CBDCs Explained: The Good, Bad and Worse

Who is Joshua Scigala, and what is TheStandard.io?

Kevin Wavect, the Web3 software company that understands what you want. Hi everyone, welcome at Wavect Today with Joshua Scigala, who is the co-founder of TheStandard.io, Bar9 and Vaultoro.com. He is also an advisor of SpotShot and has been around in 2010 when even Satoshi Nakamoto, the founder of, or whoever he, she or that organization was, was still around. And today we will talk about CBDCs, Central Bank, Digital Currencies And, yeah, I'm really pleased to have you here. Thanks, Joshua, for taking the time out of your busy day and starting. yeah.

Joshua My pleasure, Kevin. It's really nice to be here, yeah.

Kevin Cool stuff. yeah, Thanks again, and I would like to give you already the ball and let us a little bit know about your projects, what you're working on, what you're passionate about and how does your day look like.

Joshua Yeah, well, you know, like you said, I got into Bitcoin very early and I've been obsessed by it. And, yeah, I spent a lot of the years trying to fix the transparency problem in Bitcoin exchanges, And one of the first projects of mine- was after the Mt Gox collapse- was to build a transparency protocol that we called the Glass Books protocol and and then no exchanges wanted to use it. So we started building our own exchange in 2014 called Vaultoro, That's Volt, as in a gold vault, and then Oro, which is Spanish for gold.com, And and that we put this transparency protocol in there. And you know, it was around about 2020, around about 2020- when I just started noticing that a lot of people were invoicing us in Ethereum- sorry, in stable coins over Ethereum and stuff like that. So then I started to look into why, And you know, I kind of fell in love with the idea of stable coins, Weirdly enough.

Joshua I used to hate them, think there's ridiculous Bitcoin all the way, But I realized that the normal people- if we want to get crypto adoption and move away from central banking, it's kind of the Trojan horse that we need. We need digital currencies that can come out and be usable by people. You know, people know how much a bottle of water costs in their local currency. They don't know how much it costs in Bitcoin or Ethereum. So, but stable coins are. there's many different types. We saw the collapse of lunar and I also saw that coming and gave a big talk about it at LABITCONF, which was also recorded and it's on the web somewhere where I said we warned about, about Luna and that. well, you know we mentioned Luna, but it was specifically algorithmic stable coins, that they will fail, And it wasn't because I was some sort of visionary, It was more because I've seen them.

Joshua come and go over the years. We saw Dan Larimer's BitShares, which was an algorithmic stable coin, just get destroyed. We saw a bunch of different stable coins that are tried to do algorithmically. So my passion really is now to build asset-backed stable coins that are decentralized, And that's really what I'm focused on with TheStandard.io. And it's getting really exciting now because we've- you know, we've- built the smart contracts with where, almost finished building them anyway, And then onto the testing phase And we're going to be launching on the zkEVM on Polygon, which is really exciting. So it would be one of the first projects to launch on that layer two solution from Polygon. And yeah, there's just so much happening. And the stable coins are really exciting because we're not only doing USD. people can collateralize smart contracts with Bitcoin, Ethereum and tokenized.

Joshua goal but then issue themselves S-Euro, S-U-S-D, S-Indian rupee, as you know, a whole bunch of like any. pretty much we want to go for every major Fiat currency peg. And then we'll be doing some stocks and shares later on as well. And you know we're starting to focus a lot on the game side of things as well, which is really exciting in the space. I think gaming is really what's going to be the next NFT sort of style explosion in the crypto space. So yeah, so we're focusing a lot on gaming, So people will be able to lock up in-game items and stuff like that into these smart contracts later on, if they're the right standard, and use that as collateral to borrow against a 0% interest with the stable coin. So there's, there's so much happening And it's it's just super exciting. I'm just really loving this space. It's really fun. Coming from having a centralized exchange for many years to building a decentralized protocol is really fun.

Kevin I as a thank you for that. I have now a lot of questions on the top of my head. I will try to keep it short. One major question I think that many projects now battle around with is regulation right.

How should crypto and stablecoins be regulated?

Kevin since that you have had- you still have it, I'm not not quite sure- are your own centralized exchange. you are now issuing stable coins. what where the challenges are associated with that and how does it different, as it differ from, like five to 10 years ago? like, yeah, yeah, what do you think about?

Joshua it. well, you know, the standard is totally separate from the centralized exchange. it's a. it's a different project, It's a different team. It started off with picking some of the best people that we have in Voltaura and bringing them across to help build it out, But it's decentralized a lot more now. So it's it's one of the- you know, regulations are an interesting one. If there's a centralized stable coin where you have to lock up assets, then you need human regulations to deal with the bank account that you have, the transparency that you have, and to show that you do have all the money that you say you've credited into the stable coin space. I'm you know, we're building this bunch of smart contracts that allow people to lock up assets and mint themselves a token that just happens to peg to some different assets. So there's no real crossover there. It's purely virtual and there's no banking or anything like that.

Joshua So where you know why, I think some regulations are probably a good thing. in terms of trying to interface to the banks, I'm of the old school ilk of maths is the best regulator, You know. Sam Bankman-Fried was a really good example of this. There was already regulation, like crazy, that he had to oblige by, Did he? No, he just went around it and lied. So if there's a scammer out there, they're going to scam And it doesn't matter how many regulations you stick in their face, they're going to do it. So I'm a big fan of programmatic regulation, where the regulation is programmed into the smart contracts: If this, then that, otherwise that. So this is the only one way you can have true transparency up front for the user that understands. aha, this is what I'm getting myself into. These are the rule sets and they're programmatically enforced. So

Joshua there's nothing that any human can do to waver this, And that's, I think, really important for the

Kevin future. I'm on your side on this. What do you then think as a consequence is when code is law right.

What happens when code is law but code has bugs?

Kevin that. how do you deal with bugs or security issues, hacks, things like that? because there are two hardlines as well.

Joshua Yeah, Yeah, I mean it's. it's one of these things where you have to test, test, test, test, test some more. You know people talk about trustlessness in Bitcoin. Bitcoin is this trustless thing? or Ethereum, but it's not. You have to trust the wallet, You have to trust the smart contracts, You have to trust a whole lot of stuff. Even if you know how to code- you're the best coder in world- you still need to trust that. you've written that. well, The thing that gets around, like there are, you know, a lot of these smart contracts have been around long enough that we've seen what's been battle tested and what hasn't. And you can get these sort of primitives and utilize them. Of course, if you rewrite them, you want to try to follow those as much as possible without, without you know, totally ripping them off. But this is the beautiful thing about open source is that you can see some things and see how they work.

Joshua see if they've been battle tested for years, But there's been cases where there's been contracts out for years- even Bitcoin- and someone will find a bug. So it's one of these things that's. it's very, very hard to answer. I think it's part of being an early adopter in crypto that you could lose everything. You know. I don't want anyone to think that this space hasn't got that risk, because there's a definite risk of that, But at the same time, it's a high risk, high reward space. you know if we can build something, that's amazing And you know that's really what you want to look out for when choosing a project to buy into or support is that you want to look at their team. You want to make sure that they've been around for a while, they know what they're doing, they're not just writing a white paper and just. you know just straight out of high school.

Joshua writing some code. I mean that that can be okay as well. you know, never say never, but it's one of those flags that you want to sort of look at and say, okay, you know they can do it and that's why, you know, I've put together a really stellar team for TheStandard.io and and um, yeah, it's, it's, it's, it's always on the back of my mind, just like having a centralized exchange is security, security, security, security is a on your mind. the same thing goes with with, you know, dApps. how do you go about it? well, it's.

Kevin definitely a highly philosophical. come on, it's an ethical question, right. on which side are you if a hack happens? uh well, the code had a hole in it, right. a code is law here, is it right? we had this with Ethereum hack a few years ago, right, um? So basically, I'm, to be honest, a little bit towards regulation- good regulation, right, Because I'm a developer myself and I know no matter how much effort I put into something, how many security tools I use, how good the infrastructure is- just thinking about zkEVM- there still will be some kind of bugs, some kind of issues at somewhere down the line. just set it yourself with bitcoin. so at that, I personally definitely think there needs to be someone at least a tiny bit accountable for something right, because you're profiting from it. so you also need to be somewhat accountable for the risk that goes along with it.

Joshua but that's just. yeah, I mean, I, I agree, but how are you going to regulate? you can, you can definitely put accountability, but really if it's unregulatable- like if it's a smart contract running in cyberspace and it's put together by a bunch of randos that you don't know, how are you going to regulate that? You know you can say: we want regulation.

Can decentralized insurance protect users?

Joshua but it's very different when it's a literal DAP running on some chain somewhere. I think where really that solution comes in for protecting, for protecting users, is like decentralized insurance and stuff like that. these are these can be done with, like prediction markets. so a prediction market could say, I bet like me, as an insurance contract could say I bet that we will, we will never be hacked, you know and and and, and I put a whole bunch of Ethereum in there. and then, um, and then other people that use us say, well, I'll buy some insurance to say I get that pot if there's a hack. and so you can start to build mechanisms like insurances into smart contracts to allow people to get paid back for certain things. and this doesn't need to be, uh, issued by the people issuing that smart contract. it could be issued by a company like a DAP that does specifically that task for for DeFi or for NFTs or whatever.

Joshua it would be very hard to do that for like, oh, I got hacked. you know, I want to insurance pay out, but because you could hack yourself. but but it would be very good for, hey, I'm, I'm using this smart contract. uh, they are betting that it'll never be hacked, and then it was hacked, so, um, you know, not pay out. interesting point: heard that uh already, uh several times and I somewhat agree.

Kevin with you for advanced users, but thinking about people that still have a hard time remembering passwords, telling them, hey, you need to buy some kind of insurance to protect you from that service being hacked. uh, I think that's definitely something that with users, accessibility, adoption and also, um, going back to your initial statement, the devs can be anonymous, which is great, right. in general, I'm in for that, but when it comes to well, I develop something and I break something. if I develop software for an airline, right for some kind of flying vehicle, then and I didn't, let's say, take the necessary or industry standards as a measures to actually secure that code, then it should be at least a company that has to correct that or come up with some kind of correct, as it's just personal opinion, right? um, you ask, yeah, yeah, I mean, it's interesting.

Joshua because you know you, you're equating the the old school world with the new school world and, and while that sense in a lot of ways, people that are coming into the space, it's, it's different, right, because it's not like the whole philosophies have a decentralized space, right? so well, that was the philosophy of behind bitcoin and people can say, hey, we've got, you know, safeguards and everything else. the problem.

Does regulation protect users or incumbents?

Joshua with a lot of regulation is that who creates them, who writes them, who write them in which country? and then you get multiple regulations are all muddled up and you can't comply with that one and that one at the same time because they're negative. so then you have to choose which one. then you then the. you get regulatory capture where one that might say, hey, we want more regulation, more regulation, more regulation, this. what happened with the banking industry? that they regulated themselves so much, and the banking regulations are all written by the banks, by the way. so so they've they protected themselves so much from startups. that's why you didn't even hear the word fintech before. like maybe paypal was the only fintech around for years and bitcoin was kind of the first sort of breakthrough fintech thing. so you had you had these banks that have built these moats around themselves, so no one could.

Joshua compete like no one could build a startup bank, because you just try it, to try competing with that, not the amount of regulatory overhead was so much paperwork every week and that you just couldn't do it. so so they, they'd done this to and it's called regulatory capture. it's common common concept. um, and then bitcoin came along, which was so out of left field that they're like looking over the fence going what? what they trapped themselves in and they couldn't even you know, they didn't know how to how to deal with it. it was interesting because it was a total paradigm shift in the way that money works or in the way that money's even released. because what, what do you mean? there's no one that controls this. what do you mean? there's no one that issues it. huh, what? the network pays people to secure the network? how, what you know? so it was so crazy that that banks.

Joshua didn't know how to do it because they regulated themselves into this little island and they couldn't get out. so I just don't want to see that happen to bitcoin. while I do think exchanges need regulation and and to deal with the banks, and because there's a whole lot of infrastructure stuff going on there, I do still think that, uh, that a lot of regulation needs to be pulled back and we need to get back to market regulations where humans and education, education, uh, rather rather than uh regulation, because you need to teach people what. no, no one knows what a good bank looks like. if I said to you, hey, what, what's, what's, what's, what's? how do you choose your bank, you're like I don't know, like I'm not, excuse me, I'm not meaning. you know, oh good, sorry, sorry man, yeah, the, you know, I, I don't know like how to, how do I choose a bank? like the, the nice ad that I saw, you know, because all of the due diligence has been removed from us to

Joshua determine what a good bank looks like. in the past you would have to, like: look at the balance sheet, try to make sure it's good, because it could go broke. and even now it the. the fdIC insurance in the in the in the u? s is like 200k. so if you have more than that, you know you need to start spreading your money out to a whole bunch of banks. it gets very, very unruly very quickly if you have a few million bucks and so, and the fdic insurance also doesn't keep up with inflation. so you know, in five years time, 200k really isn't much at all. buy your carton of milk, so, um. so what I'm saying with that is: I think education is one of these things where shows like yours, um, and others, are so important because it teaches people how to actually use this stuff. um, because you can't just come in to the crypto space using password as a password and and expecting not to be. you know, have something go wrong. you know you do need to be a bit more.

Joshua sophisticated, and look the new kids on the block that are coming around. they are a lot more sophisticated in general, generally speaking. of course, the nfti crowd came along and you've got all sorts of people that don't have a clue um what they're doing, and you're hearing hacks all the time, and and it's heartbreaking because they lose their life savings. but at the same time, sometimes, uh, you know, the best lesson is to touch the flame. you know, you don't know how hot that candle is until you actually felt what a flame feels like, and and and then you go. I'm never touching that again and and you know some. hopefully that lesson isn't too painful. you know you lose a little bit, but you know I I lost a lot of money in Mt Gox collapsed back in the day. um, I have friends have lost money and and in other ways as well. right, they've bought a top of the market when the hype is like going crazy and they finally buy their first crypto and then it crashes.

Joshua happens to everyone. so, um, it's one of those things. education, I think, is more important than regulation.

Is education more effective than regulation?

Kevin you said a couple of very interesting things. uh, now I'm with you on the regulation side that how regulation is being set up definitely needs to change right and adapted, and all that kind of stuff. on the other hand, every time- and I think that's where we need to, or where I draw the line, and maybe that's the communication gap as well- I'm with you when the protocol that these anon devs set up doesn't make revenue for these devs by themselves in a centralized way, because they own a lot of tokens in their DAO, for example, where they can vote on decisions, on decisions and these kind of things. if that thou, the decision maker on chain, is actually truly decentralized, I'm with you. otherwise there are, there is some centralized control, right, and then, as that- just my personal opinion- doesn't mean it's a good thing, that needs to be, I totally agree.

Joshua and this is the beautiful thing about the market, right- is that, um 2017, when the whole iCO boom happened, the market evolved very quickly. everyone bought into everything. and then they started saying, hmm, no, I'm not going to buy into a project where, um, you know these and this and that and the founders have like 99 percent of the tokens and, and so the market starts to adapt and evolve and um, and then you start getting general best practices. so you're like, okay, the best practices are for things like rug pools. how do rug pools happen? rug pools happen when there's a large bunch of VCs that have jumped in early and they're going to dump on all the retail. so, so they as, as this space evolves, people get smarter and smarter and they start to build a type of regulation in any way, because if you run an ICO or some sort of token sale with really bad token economics built in- that are bad practices- a lot of people just won't go there, and we've

Joshua seen huge projects like the, the internet computer project that launched, launched with this massive- you know- hype train and massive market cap. what was it was a whole bunch of VCs and and people just had enough and so you saw it tank really quickly. I mean, it's still fairly high in the market cap, but it's, um, it was interesting watching people's opinions change about certain aspects of token sales and I, I, I think that's the market is the best regulator for that stuff. um, and you know, maybe there's, maybe there's a really good middle ground where we can have, because the gold industry, for instance, in the uk, is voluntarily regulated. it's regulated by a private organization, uh, called the bullion market Association, and they build out best practices and and if you follow those best practices you get to have their stamp on your page, so, so these sorts of things are a really good idea.

Joshua especially in a global environment where you don't want to deal with country by country having all different types of regulations. you could have a system that starts to build out really good, a really good system for certain projects and say, if a project follows out guidelines will give it the stamp of approval and, and you know, go, go with it like that. or, you know, maybe there's different scales and different types of stamps that you could have, but I think that's really where the industry needs to go, because, you're right, we do need rule sets. we need to warn people that are getting fresh into this space, uh, that are, that are looking at it with with big eyes going, wow, look at all this crazy money that's floating around, and and sort of warn them. hey, you know, there's a lot of people that can take advantage of you if you don't know what you're doing. look out for maybe these steps and and check it on their website that they're

Kevin following those, those voluntary regulations, yeah, absolutely. um, I think we are completely aligned here. um, as a regulation can also just mean education, right, looking at centralized exchanges, hey, are you sure this is your wallet? or uh, you can't take it back? and these kind of things, just these claimers, warnings, already helping you, or hey, a mini tutorial. do you understand this? uh, this, yes, yes, yes, yes, yeah, these kind of things um definitely help as well. um, I'll give you just a quick.

Joshua example of terrible regulation. so, running Vaultoro.com- we've run it since 2015 and um and the regulator in the UK forced us to um not be the custodial anymore, even though we've never had a hack. um, we're probably one of the oldest exchanges never to have a hack, right, so we know what we're doing. we're a bloody good team. yet, uh, the regulator in the UK says, if you want our license, you have to um use a third party custodian. and they didn't care who it was, as long as it was a third party custodian, as long as it wasn't us. so there's an example of people that don't know what the hell they're doing. um calling it a regulation because it's just a rule. but it's a terrible rule, um, because it doesn't make any sense. it literally made no sense. uh, for us who know what we're doing, we've got, uh, you know we've- we've had years of experience in digital security and this is, by the way, why we're so confident as well with the standard we're.

Joshua really strong in our security front, um, that we, uh, you know that they, that they come along with this terrible regular, and this is the sorts of thing that that happens all the time, where you just get politicians going, oh oh, they don't have a clue what really boots on the ground. they haven't worked in the industry, right and uh, and so it can happen where people that beg for good regulation and end up getting terrible, terrible rules sets- and usually it's, it's it's to protect legacy systems and, uh, that that's how the banking system works. they, they use regulation to protect.

Kevin themselves. that's absolutely a good one, and I think it's part of a much larger problem that people make rules in general for anything that they oftentimes are not a specialist for simple as that right, and in crypto it's more obvious than in other sectors. So I'm with you on that point, and nobody wants that kind of regulation. Maybe, thinking about or talking about these kind of regulation scenarios, let's go back to CBDCs for a second, because I think it's really tightly associated with that. First of all, how would you for to get everyone on the same page? how would you define?

What is a CBDC, and how does it differ from bank money?

Kevin them and what do you think about them? Let's keep it simple.

Joshua All right. So a lot of people get confused. They think the CBDC is just. they go: oh well, it's a digital, digital dollar or digital euro. What I'm already using digital euros. I use my my card all the time. I hardly use cash. Beep, beep, beep, beep everywhere. It's. what's the difference? The difference is with a CBDC. just to outline it for your listeners: If I pay you, Kevin, my bank says: if I pay you $100, my bank says: okay, at the end of the day, I owe your bank $100. And your bank may be sent someone else that is using my bank $50 during that day, you know? And so at the end of the day, all of it's like a roll up in the crypto space. The end of the day, all those transactions go to the central bank and the central bank says: ah, that bank sent 100 to that bank, but that bank sent 50 to that bank, So to settle everything, that bank only owes 50. Boom. So it's one transaction and it

Joshua it settles everything out. Now, what happened in that in that space? In that space, the central bank knows nothing about all the transactions that happened in that day from that bank. All they knows that bank owes that bank that much money and that's it done, settled onto the next day. Now every bank has a fiduciary duty to protect the privacy of you as a user, from the government, from anybody. actually, Now a government can see your records by going to the courts, getting a subpoena, go to the bank and having due process to figure out: hey, you're a criminal. I'm going to look through your banking stuff and see you're not doing criminals right, Or the IRS or the you know different tax authorities can do that, But there's steps that they need to go through. When a CBDC happens, you're basically removing all those banks and every micro-transaction is going to the.

Joshua the central bank identified to you and building a database of what you're spending money on, where you're spending money, whatever. So you think, okay, I got it. Now with the banking system, all those databases are spread around, So not one authority knows exactly. Your bank knows what you do, Your bank does, But not a single central authority figure which has the force power to force anything upon anyone. Now, we just lived through pretty hardcore three years right where there was lockdowns and all sorts of stuff. Now, whatever you think of it in the future, they had some weird talk about weird regulations. right, We had regulations where they just shut shops but you could buy milk and bread, but not the thing over there and they'd like caught off, like the little doll section for kids, because that you can't buy. that We're in a pandemic, don't you know? And so in the future they wouldn't. with the CBDC, you could.

Joshua just say: well, you wandered out of your 10 kilometre radius. We're not going to allow you to spend your money there, So your money just doesn't work. You could also say: hey, you've spent. you know global warming is a problem. You've already spent three liters of gas this month. You're not allowed to buy any more. It doesn't work. Oh, obesity is a problem. You've already had your ration of sugar this month. There's a war going on. We can't, you know whatever they want. they can fully control your money and your spending and your life. Now you're very, very close from that scenario. You can also then say- and actually this is already happening in some countries in some of the new test cases where they have a shelf life on your savings- Oh, the economy is doing really badly. We need people to have velocity in their money. We need people to spend and move their money to stimulate the economy. If you don't spend your savings in the

Joshua next 30 days, or at least 5% of it. it will just stop being there. We will just remove it. And this is literally happening, where your $5 becomes zero or your 10 buck notes or whatever it is. So we're talking hardcore to radical centralized control over your money. Now what is money right? Money at its core is your work and time and your toil, your hands- building or doing or service or whatever it is that you do And you take that. you put that service into a thing that you're saving. It's a proof of work, end of the day. Some people inherit and you can get, you know, a bit technical on that, But at the end of the day it's proof of work. Now you've spent your life and you've paid taxes and done everything And now you're giving the- this, a centralized state- so much control over those savings. It's a very, very, very dangerous place that we're going And not enough people are.

Joshua talking about it. It needs to be discussed around the dinner table. A lot of these governments are like, oh, by the way, we're bringing out CBDCs by 2023 or 2025 or whatever it is. And people are like, oh, okay, they just think it's like a banking upgrade. And what do they say? They say, oh, we're going to have real-time settlement for everybody. And you think, oh great, well, why do I care? I mean, I've got Venmo for that. if I want, you know, if I want- to pay your bank, yeah, it takes 24 hours. Who cares? And if I go to the shop and swipe my credit card, what do I care? if he sees the next day or not, I get my goods. He knows it's settled, It's done. And, by the way, crypto has real time- well, pretty much settlement as well. So we've already got instant settlement if we want it. What do we lose? We lose a lot, a lot of freedom potentially. Yeah, at the beginning.

Joshua they're not going to do anything, But it's one step away from attaching that CBDC to a social credit score, just like China, to really then ratchet up control. So it's really, really important that people discuss these concepts, discuss what this technology can do and be aware of it. And you know, I was telling people in 2010,. Bitcoin is not a scam, You know, it's this. it's that it's amazing. You know, I was telling people and no one would listen, And I just hope that now they listen to say when I, when I'm now warning against the technology- and that is that is the CBDCs. they're coming anyway, right, But we do have an exit door, And the exit door is cryptocurrency.

Can cryptocurrency provide an exit from CBDCs?

Kevin Okay, I have two questions now And first of all, don't get me wrong- 100%, not 99,, 100% on your side here. okay, First of all, do you think that crypto? because if we have such a system in place, there would be a lot of, let's say, incentives for governments to regulate, to actually regulate down crypto or even prohibit it, to actually prevent you from using it. For example, you are only allowed to withdraw a thousand dollars a month from crypto to your bank account because it needs to be checked, or these kind of

Joshua things. What's your viewpoint on that? They will, Absolutely. they will come after crypto, like anything but bitcoin's. bitcoin was built um with the idea of, you know, not giving a shit like it. it's that. that's why it's the honey badger of money- right, that was the nickname, because it doesn't care it. the thing is that if you have one foot in the real world, in terms of that money side of things, and one foot in crypto, First of all, you feel the volatility a lot more. It's, you know, there's a lot more sort of happening If you have both feeding crypto, meaning you get paid in crypto, you saving crypto, you, you bank in crypto, you get yield in crypto, you do everything in crypto and you- I don't know- like use a, even you can get debit card. you know that maybe, yeah, maybe, it wouldn't work in your country if that sort of regulation comes in, but you can. you know things have work like there's so many.

Joshua workarounds that are happening. um, that, I think it's. it's it's tricky, but I don't want to live in a world where I'm, you know, some sort of person just doing something that's not legal in my country. I'm always going to do something that's legal, you know, because I don't want to end up in prison, and neither should anybody else, but, But I think there's something about. what's interesting is yield right. What Defi has showed the world is that you remove a whole bunch of inefficiencies from the legacy financial system by allowing people to put their money directly into automated market makers and allow people to the trading fees to collect. now this, that is actually how your bank gives you your yield, except a bank where your money lies gives their money to about it gives your money to about 10 different middlemen before the market maker gets hold of it and starts speculating with it, or market

Joshua making with it. um, so there's no way the legacy system can compete so with DeFi. once it gets more and more established, there is only one way for legacy liquidity to go, and that's into crypto. so this money is so powerful I think they will, uh, work with regulators to to allow it to go there, because it's just a much more efficient way of dealing with money in general. um, so I I I think that's really where where the the rubber meets. the road is that liquidity always goes towards strong yields and, um and so if there's a government that regulates the heck out of it and stops it all, that liquidity won't stay in that country. it'll shift to a country that doesn't have that and then do it, and what's happening? well, there's now an exit, not straight back and forth from DeFi to that country, but totally out of that country and into DeFi. so so I'm pretty optimistic in that, um, that I don't think countries

Joshua will be so stupid to basically ban the future of financial- uh you know- business. they will try to choke it out for a little while until they realize it's a dumb move. um, that, that's a good point.

Kevin one one thing, going back a bit um to the initial question: when we have these? let's say? I just lost track, sorry for a second. oh good, when? when we have these c bDCs, right um?

Do central bank digital currencies need a blockchain?

Kevin there's probably a blockchain behind it, right? so that's that's. that's the main issue with all of that. right, you have that new ecosystem that has these, let's say, micro transactions, which is great, right, but also a lot of control that can be executed, enforced on it, and the main difference- uh, what you stated before- is that these banks, uh, usually don't share that information with orders. right, there are some steps before that, before our government, a centralized authority, gains access to all of the information. so, if that's just an assumption, right, um, just play as doing game theory here. if the actual bad outcomes of cbdc's would be an actual goal of governments and banks, don't you think they would just regulate banks in a way that they need to share this information and are able to enforce that onto banks in a unified manner? it's more complicated, less efficient.

Kevin 100% with you. but wouldn't that be, let's say, maybe also less friction with the public market, because it's an existing system, they don't need to change anything. um, I think that there's a lot of.

Joshua you know, a lot of these ideas of privacy go all the way back to the Magna Carta, Like they're very well-established structures of privacy. It's very, it's way more difficult to change all of the laws and all of the things based around that, rather than say, hey, we've got a new technology, but is this just an upgrade And everyone gets real-time settlement? And, by the way, we can, uh, you know, basically have control over everybody. And when you? just to quickly go back on what you're saying with the blockchain: Yeah, maybe it's a blockchain, but I actually think it's probably just going to be three separate servers and they're just taking turns, hashing, And so it's not, you know, the speed of true blockchains are too slow. You can do the same idea of, you know, putting the hash of the last block in the new one, just to you know. that's the reason why. why, uh?

Joshua governments haven't centralized money yet is because there is just too big of a chance of getting hacked and all of a sudden the entire country is bankrupt because the money's gone. you know like what, what just happened? right? So that's why you cannot have a, you know a SQL database that's got everybody's accounts on them, because if it gets hacked then we're screwed. so. so that's why it's taken a while to to do this and they, you know this, really, satoshi's invention was to have this distributed ledger, to make it immutable, and that's not just a word that's thrown around it, it really means that, that, that, and that's what really gives the power to the cbdc's: that immutability and knowing that, uh, a foreign adversary can't just hack in and and bankrupt the nation. Yeah, I don't know where I was going with that, or if it answered your question.

Kevin But absolutely Thanks for that. But wouldn't that imply also that we would get rid of cash, which is always a big, big discussion?

Would CBDCs replace cash?

Kevin point all the time.

Joshua Yeah, I mean there's nothing that governments want more than to get rid of cash, because cash is literally like Monero: It's it's totally anonymous. Yeah, it's got from serial numbers, But it's there's no way that anybody knows what anybody's spending and what taxes are being dodged. So the more people use cars, the more the government's happy because they can. then they can see in real time what's happening to their economy. They can see in real time where there's black holes, where you know people aren't consuming. There's lots of reasons why governments would want a more digital oversight into their economy, because the the cash economy is pretty harsh. But the problem is that a vast amount of the like more than what people realize- is part of the black economy, which is a- you know, it's not a nice name for it, because actually it's normal people like the Uber drivers. not that Uber is a different thing, because

Joshua the tip in the app. but you know the deliveroo guy, the student that comes panting up your doorstep giving your food for a buck. you know they really live on the tips And this is all black money that actually stimulates the economy. Yes, it doesn't get taxed, but it stimulates the economy to a point where it actually helps the economic thing, so that you don't want to crush all that. all the tip economies is so massive. it's really a quite a good chunk of the economy and it's important. it's an important part of the economy and so we'll see what happens. when I mean, there's countries already that, just basically, they're already starting to get rid of ATMs. Australia's already starting to get rid of ATMs. There's a lot less here now than there was a few years ago. some towns don't have any anymore. So you know it's already a slow push towards.

Joshua that, And in some countries you see homeless people with a little QR code. you know, like software, that you can transfer money like that. So, yeah, I mean it's. I think it's unfortunate, I think it's. I think cash is a really important part of freedom in general. And again, cryptocurrency is a digital cash. you know it's a, it's a type of digital cash, So it's an important, it will be an.

Kevin important part of the economy. Absolutely Love it. Hey, thanks, Joshua for this. Really was a pleasure discussing with you and listening to your insights And I would say- do you maybe have to wrap this all up, three things that you want people to remember from this cool session.

What should people remember about CBDCs?

Joshua Well, you know, I would say: you know, talk to people, talk to your friends, talk to your family about what it means. these CBDCs, You know, send them this podcast and this discussion and talk about it. Don't just let the world give you, take away, take away your freedoms, because if you're, if you have children or you're looking to have children, they won't have the same sort of freedoms as you had growing up, And that's a sad thing, You know. we should try to. you know, freedom is something that can be taken away very, very quickly, And it's something that our forefathers, our grandparents, bought and died for for our freedoms. They literally did, And so it's important to not just let a technological upgrade steal that away. So take it seriously.

Joshua And that's, that's one takeaway. The second one is: you know we'd love if you, if you've got talents or if you don't have to, if you just love technology and you know going against CBDCs, because this is really what stable coins, especially decentralized stable coins, only only fully over collateralized decentralized stable coins like TheStandard.io. Come and come and join the Discord and the and the telegram if that's what you're into. And yeah, talk about these things with us. If you can help with graphic design or with development, you know, come and join the community. It's a really fun community, It's a great community. We have like a type of metaverse where it's kind of like a cypher, punk, cowboy, Western theme. It's weird, It's sort of taken on a life of its own, But it's just basically people making avatars for each other in that sort of theme, which is fun. And yeah, come and check it out.

Kevin it's a cool community, awesome, hey, really. thanks made, um, please be so kind and send these links to me. I will put it into the video description. and yeah, thanks as well. awesome for everyone watching. thanks, mate, thanks everyone. smash the likes. Wavect, the Web3 software company that understands what you.