Part 1 of  Cryptocurrencies and the Future of Banking | Banking Beyond with Sam Ghosh

The growth of cryptocurrencies can only be described as an explosion, the Launch of a new era. And if we do not pay attention, industry after industry may change forever without us realising it. 

Cryptocurrencies are coming and they are coming in hot.


Maybe no other industry will be impacted more than the banking industry. This series is about that impact. 

Hi, this is Sam Ghosh and let us talk about Crypto Currencies and the future of the Banking industry. This is the first part of this series and in this part, we are going to talk about crypto-economics.

0:00 - Prologue
0:43 - Disclaimer
0:54 - Intro
1:08 - Topics
1:17 - Rise of Cryptocurrencies (Growth figures of all cryptocurrencies and Bitcoin separately)
3:38 - Crypto as Currency (What is a currency and how suitable cryptos as currencies? )
9:49 - Cryptocurrencies as an Asset Class (Comparison of Return and Risk of cryptocurrencies with some other investments)
13:23 - Preview of next part

Economic Role of Cryptocurrencies - Currency or Asset?  Return from Cryptocurrencies?

From the beginning of time, human society revolved around the marketplace...we can say that the human story is a story of marketplaces….


And stands in the middle of all this, tying every buyer and seller, connecting all marketplaces…….Currency


So what separates these marketplaces around the world? not distance, but different forms of currency- from US dollars to Yuan, from Euro to Indian Rupees…existence of different forms leads to inefficiencies and costs.

A special group of cryptocurrencies, Stablecoins may help bridge these different forms and remove, at least to some extent, the inefficiencies and costs. 

Stablecoins can change how we deal with and think about currency forever by fading the economic borders and bringing the idea of a global marketplace to reality. 


Hi, this is Sam Ghosh, and let us talk about stablecoins and the future of currency.  




__________________________________________________________
Content:
Prologue 00:00
Intro 01:38
Topics 01:59
Cross-Borders Payments 02:19 
Stablecoins 05:40
Stablecoins for Global Payments (Libra and Diem) 09:48


Disclaimer: 

This media or any derivative of this media should not be construed as investment advice to individuals or to companies. This is a commentary on the growth of cryptocurrencies and their potential impact on the banking industry. The producer of this media is not liable for any losses arising out of any investments in any cryptocurrencies or any other related assets.



This video does not cover the technical aspects of Blockchain and Cryptocurrencies. Interested viewers can refer to the following links: 

https://developer.ibm.com/technologies/blockchain/
https://www.coursera.org/learn/cryptocurrency#
https://www.coinbase.com/learn
https://ethereum.org/en/learn/


Read the Banking Beyond blog here: 
https://bankingbeyond.substack.com/


Produced by Sam Ghosh: 
https://www.linkedin.com/in/sumansghosh/

Free books by Sam Ghosh here. 
https://books.apple.com/us/author/sam-ghosh/id1446187044

Global Stablecoins and the Future of Currency, Part 2 of  Cryptocurrencies and the Future of Banking

Cryptocurrencies faced fierce opposition from financial machinery for a long time - from regulators to incumbent banks. 

Recent trends though show that maybe an age of re-thinking is upon us. 

For a long time cryptocurrencies were considered as a threat to the traditional financial industry - and generally avoided by the incumbents but it seems the future of crypto as well as of the financial ecosystem is about blending crypto and blockchain in already established systems and processes.

Crypto, it seems, is not likely to replace the traditional financial system but rather blend with it to eliminate inefficiencies, strengthen security and even help the traditional financial services to grow beyond the perceived boundaries. 

An age of blending is upon us.

Cryptocurrency Adoption in Banking, Part 3 of  Cryptocurrencies and the Future of Banking

A new technology like crypto and blockchain is like a handful of seeds..carries enormous potential but has to go through trials and tribulations (tri·byuh·lay·shnz) to grow...

Some of these seeds will see the light of the day, fewer will flourish.

Some industries and locations provide a favourable environment for these seeds to grow and others do not. 

Such an industry for crypto and blockchain technology is payments, especially cross-border payments. 

The reason is the high expense and obscurity involved in remittance.

Crypto and Blockchain Ventures in Payments Industry

Do you wonder how do people take big risks….what does enable them to deal with the uncertainty


Trust

Trust that the equipment will functions properly when we jump out of an airplane, 

Trust that our team will extend support when needed

Trust that our skills will help us face uncertainties


Trust is an abstract concept, but trust is what holds the traditional financial system together..especially the credit system...yes, billions of dollars change hands based on trust…

Amount that we can get as credit is based on how much we are trusted….

and the interest we pay is also based on how much we are trusted…

We can say that the traditional credit system is a trust system…


Intermediaries like banks establish trust between lenders and borrowers. In return for the trust intermediation, banks charge interest margin i.e. they charge higher interest from the borrowers than they pay to the depositors and entities lending to the banks. 

The banking system uses various ways to evaluate trust - from background checks or KYC, to credit history to reference checks. 


But is this trust system working?

Rethinking Trust with Crypto and Blockchain in the Lending Industry

What does freedom mean to you? 

Does it mean not requiring anyone's permission? 

Does it mean being listened to and trusted for being your unique self for your unique needs?

Does it mean complete transparency? 

Or all of them together



This is what Decentralized Finance or DeFi is bringing - Freedom

The awakening of Decentralized Finance

With EIP 1559 or London Hard Fork, the Etherreum ecosystem is going through a drastic reorientation. 

Ethereum plays a significant role in the Decentralized Finance ecosystem and the changes in the Ethereum fee structure through EIP 1559 are supposed to have long-lasting effects on the DeFi ecosystem. 

So, let us talk about them.

DeFi Operating Economics and London Hard Fork (EIP-1559)

From galaxies to microbial colonies - we know the existence of various autonomous systems in nature. 

Is it not surprising that these systems dealing with so many unpredictable forces, pulls, pushes and uncertainties do not fall apart?

What is holding them together?

Inertia. 

Complex systems in nature reach inertia when all the forces influencing the system balance out.  

In man-made systems, we call this balancing out Governance.
 
The aim of governance is to balance out the influence and accountability of the participating members in a system. 

For Decentralized Financial or DeFi platforms to scale as autonomous systems i.e. to gain inertia, robust governance structures are required to balance out the influence and accountability of all the stakeholders.

DeFi

Governance of DeFi Platforms - Influence and accountability

We always wonder what the future would look like - for us and for the world. 

Countless stories have been written and movies made to show what the future might look like.

But at the same time we can be oblivious to the fact that the future is being built just in front of us.

Developments in Decentralized Finance or DeFi gives us a view to the future. 

Decentralized Finance may not give us time travel but it is for sure going to be part of our future in many ways. 

Let us talk about some of the emerging sectors in DeFi.

DeFi Use Cases - A Window to the Future

What makes a market function efficiently? 

Liquidity

Liquidity is not about the value of the assets traded in the marketplace but how frequently the trades happen and how many people participate in the trade. Liquidity is what creates trust in the marketplace by providing options for buyers and sellers and making it more likely that the prices reflect all relevant information. 

While governance is about the market structure, liquidity is what keeps a market running and functioning. 

As it happens, attracting liquidity is one of the biggest challenges in creating marketplaces or any kind of platform. 

In the case of DeFi systems, the complexity is multiplied due to the absence of any central authority who provides the initial liquidity in traditional systems. 

Due to this, DeFi platforms need to employ various techniques and offer incentives to attract liquidity. 

This need for liquidity in DeFi systems has led to many new concepts which only exist in DeFi - Yield Farming, Liquidity Mining, Staking, etc.

Liquidity in DeFi Systems  - Automated Market Making, Yield Farming, and Staking

From Neobanks to Open Banking, from banking platforms to the use of new technologies - Banking is changing rapidly and will not be the same again. 

We are in an age when Banking is rapidly becoming a lifestyle product as technology and regulations are lowering the entry barriers to the industry. As consumers are bombarded with new applications and banking models, most of us are not aware of the full extent of these changes and how they can affect us. What lies behind those colorful cards, cool apps, and unbelievable offers?

Let us talk about them. 


Produced by Sam Ghosh.

The Banking Beyond Show