Could This REALLY WORK?! Stablecoin Backed By WHAT?!

The catastrophic collapse of terror’s Ust stablecoin has many wondering Whether crypto will forever be reliant On centralized stablecoins like usdt and Usdc Well a recent research paper proposes a Solution and that’s to create a Decentralized stablecoin that’s backed By and can be redeemed for Electricity an idea so crazy that it Just might work Today i’m going to give you a bit of Background about the paper break down What it says in simple terms give you my Take on whether this crazy idea could Indeed work and what it could all mean For crypto [Music] Before we get electric you need to know About my aesthetic i’m really not a Financial advisor so please save your Quips education and entertainment are my Only dialectics please contact a Financial advisor if your portfolio is Anorexic If this is the first time you hear this Brit my name is guy and i think crypto Is lit that’s why my mission is to make The highest quality crypto content up in This Coins tokens news and reviews are just a Portion of my remit if you’re a crypto Addict subscribe to the channel and give That notification bell a flick now that

I’ve insured my acquit let’s see if this Electric stable coin is legit or if it’s Just a load of If the idea of an electric stable coin Sounds familiar that might be because You saw the recent coin telegraph Article about it now i also saw this Article and after giving it a read i Decided to go down the rabbit hole of This research paper and boy did i find Some rabbits So for starters the research paper comes From the lawrence livermore national Laboratory a government-funded research Facility founded way back in 1952 to Study the development of nuclear weapons And later expanded to study just about Anything related to the national Security of the united states If that wasn’t interesting enough i Couldn’t find much information about the Authors of the research paper maxwell Marieldo and jonathan belloff Maxwell’s only social media presence Seems to be his linkedin profile which Notes that he holds a doctorate degree From the california institute of Technology with a speciality in material Science His phd thesis was titled quote Anomalous thermodynamics of non-ideal Gas physician on nanostructured carbons Ah that old chestnut Now seriously if anyone knows what that

Means please comment down below because I think we’d all like to know Now what’s also interesting is that Maxwell has spent almost all of his Career working at the lawrence livermore National laboratory and he notes on his Linkedin that the focus of his work at The laboratory is 3d printable soft Electronics and adversarial machine Learning Now this is interesting because Maxwell’s previous publications have Nothing to do with cryptocurrency save For one published in 2020 to the journal Of interdisciplinary economics titled Quote quantifying value with effective Complexity Now unfortunately i couldn’t find the Full text but i suspect complexity Equals value Jonathan is equally interesting for Almost the same reasons like maxwell Jonathan’s only social media presence Seems to be his linkedin profile though He does seem to be quite active on it Jonathan’s linkedin notes that he holds A doctorate degree from the university Of south florida with a speciality in Physical chemistry and his thesis was Titled quote theory and simulation of Metal organic materials and biomolecules So clearly these are some seriously Smart chaps just like maxwell jonathan Has spent almost all of his career

Working at the lawrence livermore National laboratory and he notes on his Linkedin that the focus of his work at The laboratory is quote matter under Extreme conditions non-equilibrium Statistical physics pattern formation Multi-scale physics and self-assembly Again this is interesting because it Seems none of jonathan’s previous Publications have anything to do with Cryptocurrency either which begs the Questions of how and why these two chaps Decided to write a research paper about A cryptocurrency stablecoin backed by Electricity The acknowledgments at the end of the Research paper specify that quote this Work was performed under the auspices of The u.s department of energy by lawrence Livermore national laboratory under Contract deac 5207 na 2734 a contract worth a whopping 61 billion dollars according to gov Tribe Now while i’m tempted to say that There’s a lot more to this story than Meets the eye the answer might be as Simple as both authors investing in Terror watching their luna and ust go Down to xero and wanting to blow some Research money Anyways you can find out what happened With terror using the link in the Description

Anyways the research paper is titled Quote can a stablecoin be collateralized By a fully decentralized physical asset It was published to the journal Cryptoeconomic systems in june this year And the full text can be found using the Link in the description The research paper begins with a brief Introduction wherein the authors Rightfully point out that stable coins Are stuck with a trade-off between Decentralization and being backed by Real-world assets with intrinsic value The assumption being that these Real-world assets must always be Centralized In the author’s own words quote we Propose a new class of stable coins that Can be both fully decentralized and Fully collateralized by a physical asset With intrinsic utility which is of Course electricity The electric stable coins the authors Propose can quote transfer free energy In the form of electricity between Anonymous users of a decentralized Network without interfacing with utility Corporations power plants or even Electrical grid networks And if that wasn’t cool enough quote Electricity can be used to collateralize A stablecoin such that each token can be Exchanged for one kilowatt hour of Electricity and vice versa without any

Centralized authorities Epic So the first part of the research paper Explains what the authors consider to be The two types of cryptocurrencies These are collateralized Cryptocurrencies such as paxos’s pax g Which is backed by physical gold And uncollateralized cryptocurrencies Such as bitcoin’s btc which is often Referred to as digital gold The authors reiterate what they Mentioned in their abstract and that’s That collateralized cryptocurrencies Always carry some risk due to the Centralization of the assets that back Them in this case the risk that someone Would steal the gold backing the pax g In circulation from paxos’s custodians The authors also highlight the fact that You have to trust the issuers of these Collateralized stable coins and use Tether as their example given that it Hasn’t been all that transparent about The assets backing its usdt stablecoin More about how the biggest stablecoins Are backed using the link in the Description Now what’s awesome is that the authors Even call out central bank digital Currencies by saying quote if a nation State were to issue a cryptocurrency That is directly backed by that nation’s Fiat currency there would remain risks

That the nation would enact monetary Policies that lead to excessive Inflation The authors then turn to the topic of Uncollateralized cryptocurrencies like Bitcoin’s btc and correctly point out That their value is ultimately Determined by how many people believe it Holds value the authors argue that this Is exactly why the prices of Cryptocurrencies are so volatile and That even though many crypto holders Claim that the volatility will decrease Over time this quote emergent value Hypothesis has yet to be proven which is A fair point As far as the authors can tell the Volatility caused by this value Mechanism is why stable coins were Created but stress that quote to date no Stable coin has been invented that is Both hard pegged to a stable physical Asset with intrinsic utility and fully Decentralized Also true Now after briefly explaining the three Types of stable coins and their Drawbacks fiat collateralized Cryptocalaturized and uncollateralized The authors propose their electric Stablecoin as a solution and specify That quote The stablecoin concept proposed in this Work has not yet been implemented

The authors add that it’s going to take A few years for the technology to be Developed that would make stable coins Backed by electricity possible so let’s Hope one of our viewers takes it upon Themselves to make this happen sooner Rather than later Anyhow the second part of the research Paper explains why the authors are Interested in creating a stable coin Backed by electricity and it starts with Yet another incredible layman’s Explanation of the author’s so-called E-stablecoin quote The price peg is maintained by ensuring That each e-stablecoin token is directly Exchangeable for one kilowatt-hour of Electricity and vice versa any user can Mint an eastablecoin token with the Input of one kilowatt hour of Electricity with fees or can redeem an Establecoin token in exchange for one Kilowatt hour of electricity output with Fees Crucially there is no centralization Anywhere in the system There are no entities of authority eeg Leadership corporation nation state Centralized infrastructure etc it is a Trustless system Brings a tear to my eye Now as to why the authors chose Electricity they explained that it’s the Most widely available asset it’s an

Asset that’s always in demand it’s an Asset with a relatively stable price Recent economic crises notwithstanding And that an e stablecoin would make it Possible to lower global energy prices Now this is where things get a bit Complicated because these e-stable coins Quote cannot transmit electricity Through conventional power lines but Instead transfers free energy solely Through the communication of information Now for those unfamiliar the concept of Free energy comes from nikola tesla the Famous inventor who revolutionized Electricity Nikola theorized that it was possible to Transmit energy wirelessly and was even Working on a prototype in 1901 before Running out of capital look it up it’s Seriously interesting stuff Now the authors conclude this section by Noting quote the intended goal of E-stablecoins is to provide a stablecoin That replicates all of the decentralized Functionality afforded by bitcoin Without ever having to rely on the Unproven emergent value hypothesis With that said though the authors also Admit that an e stablecoin would never Be able to replace btc because they have Different economic profiles the format Having an indefinitely inflationary Supply and the latter having a fixed Supply

This is why it’s odd the authors refer To both as a store of value The third part of the research paper Explains exactly how this e stablecoin Works and the first sentence is Deceptively simple quote The theory behind e stablecoin is built On the fact that free energy can be Transferred by the transmission of Information alone The authors go on to give an example of How energy can be transmitted wirelessly Without releasing heat something once Believed to be impossible because of the Second law of thermodynamics The authors then talk about how this Free energy is analogous to the wireless Transfer of information Now as far as i understand what the Authors are really getting at here is That physical energy can literally be Converted into digital information and Vice versa if you have the right Technology The authors give an example of what this Would look like and it’s as complicated As you might expect Step one quote Alice connects a syllable engine to a Large thermal mass at a single Temperature alice extracts thermal Energy and converts it into one kilowatt Hour of electricity along with waste Data which she stores locally via

Reversible computing we’ll come back to That Lizard engine later Step two quote for the price of one Estable coin token plus a fee alice Outsources her waste data erasure Process to a decentralized data storage Cloud d In this exchange a smart contract Destroys the e-stablecoin tokens that Alice paid for this service The decentralized data storage cloud is Housed across a network of privately Owned decentralized and anonymous Reversible computers Step 3 quote bob storage space 2d can Expand his own electricity locally to Erase the waste data outsourced to his Privately owned hard drive for this Service bob is awarded one e-stablecoin Token plus a fee this transaction is Automatically mediated by a smart Contract Step 4 quote the fee structure is Regulated with a transparent automated Smart contract based on an estimate of The percentage of d that is currently Empty Now if all of that flew over your head Let me try and explain it in another way To the best of my ability basically Alice has some futuristic device that Lets her extract energy from her Surroundings

She can use this energy to do day-to-day Things like trade crypto link to my Binance tutorial in the description huge Fee discount is available there Now whenever alice extracts energy from Her surroundings with this device it Creates waste in the form of data which Alice must spend the same amount of Energy to destroy i.e delete from her Device Because this waste data builds up over Time alice would eventually either have To pay energy to delete it from her hard Drive when it gets full or buy more hard Drive space This is for the thermodynamic reasons That the authors explained earlier and I’ll again come back to later Now there is a third alternative for Alice and that’s that she can send this Waste data from her device to a Decentralized storage cryptocurrency Where bob is providing storage space via His personal hard drive as a miner or Validator in much the same way you would For crypto projects like filecoin The catch is that disposing of this Waste data costs alice one e stablecoin Plus a fee which is paid to the Decentralized storage cryptocurrency Network Assuming bob is selected by the network To destroy the waste data on his drive He expends electricity to destroy it in

Exchange for one e-stablecoin plus a fee Naturally alice would buy this E-stablecoin from someone be it an Individual in a peer-to-peer transfer or An institution like a crypto exchange Since each e-stablecoin represents one Kilowatt hour it would cost whatever one Kilowatt hour of electricity costs In fiat terms Now the fourth part of the research Paper explains the economics behind Electric stable coins Here the authors begin by reiterating That bitcoin’s btc is considered to be Digital gold and though they’re still Skeptical of the value theory that Underlines it they don’t deny that it’s Headed in that direction The authors then acknowledge that Minting and redeeming e-stable coins Will cost quite a bit of electricity Roughly 2.8 percent of the world’s total Annual energy consumption over a 12-year Period They say this isn’t a problem because There will be no shortage of energy to Go around as more is created That’s something the critics Conveniently forget about when Discussing bitcoin’s own energy use and You can get the facts and stats about That using the link in the description i Digress Because there could be issues with

Redeeming billions of e-stable coins for Billions of kilowatt hours of Electricity in a short time frame the Authors seem to suggest creating a cap On how many e-stable coins can be minted And redeemed each day which makes sense If you ask me Now this ties into one of the issues E-stable coins could run into and that’s That if there isn’t any more waste data Left to erase from the decentralized Storage cryptocurrency network it means That more e-stable coins can’t be minted As basic economics dictates this would Cause e-stable coins to go above their One kilowatt-hour peg Logically the second issue e-stable Coins could run into is an inverse of The first and that’s if the Decentralized storage cryptocurrency Network is filled with waste data it Means nobody can redeem estable coins For electricity as basic economics Dictates this would cause e-stable coins To fall below their one kilowatt hour Peg The authors admit that this second Scenario could lead to a death spiral Because e stable coin holders would lose Faith in their tokens causing their Price to collapse The authors underscore that this is a Real risk with a decentralized storage Cryptocurrency whose total storage is

Always changing as such the authors Suggest using a smart contract to adjust Fees for the e stablecoin protocol to Ensure that one e-stablecoin can always Be redeemed for one kilowatt hour of Electricity provided by a miner or node On the decentralized storage Cryptocurrency network The authors then pivot to discussing the Profitability of providing futuristic Data waste management services for E-stablecoins and highlight that it Fundamentally depends on two things The fees being paid by alice and the Cost of energy wherever bob is with Cheaper energy yielding a higher reward The authors even go as far as to discuss The implications of intermittent energy Sources such as wind and solar and how That could result in some decentralized Storage providers being online at Different times of the day or year Now this all relates to the next Subsection which concerns the energy Arbitrage between different Jurisdictions if you’re confused by this Jargon the authors use a plain english Example quote Germany has the highest average Electricity price at circa 36 cents per Kilowatt hour for comparison in qatar The price of electricity is as low as Circa three cents per kilowatt hour A savvy investor may therefore take

Advantage of this arbitrage opportunity By minting e-stablecoin tokens in qatar And cashing in these same e-stablecoin Tokens in germany where the same Kilowatt hour of electricity could be Sold back to the grid at a higher price Point The authors note that this arbitrage Would eventually create an average Energy price that will hopefully lower Energy costs in most countries the best Part is that this electric arbitrage Will always be possible precisely Because of things like intermittent Energy sources and regional change in Energy output And because the futuristic device used To create this energy is extracting it From one’s surroundings this means that This same arbitrage is even possible Between places with radically different Temperatures the authors do admit that It might not be all that profitable Though The fifth part of the research paper Explains the five technologies required For this e-stablecoin system to work The first technology is the Decentralized storage cryptocurrency Network and its smart contracts and i’m Sure most if not all of you know about Those Both of these technologies must be Compatible with reverse computing which

Doesn’t currently exist though it’s Known to be possible as per the author’s Earlier comments The authors actually go into extreme Detail about how these smart contracts Should be set up and how they can Preserve privacy The second technology is called Factual communication which sounds a lot Like conversations i’ve had with a few Folks in the past In all seriousness the authors Effectively define counterfactual Communication as a form of information Sharing that is completely frictionless Or in the author’s words quote Does not transfer mata slash energy from Point a to point b Something that is necessary for an e Stablecoin system Although counterfactual communication is Also still mostly theoretical the Authors say that scientists have managed To achieve it on a small scale by using Quote a single photon to detect the Presence of a photosensitive bomb Without interacting with and destroying The bomb in the process Moreover quote a counterfactual Communication network may be able to Piggyback on photon based qubit Transmission channels eg satellite and Fiber optic that are already being Constructed for the quantum internet

Looking forward to that one Now the third technology e-stable coins Would require for their operations is That aforementioned silad engine which You’d think is entirely theoretical but Actually seems to be in its early stages Of development as well Now what exactly the zillard engine is And how it works is outside the scope of This video but the tldr is that all Information is entropy and this means That you can transmit energy without Emitting heat by expressing that entropy As information In the context of e-stable coins the Entropy is the waste data The fourth technology is closely related To the third and that’s reversible Computing As explained by the authors quote Reversible computing allows alice to Extract ambient heat and convert it into Work plus waste data using a salad Engine without expending energy which in This case would be heat Additionally reversible computing quote Allows alice to outsource her waste data To bob for erasure so that she does not Have to expend energy locally to erase It Now as to what exactly reversible Computing is the name essentially says It all reversible computing makes it Possible to reverse quote every aspect

Of operation involved in computation Including the energy your computer uses To compute things or trade crypto As i mentioned a few moments ago Reversible computing doesn’t currently Exist but the authors again note that it Is theoretically possible and spend Quite a bit of time explaining a design Proposed by some other big brain bloke That involves lots of magnets The fifth technology required for an E-stablecoin to work is data storage Capacity which the authors note as being Limited to supporting two quadrillion Dollars worth of e-stable coins based on The laws of physics brilliant stuff But alas the authors revealed that Today’s data storage technology is Insufficient to support e-stablecoins And quote only negligible quantities of Value could be stored using the digital Data storage media commercially Available today What’s seriously scary is that the Authors say that dna could eventually be Used for e stablecoin related storage Because quote On a per gram basis dna or rna can store Several orders of magnitude more data Than state-of-the-art silicon-based Hardware What’s more is that quote recent Experiments indicate that dna data Storage can store up to 215 petabytes of

Data per gram of dna and quote Approximately 200 kilograms of dna Storage could continuously transfer Enough electricity to power the entire Planet Now on that note you can find out what Rising energy costs could mean for Crypto mining using the link in the Description Anywho the research paper concludes with Quote this is the first proposal for a Cryptocurrency that is both fully Decentralized and fully collateralized By a physical asset with stable value And intrinsic utility electricity And that even though the technology Isn’t ready for it yet it will be Eventually This is simply because all the five Technologies required for eastable coins To work are currently being researched And developed for other purposes and That means there’s a lot of money and Manpower going towards each of them The authors end with quote if any Cryptocurrency asset leans solely on its Credibility to set it apart the entrance Of other cryptocurrencies with Comparable credibility like e Stablecoins can pose a threat to its Unique value proposition in the future So this brings me to the big question And that’s whether e-stablecoins are the Next big thing or just bs and what they

Could mean for the future of Cryptocurrency I’ll start by saying that based on my Admittedly amateur understanding of this Research paper e-sable coins have lots Of potential and could be the holy grail That many crypto holders are looking for The thing is that the technologies that Are required for e-stable coins to work Are arguably even more revolutionary Than the e-stable coins themselves That makes me wonder whether they would Ever be really adopted or they even face Competition resulting from other Innovations related to their core tech i Mean think about it if you can make Energy out of thin air with some sort of Blizzard machine then why would you ever Bother buying electricity with an E-stablecoin Never mind the fact that governments Around the world seem to be trying to Centralize and control their power grids From the top down Now i know physics says lots of waste Data will be created when i make energy With my lizard machine but it sounds Like additional storage space will be Extremely easy to get in the future Especially with all that dna data Storage so why not just buy more storage Space instead There’s also the question of whether Governments would ever allow such a

System to exist especially since they Appear to be the ones funding all this Research and development Something tells me they won’t let this Technology fall into the hands of the Plebs because it would cut them out of The equation In terms of what it all means for Cryptocurrency i honestly don’t know Because crypto will likely benefit from These technological innovations as well And it’s possible if not likely that These e-stable coins will come from the Crypto industry itself And speaking of which i also don’t Entirely agree with the author’s claim That emergent value is incorrect i Reckon it’s quite clear that the value Of an asset is something subjective and I understand how that idea wouldn’t sit Well with someone who spent their career Obsessing over objective scientific Truths At the same time however i can’t claim That the emergent value hypothesis is Correct because as the authors pointed Out it hasn’t been proven yet It’s also clear that bitcoin’s btc Ethereum’s eth and these e-stable coins Will all play a different role They are not and probably will not be Competitors Even so that hasn’t stopped people from Claiming that eth could someday kill btc

Or stop these authors from suggesting That e stable coins will kill crypto I can’t say much more about the latter Battle because it hasn’t begun but if You’re wondering what would happen if Eth flips btc well Link in the description And that’s all for today’s video about Electric stable coins if you enjoyed it Smash that like button sieve and play if You plan on coming back for more Subscribe to the channel and ping that Notification bell If you’ve already watched all the videos On this channel check out coin bureau Clips for behind the scenes and more Crypto flicks If you’ve already watched everything on Coin bureau clips tune in to the coin Bureau podcast for crypto info from the Very beginning If you’ve already listened to all the Coin bureau podcast episodes follow me On twitter tiktok and instagram for Memes and market insights if you already Follow me on twitter tik tok and Instagram then join my telegram for Daily crypto updates if you’re already Part of my telegram channel then Subscribe to my weekly newsletter to see My crypto portfolio If you’ve already done all of the above Then that means you are a super fan and The only thing left to do is visit the

Coin bureau merch store and get yourself A cool crypto hoodie sweater or t-shirt You can find your way there using the Link in the description so thank you all So much for watching and i’ll see you All next time stay cool stay safe and Stay crypto [Music] You