Bitcoin Banking in 2050 with Eric Yakes

 
 

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“Now that we have this peer-to-peer payment network, where normally that value is being captured by credit card companies and applications and things like that in our current system, now that it’s peer-to-peer, that value can be captured by individuals peer-to-peer…that 5% fee going to your credit card company, that’s going to you baby.”
— Eric Yakes

SHOW DESCRIPTION

Eric Yakes is the author of ‘The 7th Property’. In this interview, we discuss the possible Bitcoin banking systems that could emerge when Bitcoin reaches maturity. We consider the forms of banking that developed in the past, and the new forms of banking Bitcoin and the Lightning Network could engender.

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One of the major changes brought about by Bitcoin is that it encourages those who discover it to study and question money. It is an awakening, which changes the concept of finance, and the balance of power between the state and individuals. Not only does this upend the confidence in state control monetary systems, it also makes people question state-regulated banking systems.

The idea that there are alternatives gives optimism to those who have railed against fractional reserve banking. Expanding the money supply beyond that covered by reserves was deemed by some to have been a primary driver of the global financial crisis. Further, it has given rise to a generation of central bankers who are more comfortable with printing money.

The promise of Bitcoin is the return to full reserve banking: a balance between deposits and lending. However, whilst this mitigates the chaos of deleveraging from unsustainable debt, it may also hinder long-term investment. These are the basic outlines of the major economic arguments that have separated the Austrians from the Keynsians, which have defined the push and pull of western monetary policies in the post-war period.

Irrespective of the merits of either side of the debt around the usefulness of credit, Bitcoin could be expected to work in a spectrum of societal approaches to credit. The question, therefore, is what banking systems will Bitcoin and the Lightning Network facilitate?

Will the nature of banking remain similar to the present, will there be a renaissance of old forms of banking, or will the market evolve new forms of banking? Each scenario is complete with a set of tradeoffs. But, Bitcoin’s scarcity, combined with its utility as a digital permissionless uncensorable global monetary system, opens up a world of possibilities.

TIMESTAMPS

00:04:18: Introductions
00:06:58: Bitcoin banking systems
00:14:11: Fractional-reserve vs full-reserve banking
00:19:36: The emergence of stablecoins
00:22:58: A football education
00:26:19: Hyperbitcoinisation in 2050
00:30:24: Lightning limitations and future developments
00:40:37: Limitations of a Bitcoin full-reserve system
00:47:45: A sidetrack into films…
00:49:21: Credit expansion
01:03:12: Insurance markets and the FDIC
01:05:42: Sociopath politicians
01:10:53: Another sidetrack into films…
01:31:05: Wealth inequality, and the Cantillon effect
01:37:47: The broker system
01:42:17: The end of fractional-reserve banking?
01:46:56: Final comments

 

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SHOW NOTES

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