The Perfect Cryptocurrency: This is What It Looks Like!!

The purpose of cryptocurrency is to Replace the existing financial system This means replacing the money which Bitcoin is doing and replacing the Payment rails which ethereum and others Are doing However this also means replacing the Currency that’s used for day-to-day Transactions and the quest for the Crypto that’s actually a currency Continues with many contenders including Fiat stablecoins That’s why today i’m going to tell you What characteristics the crypto that is Used as a currency should have so that You’ll know what the perfect Cryptocurrency looks like when it Eventually comes around [Music] Before we begin i need to fill you in Financial advice is not something i Sling education and entertainment are The only things i fling so please Contact a financial advisor if you need Help getting bling If this is your first time seeing my Face my name is guy and i’d like to Welcome you to my crypto base the coin Bureau contains some of the highest Quality crypto content a human can Create coins tokens news reviews and Other knowledge that will take your bags To outer space So if this sounds great subscribe to the

Channel and ping that notification bell So you never get a video late Now that you know about my state it’s Time to look at some crypto traits I suppose i should start by clarifying What i meant in the introduction As some of you will know money and Currency are not the same thing for the Sake of simplicity you can think of Money as being something that’s held Onto as a store of value whereas a Currency is used for standard financial Transactions Once upon a time fiat currencies which Are of course used for everyday Transactions were backed by gold which Is of course not used for day-to-day Transactions Today fiat currencies are backed by Nothing and it’s part of the reason why There’s been so much inflation and part Of the reason why crypto was created in The first place Now as i mentioned in the introduction Bitcoin’s btc is slowly but surely Taking the role of money i.e the store Of value in the rapidly expanding crypto Economy Note that this is up for debate as some Would argue that btc can also be used as A currency thanks to the lightning Network more on that later For the purposes of this video btc is Assumed to be money and nothing more

Meaning that the role of an actual Currency has yet to be filled in the Crypto industry As i also mentioned in the introduction This is a role that stable coins and Even payment cryptocurrencies like Litecoin’s ltc are trying to fill The problem with stable coins is that Most of them are centralized this not Only goes against the ethos of Cryptocurrency but it leaves such stable Coins vulnerable to all sorts of issues Especially since many of them are backed By various forms of government and Corporate debt There are also decentralized stable Coins but as we’ve seen they have all Sorts of issues of their own namely Limits on growth due to the volatile Collateral that’s used to mint them Now even payment cryptocurrencies like Ltc have limitations that prevent them From being adopted as actual payment Methods namely scalability i.e speed on That note you can learn about the Fastest cryptocurrencies using the link In the description Now as you’ll soon see there are many Cryptocurrencies that have some Characteristics of a perfect payments Coin or token and i reckon it’s only a Matter of time before someone somewhere Puts these characteristics together and Creates a new crypto project that will

Be an actual crypto currency You can consider this video as being my Small contribution to this new crypto Project which to be clear does not exist It’s an idealistic look at what the Perfect cryptocurrency would look like If someone were to develop it So the first characteristic of a perfect Cryptocurrency is an equitable initial Distribution of the coin or token and There’s really no shortage of routes you Could take in this regard that said it Would be wise to avoid conducting an ico If possible this is because crypto Projects that have conducted icos are at Risk of regulatory scrutiny and the Initial distribution of the coin or Token will likely be skewed towards Early investors and the team which is Neither equitable nor desirable for a Crypto that’s supposed to be used for Payments by everyone This leaves two other options for an Initial token distribution and that’s a Fair launch or an airdrop Now as many of you will know a fair Launch is how bitcoin litecoin dogecoin Monero and a handful of other Cryptocurrencies got off the ground Basically someone posted on a forum Saying they were going to create this Cryptocurrency on this date and time and Invited everyone to come and mine it From xero

Now fair launch cryptos are extremely Rare these days and as far as i can tell That’s simply because they’re incredibly Difficult to do in this day and age There are just too many bad actors eager To make a quick buck and it’s hard to Bootstrap an ecosystem with no initial Funding or team allocation One solution to this issue would be to Do a variation of what r we’ve did which Is to take a portion of all block Rewards and or transaction fees and have Them accumulate in a special wallet Which the community can decide how to Spend This ties into crypto governance which I’ll come back to later on Now another way to distribute a coin or Token in an equitable manner is to Conduct an airdrop to active wallets on Specific blockchains This is exactly what lifepier did with Its lpt token and it’s something that’s Frequently done by crypto projects in The cosmos ecosystem Ideally these airdrops would be paired With some sort of decentralized identity Mechanism so that a single entity Controlling multiple wallets doesn’t end Up with an abnormally large share of the Initial supply as was the case with juno If you’re wondering where you can find Crypto airdrops i’ll leave a link to my Video about that in the description

Anyways conducting an airdrop is Probably the way to go if the Cryptocurrency will use proof-of-stake As its consensus mechanism and this Brings me to the second characteristic Of the perfect cryptocurrency So the second characteristic of the Perfect cryptocurrency is it has a Robust consensus mechanism Now there’s a lot of debate out there as To what is the best consensus mechanism And they all inevitably have pros and Cons from scaling to security to Decentralization Indeed my portfolio has a wide variety Of altcoins with varying consensus Mechanisms precisely because no Cryptocurrency right now has the perfect Consensus mechanism However if you were to ask me what Mechanism the ideal crypto would have it Would be some form of proof of work A completely novel version of it Now this is because a proof-of-stake System could be easier to corrupt as all You need is lots of capital to acquire Enough stake to change the rules of the Game This is something big investors could do Quite easily and something governments Can do with even greater ease since They’re the ones with the money printers However this doesn’t mean that the Perfect cryptocurrency should use the

Same proof-of-work consensus mechanism As bitcoin or litecoin and i would go as Far as to say that it shouldn’t because It would eventually make mining Inaccessible to the average person as is The case with btc ltc and others One solution could be to use an Asic-resistant proof-of-work consensus Mechanism like monero meaning that you Could mine this perfect cryptocurrency Using a regular computer Even then though you’d probably need to Buy a pretty expensive rig to make Mining worth it and don’t get me started On the electricity bills trust me i know This is why i emphasized the word novel A few moments ago If you think about it the whole point of A crypto consensus mechanism is to Process crypto transactions accurately I.e securely The reason why proof of work is so Secure is ultimately because it’s hard For a single entity or group of entities To manipulate crypto transactions As we’ve seen with cryptos like ethereum Classic however this can still happen if Someone is able to acquire the computer Power required to do so As such the ideal proof-of-work Consensus mechanism should involve a Type of work that’s difficult if not Impossible to corrupt with sufficient Capital and a type of work that the

Average person could easily do with Technology that’s widely available Ideally whatever hardware is required to Participate in consensus would be Possible to build from scratch and the Instructions would be open source for Anyone to see as is the case with Helium’s hotspots Now this might sound crazy but it’s Possible that physical movement could Play a role in this proof-of-work Consensus mechanism especially since Smart watches are commonplace Microsoft is actually working on a Similar kind of proof-of-work mechanism Albeit for advertising purposes Now if you want more ideas for what a Novel proof-of-work consensus mechanism Could look like you can check out our Video about crypto consensus using the Link in the description Now the third characteristic of the Perfect cryptocurrency is the tokenomics That are aligned with the coin or tokens Role as a payments currency this is Where things get quite complicated but Also very interesting so listen closely The reason why many believe that btc Can’t play the role of a currency is Because of its tokenomics Btc has a maximum supply of 21 million This supply increases at a slower and Slower pace as per bitcoin’s halving Cycles which is why it might take around

Another 100 years to mine the last 3 Million or so btc As basic economics dictates if the Demand for an asset stays the same or Increases while the new supply of said Asset continues to decline its price Will rise This is essentially the economics of btc And many other cryptocurrencies hence Why their prices have all exploded over The last decade There’s only one problem though and That’s that this dynamic means the Average person will eventually not want To spend their btc and some would say This is already the case today After all why would you spend something Today that’s going to be worth more in The future This unwillingness to spend would Eventually lead to what’s called a Deflationary death spiral where debt Becomes more expensive risk-taking stops And innovation slows to a crawl Obviously that’s not ideal and it’s a Situation that many debt burdened Individuals and institutions want to Avoid at all costs To be honest i’m not entirely convinced That this deflationary death spiral Would actually occur given the vested Interests of the entities fighting Against it but the reasoning is Admittedly sound and it consequently

Could disqualify cryptocurrencies like Bitcoin from ever being actual Currencies So what would the tokenomics of the Perfect cryptocurrency look like well we Know that a fixed or inelastic supply is No good because it leads to deflation And we also know that an infinite or Extremely elastic supply is no good Because it leads to inflation This leaves only one option and that’s Tokenomics which automatically adjust a Coin or token supply based on demand to Ensure its price remains relatively Stable while simultaneously preserving The purchasing power of all its holders This is exactly how ample force Tokenomics were designed but the problem There is that ample’s supply adjustment Isn’t instant which leads to lots of Volatility Ample is also pegged to the us dollar Which is again not ideal even though It’s pegged specifically to the 2019 us Dollar Ideally the perfect cryptocurrency would Instantly adjust its supply based on Demand and target a peg to a relatively Stable asset that everyone recognizes And that’s not a fiat currency This could be gold and it could Eventually be btc Heck there might even be a way for this Perfect cryptocurrency to be backed by

And redeemable 4 btc But this opens a whole can of worms About minting burning liquidations and Runs on the bank I reckon there’s a way you could avoid Many of these worms by allowing Self-minting involving locking btc in a Special multi-sig wallet but it’s safe To say that this kind of crypto Architecture is above my paygrade It’s also hard to conceptualize how an Elastic currency could be backed by an Inelastic money in any case if you’re Curious about what happens to bitcoin When the last btc is mined you can find Out using the link in lost description Anyhow the fifth characteristic of the Perfect cryptocurrency is the ability to Directly or indirectly solve the Blockchain trilemma If you watched our aforementioned video About the fastest cryptocurrencies You’ll know that the blockchain trilemma Was defined by ethereum creator vitalik Buterin and it states that a Cryptocurrency cannot be decentralized Scalable and secure it can only do two Of these three things effectively Although there are many cryptocurrencies Which have claimed to solve the Blockchain trilemma i have yet to find One that isn’t centralized under the Bonnet Not only that but the faster a

Cryptocurrency is the faster its Transaction history will grow This rapid growth in transaction history Means a smaller and smaller number of Nodes will be able to store the full Blockchain history which will lead to Centralization down the line That said the rapid growth of Transaction history may not be an Immediate issue if our hypothetical Perfect cryptocurrency only supports Simple transactions and has limited Smart contract functionality Even then though it’s only a matter of Time before this does become an issue Now given these facts it’s unlikely that Any cryptocurrency will be able to Directly solve the blockchain trilemma Anytime soon if ever And this means that the only option is To solve the blockchain trilemma Indirectly Ideally the perfect cryptocurrency would Leverage multiple decentralized storage Solutions for its long-term blockchain History to ensure that this history can Always be retrieved This could potentially be done in-house By using a portion of block rewards or Transaction fees to compensate storage Nodes Now as for scalability ideally the Perfect cryptocurrency would focus on Decentralization and security at the

Base layer like bitcoin does and rely on Novel layer 2 scaling solutions like the Lightning network for speed like bitcoin Also does According to blockstream’s most recent Estimates the lightning network can Currently process around 40 million Transactions per second with the current Number of nodes on its network and this Scalability will only increase as the Number of nodes increases If you watched our video about the Lightning network you’ll know that the Only real issue is that it requires Nodes to lock up large amounts of btc in Multi-sig wallets to ensure they stay Honest and that the absence of Sufficient btc collateral at certain Junctions means large transactions don’t Go through Moreover having a handful of lightning Network nodes process most transactions Is really not all that different from The current financial system and could Also create a single point of failure I.e result in centralization This is an issue that the perfect Cryptocurrency would ideally solve with Some other incentive mechanism like On-chain reputation or the ability to Use other cryptocurrencies and possibly Even real-world assets as node Collateral on this hypothetically Perfect lightning network

Plato would be proud Philosophy jokes aside the sixth Characteristic of a perfect Cryptocurrency is twofold and that’s Privacy and interoperability If you watched our video about the worst Case for cryptocurrency you’ll know that Privacy is a prerequisite for financial Freedom This is because if transactions are Completely transparent the people Sending and receiving those transactions Can still be coerced and punished even Though the transactions these oppressed People are sending are technically Unstoppable This isn’t some conspiracy theory either Blockchain analytics companies like Chainalysis are tracking just about Every crypto transaction and they are Actively sharing this data with Governments around the world This opens the door to some seriously Dystopian stuff if privacy is not Somehow preserved At the same time there are legitimate Concerns that criminals could take Advantage of this privacy to engage in An unprecedented amount of illicit Activity which begs the question of Where to draw the line on privacy To my mind the perfect cryptocurrency Would ideally keep all transactions Private by default but provide a tool

That allows you to reveal your Transaction history to authorities for Compliance purposes Alternatively it could make it possible To attach a payment id to transactions Like onhaven protocol in terms of Interoperability the perfect Cryptocurrency would need to be Seamlessly interoperable with most major Cryptocurrencies and ideally be Interoperable with other payment systems As well Crypto interoperability could be Achieved by integrating with the cosmos Ibc but seamless transactions with the Cosmos ibc are only possible for Proof-of-stake cryptocurrencies Alternatively the perfect cryptocurrency Could simply integrate with a next Generation decentralized exchange like Thor chain that allows for native coin And token swaps between and within Different cryptocurrency blockchains More about thor chain in the Description now as for interoperability With other payment systems i can’t say i Know of any existing solutions but the Closest would probably be the flexor Network with its amp token External interoperability would probably Be very difficult to achieve in a Decentralized way due to regulations and Funnily enough the amp token is facing Regulatory scrutiny from the sec and you

Can learn more about that using the link Down there Anywho the final characteristic of a Perfect cryptocurrency would be either An effective governance structure or the Absence of any governance structure Now i’ll explain why the absence of a Governance structure is ideal in just a Second First i need to explain why crypto Governance is currently ineffective For starters most crypto governance Follows a one token equals one vote Model which really isn’t all that Different from proof of stake This means that a handful of token Holders have the power to pass whatever Proposals they want and this issue was Recently confirmed as endemic by Chanalysis Moreover most crypto governance Structures are on-chain versions of Democratic processes which we know to be Inherently centralizing Look no further than the capital city of Your country if you need evidence all The important decisions are made in Washington dc in london in ottawa etc We’re starting to see the same sort of Centralization emerge in supposedly Decentralized autonomous organizations With important decision-making powers Being delegated to small groups of Community elected representatives or

Council members which are again put in Place via token vote Personnel from crypto vcs are often the Ones who occupy these positions of power And i’ve seen them argue that this Centralization is necessary because in Crypto there are many cases where Decisions need to be made quickly say in The case of a hack which makes sense and I completely agree This is why the perfect cryptocurrency Should ideally have a governance Structure that’s akin to an on-chain Monarchy This is because it’s almost exactly how All cryptocurrency consensus mechanisms Work today regardless of whether they’re Proof of work proof of stake or Something else By some process usually pseudorandom Based on stake or hash power a single Node is selected to produce a block and Earn a block reward This node is often referred to as a Leader in crypto project documentation And this leader is typically in power For a single block while it’s being Produced So Why not modify this mechanism to be Suitable for governance a leader is Pseudo-randomly or even randomly Selected from the community to govern The crypto project for a short period of

Time during which they can table Proposals for community vote and decide How money is being spent from the Treasury For extra security a council consisting Of developers and vcs could have the Power to veto any malicious proposals Coming from the crypto project’s interim Ruler it sounds insane on paper but i Really think this could work in practice And the proof is again in the crypto Consensus mechanisms themselves The best part is that it would create a Massive incentive for the users of this Perfect cryptocurrency to participate in Governance because doing so would give Them a chance of becoming the king or Queen of a global payment system for a Short period of time and heck maybe they Could even be compensated Now as amazing as this may sound the sad Reality is we’re a long way away from These kinds of novel governance Structures and this is why the ideal Governance structure for the perfect Cryptocurrency might have to be no Governance structure at all As we’ve also seen with the governance Structures of the world’s governments It’s easy to influence politicians if You have enough capital and the Inability to do so for cryptocurrencies Like bitcoin due to the absence of a Governance structure is apparently

Driving some institutional investors mad You can find out more about that by Watching our video about esg using the Link in the description And that is all for today’s video about The characteristics of the perfect Cryptocurrency Now if you guys have any ideas about What the perfect crypto that’s actually Used as a currency should look like Please drop them in the comments section Down below because i would really love To know what you all think I’m sure any would be perfect crypto Developers would love to know too Now if you enjoyed the video smash that Like button and subscribe to the channel If you haven’t already make sure to ping That notification bell for good measure Too If you have some extra time to kill head On over to coin bureau clips to get some Behind the scenes content from yours Truly and if you’re on the go tune in to The coin bureau podcast to keep learning More about crypto If you’re addicted to social media you Can follow me on twitter tiktok and Instagram for memes and market analyses And join my telegram channel for daily Crypto updates you can’t afford to miss If you want to know what perfect cryptos I hold as part of my e-portfolio you can Find out by subscribing to my weekly

Newsletter where i also reveal what Projects i’ll be covering next And if you want to support the channel Just head on over to the coin bureau Merch store and cop some comfy crypto Clubber Links to all these resources and more Are down in the description as always Thank you so much for watching and i’ll See you next time this is guy bidding You goodbye [Music] You