Banks Without Bankers?! This BITCOIN Report Will Blow Your Mind!

The key selling point of crypto is that It allows you to become your own bank it Lets you own and hold your own assets by Contrast Banks technically own the Assets you hold with them it's true look It up now as amazing as being your own Bank is in theory it's not all that Practical it wasn't practical and many Have argued that if crypto wants to Compete with the traditional Financial System it needs it own Banks so today We'll be summarizing a report which Reveals exactly how it could be possible To create Banks without Bankers using Bitcoin a way to realize crypto's vision Of replacing the corrupt Financial System Corruption the report we'll be Summarizing today is aptly titled quote Banks without Bankers it was recently Published by axium BTC a Bitcoin Venture Capital firm and we'll leave a link to The full report in the description now The report begins with an epic quote From Hal finny for those unfamiliar Hal Finny was an early Bitcoin developer and He was actually the recipient of the First ever BTC transaction sent on Bitcoin the quote basically talks about How BTC will someday make it possible to Reform the banking system the author of The report then goes on to explain that There are two possible futures for Bitcoin at one stream you have all of

The BTC being held in custody by Third Parties such as banks with people Trading receipts instead for context This is essentially how Fiat money used To work it used to represent a claim on Gold at a bank at The Other Extreme Meanwhile you have BTC being transacted Directly between people and effectively Replacing money and all of its functions Now this is unrealistic for many reasons Namely the fact that Bitcoin Co can't Scale at the layer one level and lacks The smart contract functionality Required for complex Finance however the Same is also true for all the BTC being Held in custody this is unrealistic Because there will always be some Portion of BTC holders who opt to self- Custody their crypto and transact Peer-to-peer logically then the future Of Bitcoin lies somewhere in the middle Between custody and self custody the Reports author not not that there are Emerging Technologies within the Bitcoin Industry that will make it possible to Walk this fine line but notes that they Will focus on taking the view that more Peer-to-peer is better this makes sense Given that the entire purpose of Bitcoin Was to get away from entities like Banks Put differently the entire purpose of Bitcoin was to eliminate the need to Trust third parties with your assets Hence the trustless nature of crypto the

Author argues that not all trust is bad Though it's just a question of trusting The right people and ensuring that all Of their incentives are aligned to drive This point home they underscore research From evolutionary biology which shows The importance of communities in Survival and reproduction they then Relate This research to what we see in The modern Financial system where Community focused banks have a much Lower chance of closing from the Author's perspective the primary Limitation though of Community Banks is Geography unless you live near the Community Bank in question you can't Take advantage of its benefits it's a Limitation of the physical world in the Digital world however there are no Borders or geographies as you might have Guessed the author argues that Bitcoin Can make it possible to operate a Digital Community run Bank assuming you Have the right technology one of these Key technological pillars is multi- Signature wallet which make it possible For multiple people to operate a single Bitcoin wallet and more accurately Multisig make it possible to create Conditions under which this shared Wallet can spend BTC with this primitive It becomes possible to create something Called a federation which the author Explains as being where quote multiple

Participants hold keys that are useless In isolation but can be combined to Produce a signature that is required to Make a transaction and by the way if You're enjoying the video so far folks Be sure to smash that like button to Give it a boost And subscribe to the Channel and ping that notification Bell So you don't miss the next One yes yes cousin Barry coin buo one Two here we go hello hello Barry here Guys cousin here to tell you about Crypto deals by the Dozen the coin Bureau deals page is the place to go That's where all the Mad discounts are Put on show what that you think I'm full Of crap you trying to say this Gea Can't Rap okay then try this one on for size I'm going to hit you with the deals page Big price yes Exchange sign up bonuses Of up to 50K oh yes I'll have a bit of That I hear you say you're welcome yes It's my pleasure but wait there's even More treasure yeah there's trading feed Discounts too so don't say I don't do Nice things for you and hold up there's Even more there you can even get some Money off of Hardware Hardware right There oh yeah so pure wallets to keep Your crypto secure because you know me I'm all about self- custody and so Should you be don't you see anyway That's all I've got to say today so once That video's done make sure you click

Away to the coin bureo deals page you Know where to go Link in description Down [Music] Below now this brings us to the first Part of the report which is about a Federated Network called fedy Min fedy Min solves the problem of not being able To trust third parties and not being Able to trust yourself with the Technicalities of self- custody the Solution is simple trust your community Instead under the hood fedy mint Consists of four Technologies Federations which can be simply Understood as a set of trusted nodes Operating a network those aforementioned Multisig wallets a privacy preserving Digital currency called ecash that's Backed by BTC and the lightning Network A layer two on bitcoin and you can learn More about the lightning network using The link in the description I Digress now at the protocol level fedy Mint consists of four participants users Who can mint redeem and transfer ecash Guardians which function as nodes on the Network and facilitate the minting Redemption and transfer of e-cash Gateways which can be simply understood As nodes that make ecash transferable on The lightning Network and modules which Are the applications on fedy Min what's Interesting is that each fedy Min system

Comes builtin with three modules BTC Obviously ecash and an adapter for Connecting to the lightning Network Users of each fedy Min system can choose To add additional modules such as e-cash Payments and more elaborate e-cash Exchanges in case you haven't noticed This means that fedy Min networks could Someday play the role of de facto Digital Community Banks without any Actual Bankers the infrastructure would Be entirely Community run and would come With the buil-in capacity to interact With other bitcoin-based fedy Min Networks the author then unpacks another Possible way that Bitcoin could be used To replace Banks and that's with another Protocol called cashew like fedy min Cashew leverages privacy preserving Ecash which is backed by Cold Hard BTC The difference though is that cashew is Much more centralized and by much more Centralized I mean that it runs on a Single server the trade-off is that the Centralized nature of cashew makes it Possible to keep track of all the ecash In circulation without compromising Privacy apparently on Fint it's Difficult to keep track of ecash Supply Due to its private nature in the second Part of the report the author makes the Bold claim that everyone will eventually Use a single form of money quote in Theory Market participants converge upon

A monetary standard in a perfect world There would only be one form of money They explain that there are three Reasons why this hasn't been the case Historically the first is opacity or Rather the general lack of information About other currencies available to the Average person the second is Sovereign Coercion I.E because governments want Control over their own currencies the Third reason is the most straightforward And that's the tradeoffs involved with Money the author uses the simple example Of real estate versus the US dollar in The modern day real estate is used as a Store of value rather than the USD for Reference money means something that Also stores its value conversely Currency is something that you use to Pay for goods and services now if you Watched our video about how the Financial system is rigged you'll know That currency and money were the same When currency was backed by gold when Currency stopped being backed by gold However it lost its monetary properties And yet we're still taught implicitly And explicitly that we are still working For money big think anyways if you think That the author reckons BTC is the Solution to this problem well you'd be Mistaken they note that while BTC does Overcome many of the hurdles that have Historically restricted people from

Adopting a single currency it has two Hurdles of its own scalability AKA speed And privacy as you might have gathered The lightning network is one potential Solution to bitcoin's scalability Problem and ecash is one potential Solution to bitcoin's privacy problem The author acknowledges that each of These Solutions come with their own Challenges but could be sufficient Nonetheless this ultimately depends on Whether ecash can gain enough adoption So that it becomes viable for money Markets to form without getting too Technical this would involve individuals Or institutions with large amounts of Money doing Arbitrage between all the Different forms of ecash being issued This would ensure that the global value Of ecash stays the same relative to the BTC backing it the result would be a Positive flywheel wherein more accurate Ecash prices result in more adoption Result in more Market making to make the Prices even more accurate resulting in More adoption and so on this relates to The third part of the report which is About the risks associated with this Kind of ecash BTC based system the Author starts by explaining that ecash Is designed to be minted with and Redeemable for BTC on the Bitcoin Blockchain or BTC on the lightning Network using a fedt network as we just

Discussed this should make all the Different kinds of ecash issued by the Different fedt networks fungible I.E Equal in price in other words it should Be possible to take eash minted for BTC With one fedy minint network using Lightning Network BTC and redeem it for Layer 1 BTC at another there's just one Small problem though and that's that Fedy mints technically have the ability To Mint more ecash than there is BTC Backing it what this means is that there Could be one fedy minint network that's Minting say 10x more ecash than the Others are and its users are then Claiming more BTC at other fedy mins Again that's just because ecash is Completely private so there's no way of Keeping track how many units of it are In circulation at least with fedy Min Networks you'll recall that this was the Primary advantage of CAS is being able To keep track of circulating ecash so That it's always backed by BTC now Believe it or not but there's already a Precedent for how to solve this problem It's called Free banking that is banking Before central banks existed in the Free Banking era Banks were able to issue Currency at their own discretion in Theory this currency was backed by their Gold in practice it wasn't always Because of the information asymmetry Between the free Banks and their

Customers the customers often didn't Find out that the bank's currency was Bad until it was too late in this sense You can think of this information Asymmetry as being analogous to the Privacy qualities of ecash issued by Fedin the catch though is that free Banks didn't have this relationship with Everyone there were a few participants Who were aware of the free bank's Finances and these were often the ones Who got their money out first before Everything collapsed The author notes three competitors Brokers and Clearing Houses given this Fact the author argues that it could be Possible for similar participants to Provide the same assurances in a Federated ecash system this could Include the fedy mins themselves the Lightning Network gateways ecash Brokers And even solvency speculators those Betting against Bad fedy mins the most Significant participant that could be Introduced to an ecash system however is One that could provide some form of Proof of reserves now if you've been in Crypto since FTX collapsed you'll know That proof of reserves was all the rage With exchanges that were trying to Increase trust the problem there is that Proof of reserves doesn't tell you Anything about a crypto exchange's Liabilities AKA debts so for instance

You could have an exchange that proves That it has $1 billion worth of BTC Being held for its users who have $1 Billion worth of BTC deposited there but The exchange could also be $2 billion in Debt without users knowing that fact With an e-cash system however it's not Exactly possible to have liabilities in The classic sense because all of the Ecash in circulation is backed by BTC Sitting in a multisig wallet if you can Show that the ecash is backed by this BTC then that's sufficient to trust that The ecash minted by edim is legit this Pertains to the fourth part of the Report which is about proof of Liabilities in this case it's a Reference to the protocol developed by Cashew for keeping track of the ecash in Circulation without compromising privacy Cashew proof of liabilities protocol Requires four voluntary actions in order To work the first is that the private Keys used to Mint the ecash must be Periodically changed the second is that Each creation of ecash must be Accompanied by a mint proof the third is That each Redemption of ecash must be Accompanied by a burn proof the fourth Is that a system needs to be maintained With this info what's fascinating is That the periodic changing of ecash Private Keys is meant to simulate a bank Run on the fedy Min if the fedy Min is

Unable to change the private Keys it Used to Mint the ecash then it's a sign That the ecash they've minted is not Backed by the BTC they claim it to be Very cool stuff now in the fifth part of The report the author talks about the Potential that a Bitcoin ecash system Has to be resistant to politics Naturally this is only possible if there Are lots of fedy minint networks the Author estimates that there could be as Many as 10 million of these digital Community Banks someday they then note That fedy Min networks are also Resistant to politics because they are Currently EX exempt from Financial Regulations they admit that this could Change and if you've been keeping up With our coverage of crypto regulations You'll know that the goal is to end all Non-custodial crypto in any case after Spending the sixth part of the report Talking about why Bitcoin and the Lightning Network alone are insufficient The author returns to the comparison Between Free banking and the ecash System in the seventh part of the report They begin by noting the risk risks of Each which can be seen here a little Later on they address the elephant in The room and that's the possibility that Fedy mints could begin engaging in Fractional Reserve banking now for those Unfamiliar with that term fractional

Reserve banking involves holding only a Fraction of the money backing the Currency in circulation almost every Bank on the planet has a reserve Requirement of less than 30% meaning They only need to keep 30 cents for Every dollar they've issued some of you Will know that the FED removed all Reserve requirements for US Banks at the Start of the pandemic and has apparently Never reinstated them probably nothing Anyhow the author then notes that There's a risk that fedt networks will Begin functioning as fractional reserve Banks that is issuing more ecash than They have BTC for what it's worth they Believe this risk will be addressed by Competition between fedy mins and the Ones with full reserves will win the Penultimate part of the report talks About emerging technologies that could Turn this ecash dream into a reality the Author focuses on a new protocol called Arc which can be understood as a mixer Combined with an escape hatch that Allows users to withdraw BTC in an Emergency funnily enough the primary Drawback of Arc is that it can only Support up to 10.5 million BTC for Technical reasons that are outside the Scope of this video the author says this Built-in limit could be beneficial in The future again for technical reasons That we won't go into here the key

Takeaway is that Arc could address the Technical drawbacks of the ecash system As noted by the author quote The Arc Protocol could provide the necessary Infrastructure for a trustless free Banking system of service providers to Emerge removing agency from fundament m Al economic functions then in the final Part of the report the author puts it All together as follows quote imagine a System where users dollar cost average Into Bitcoin via Arc use Federated Technology for custody use ecash as the Private cash balance for everyday Transactions on the back end all service Providers are clearing balances between One another via the lightning Network Fedy mins and Arc nodes could act as Banking infrastructure and the lightning Network could act as the Clearing Houses Amongst them as a hub and spoke model in Some a financial system of decentralized Community-owned and operated digital Bitcoin Banks so this brings me to the Big question and that's what all this Means for BTC well assuming this ecash System could be turned into a reality it Would be pretty damn bullish for BTC That's just because this alternative Financial system would be a massive Demand driver for BTC due to the ecash Aspect the bigger question though is What this means for the financial system And your Financial Freedom it's easy to

Forget that Financial Freedom doesn't Mean having lots of money it means Having the ability to decide what to do With that money whenever you want this Is something that's disappearing in Trafi as we've mentioned before you Could have billions of dollars in your Bank account but what is that money Worth if you can't spend it if you ever Meet someone who's truly Rich ask them What it's like to move that kind of Money around it's not easy and it's Becoming more and more difficult now This might have something to do with the Fact that the fractional Reserve banking System we have is becoming ever more Fractional by the day put simply banks Are purposely putting up hurdles that Make it harder to move your money around Because the money you have there doesn't Even really exist as we saw with the Banking crisis last spring it's Comparatively easy to move money around In the modern day way back when you Would have to line up at the bank to get Your cash if there was a problem as per The true definition of a bank run today Though all you need do is click a button And that is a big problem for the banks Regardless the fact of the matter is That there is an increasing desire Around the world to have a financial System where you can own your asset and Keep your Financial Freedom the one

Discussed in today's report may or may Not be the solution but it's certainly One step closer towards something we Will all need soon so if you have any Ideas about how these theories could be Put into practice then I urge you to Reach out to the right people and see What you can do because there's no Shortage of Crypt VC's looking to fund These protocols after all what could be More profitable than repl replacing the Entire Financial System okay that's all for today's video Folks so if you learned something new Smash that like button to let us know And if you want to keep learning Subscribe to the channel and ping that Notification Bell if you want to help Others learn about this important topic Then do take a second to share this Video with them meanwhile if you're Looking to maximize your gains while Minimizing your losses in crypto then Check out the coin Bureau deals page It's got trading fee discounts of up to 60% and sign up bonuses of up to $50,000 On the best crypto exchanges and the Biggest discounts on the best hardware Wallets too these deals won't be around Forever so take advantage of them while They last using the link down below as Always thank you so much for watching And I'll see you in the next one this is Guy signing

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