WEBVTT - The Mark Moss Show - Major Crypto Crash 0:00:00.040 --> 0:00:02.640 Hello, and welcome to another episode of The Mark Moss 0:00:02.720 --> 0:00:06.519 Show where we're talking about bitcoin, We're talking about cryptocurrencies. 0:00:06.519 --> 0:00:10.520 We're talking about the decentralized revolution that is happening right now. 0:00:10.520 --> 0:00:13.560 We're living through this and we're documented each and every 0:00:13.560 --> 0:00:17.720 step of the way. Big, big, big things are happening 0:00:18.200 --> 0:00:20.760 right now as I'm taking taking the time to make 0:00:20.800 --> 0:00:23.200 this recording, as we're as I'm talking to you for 0:00:23.280 --> 0:00:26.840 the Mark Moa Show, and that is uh, the entire 0:00:26.880 --> 0:00:30.400 cryptocurrency market cap is literally melting down. It's like a 0:00:30.400 --> 0:00:32.840 sea of red. But it's not just the cryptocurrency market, 0:00:33.080 --> 0:00:38.680 it's the entire market. We're talking about the NASDAC. We're 0:00:38.680 --> 0:00:42.560 talking about this, the tex stocks, we're talking about um, 0:00:42.760 --> 0:00:45.280 you know the tech darleans that are down. I think 0:00:46.040 --> 0:00:48.040 exchanges down or that index is down by more than 0:00:48.880 --> 0:00:52.040 some of the big darlens they're like Zoom and Shopify 0:00:52.240 --> 0:00:56.720 and Peloton are down like eighty percent or more. Um. 0:00:56.760 --> 0:00:59.280 But even other things like gold is down. I mean, 0:00:59.320 --> 0:01:02.560 we're seeing um things getting hammered all the way across 0:01:02.600 --> 0:01:05.160 the board, and even some of the big Darlin's like 0:01:05.720 --> 0:01:09.880 um Tesla. Even Tesla is getting absolutely crushed right now 0:01:10.760 --> 0:01:13.560 UM and even safe haven assets. Now today it looks 0:01:13.560 --> 0:01:16.080 like gold is doing a little bit better than it 0:01:16.160 --> 0:01:21.120 has been, but typically people think about gold as being 0:01:21.200 --> 0:01:25.679 that safe haven hedge. But yeah, even even uh even 0:01:25.760 --> 0:01:29.680 Tesla looks like it's getting absolute crushed right now, which 0:01:30.400 --> 0:01:33.280 I wonder if that's going to affect Elon must bid 0:01:33.440 --> 0:01:39.479 for buying Twitter M it's down about um since it's 0:01:39.520 --> 0:01:42.560 November high. Uh so that's interesting. The whole world is 0:01:42.600 --> 0:01:45.520 melting down, and of course the cryptocurrency markets are being 0:01:45.640 --> 0:01:48.720 completely hammered. If you look at um coin market cap, 0:01:48.760 --> 0:01:51.480 which is kind of a listing of all the cryptocurrencies 0:01:51.480 --> 0:01:55.000 that are out there, you can see, um, what do 0:01:55.040 --> 0:01:58.640 we have nineteen thousand four D cryptocurrencies listed here? And 0:01:58.680 --> 0:02:00.480 if you scroll through, I mean, it's just a sea 0:02:00.720 --> 0:02:04.600 of red. The only green that I see at the 0:02:04.640 --> 0:02:07.560 time that I'm talking to you right now is uh 0:02:07.960 --> 0:02:12.080 us D coin U s D C. I see binance 0:02:12.120 --> 0:02:16.680 coin b U s D and I see shoot man, 0:02:17.160 --> 0:02:21.000 uh true us D. So basically we have the stable 0:02:21.000 --> 0:02:23.600 coins are the only things that are still in the 0:02:23.680 --> 0:02:26.959 green here, and that is uh, that's the big story. 0:02:27.040 --> 0:02:30.240 The big story is the stable coins themselves and So 0:02:30.320 --> 0:02:32.640 the big, big story is the stable coins, and in 0:02:32.720 --> 0:02:36.840 particular U s T so us T is a terror 0:02:36.919 --> 0:02:41.560 lunas stable coin, and there's big things happening with that, 0:02:41.639 --> 0:02:43.680 and it appears to be I don't want to say 0:02:43.680 --> 0:02:45.800 it's the cause of all the market panic. It's certainly 0:02:45.800 --> 0:02:48.840 not the cause, but it's definitely exaggerated. So I want 0:02:48.840 --> 0:02:50.880 to break that down. I want to break down what 0:02:50.960 --> 0:02:54.200 the heck the stable coins are. We're gonna talk about 0:02:55.760 --> 0:02:58.079 the different types of different categories, how they're used, why 0:02:58.080 --> 0:03:00.240 they're used, um, what the government wants to do about 0:03:00.240 --> 0:03:02.919 regulating these things, um. And then we're gonna talk about 0:03:03.200 --> 0:03:05.640 um the only two that I think are the ones 0:03:05.680 --> 0:03:07.240 that you even want to be in. I want to 0:03:07.280 --> 0:03:11.720 then talk about it from a historical perspective, because the 0:03:11.760 --> 0:03:14.639 reality is is that stable coins are nothing new. It's 0:03:14.680 --> 0:03:16.359 a matter of fact. I like talk about history of 0:03:16.400 --> 0:03:19.800 the time. History doesn't just repeat at rhymes, uh, and 0:03:19.840 --> 0:03:22.359 it's it's rhyming and it's repeating right now. So this 0:03:22.480 --> 0:03:25.600 is nothing new. We've seen this before. UM. So I'm 0:03:25.600 --> 0:03:27.560 gonna give you that a historical perspective, and then I'm 0:03:27.560 --> 0:03:30.480 gonna give you the warnings and uh, some ways that 0:03:30.520 --> 0:03:33.119 you can pretend potentially protect yourself. So lots of cover 0:03:33.360 --> 0:03:35.960 today on the Markmall Show. Thanks for tuning in. If 0:03:35.960 --> 0:03:38.120 you're not tuning in on a regular basis, then you 0:03:38.160 --> 0:03:42.000 certainly should. You're probably missing out and so make sure 0:03:42.040 --> 0:03:43.400 to set a re minder to be with me each 0:03:43.440 --> 0:03:45.960 and every time at this same time, at the same channel. 0:03:46.440 --> 0:03:49.000 So at the time of my recording, as I said, 0:03:49.200 --> 0:03:51.880 it's an absolute blood bath. We see Bitcoin is down 0:03:53.200 --> 0:03:58.600 on the seven day ethereums down, um finance coin x 0:03:58.720 --> 0:04:05.600 r P, Cardano Salona fift. I mean, it's just an 0:04:05.640 --> 0:04:09.440 absolute murder out there. And like I said, the the 0:04:10.480 --> 0:04:14.520 markets are melting down. But the big thing that's dragging 0:04:14.520 --> 0:04:16.720 down all the markets, including a lot of the big 0:04:16.720 --> 0:04:20.200 hedge funds, including a lot of the blue chip stocks 0:04:20.240 --> 0:04:23.040 like the Tesla's, and including the entire cryptocurrency market cap, 0:04:23.120 --> 0:04:26.599 like I said, is this terror Luna situation that's going on. 0:04:27.400 --> 0:04:29.360 And so let's talk about that real quickly. So the 0:04:29.400 --> 0:04:34.159 first thing is we're talking about stable coins. So stable 0:04:34.200 --> 0:04:37.640 coins are the big um darling of cryptocurrencies. Of course, 0:04:37.720 --> 0:04:41.960 it's like this defy. DEFY stands for decentralized finance, which 0:04:41.960 --> 0:04:43.920 a lot of people believe is one of the biggest 0:04:44.080 --> 0:04:49.160 use cases to come out of cryptocurrencies, because supposedly everything 0:04:49.400 --> 0:04:54.360 needs to be decentralized, right, isn't that the big isn't 0:04:54.360 --> 0:04:56.560 that the big technological revolution that you talk about all 0:04:56.600 --> 0:04:59.920 the time mark Um everything should be decentralized, will not. 0:05:00.520 --> 0:05:02.760 That's not exactly right. No, I do talk about the 0:05:02.839 --> 0:05:05.760 decentralized revolution, which is what we're witnessing, which is what 0:05:05.760 --> 0:05:09.600 we're living through right now. Which, yes, the technological revolution 0:05:09.720 --> 0:05:15.159 is decentralization. However, unpopular opinion is not everything needs to 0:05:15.240 --> 0:05:18.800 be decentralized. Let me say it again for the people 0:05:18.800 --> 0:05:22.760 in the back. Not everything needs to be decentralized. So 0:05:23.279 --> 0:05:28.320 defy decentralized finance. Okay, really is it really decentralized? So 0:05:28.360 --> 0:05:30.600 let's think about this. If I was going to make 0:05:30.640 --> 0:05:34.760 a loan to somebody, I should know who that person 0:05:35.000 --> 0:05:38.440 is and what the percentage chance or the risk that 0:05:38.480 --> 0:05:41.680 they may or may not pay me back. I don't 0:05:41.720 --> 0:05:43.880 think anybody listening to this would ever want to loan 0:05:44.600 --> 0:05:46.800 money that you've worked for, your hard earned money that 0:05:46.839 --> 0:05:49.280 you've saved up, loan that to someone who you don't know, 0:05:49.279 --> 0:05:51.440 who they are, and you don't know what they're going 0:05:51.480 --> 0:05:54.000 to use it for, and nor do you know what 0:05:54.080 --> 0:05:56.839 the percentage chance the probability of them paying you back is. 0:05:56.920 --> 0:05:59.640 That would be insane. I hope nobody here whatever think 0:05:59.680 --> 0:06:03.200 about doing that. UM, And if you would think about 0:06:03.200 --> 0:06:05.480 doing that, I think you should rethink that. And so 0:06:06.200 --> 0:06:09.799 that thou think about that. In terms of decentralized finance, 0:06:09.839 --> 0:06:14.760 what does that mean? Finance should be centralized. There should 0:06:14.760 --> 0:06:18.840 be a central entity that's looking at the credit worthiness 0:06:18.880 --> 0:06:21.760 of the borrower and determining if it's a good or 0:06:21.839 --> 0:06:25.200 bad deal. They should determine that one person is less 0:06:25.279 --> 0:06:27.800 risky and gets a better rate, someone is more risky 0:06:27.839 --> 0:06:32.160 pays a higher rate. Somebody has to do that essential entity. 0:06:32.320 --> 0:06:34.960 We don't need that to be decentralized. What other things 0:06:34.960 --> 0:06:37.720 don't need to be decentralized, Well, lots of things. UM 0:06:37.800 --> 0:06:42.480 for example, tracking UM logistics on on the supposedly on 0:06:42.560 --> 0:06:46.040 the blockchain. Well, you could substitute the word blockchain for 0:06:46.360 --> 0:06:49.880 database and so let's track them in a database. And 0:06:49.960 --> 0:06:53.200 we do that now already amazing, isn't it? All? Right? 0:06:53.240 --> 0:06:56.120 Now back to the lesson at hand. So this defied movement, 0:06:56.160 --> 0:06:59.960 this decentralized finance movement has really been opened up. Why 0:07:00.000 --> 0:07:04.480 I'd buy what's called yield farming. And so people are chasing, 0:07:05.160 --> 0:07:08.280 chasing higher than average yield. So, for example, you put 0:07:08.320 --> 0:07:10.360 your money in the bank. When you put your money 0:07:10.360 --> 0:07:13.560 in the bank, the bank uses that money to create 0:07:13.680 --> 0:07:16.600 more money by loaning it back out. Now, the bank 0:07:16.720 --> 0:07:20.200 pays you interest on that money, because of course they're 0:07:20.280 --> 0:07:22.800 using that money to make more money. Now, it used 0:07:22.800 --> 0:07:25.360 to be that you could actually live off the amount 0:07:25.360 --> 0:07:27.480 of interest that you get from the bank. When I 0:07:27.560 --> 0:07:31.200 was a kid, you could make a tent on your 0:07:31.240 --> 0:07:32.960 money sitting in the bank. You have a million bucks, 0:07:32.960 --> 0:07:35.000 that would be a hundred thousand dollars a year hud 0:07:35.600 --> 0:07:39.400 dollars a year of passive income coming just from putting 0:07:39.400 --> 0:07:41.400 your money in the bank and then leaning it back out. Today, 0:07:41.640 --> 0:07:45.920 the problem is the bank gives you zero point zero 0:07:46.080 --> 0:07:48.440 five percent. I mean, basically, they give you nothing for 0:07:48.480 --> 0:07:50.000 having your money in the bank. So a lot of 0:07:50.000 --> 0:07:53.760 people are chasing this yield. How can they get away 0:07:53.840 --> 0:07:55.480 to get this yield away, to get these better than 0:07:55.480 --> 0:07:58.600 the average returns, And so people start going out further 0:07:58.800 --> 0:08:01.480 and further in the risk curve. In order to do that, 0:08:01.960 --> 0:08:06.720 they they start chasing all types of risky investments, obviously 0:08:06.840 --> 0:08:10.080 options trading and cryptocurrency investing, anything they can do to 0:08:10.160 --> 0:08:13.040 try to get better returns than what the market would bear. 0:08:13.680 --> 0:08:16.480 And so um they've done that. Now this yield farming 0:08:16.920 --> 0:08:19.280 seems like a great idea. And so we have defied 0:08:19.360 --> 0:08:22.440 decentralized finance. We have c FI, which is centralized finance. 0:08:22.720 --> 0:08:25.760 So the cea FI are players like Block five, um, 0:08:25.800 --> 0:08:31.120 players like celsius, um, players like Nexo, Crypto, dot Com, etcetera. 0:08:31.160 --> 0:08:34.840 So those are c FI centralized finance applications. And the 0:08:34.840 --> 0:08:37.080 thing with c FI is they supposedly cut out the 0:08:37.080 --> 0:08:42.120 middleman and they give more of those distributions back to you. Um. 0:08:42.160 --> 0:08:45.480 Now those have their own risk and reward scenarios, as 0:08:45.640 --> 0:08:48.960 defied does as well. Now we're finding out first and 0:08:49.080 --> 0:08:54.560 foremost the dangers that these DeFi can pose, as millions, 0:08:54.640 --> 0:08:58.040 hundreds of millions of dollars, billions of dollars are evaporating 0:08:58.240 --> 0:09:00.960 from people's accounts right before of very eyes. I'm gonna 0:09:00.960 --> 0:09:02.679 explain all that to you and more and how to 0:09:02.720 --> 0:09:04.720 protect yourself from that in a second. By the way, 0:09:04.760 --> 0:09:07.560 you're listening to the markma Show. We're talking about bitcoin, 0:09:07.640 --> 0:09:10.600 We're talking about cryptocurrencies. We're talking about the decentralized revolution 0:09:10.640 --> 0:09:15.120 that we are witnessing right now. And we're we're witnessing 0:09:15.320 --> 0:09:18.640 a meltdown of the financial system and it's taking down 0:09:19.080 --> 0:09:23.000 this decentralized revolution with it. However, it's not all what 0:09:23.120 --> 0:09:24.760 it seems, so I want to explain that to you 0:09:24.880 --> 0:09:27.160 and show you how you can navigate this. UM. I'll 0:09:27.200 --> 0:09:29.040 be back with that and more in a minute, So 0:09:29.080 --> 0:09:31.240 don't go away. I'll be right back. All right, Welcome back. 0:09:31.280 --> 0:09:33.199 You are listening to the Mark Moa Show. We're talking 0:09:33.200 --> 0:09:37.680 about bitcoin, We're talking about cryptocurrencies. We're talking about the 0:09:37.720 --> 0:09:41.640 decentralized revolution that we are living through right now as 0:09:41.720 --> 0:09:44.360 we speak now. Before the break, I was setting up this, uh, 0:09:44.520 --> 0:09:47.880 this thing about cryptocurrencies and this decentralized revolution we're talking about, 0:09:48.320 --> 0:09:51.559 UM defy decentralized finance. I was explaining the difference between 0:09:51.559 --> 0:09:55.440 DEFY and c FI, which is centralized finance. So centralized finances, 0:09:55.600 --> 0:09:58.320 the Celsius, the block five, the next the crypto dot com, 0:09:58.640 --> 0:10:02.120 central entity, central come puns that are that are handling 0:10:02.160 --> 0:10:07.439 this versus supposedly DEFY that's somewhat decentralized. Now I was 0:10:07.480 --> 0:10:09.520 making the case that not everything needs to be decentralized, 0:10:10.080 --> 0:10:12.640 all right, But now that you understand that, So now 0:10:12.679 --> 0:10:16.240 we have these decentralized protocols. The one that's blowing up 0:10:16.360 --> 0:10:18.319 right now and dragging the entire market down with us 0:10:18.400 --> 0:10:22.000 is called Terra Luna or its symbol as u ST. 0:10:22.720 --> 0:10:25.559 Now it's grown very very fast. It's grown very very 0:10:25.600 --> 0:10:30.240 big because they throw out a nineteen point five percent 0:10:30.320 --> 0:10:34.080 about a tent interest rate. So I can make zero 0:10:34.200 --> 0:10:38.000 percent in my bank, I can make eight to twelve 0:10:38.080 --> 0:10:42.240 percent through one of these centralized finance fis, or I 0:10:42.240 --> 0:10:46.360 could make tent by using one of these DeFi protocols 0:10:46.440 --> 0:10:50.920 like Tara Luna, staking it on the anchor protocol. Now, 0:10:52.280 --> 0:10:54.560 let's just ask a question. You've probably heard the saying 0:10:54.559 --> 0:10:56.439 there's no such thing as free lance. You've probably heard 0:10:56.440 --> 0:10:58.920 the saying that if something is too good to be true, 0:10:58.960 --> 0:11:02.480 then it probably is is. So ask yourself if the 0:11:02.520 --> 0:11:05.400 banks which are pretty much risk free, I mean, your 0:11:05.400 --> 0:11:07.360 money is f d I c ensured if they pay 0:11:07.360 --> 0:11:10.959 you zero point zero five, someone else could pay you 0:11:11.000 --> 0:11:14.360 ten percent, and then um Tera Luna on anchor pays you. 0:11:15.800 --> 0:11:18.960 Why do you think they can pay Because you're taking 0:11:19.040 --> 0:11:22.000 an enormous amount of risk, and so the first thing 0:11:22.040 --> 0:11:24.360 is you always have to think about your risk adjusted return. 0:11:24.800 --> 0:11:26.560 So there's a enormous amount of risk for doing this, 0:11:26.760 --> 0:11:29.640 and we're finding out exactly how much risk we have. 0:11:30.520 --> 0:11:34.520 So we're talking about this defy and we're talking specifically 0:11:34.559 --> 0:11:38.200 about these stable coins. So a stable coin now means 0:11:38.280 --> 0:11:41.760 that the token itself. So in this case, this U 0:11:41.920 --> 0:11:46.600 S T token is equal to one dollar and UM 0:11:46.600 --> 0:11:50.800 not the dollar superstable. We can see the prices of milk, steak, food, gas, 0:11:50.840 --> 0:11:53.800 cars going all over the place, but it's always pegged 0:11:53.920 --> 0:11:57.240 to a dollar. So as the dollar, that's always worth 0:11:57.240 --> 0:11:59.040 one dollar. Whatever dollar comby you, that's what it's worth, 0:11:59.600 --> 0:12:02.199 all right. Now, we have a couple of different versions 0:12:02.320 --> 0:12:04.320 of these stable coins that I think are important to 0:12:04.320 --> 0:12:06.240 dig into before we go too far into this story. 0:12:06.920 --> 0:12:09.520 Um so stable coins have become very very popular. The 0:12:09.559 --> 0:12:12.640 first one was tether. Tether became this first one and 0:12:12.679 --> 0:12:14.280 basically if I put a doll, if I give them 0:12:14.280 --> 0:12:17.040 a dollar US dollar, they'll give me back a token 0:12:17.640 --> 0:12:20.480 that UM is equal to one dollar. It's redeemable for 0:12:20.600 --> 0:12:22.199 one dollar. Anytime I want, I could go redeem that 0:12:22.240 --> 0:12:24.439 token get my dollar back. Now, they were supposed to 0:12:24.440 --> 0:12:27.720 be holding those dollars in an account, so they had 0:12:27.800 --> 0:12:30.280 my reserves in an account. Anytime we want, we can 0:12:30.320 --> 0:12:32.760 go exchange those That's how it's supposed to work. Now, 0:12:32.760 --> 0:12:34.880 we've had lots of stable coins start popping up. And 0:12:34.880 --> 0:12:36.960 the reason why they really gained a lot of popularity 0:12:37.240 --> 0:12:39.920 is if I'm in Bitcoin or some other cryptocurrency position 0:12:40.200 --> 0:12:41.920 and I want to I'm trading them in and out. 0:12:41.920 --> 0:12:43.880 I'm in and out. I'm in now. Um, it's hard 0:12:43.960 --> 0:12:45.680 to go in and out of US dollars. And so 0:12:45.760 --> 0:12:47.960 we've created this token, and they created this token that 0:12:48.000 --> 0:12:50.520 allows me to sell my position in this cryptocurrency and 0:12:50.559 --> 0:12:52.959 go into the stable coin temporarily, and then I can 0:12:52.960 --> 0:12:54.559 go back into position when I want, and so it 0:12:54.600 --> 0:12:58.000 allows me to stay within this crypto ecosystem. Well, Tether 0:12:58.080 --> 0:13:00.800 grew really really fast. It gained a lot of reserves, 0:13:00.840 --> 0:13:03.920 gained a lot of notoriety, and so of course they're 0:13:03.920 --> 0:13:06.400 stable coins popped up. Um, we have a lot of 0:13:06.400 --> 0:13:09.240 different stable coins of Tether. We have die which is 0:13:09.280 --> 0:13:11.679 another moment. We'll break that in the second US d coin, 0:13:11.800 --> 0:13:15.320 true US d um d g x UH, and on 0:13:15.360 --> 0:13:17.000 and on and on. But I don't want to go 0:13:17.040 --> 0:13:18.880 into all the particulars of each and every coin. What 0:13:18.920 --> 0:13:20.280 I want to do is I want to break down 0:13:20.800 --> 0:13:24.040 um really the two different types that we have, or 0:13:24.040 --> 0:13:26.599 really maybe the three different types that we have. Okay, 0:13:26.679 --> 0:13:29.240 So the first one, which is what they're supposed to 0:13:29.240 --> 0:13:31.240 be and what I think most people believe they are, 0:13:31.320 --> 0:13:33.040 and they're find out the hard way they're not, is 0:13:33.080 --> 0:13:36.760 that they're backed. They're backed with dollars. So I give 0:13:36.800 --> 0:13:39.640 them a dollar, they give me a token, They hold 0:13:39.720 --> 0:13:43.240 my dollar until I'm ready to exchange it. Now, if 0:13:43.280 --> 0:13:45.880 they keep all those dollars in their account, that would 0:13:45.920 --> 0:13:48.880 mean they're fully reserved, all the dollars they've accepted they're 0:13:48.880 --> 0:13:52.400 sitting in their account. That's okay, because at any time 0:13:52.559 --> 0:13:54.640 people can go redeem and get their dollars, no big deal. 0:13:55.440 --> 0:13:58.480 The problem is when they start going into what's called 0:13:58.480 --> 0:14:02.199 a fractional reserve, meaning when you give them your dollar 0:14:02.400 --> 0:14:04.400 they only hold on to fifty cents of it, or 0:14:04.440 --> 0:14:06.640 they only hold on to ten cents of it, and 0:14:06.679 --> 0:14:09.640 the other fifty cents or other ninety cents they go 0:14:09.720 --> 0:14:12.160 do something else with like put it into another asset, 0:14:12.640 --> 0:14:14.760 or try to gamble or trade with it to try 0:14:14.800 --> 0:14:18.160 to earn more money on that float on your money, 0:14:18.720 --> 0:14:23.160 all right, So this is where the problem comes in again. 0:14:23.400 --> 0:14:25.480 Full reserve, they have all the money. Everyone go get it, 0:14:25.560 --> 0:14:29.640 no big deal. Fractional reserve is a problem. If everybody 0:14:29.720 --> 0:14:32.600 wanted to go cash in their money, it would create 0:14:32.640 --> 0:14:35.440 a run. They won't have enough money to pay it 0:14:35.480 --> 0:14:37.960 all back. In addition, depend on what they're doing with 0:14:38.000 --> 0:14:40.920 the rest of that money, they're putting it more at risk, 0:14:41.040 --> 0:14:43.080 and if they lose it, they may not have your 0:14:43.120 --> 0:14:45.360 money to give back to you. And that's part of 0:14:45.360 --> 0:14:49.160 the problem. So real quickly. The only coins that I'm 0:14:49.200 --> 0:14:51.400 aware of, and if I'm wrong, please feel free to 0:14:51.440 --> 0:14:53.080 hit me up on social media let me know. The 0:14:53.120 --> 0:14:55.600 only two coins that I'm aware of that are fully 0:14:55.880 --> 0:14:59.840 regulated and fully backed by U S dollars are you 0:15:00.240 --> 0:15:03.600 s d C, which is the Circle coin, and g 0:15:03.960 --> 0:15:06.960 U s D, which is the Gemini coin. So US 0:15:07.040 --> 0:15:09.680 d C and g U s D, they're both federally 0:15:09.720 --> 0:15:14.320 regulated and backed by US dollars one to one. As 0:15:14.400 --> 0:15:17.160 far as I'm aware, every other stable coin out there 0:15:17.360 --> 0:15:21.920 is not fully reserved. Now why is that important? Well, 0:15:22.000 --> 0:15:25.320 let me tell you. Uh So, One, it's important because 0:15:25.320 --> 0:15:28.240 as we can see us, t Tera Luna coin is 0:15:28.400 --> 0:15:32.080 getting attacked right now, and as it turns out, they 0:15:32.080 --> 0:15:34.040 don't have the money to pay back. So instead of 0:15:34.080 --> 0:15:36.760 having those dollars, what they did is they put those 0:15:36.800 --> 0:15:41.080 dollars into another token they have called Terra Luna. So 0:15:41.320 --> 0:15:44.080 if I want to redeem my dollar stable coin for 0:15:44.160 --> 0:15:46.320 a dollar, what they do is they don't give me 0:15:46.360 --> 0:15:48.440 my dollar back because they don't have it. What they 0:15:48.480 --> 0:15:51.400 do is they give me a dollar's worth of this 0:15:51.440 --> 0:15:55.240 new token. The problem is, what if that new token 0:15:55.480 --> 0:15:59.080 isn't worth a dollar. Now, that's the problem that we've 0:15:59.120 --> 0:16:02.560 run into, and that's the problem that we're seeing melt 0:16:02.640 --> 0:16:06.600 down the entire ecosystem. To give you an idea of 0:16:06.680 --> 0:16:09.480 exactly what is going on, well, before we go into that, 0:16:09.520 --> 0:16:11.400 I wanna I'm gonna break down the mechanics of how that, 0:16:11.480 --> 0:16:13.720 how that works, but I want to explain to you, 0:16:13.840 --> 0:16:17.560 like I said, the difference of fully reserved or fractional reserve, 0:16:17.640 --> 0:16:20.080 because I think that's a key piece and I dig 0:16:20.120 --> 0:16:22.360 into history at the time, because history continues to repeat 0:16:22.920 --> 0:16:27.360 and there's a parallel throughout history that explains us to 0:16:27.440 --> 0:16:31.440 us this is this is nothing new. The period in 0:16:31.560 --> 0:16:34.840 time that I'm talking about is in the United States 0:16:34.840 --> 0:16:37.760 and really happened all around the world, and it was 0:16:37.800 --> 0:16:41.640 called free banking. Free banking was a time before we 0:16:41.680 --> 0:16:43.760 had central banking. So today we have central banking, which 0:16:43.800 --> 0:16:46.600 means that we have people at the top, central planners 0:16:46.640 --> 0:16:50.840 that are planning the entire banking system. Free banking would 0:16:50.840 --> 0:16:53.240 be the opposite. Free banking would mean there was competition. 0:16:53.520 --> 0:16:56.000 That means people could start different banks, and they could 0:16:56.000 --> 0:16:58.840 have different business models, and they could compete against each other. 0:16:58.920 --> 0:17:01.440 Now you probably you know which camp I'm in when 0:17:01.440 --> 0:17:04.000 it comes to that. I'm a free market person. I 0:17:04.080 --> 0:17:07.200 believe in free market um competition. I believe competition makes 0:17:07.200 --> 0:17:10.840 better products, better service, better prices. Central planning, to my opinion, 0:17:10.920 --> 0:17:13.680 always fails. Well it's not just my opinion. Throughout history, 0:17:13.680 --> 0:17:17.520 central planning always fails because it lacks the competition, it 0:17:17.600 --> 0:17:21.639 lacks the profit incentive, it lacks the information that comes 0:17:21.680 --> 0:17:27.080 in a free market UM system. So free banking uh 0:17:27.119 --> 0:17:30.320 per Wikipedia, it says that in the strictest versions of 0:17:30.359 --> 0:17:33.720 free banking UM, there is no role at all for 0:17:33.840 --> 0:17:37.480 a central bank or the supply of central bank money. 0:17:38.280 --> 0:17:41.320 Central bank money is supposed to be permanently frozen. There 0:17:41.440 --> 0:17:45.920 is therefore no government agency acting as a monopoly as 0:17:45.960 --> 0:17:50.080 a lender of last resort. Sounds sounds quite different than 0:17:50.080 --> 0:17:52.240 what we have before. And I'm gonna tell you why 0:17:52.440 --> 0:17:55.120 I think this is preferable. I'm gonna tell you what 0:17:55.160 --> 0:17:57.800 the history of this shows us. And then, like I said, 0:17:57.800 --> 0:17:59.960 I want to show you how it's exactly the parallel 0:18:00.000 --> 0:18:03.520 to what's happening today. Don't go away, all right, welcome back. 0:18:03.560 --> 0:18:06.320 You're listening to the markma Show. We're talking about bitcoin, 0:18:06.359 --> 0:18:10.080 We're talking about cryptocurrencies. We're talking about the decentralized revolution 0:18:10.119 --> 0:18:13.080 of course all the time, and today specifically we are 0:18:13.119 --> 0:18:17.840 talking about defy decentralized finance. We're talking about stable coins. 0:18:17.880 --> 0:18:21.280 We're talking specifically about terra lunar stable coins, which are 0:18:21.320 --> 0:18:24.600 blowing up the entire ecosystem. Now, before the Breakoup was 0:18:24.600 --> 0:18:27.760 explaining how there's really two different types um stable coins. 0:18:27.760 --> 0:18:30.480 We thought they were reserved, they had full reserves, meaning 0:18:30.520 --> 0:18:32.879 they were holding our dollars and we could redeem them 0:18:32.880 --> 0:18:35.280 for dollars whenever we want However, we found out that 0:18:35.359 --> 0:18:37.879 most stable coins are not reserved, meaning they're not holding 0:18:37.920 --> 0:18:41.399 our dollars, and instead they are fractally reserved and stare 0:18:41.440 --> 0:18:43.560 holding a little bit maybe fifty percent of your dollars 0:18:43.640 --> 0:18:46.040 or ten percent of your dollars, and the oif ninety 0:18:46.040 --> 0:18:48.960 percent are being loaned out and are at risk in 0:18:49.040 --> 0:18:51.600 some other assets. Now I was explaining how this is 0:18:51.600 --> 0:18:54.480 actually nothing new, and this is actually how the banking 0:18:54.560 --> 0:18:57.359 system works. So the banking system that we have in 0:18:57.400 --> 0:19:00.679 the world today, central banking is built on actional reserve. 0:19:01.040 --> 0:19:03.240 You put ten dollars in the bank, and nine of 0:19:03.280 --> 0:19:06.320 them get lent back out. The problem is those dollars 0:19:06.359 --> 0:19:08.399 get lent back out and going to somebody else's bank, 0:19:08.760 --> 0:19:12.280 and then they keep ten percent and loan out, and 0:19:12.320 --> 0:19:14.280 it happens over and over and over again, until we 0:19:14.280 --> 0:19:16.480 have so much leverage in the system that if even 0:19:16.480 --> 0:19:18.480 just a few percent of people, less than temperati of 0:19:18.560 --> 0:19:20.200 the people went to the banks to get their money out, 0:19:20.800 --> 0:19:23.639 the banking system would collapse. This is actually what happened 0:19:23.640 --> 0:19:26.920 in Canada as they started to freeze everybody's accounts from 0:19:26.960 --> 0:19:30.440 the from the Trucker protest that um very quickly they 0:19:30.440 --> 0:19:33.040 decided to reverse their position because the banks were going broke. 0:19:33.400 --> 0:19:35.800 But I wanted to liken this back to a period 0:19:35.840 --> 0:19:38.520 of time known as free banking. So free banking was 0:19:38.600 --> 0:19:43.400 before central banking. And it says, per Wikipedia, the strictest 0:19:43.480 --> 0:19:45.640 versions of free banking, there's either no role at all 0:19:45.640 --> 0:19:47.360 for the central bank or the supply of central bank 0:19:47.359 --> 0:19:51.560 money is supposed to be permanently frozen. Um. There's no UM, 0:19:51.640 --> 0:19:54.200 no government agency acted as a monopoly as a lender 0:19:54.240 --> 0:19:56.480 of last resort. And so in the central banking system, 0:19:56.520 --> 0:19:58.280 the central Bank, the Federal Reserve of the United States, 0:19:58.480 --> 0:20:00.960 is the lender of last resort, and so if a 0:20:01.000 --> 0:20:03.600 bank RT too bankrupt, the fire reserve can step in 0:20:03.880 --> 0:20:06.719 and backstop them, basically print more money out of thin 0:20:06.800 --> 0:20:10.440 air to give them money to keep them from going bankrupt. Now, 0:20:10.840 --> 0:20:14.360 the historical reference of this is really going back into 0:20:14.440 --> 0:20:18.320 the eighteenth and the nineteenth centuries. UM. It was defended 0:20:18.359 --> 0:20:22.639 by most notably Adam Smith, who Adam Smith is it 0:20:22.760 --> 0:20:25.320 was an amazing author. If you haven't read his books, 0:20:25.320 --> 0:20:28.359 you definitely should. Um. And really, if we go back 0:20:28.400 --> 0:20:31.439 into the United States, and we saw it through Australia, Switzerland, Scotland, 0:20:31.440 --> 0:20:34.000 et cetera. But in the United States specifically from the 0:20:34.040 --> 0:20:38.640 period of eighteen thirty seven to eighteen sixty four that's 0:20:38.680 --> 0:20:42.200 referred to the era of free banking. Now, a lot 0:20:42.200 --> 0:20:46.520 of people, specifically people that are proponents of the central 0:20:46.560 --> 0:20:49.160 banking model and people that have been raised to think 0:20:49.200 --> 0:20:51.159 the central banking model is good. So people that have 0:20:51.240 --> 0:20:54.480 gotten economics degrees and so forth have been taught that 0:20:54.640 --> 0:20:59.600 the that the free banking era was bad, that all 0:20:59.640 --> 0:21:02.560 these different banks that were that were starting up on 0:21:02.600 --> 0:21:05.200 their own and creating their own currencies was a big 0:21:05.240 --> 0:21:09.280 problem because they were continually going out of business and 0:21:09.359 --> 0:21:13.040 blowing up and people were losing their money. Now that 0:21:13.240 --> 0:21:17.879 is true, However, maybe the reasons for why that happened 0:21:17.880 --> 0:21:20.919