Could the Federal Reserve end one of the most important use cases for cryptocurrency, instantaneous transactions with the utmost security? We've got to talk about that and a new system. The Federal Reserve is launching in 2023 in this video. But first, we need to understand the fundamental value of an investment and understand the difference between fundamentals and intangible. See, one of the intangibles that we'll be talking about is: wait a minute.

How can the FED replace something when crypto is designed to replace the FED? After all, crypto is tired. and the crypto Community is tired of the fact the Federal Reserve can essentially accelerate boom and bust Cycles by the use of a money printer or the inverse money printer. And maybe we should just stop printing money and paper currency. or Fiat is just totally worthless.

Those are going to be some of the intangibles that we talk about in this video. But first, what are some fundamental values that go into anything that we spend money on? Well, they're generally two. There's the fundamental value of how much we expect to receive in return for an investment, and then there's the fundamental intangible value of something that we can receive in return. So for example, if you put a hundred dollars into an investment and you have ten dollars back every year, you might look and say, okay, Well, fundamentally, I'm getting a 10 cash on cash return.

You go put a hundred dollars a month into a payment on an iPhone. You're gonna get some intangibles like, well, the camera's better, right? We don't really measure that by a dollar, We go. Yeah, it's it's better. It's faster.

That helps me. intangibly. We don't really value that. It's kind of like, oh well.

We like the idea that we're supporting A system that puts an end to the centralization of central banks. That's an intangible. Fundamental is how much cash flow are we going to get back? And when we look at fundamentals, there are really two forms of cash flow. There's the preservation of value, and then there's actually getting money back.

With cryptocurrency, The pressure: preservation of cash flow might: Simply Be Keeping a stable value. Kind of like being a digital gold. The second form of a fundamental value would be a cash flow. So when we look at the first form, we generally look at Bitcoin.

Gold is worth about 12 trillion dollars, and Bitcoin is worth about 1 40th of that at just under 400 million dollars. And so some folks say Bitcoin should be worth as much as Gold's market cap, which could put the price of Bitcoin somewhere in excess of five hundred thousand dollars per coin, which is pretty dang remarkable. In fact, some folks say that Bitcoin is just much more useful than gold. Because see, with gold, even though gold might be better than treasuries because it's harder to sanction gold than it is to sanction treasuries.

For example, if you're like Iran and you buy U.S treasuries with your dollars or you're Russia and you buy us treasuries and then all of a sudden you do something the United States doesn't like. The US says we're freezing all of your assets and now you don't have access to your treasuries or money anymore, right? That is a risk that you have with centralized currencies and treasuries, but one that you don't really have with gold Because gold is universally accepted. Except the problem with gold is it's heavy to transport. It's difficult to sell quickly.

It tends to have a relatively stable price, but it's expensive to secure and maintain. and that's kind of where Bitcoin's digital gold comes in pretty aggressively. Where you look and say, hey, well, Bitcoin might be better than treasuries due to, well, it's immunity to sanctions Harvard actually suggested that central banks hold treasuries for exactly this purpose. They put together a piece that I broke down about a week and a half ago on the channel, but the piece is entitled hedging Sanctions Risk Cryptocurrency in Central Bank Reserves Pretty good piece into the idea that hey, you know crypto could make a very good hedge against the risks you have with central banks or governments because it's decentralized, right? Bitcoin is also universally accepted.

It's inexpensive to secure and maintain, and it's pretty easy to liquidate. But the problem with Bitcoin much like what Harvard suggested, is that you have a really big danger in price volatility. see: Bitcoin's price instability may go away over time, but at least over the last year it's dropped 75 percent through the bankruptcies of 3ac, a hedge fund. The brokerages like Block Five, Voyager, FTX and more.

All of these don't really give reason for Price stability, so it makes it a really hard digital goal and gold became known as gold because it had relative stability over the rise and Falls of many different Empires over thousands of years. For Bitcoin to really be known as something that has price stability and be a digital gold, probably going to have to see price stability with Bitcoin for decades before. It really has that fundamental preservation value that then brings us to the potential other value for cryptocurrencies, which all cryptocurrencies really try to fight for and share. And that has to do with transactions.

See, transactions create a potential for fees, and a potential for fees means a potential for revenue. And then there's a fundamental value because if you own Bitcoin or Ethereum, you have a voting stake along with many other Erc20 tokens you know, tokens built on top of Ethereum or other blockchains in general like the Cardano network or whatever. These other chains ultimately have this fundamental premise of hey, we'll provide better transactions and more secure transactions for some form of nominal fee. Which of course, the goal is that some of that residual Revenue flows through to stakeholders like the underlying coin holders because they control the voting shares of that that blockchain.

Well, the problem here is the fan. see: blockchain right now has a transaction cost of about a dollar 56 per transaction. Ethereum 2.0 came out and promises that 100 000 transactions per second and the average transaction has come down to about a similar range as Bitcoin somewhere between a buck fifty to four dollars, which is on the more expensive side. That's way down from about forty to fifty dollars a year ago.

But it could be because trading volumes are lower right now because crypto has kind of gone through a crypto winter. So if trading volumes rise again, we could see Ethereum 2.0 transactions be a bit expensive as well. So when you pick Bitcoin and Ethereum into a space of transactions, they're still relatively expensive for the value that they provide. especially since right now you have a lot of fear over how people should even remotely consider transacting with cryptocurrencies.

Most people say the best thing to do is do it obviously off exchange and a transact with your own wallets. But the risk here is it takes at least a little bit of tech technical skill to operate your own wallet that you can keep in Cold Storage When you want to transact more easily, generally you'd go to a coinbase or something, or maybe use a metamask, but then again, you're paying fees and you're potentially thinking to yourself, hey, look, this is great if I'm trying to transfer money cross Borders Or maybe in a way where I don't want the government to see what I'm doing. but on the flip side, it's a whole lot easier to just PayPal somebody for pizza or dinner or 99 of the things that we do in our daily lives And so this is actually where the FED comes in. See many banks, especially local Community Banks have gotten frustrated that companies like PayPal Zell, Venmo and Cash app have taken a lot of uh of of customer deposits because they're much more convenient to use than writing checks to people which can take like 10 days to clear ACH which could take three to four days to clear and it's complicated and wires which usually come with wire fees and can take up to 24 hours to process.

even though they're supposed to be instant, they're fed, cut off Windows and and it's really frustrating if you miss the window and then the money doesn't show up until the next morning, it's all a headache. To be clear, Zell is a feature that has been trying to make this easier for banks because it's kind of supposed to be like a service that many different banks can offer. so it's not One Bank like sort of a PayPal depository institution or a Venmo or a Sofi which is have gotten its banking Charter right. It's supposed to be able to be used by most banks to provide instant peer-to-peer payments, but it doesn't work for everything.

It doesn't work for bill pay. It doesn't work for large amounts. You have to break up amounts into like five thousand dollar increments and so it's not as ideal. Well, enter the Federal Reserve.

The Federal Reserve is actually looking to launch in May to June of 2023, a service called Fed Now And the FED Now service could actually be something that replaces the vast majority of the need for instantaneous and free transactions. Now, it will never replace what the cryptocurrency ecosystem is really designed for, which is an escape from the Federal Reserve After all, the FED Now system would be provided by the Federal Reserve. So it's it's like you're not going to get away, uh, from that uh, centralized aspect with Fed Now. So if a big priority for you is not to be exposed to the government, or to be exposed to the FED system, well, then you're not going to want to be exposed to Fed now.

But unfortunately, if the fundamental value of blockchain is hey, how many transactions can we conduct, we have to ask how many people actually need to escape the Federal Reserve And the odds are probably less than one percent of people want to avoid being exposed to the Federal Reserve and just want quick and fast, instantaneous bill pay, instantaneous payments around any kind of network that they're using, And that's what Fed Now does. In fact, I'm going to just play you a video clip here. We'll go about a minute into where you could see how the FED Now system works, and it's kind of eerie how similar it looks to cryptocurrency, except it's cleared by the Fed. And so this is leaving a lot of people wondering: wow, is the Fed basically trying to eliminate the fundamental value of cryptocurrency? And this is where some folks say yeah, Because basically now you're pushing the only potential use case left for cryptocurrency into this Niche corner of the ecosystem of where governments like Russia and Iran or illicit actors may want to have that ultimate privacy and security that blockchain offers that just isn't necessary for people on a day-to-day basis.

Especially since most consumer apps and almost certainly apps that that are approved by centralized organizations like the Apple App Store are probably going to prefer using something like a Fednow system. Then they will encourage something like an FTX again in the future, right? So it's unfortunate that all this crisis has come to to crypto, but it's probably going to require a lot of regulation for crypto to really be trusted again, like some kind of actually safe platforms that people can use other than just more complicated Cold Storage which is really not that difficult, but any kind of single level of barrier is going to shut people down, and that means less use and less fundamental value for cryptocurrency. Look at how similar though this Fednow system feels to how cryptocurrency. should work minus that centralized aspect I Mean they're even using tokens in their example.

Here, let's go work. Imagine the owner of a coffee shop is running low on coffee beans. It needs to schedule a quick delivery. She places an order and the Coffee Bean company sends her a request for payment.

She responds to the request for payment and pays for the coffee beans right then and there through an app from her credit union which uses the FED Now service. Once she initiates the payment, her credit union screens the payment and sends an ISO 20022 compliant payment message either directly or through a service provider to the Federal Service over the Federal Reserve's Fed line. Network. The FED Now service instantly validates the payment message and passes it along to the Coffee Bean suppliers.

Bank. In real time, the Suppliers Bank confirms to the FED Now service that it intends to accept the payment and the Federal service debits and credits to master accounts of both the shop owners and the Coffee Bean suppliers, financial institutions or the master accounts of their correspondence. The FED Now service also immediately sends a payment message with an advice of credit to the Suppliers bank and notifies the shop owner's Credit Union The settlement is complete. Finally, the Suppliers Bank credits the supplier's account in near real time, making the funds available.

The Suppliers bank will have the option of sending a confirmation to the shop owner's Credit Union that the payment has been posted to the supplier's account, providing the coffee shop owner with certainty that the payment was received. The FED Now service will be all right. So there you go. There's an intro to instantaneous payments through the FED Now system which is expected again to be launched in the middle of 2023.

And amongst all this crypto crisis really is giving a lot of folks in the Crypto Community some fear that how do we fundamentally value crypto if a lot of the use cases are being questioned, that is, think about the use cases. If you're looking for instantaneous transactions, Fed now might now have you covered next year, right? Instantaneous transactions 24 7 Nearly instantaneous at least is what they say. but it has the centralization aspect of the FED which means there could be some uh, privacy risks here, right? We don't solve that with the FED that remains uh in the cryptocam, but along with the crypto Camp comes with the uncertainty with hey, well, where do we transact? How do we easily transact? This is like the pain of paying is high and ultimately there's still a fee. It still costing you a buck to four bucks whether using Bitcoin or Ethereum per transaction.

When the FED Now system is free and so when you look at instantaneous transaction crypto versus instantaneous transaction of the FED, you've got to ask, is it worth paying a buck 50 every single time for that potential for privacy? Although as soon as the IRS figures out what your wallet address is, there goes your potential for privacy. So you really have to be clever with how you handle your potential for privacy, right? Because as soon as they start requesting your wallet address on your tax returns, it's like, all right, Well, now all your transactions are actually more transparent than they would be. Uh, if if you weren't using crypto because you'd have to be audited for them to see your transactions whereas you can open audit anyone's crypto wallet, right? So you've got a little bit of a mix here in terms of like, ah, how do you balance this Again, you're never going to get away from essentially the government as the Uh with banks taking the loss essentially on these instantaneous transactions because they want customers, so they'll pay for the transactions to be free, right? They'll be the ones implementing the system at their cost. They make sure that it's free and so does the FED bear some of this cost.

Uh, but ultimately, for the user, it's free. whereas with blockchain, there is no centralized entity or Bank taking control of that cost. So therefore, the user has to pay. And so this is where you have to fundamentally compare the value.

Okay, well, in order for crypto to have fundamental value, it either needs to be digital gold, which could be decades away, or it needs to actually generate revenues by transacting. But the problem is if your selling feature is instantaneous transactions, Well, the Fed's doing that for free. so your cost per transactions needs to approach zero at Ethereum or the other currencies uh, or Bitcoin to be competitive. And even if that transaction cost goes down to a few pennies per transaction, you actually have so have to have so many more transactions to actually have any money left to distribute to anybody as a fundamental valuation.

As a utility? Basically right. Think about it. Kind of like blockchain becoming your third utility or fourth utility, right? You've got water, gas, and electricity. Now you've got blockchain technology.

Well, great. But what if Fed now starts implementing blockchain technology to process their transactions instantaneously and maybe take themselves out of the clearing process. Which they could do. And now they step back from a blockchain based uh, cryptocurrency? Network That again, is still centralized because the banks are the one subsidizing it.

So that way users have free payments. Well, then you really have little reason to suggest that Bitcoin Ethereum or any other cryptocurrency should have any fundamental value for the basis of transactions. Really, the only fundamental value you could provide to cryptocurrency is digital Gold at this point, which means means the only fundamental value you could give to any cryptocurrency exists only in Bitcoin, But that could take decades for Bitcoin to actually prove itself as a digital gold through the volatility that is cryptocurrency. So really, what then is the value of crypto? Well, it's not much.

The actual fundamental value of crypto was very, very little. It's the future value of whatever you think Bitcoin as digital gold is worth. Because unfortunately as it means for transactions, that value in my opinion is approaching zero and will always approach zero because Banks want to remain competitive. So if blockchain works very well, they'll implement it.

They'll operate their own blockchains at zero cost. So if you so you're really only segmenting the super security focused and privacy focused individuals which probably represents less than one percent of all transactions who would be left using cryptocurrency. So again, the real wide use case for cryptocurrency is digital Gold and the only one that would ever probably meet that criteria is Bitcoin. So bottom line: out of all this, my opinion not Financial Advice: Even though I'm a licensed financial advisor, this is not personalized.

Financial advice for you. My bottom line opinion is the only cryptocurrency that really makes investing in outside of speculation is Bitcoin. But even then you're making a bet on the future value of cryptocurrency decades out in the future because whether it's the Fed or whether it's Banks transaction costs will probably always approach zero and that's a very difficult investment to make. You generally don't want to invest in something in my opinion that has a value that approaches zero.

that means you literally have no pricing power. I Like investing in things that have pricing power, this is what I Talk about to course members and our course member live streams daily when we do fundamental analysis. Remember, you could use a coupon code that expires on December 9th. It's coupon Code PP Take a look at that coupon, take a look at the links down below and folks, we'll see in the next one.

Thanks so much! Goodbye and good luck.