Lyn Alden Makes the Case for Bitcoin, Explains Why Money is Falling Behind the Times

Be sure to check it out at bloomberg dot com, slash wealth or search for my name. Of course, you can also find columns from Bloomberg's many other brilliant columnists, and be sure to subscribe to Bloomberg for access to insightful stories, data videos, podcasts, and much more. John, ma'am John, does anyone except for me have off youve advice like financial advice.

an awful lot of them back. It's absolutely huge. So the share price fell, we're talking, by the way, everybody. On Thursday the twenty eighth, the share price fell around thirty percent first thing this morning. Is back up a little bit now, but it is still down over one year sixty two percent, and that is a direct result of the regulatory authority starting to look at what represents value in the financial services industry. So a lot of

people will get a night little bit of money. It's a bit like the cars where everyone didn't get quite what they're expecting from their interest rates and may not get a pile of money back. But do you know what I want to talk about when it comes to Saint James's Place is not so much the advice that people weren't getting, thought they might be getting, didn't know they were paying for.

did a lot of good work on this. From what I remember, they would have realized that there was at the very least some controversy around Saint James's Place and the fees that it was charging and exactly how that fitted in with the FCA's overall view of how customers should be treated, and that's been saying that in the most diplomatic way possible. So yeah, I think if they had actually been doing any other than box ticking, then

they should have realized that. I do think it also points to the fact that grouping ES and G it's kind of a mish mash of compute bollocks. If I'd allowed to say that, you know, it's like, as far as I can see, the E is the bit that

gets all the attention. That's what people think of. So it's like, if it's a wind turbine creator, then yes, I'm going to buy that because it's it's E, and they don't really think about the S or the G. And if it's an oil major then not going to buy it because they just think about it, but they don't actually think, actually, this is a well run oil major. And that's before we even talk about how we meant to do without fossil fuels, you know, et cetera, et cetera.

So yeah, I think it's more just it just points to that it was always a you know, a marketing tool at best, and a weird kind of metastasization that all of the stupid ideas that have come out during the zero percent interest rates.

been slashed fairly significantly. So there's a you know, there's a G issue there, and that seems to be the one that we should be looking at going forward. Anyway, that gave me an excuse to round about ESG briefly, but we'll move on from that. This is complicated, look at it more carefully than you ever might have thought that you needed to. Now, the next thing that's coming up is the budget quite soon. There's a lot of G issues going on there, right. We can't tell you exactly.

your eyes allowance. But I think the other thing is and I mean I think it almost feels that it should be redundant to say this by now, because this has been the case for at least ten years now. But if you have your money and anything that even smells faintly like a tax dodge vehicle, then you shouldn't have because nowadays it's all about the spirit of the

law rather than the letter of the law. So if the HMRC comes across this game that says that it's a bit avoiding tax, but they didn't intend it to be allowed to avoid tax, then you're going to carry the can for that at some point, And they're pretty aggressive it pursuing this, so don't be invested in it. And Dodgy basically just use the government approved tax efficient vehicles as best you can and then cross your fingers because the tax button is going to be high for a long time. Probably.

to do with films being the obvious, etcetera. And it turned out the very very very easy way to check which accountant you want to use, and anyone who offers you that stuff is not the accountant you want to use.

And also, I mean, I do wonder how much that's kind of influenced the way that a lot of politicians seem to want to now just say things and make it so, and that whole virtue signal and idea where you think you've passed a law and therefore you have dealt with a problem, as opposed to having you think about what the consequences of the law might be. So I do wonder how much of that's down to well, okay, now that this spirit of the law rather than the letter of the law kind of thing. But you just

have to live with it. Unfortunately, you have to operate in the world as it is.

over the place. They choose different types of money based on their technological development, based on what's available to them. But those moneys tend to have certain attributes, and certain technical changes tend to obsolete certain types of money, and it tends to be like an iterative process. So if you choose the wrong type of money, someone else can basically exploit your wrong choices until the society settles on the right Money's basically the good that you'd like to hold.

It's liquid, that's portable, that's long lasting, and that you can basically always have a high likelihood that you can trade it for something else. That's not the one camp of money. The other one less from the economic side and more from the anthropology side, which is to point out that not a lot of barter is found even in hunter gather societies or in kind of history as we know it, that barter tends to be a pretty

rare state. And instead they point out that societies tend to sidestep the need for barter before it even arises. It's basically such a basic problem that even pre dating commodity money, usually they use credit to try to reduce the number of times they actually have to make a physical transaction, they say, but instead of trying to trade spears for furs and trying to figure out exactly what you need when I need. Instead, I can just give you what you need because I happen to have a

surplus of many things at the moment. And that's based on the premise that at a later time and I might be deficient on something, you owe me whatever I need at that time, and so credit is an early tool,

along with commodity money to mitigate that. And I think that the two ways to summarize that are if you're trying to avoid the double coincidence of wants, basically the challenging thing of having a surplus is something that someone else has a deficiency in, and having a deficiency is something that someone else has a surplusit and therefore being

able to make a trade. The two ways to make that easier are either a shared unit of account that we can use for one side of every transaction that's basically commodity money, or that we can delay that over time by making it so that our double coincidence of wants doesn't have to be for the same thing at the same time. As long as there's a period where you need something and is a later period, write something that can be extended and therefore have a higher probability

of success. Those are kind of the two paths of where money has originally.

But instead of what he does, it says, I'll do this favor for you now, because he's in the position where he has a surplus of many things, many resources, and in their shadow economy that he's got a lot of resources to deploy, and what he asks for in favor is an unspecified favorite of future time. So he's basically saying, there's absolutely nothing I really want from you right now, but I perceive that there's a chance in

the future that I will. And so that's basically a way of him granting them something even though he doesn't need anything from them, because he employs the usage of credit.

record system that they're going to rely on. And so if you're using commodity money, you're basically using nature as your tool for saying, Okay, here's the number of units that exist at a given time, here's and then those units are updated by physical possession, whereas if you're relying on credit or similar systems, you're relying on human administers

of that ledger, either orly or in writing. And the yap stones are interesting because they were an early combination of both, they kind of get to the root of money, being a ledger itself. And so that's an instance where a unique set of circumstances gave them a particularly unique type of money. So most commodity moneys and early times were things like grains and shells and cocoa, and they tend to have these kind of common attributes, whereas the

yap stones the ry stones were quite different. So they were on a small island, and there's another island two hundred and fifty miles away or so, and on that other island they had very attractive limestone, and so they did not have it on their own island. And so they would go on fairly simple boats and they would go across this kind of treacherous water. They'd go mine the limestone, bring it back, carve it into big circles,

and they'd have different sizes. Some of them could be moved, and some of them were so big that they could never realistically be moved again. And they had all these these stones, these limestones now on their own island, and when they transacted with each other from major things, they would just orally say, this stone now belongs to this person.

So the big stones themselves don't move, and instead it just basically the island has a mental and oral ledger of who owns all the stones, but that it is backed up by the physical properties of the stones themselves. It's very hard to add new stones to the system. It takes a lot of work to do it. It's very dependent on the time and place. So, for example, the fact that it's a small island makes oral transmission

of the ledger possible. And two, the technological era that they existed in made it so that the stones were very hard to acquire, and that was eventually broken by the fact that as people from industrial societies came to the island saw how to exploit the system, they would use their advanced technologies to more rapidly increase the number of those stones on the island, or otherwise use forced to coerce them through their appreciation of the stones to

do things. But in that era that served as a particularly unique type of money.

of like modern art. We're not going to treat them the same way, whereas like these older stones are like Da Vinci paintings, right, they're not able to be reproduced even with better technology because we're now adding age as a factor. And so there's still were attempts to make that system go longer, and just of course over the long arc of time it became more of a relic of the past.

of money in the more universal sense. And each society had their own money based on what was available, what was technologically suitable. But then as time progressed, as societies met each other, there were objectively better answers than other answers for what constitutes good money, and as those came together, the more suitable money would win out, until the whole world found itself on a shared standard.

other kind of technical path was different. Proto banking and full service banking arrangements that people and cultures would develop on top of those money systems so that they could move the ownership of the money more easily and faster and cheaper. They didn't have to move the physical money itself. An early example in the book that I used is the Hawala system, which is prevalently even before Italian city state banking, basically throughout North Africa, the Middle East and

stretching into India, basically along the Silk Road path. There would be these money changers called haualidars, and if you wanted to transport gold from one city to another city, for example, the expensive way is to physically transport it, which you might do if you have a sufficient amount and you're highly secure, you might want to do that. But if you're doing that on a regular basis, a service that was provided was that you could deposit gold

with your local haualidar. They would give you a receipt for that gold, and then you or your messenger could transfer that receipt to another city, and in that city, that Houalidar has a contact with another Haualidar, and you would redeem the gold from that other Haualidar, and those Haualidars between those cities would do multiple these transactions and give monther a given year and they would net out, so maybe every six months or every twelve months they

would actually do a physical settlement to sort that out, but they're able to do multiple transactions between them just by transferring kind of the knowledge that was made. And so we can think of that as a series of analog encryptions. Because when they invented paper, it was improvement over papyrus. When they invented book binding, that was an improvement over scrolls. When they invented the printing press, that

was an improvement over handwriting. They had to have analog encryption techniques to make it so that people could not just forge different types of receipts or copy different types of receipts that are redeemable for gold for obvious reasons relating to fraud, and so on top of all that kind of global contest to see what types of moneies are most suitable, there's also this kind of global growth in terms of all these different methods to more efficiently

transfer the ownership of those underlying especially gold and silver, but really any sort of physical object.

at once. Any given time, there's a small percentage that might be being redeemed or being deposited, but that they have a common float there, and so the temptation there is, okay, we can lend some of it out, earn interest and therefore reduce the fees that you charge your depositors and maybe even give them a share of interest, which allows

you to outcompete other custodian type entities. And that works for a period of time, but it leads to obviously some systemic issues if you do get a bigger than normal attempt to withdraw the gold, and your assets are denominated partially in gold and partially in these less liquid loans and other assets other types of collateral, then you could fail to meet that, and so they started to introduce basically systemic instability into some of these arrangements, because

the way I put it in the book is there was an increasing speed gap between transactions and settlements. So over time, as all these different layers on top of gold and silver became more and more efficient, it allowed those number of claims to grow compared to how much underlying metal there was, until it became systemic and a big technology I focus on, which people don't really think of the telegraph as a monetary technology, but it was arguably one of the biggest technologies for how we use

money and how banking works. Because prior to the telegraph, anytime you transferred to information, you still had to get there.

You had to physically move people, ships and horses and all that to get the information to another city, whereas in the eighteen sixties, once we had the telegraph over continents and across oceans, you could update each other's ledgers at the speed of light, and you had a huge gap between all these kind of banking arrangements and the physical gold, and you had a very kind of elaborate, hierarchical system of multiple claims for every unit.

look how efficient we've become. Every friction we encounter, we just centralize it. So you know, basically all global trade can just go through London now and everything can net out and gold rarely ever has to ever move, and it's hyper efficient, and this is great. The other hand is we have to remember that all of these claims are redeemable for gold, and the system's now levered twenty to one, and so if five percent of people show

up and want their gold back. The system is illiquidated and not solvent, not able to make those claims, and so it's like he's balancing these kind of observations around efficiency and stability. And of course we know from history that a few decades later in World War One, that whole leverage system unraveled and we had to go through major transformations of what we use as money because that increasing kind of leverage, that increasing speed gap, really changed how humans interact with money.

a very kind of steady, slow debasement rate. But once World War One happened, and once kind of this huge gap opened up between efficiency of trading all these claims around and being able to fraction reserve everything, you started to get this rapid deterioration in the pound sterling compared to the underlying precious metals and for perching power in general.

And one of the observations I make in the book is that that opened up a kind of a problematic inct of structure, because the basement has been something that has existed for thousands of years, I mean, going back to Roman times and prior coinage has always been debased to varying degrees. But the modern system allowed that debasement to happen practically overnight instead of over years and decades.

And so basically with a stroke of a pen, whenn entity a government can now print a lot of money and then break all the pegs to base all the money, and then as in the years that follow, as the inflation follows, then they go back and try to address what happened. And so what would normally take many years in a long period of time can be compressed into it really with a stroke of a pen. And that's the modern era of money that we find ourselves in.

the time. But it turned out, of course not to be true at all, and we only found out much later in twenty seventeen that the Bank of England blog was called Bank Underground wrote a piece explaining the in fact, this hadn't happened at all, and effectively the money is simply been printed and then in a wonderful little end point of this saga the ft that had written stories at the time saying how wonderful it was that everyone had rushed to buy the wooloone printed and apology in

twenty seventeen saying that everything they had written was not true. We are now happy to make it clear that none of the above was true. So this is when the central banks started this money printing process in real earnest and also started not quite telling us the truth about it.

have already occurred. And for example, in that arrangement to finance that war, they could just lie and say, Okay, the loans have been met, when really what they're doing is they're just printing money. They're financing the loans through new money creation. And therefore they're spending into the economy

money that they did not withdraw from the economy. Therefore they're expanding new overall money supply, and therefore all of the holders of the currentsy all the holders of the bonds, including foreign holders of currency and bonds, are getting sharply devalued without knowledge that it's happening, and without having given any sort of consent or any sort of process to make that happen, and then only in hindsight in this

case comically like a century later. But even if it takes place three years five years later, the consequences have smoothed out over time, they go back and realize that they never actually consent to. This is basically taxation without input or knowledge, and therefore it could not be debated, couldnot be protested, It couldnot be discussed in a way

that would normally be done with taxation. I guess one of the themes in the book is that as technologies come, it can sometimes change the power structure, or the incentive structure,

or where the source of power is. Prior to that kind of era of telecommunications and heavy use of banking, money was intrinsically hard to debate it was a very challenging physical process, slow process to do it, but in this modern era, because it can be done so quickly, it really shifts a lot of that power to those who wield the power of the printing press.

of separate powers. The challenge is that, especially during crises, central bank independence tends to go away. The government just captures the central bank and says, look, it's a war. You're going to finance the war. So it's not really independent anymore. And then two, even when it is independent, people are end up therefore very reliant on the competence and the ethics of the central bank, which can be

people that they didn't necessarily lack. Obviously, each country will have its own process for how the bank is structured,

but these are generally appointed rather than elected officials. A rather small number of people dictating what the price of money is, what the price of money and time is essentially able to make low credit loans to certain entities and not other entities, and therefore they get quite a bit of power, the power of the purse, the power of even defining what our money is, something that is both powerful but opaque.

Now they're getting some interest on their bank account. That I was saying, this is marvelous. So for most people they would say, well, I don't know what you're talking about. My money works.

the slowest despite all the problems we just discussed. Outside of major wartime, they are kind of a slowly debasing currency, Whereas when you look at the long tail of most currencies, which is actually where most of the people in the world live, they experience much more rapid currency debasement, and therefore all of those issues we just talked about, the opaqueness of say, financing government through inflation, for example, things like that happen way more magnitude and way more frequency

in many other countries in the world. So that's one big problem. And two, there's actually a shocking number of people in the world that are still unbanked. So you know, banks have been now around for centuries even longer in some forms, and yet there's in a fairly short period of time more people have smartphones than have bank accounts. In the current era, there's basically an inherent kind of limitation to banks and so the combination.

more choice over their money. So things like bitcoin or stable coins allow people in all these different jurisdictions to say, instead of my local rapidly debasing currency that my wages and my savings are denominated in, I can go around that system and I can say I want dollars from this jurisdiction, or I want this decentralized currency bitcoin, or whatever the case may be, depending on their preferences, their volatility tolerance, their technical understanding. And so that's basically a

way to break into all these different silos. And the other point I make in the book is that when we look at develop countries, so obviously we have a lot fewer obvious problems with our money. Like you said, we don't really have problems making payments, we don't really have problems with rapid debasement, but instead that the problems

tend to be more subtle. So, for example, the rapid accumulation of government debt is one of those things where it's this kind of slowly growing instability outside of our kind of immediate concern, but something that long terms an issue, and I think a more kind of short term issue something that kind of happens on a regular basis is that people underestimate the importance of credit. And so, for example, during major crisses, when credit locks up, when governments and

central banks give selective credit to some entities. For example, in the United States during the Global financial crisis, they gave credit to large banks, but they would not give credit to say, some smaller banks or homeowners and entities like that, and so they can selectively basically bail out certain entities more so than other entities. And this is kind of a recurring cycle that happens recession after recession after recession, and it's one of the key forces of

wealth concentration that's happening under the surface. So in some ways, the kind of the problems of the money that we have in developed countries are more like the problems of having a bad diet. And we talk about the quality of food, for example, we might say, well, when we eat it, we get full, we function, we don't really

see a problem. But of course if we're eating bad food over a long period of time, those problems tend to accumulate, Whereas in developing countries the money problems tend to be more bad on the surface, it's more like the food is poison, and it's more obviously in your

face a problem. And so there's all these kinds of inefficiencies built up in the system, and I argue that a lot of it is just because of the technology path that we've you know, kind of the deterministic technological path and the order of technologies that we've had up to this point.

than they get credit for. Basically, within that kind of one hundred and sixty different currency framework that I mentioned, the fact that these currencies can go around borders, the fact that they can provide people more choice of what money that they want to hold, regardless to where they are. As long as they have some sort of basic internet connection, some sort of basic phone service, they're able to go

around these types of blockades. And that's over the long arc of time, I think able to put a lot more restraints on the types of manipulations that can occur outside of their purview and give them more options. For example, I personally spend part of each year in Egypt. So I live most of the year in the United States part of each year in Egypt, and that's because some

of my family and friends are in Egypt. My husband and I are kind of buy country, and whenever we're in Egypt, we see a lot of these problems, a lot more acutely compared to when we're in the United States, and I'm always reminded when I go there. How in the twenty first century, our technological aspects of money have not really caught up with the technological aspects of other

parts of our lives. And so, for example, an anecdote that I'd like to share a lot is I know a physician in Egypt that holds physical cash dollars that he buys on the black market as his primary liquid savings because he doesn't trust the local currency. They have thirty seven percent inflation, They've had double digit inflation more often than not over the past fifty years. That's in

the twenty first century. In twenty twenty four, that's his chosen monetary technology, and it just shows that this whole

system I think is right for disruption. And I think that these kind of open source things, and I tend to focus on bitcoin and stable coins have thus far kind of had the most utility in these areas, serve people in these different jurisdictions and kind of go around and present an alternative to somebody's more centralized and kind of rapidly debasing or rapidly kind of financially abused systems.

One the currency is rapidly debasing generally faster too. They don't really have access on average to as good equity markets as we do. You know, they'll have a lot of volatility, not a lot of upside. If the country even has a significant equity market to the extent that they can get access to offshore assets, it's usually more

restricted to the wealthy end of the spectrum. Right, If you can afford an offshore bank account, if you can afford an offshore brokerage account, you're generally in a better position. And so there's a lot of these technologies are kind of an equalizer. They basically say, if you have a smartphone, then you can access to the type of things that historically

we're more accessible to the wealthy. And then also, for example, if your bank accounts are just arbitrarily frozen, right, there are a lot of countries where if you protest or

things like that, your bank account's just frozen, confiscated. And so there's actually you know, human rights organizations or democracy advocates and things like that that make use of stable coins, bitcoin and other sort of descentalized financial systems to go around the fact that their local jurisdictions got a monopoly

over the monetary system. And I think that those are these things that often go overlooked in a lot of these discussions around the usefulness of this type of technology, which to some extent understandable because there's been so much fraud, there's been so much hype in the broader space, and I think it's a shame because underneath all of that kind of hype and fraud and problems, there are these seeds of really important use cases, at least for a subset of the technology.

the sovereignty of the nation state. Right, So if stable coins, Bitcoin, any of the new cryptocurrencies were to become a threat to an existing currency, surely the same thing can happen, and that if they become a threat, we find out about the power of the nation's stage and they're stopping a threat.

they had very limited adoption of the enira. And they have one of the highest adoption rates of cryptocurrencies mainly stable coins and bitcoin in the world. And specifically they have really high peer to peer trading volumes because that's how they go around their local banking system. And so there are certain technologies or certain kind of transparency things that make it pretty hard for governments to always get

away with specifically what they want to do. Now, obviously a country like China would would likely have more success us at pushing things that it wants to do then say a country like Nigeria.

they tend to come and go. You get inflation, you get a little disinflation, you get inflation again, et cetera. And having looked at your work, I see that's a few point that you agree with or appear to agree with.

bit of power. And if you have abundant energy, then some of those other inflationary forces in the economy they're present, but they're not as severe as one might think. Whereas when the energy itself is inflationary, almost any reductions in other areas tend not to be sufficient to offset that inflation.

So my kind of expectation is that on average, this decade is going to have higher average inflation than the prior couple decades, but the timing and severity of any kind of further inflation waves you might experience are likely

to be quite coincident with energy. So I think basically, if one wants to have a strong opinion on that, they really have to dive into, especially in their particular country, the sources of energy that they use, the likelihood of, for example, global oil disruptions, the growth rate of US shale oil, and the ability to meat demands of the

next five years or so. And so my expectation is that by the time this decade's finished, we're probably going to have another energy price spike and another inflation spike, and so I think that's where I'm focusing. I think, aside from that is just the ongoing issue of the money supply growth that occurred a few years ago is still working its way through the economy. It's still working its way through weight growth as a price growth, and so I think that process still has some time to go.

But that if not for an energy spike, that can eventually settle back down. And it's really about the energy side that I think will determine the timing or magnitude of future inflation waves.

is very low. Whereas in environments where we have more of these inflation of core inputs, some of these more disinflation type of assets, high valued equities or bonds and things like that, tend to do very poorly. So a lot of investors are invested with structural disinflation in mind. The classic sixty to forty portfolio of equities and bonds, and especially market cap weighted equities, so they're very geared towards the large growth stocks, especially in the United States markets.

I like having a separate segment in a portfolio focused on energy because that is in many cases a better hedge against the rest of the assets during decades that are more inflation a on average. So during disinflationary decades, bonds are a better hedge for equities, whereas during inflationary decades, energy tends to be a better hedge for the rest of in equity portfolio. So I certainly like to have that slice of protection.

can imagine. I think gold just transfers over to that new world and still serves that kind of similar mental backstop. And it's also still what central banks prefer as their their main underlying collateral, aside from other other countries bonds.

based on just investing principles. And so if people that aren't familiar with him, Howard Marx is a billionaire investor primarily in junk bonds, but the book itself applies to He's well known for his kind of macro or insightful articles on multiple topics, and the book itself is not

about any specific asset class. It's more about the mindset and kind of the joke of the book is that Howard found himself whenever people say would talk to him and say the most important thing is this, and then like in another conversation, you'd be like the most important thing and it'd be like a different topic. So, as a joke wrote the book in every chapter is a

different most important thing. And so the book itself is a fairly concise set of independent descriptions or recommendations for how to think about investing, how to think about finance.

we're talking about keeping ledgers. And I wrote about this years ago. Actually I wrote about my bitcoin first. I wrote about it ledgers and wrote about how the rise tones of yapp were a ledger currency, and bitcoin was the modern version of that, and that you know, she's really expanded on all that stuff in this book and taken her through the entire history of money with this idea of the ledger.

And I think it was at the kind of I think it was David Graeber's book that eventually kind of displaced that in the popular imagination at that point when you start to realize, well, so that's it's really daft to imagine that that's how things started, because you couldn't get anything done then until someone had come up with the idea of a currency. But it's like, you say, this ledger thing, if you've got a small enough tribe of people. Then everyone can remember, well, you know Dave

always Merrin, who always join, who owns summer? You know this amount of money, and then you don't have to have any real you know, it doesn't have to be a kind of anything that represents it in a passing things sort of way. You've just got all that big stone is yours or know what's mine? Now? So no, I do I think that that made a lot of sense.

You simply need the record. And we didn't talk about this, but my favorite favorite bit about rites right stands and Yap is the story which may or may not be true, but I think it is about one of the boats coming back from the distant island with very large ry stones on the boat thinking and so the stones are then lost under the sea, but they still exist as wealth.

of sense. And I think that a lot of Len's points about the difference between developed markets and developing markets what interesting as well.

money systems that we do. But the bit where I didn't find Lens replied to me to be satisfactory, and where I'm still concerned is that I believe in the nation state and the sovereignty of the nation state and the reassertion of the nation state in times of crisis, right, And we do find that that whenever there is a financial crisis or died any other kind of crisis, we see the nation state showing who holds power.

You know, it's not going to go on and replace the dollar, and it's not going to go on and replace the pound. It's just but but I guess, I guess the argument that is digital gold makes the fair element sense.

a very deep understanding of the money system. But I say the thing also I wanted to bring up was I was recently reading an Old Bank for International Settlements report on digital currencies because I was bored and I was on a plane, and that was the only thing

in my back. And what was interesting about that is because I think this is the other the other part of what Linn's talking about in the crypto currency thing in general, is that it's very clear that sovereigns want their cut and they are taking this seriously like central bank digital currencies are the you know, the suffering the equivalent of basically recognizing the threat posed by something like Bitcoin or more and more accurately stable coins, the thing

that's freaking them out of stable coins, because those are kind of like I guess, almost like counters, not counterfeit, but private very versions of the dollar, but they're backed by dollars, but they're being used in the digital realm.

And if that realm is gonna what the BIS was basically saying is the central banks, and it was doing in a very cuddly way, but was saying that central banks should be part of that world so that they can provide the asset elast resort, the currency elast resort basically for all the future applications that will be on the blockchain, if you like. And then when they were

talking about the applications, that was a bit fuzzier. I think the problem there is it's like if I want to send money to you from my bank account, then fine, there's about ten different transactions behind the curtain, but I don't care, and you don't care. Yeah, it takes seconds, and if it doesn't arrive, then we can shout it somewhere.

the time, unless it's a Glasswegian call center. But it's a trade finance so where you've got to you know, you've got to order a shipload of goods from something from you know, somewhere across the world, and the problem is that you don't want to pay them before you've got the goods, they don't want to send the goods before you pay them, And then there's a whole load of complicated bits in the middle where the person on the other side of the world might also be staking

the goods is collateral to like five different people, and you don't know anything about it. So that's sort of areas where they were talking about how kind of programmall bowl contracts and smart cuncies and all the rest of

it might actually work better for these specific applications. So I guess a long way round, what I'm talking about is that it's clear that this technology does have some use in certain financial areas, and I think perhaps the biggest threat to something like bitcoin is that central banks are just going to come in and occupy that space. But it is again, it is a real area of technology. It's not something that is just a problem. Can I

looking for us a solution? Looking for a problem, Well, I think.

dot net. This episode was hosted by me Maren Sumset Web produced by some asidi. Special thanks to Lynn Alden and John Steppeck.