distributed network   with efficiencies such as high transaction  rate and settlement finality so we just read   this imf document they're they're crapping on  ethereum they're cropping on proof of work or   they're crapping on proof of stakes or it's just  me tonight about my negative ethereum attitude   because you know when i do eight transactions  on ethereum and it cost me eight hundred dollars   american i think to scale of the whole globe how  much of that money is actually going to minors   and enriching a select few well here we are  just trying to get a transaction to go through   and that really upsets me because i care for  all you citizens i care for everyone out there   that's losing money you know it's not efficient  when we got to pay a hundred dollars to make one   transaction oh your transaction failed  and oh i got to pay a cancellation fee   are you kidding me like the what is this the  banking system like this is messed up so okay   so conclusion here let's finish this off strong uh  let's see we're into here uh oh my god 48 minutes   sorry guys this is long reading this stuff proof  of work is too energy intensive to be considered a   viable consensus mechanism involving many  regulated financial service activities it runs   counter to several of the imf aims particularly  those involved transitioning to a greener economy   do you hear this although the mechanism is secure  or silent and offers true democratization of data   within distributed systems significant energy  consumption the nature of forking and the   attendant issues around probabilistic  settlement are likely to create friction   with many regulatory frameworks  regulatory mandates and the bfa this is in their conclusion for supervisors  we gotta realize how big this is and i'm   telling you guys let's pick i'm gonna mark  this day from a year from now and two years   from now we're going to see a domino effect  of regulatory whips being lost and it's going   to be a fight so if you support bitcoin and you  support these markets be ready for a fight or go   carbon neutral carbon neutral you'll be adopted  proof of work you've got a battle on your hands uh so here you go this is just a  comparison chart you guys can look   at uh these are similar mechanisms are  likely to be deployed in financial services   where participants are known and likely  to be used in global stable coins   and potential cbdc's which can  create risks to financial stability   uh the mechanisms can raise risk blah blah blah  deploy widely used project products like global   stable coins now i'm gonna at the end of this  i'm gonna reflect back to the stable coin thing and networks that are too big to fail so public  and private collaboration might be better to allow   authorities to monitor that developments in the  market and ensure the development of compliant   business models and new financial services [ __  ] coins are gonna die telling you that right now   if they don't have federated on bridges off  bridges uh your [ __ ] is coin's to die out   where development of dlt is small and  non-systematic authorities might decide to   take a wait-and-see approach where development of  dlt operates at a larger scale authorities might   take a test and learn approach through outreach  and engagement to better understand the risks and   benefits as well as the additional  variables such variables include   interoperability with other financial systems  emerging standards across financial institutions   so let's talk about this interoperability with  other financial institutions so interoperability   uh is quant and other bridges that can get in  with traditional finance so quant will connect   these regulated blockchain networks to financial  systems and then we talk about emerging standards   across financial institutions well what  do you think about i think about iso 20022   we know that's the messaging standard that's  being upgraded between banks worldwide that is   a requirement by 2025. i think about iso  tc 307 which is a blockchain standard um   that companies are working towards that  gilbert verdian of quant network has put   in place years ago and i will attach some  screenshots so you can take a look at that and it says engagement between  authority and industries can   happen through short-term engagements  using business as usual supervision   or through longer term engagements via innovation  hubs short term public provi and private   collaboration can happen through joint events or  commission surveys focused on consensus mechanisms   longer term collaboration can be through  joint research experiments and testings so they're saying regulatory authorities should  consider implications of different mech consensus   mechanisms and consider a technology agnostic  approach so they're not picking favorites   like the sec government is it's [ __ ] [ __  ] apartment language by taking a technology   agnostic approach authorities can work with market  participants to better understand the strengths   and weaknesses of different consensus mechanisms  and where comp comparative advantages in   the provision of different financial products and  services for example payments and issuing debt   and equity supply chain management  and record activity might exist shifting through a technology agnostic approach  authorities remain unbiased to the use of   different technologies but recognize the different  technologies for and bring different risks and   authorities are not neutral to these risks  so they're not neutral it's good or it's good   it's unfair to the technology and it's unfair  to the citizens because if they pick favorites   then that's not letting technologies that  could actually flourish they're denying the   right to that flourishment because they're busy  picking favorites like the sec governor ethereum supervisors can ask firms certain questions  and make accurate judgments on the risk and   efficiency of different consensus mechanisms  although regulatory authorities are beginning   to make a shift towards becoming more data  driven digital regulators resources budgets   and availability of the skilled supervisors  remain a challenge for many of them here are the   international organizations like the imf have  a role to play providing technical assistance   and sharing best practices standard setting bodies  can help by providing global recommendations   that can provide minimum requirements  for consec consensus mechanisms   when requi when utilizing regulated financial  entities so you're gonna create standards   then they're talking about regulatory  sandboxes can help authorities understand and help them foster the technology that is coming well that was a big mouthful i hope i  hope that shows you that what is to come   because this is in spot this has put  some thoughts in my mind that you know   back up some arguments that we've been  thinking about in the communities here so okay so this is the stable coin i want  to quickly refer back to so i wrote   about this three weeks ago uh it was in a cbdc  cross-border payments world bank document okay   but this is the things that i noticed so first  things first they talk about xrp and xlm is stable   coins they call them digital currencies right  here in here they call them digital currencies   cough sec gov they're not securities why is the  world bank calling xrp and xlm digital currencies   but you guys are calling them securities  sounds like you're really only talking about   the united states thinks their securities  in the united states is going to be wrong japan just throwing this out there japan it's  not a security it's a digital asset they're   completely separate uh entities they're  two different classifications it's not xrp   not a security in japan it's a digital  asset it's a new class of currency   u.s is falling behind in this race  and this is why i'm calling it out   so basically my question is they  call xrp and xlm a stable coin   but they're not the price isn't stable but what is  stable is that it settles in four seconds and it's   always a fraction of a cent and it's scalable  so maybe they're recalling it a stable coin   because of its ability to that in that fraction  of us in the four second settlement the price is   stable the price doesn't fluctuate in that time so  if you're an institution and you're settling funds   whether it's million dollars 10 million dollars  in that four seconds and you cash out on the other   side well there hasn't been much movement maybe  that's what they refer to as stable coin comparing   it to the current legacy financial system which is  you know correspondent banking system which takes   five to seven business days for the payment to  settle there's no end-to-end tracking you got all   your foreign exchange fees you've got your your uh  uh your settlement fees and then you've got your   nostro and vostro accounts which are gaining zero  percent interest and uh so maybe they're talking   about stability and that when you send that  payment it's there in four seconds that's a stable   coin that you can settle in four seconds that is  just my theory and if you guys want to chip in   why they would call you know xrp and xlm stable  coins feel free share your thoughts but that's   what i want to leave you guys with is you know we  see the uh the imf here uh we read this document   and they mentioned stable a global stable coin  system they mentioned ripple they mentioned   xlm and then we see a world bank document here  which talks about stable coins ripple and xlm which is very convenient that those  two are mentioned in the IMF and in   the world bank document under the same  stable coin stuff um but yeah anyways   i'm going to leave you guys the article you guys  can read it share it if you've got something on   this like comment subscribe leave some feedback  share it with your favorite influencers be like   check this out let's get this information out  there i'm a small account i got 6 000 followers   it's just a drop in the bucket but what i want to  do is create regulated content that helps show you   guys what we are in because we are in markets of  the future i classify all of us as citizens of the   future you're participating in these markets  you're a citizen of the future so everyone   out there i hope you got something from this  thank you for supporting and liking commenting   and uh cheers i hope this was great and  i'll see you next one citizen of the future

2022-02-07

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