Session 7 Transcript

This is an excerpt of our 7th academy session.

Hey everyone.

How are you all doing.

Welcome back to Cointelligence Academy.

We're glad to have you again.

Probably noticed we've changed our design a little bit.

I like it a lot.

I hope you do too.

And today we will extend and expand upon a topic that we already touched on a little bit.

And that is payment coins and that's meaning crypto currencies that were designed to act as means of payment or transfer of value.

And we started our course with bitcoin and we learned why it's so important and what makes it unique as so-called Internet money right.

Quotation marks.

And today we will dive into some other coins to see how they differ from Bitcoin and what their value proposition is.

First and foremost foremost I do want to thank our sponsor Puma pay.

They are allowing us to offer this course for all of you guys and Puma Pay is the first comprehensive crypto payment solution for businesses.

They combined the flexibility of payment cards with the advantages of block chain technology.

We are very excited and glad to be working with a company that's genuinely want to create adopt increase adoption of crypto currencies and help many people pay less fees and have more control over their own money.

So before we begin last thing I wanted to remind you all is that we are taking the discussion to our WhatsApp group quality discussions that are going on there and you can ask us anything on there and we'll answer it.

You know stuff that's happening in the crypto world stuff that's related to our cointelligence academy.

You'll get updates about new sessions and the physical meet ups that we do.

So links to the WhatsApp group and everything I will be talking about today will be in the description of this video.

And what do you say we get started.

So we'll start by taking a look back at what we already know and we'll talk about Bitcoin first.

So we know that bitcoin is open source and that means everyone can see this source code to bitcoin.

They can do whatever they want with it.

They can take it copy it and build a new application for it.

That's the meaning of open source code.

And the problem with doing such a thing is you know you have to bootstrap a network.

You have to get people to start using your network and switch over from what they're currently using.

So around 2013 many coins started doing the same thing and popping up and they had goals that are either similar to Bitcoin like light coin which wanted to be the silver to Bitcoin gold or ethereum who wanted to become a world computer and serve purposes that are completely different than what Bitcoin wanted.

And as it turned out the market evolved and after around a decade we now have a market that is still young right.

Very young but much more mature than it was a few years ago and we are seeing it develop and very quickly when you put it in comparison and in contrast to the global financial system that's been running for more than a century now.


So the economy is developing the crypto market is developing and we will be talking about the payment coins today and a small recap about digital money and to get the most out of this part.

You should go watch our stable coin session.

It's a great session is a great introduction to this one because it talks about the properties of money and what it would take for crypto currencies to become money to evolve into money.

So we said that money has three properties right.

Money currency has three properties.

And the first one is a medium of exchange.

The second one is the unit of account.

And the third is a store value.

Again going into depth into all of these on our stable coin session show.

So go watch that if you kind of don't really understand what any of these is saying and we've can't we've come to the conclusion that our crypto currency is money.

And we said that currently No.

And they do lack two main things to become money.

And those are price volatility.

Well hold on a second so price volatility problem.


And the adoption problems.

So we have the price that's very very volatile changing all the time and the adoption problem which is getting people to actually use them.

And it's kind of the chicken and the egg.


Why would people use the crypto currencies because they already have many much much usage everywhere.

And you know to get to that that you're in kind of a vicious cycle that you got to break into it somehow.

So today we're going to be looking at this question which is our payment coins money and they I'll give you a slight spoiler.

They do suffer from the same problems that all crypto currencies do in bitcoin also and promoting them.


The people that are promoting them the people that are designing them and building them they're promoting these crypto currencies.

These payment coins and they are working hard to solve these two problems.

We said the volatility problem and the adoption problem many are taking different approaches.

I mean today we'll look at the biggest payment coins in the market and the most important ones.

And we cannot say confidently right now that any crypto currency is widely regarded as money.

So the question will still be no.

At the end of the session.

But it is important to get to know these payment currencies what they're doing differently and why they are even here so we will talk about block chain forks.

I know it doesn't really look like it is in any way related to payment coins but we need to say a word too about blockchain forks before we start talking about Bitcoin Cash for example.

So block chains are representations of the state of the network as a function of time.

This is like the cold technical definition of a block chain and a fork.


You see fork in the title so a fork is a term and open source software development has nothing.

You know it didn't start in cryptocurrency it's it's very very old term way before bitcoin was invented.

And as we know you know block chains are linear you have blocks or blocks are going as a function of time.

For example in bitcoin around every 10 minutes on average there is a new block that is mind and added to the chain.

So this is how it looks like more or less.

These are just example numbers.

You know I'm not talking about the actual block five thousand fourteen because it was much longer very long ago.

This is this is like an example of how the Bitcoin network or any block chain that looks like the Bitcoin network.

This is an example of how it looks like.

So when you fork a block chain right when you hard fork a block chain and so the network creates two separate network.


And these two separate networks are incompatible with each other.

And what does that mean.

You can see that in this illustration right here.

So after the fork is created and we treat this as you know the point of the fork after the fork is is as has happened you now have two different timelines.

You have the original one right which we call you know we refer to as this one and the fourth one which we referred to as this one and the Bitcoin and Bitcoin Cash you they're just examples.

It happens the same process happens on any hard fork in which two separate networks are created.

So the blocks as we know the newer blocks like this one and this one and this one as compared to this one and this one the newer blocks always know the previous State of the network.

So we know the block fifty eighteen is built on block fifty seventeen and fifty seventeen is built block fifty sixteen and fifty sixteen is also built on block Fifty fifteen just like these three but the block the first block in the new network is also built on this block.

So these two blocks they have the same history but this is the point where history is divided right in these blocks are going to be having separate histories.


This will be based on this and this will be based on this.

So new networks are being created and they're going each you know in their separate ways and going independently you know to wherever they may go and we will have an entire mini session you know talking about forks which forks happened The like political implications of forks I'm not talking geopolitics I'm talking about within the crypto community the bitcoin community the Bitcoin Cash community.

But the biggest example of a blocking fork is between Bitcoin and Bitcoin Cash that happened in 2017.

So we'll now move forward and start talking about the actual payment coins.

So I want to take a step back and think in broader terms about these.

I want to talk a little bit about the terminology of these coins.

So we have Bitcoin and Bitcoin Cash right.

They are very big currencies considered when you look at the market cap that they have when you look at people who use them size of their communities scope of their development.

So they belong into a category of crypto currencies that we call currencies right.

Also payment coins you'll see many terms being tossed around but these are the two most popular ones payment coins and currencies and these are aimed primarily most popularly to facilitate payments.


That's what the the the users say you know there is the the argument of store of value for Bitcoin which is a very very big narrative in bitcoin right now.

But there are also lots of people who are talking about these payment coins facilitating payments.


So bear in mind that these are certainly not the only payment coins.


So the Bitcoin Bitcoin Cash be once all the ones we're going to be talking about today they're not the only payment coins out on the market there are many I would go to say that there are hundreds if not thousands of crypto currencies aimed at you know being a payment coin and new coins are constantly being launched every every.

I don't know.

Week two weeks probably slow down since 2017 and 18 but new coins new payment currencies are kind of constantly being launched and their developers are tweaking certain things in relation to other currencies you know optimizing say transactions per second capability in favor of I don't know decentralization each payment coin does its own you know balancing and figures out what it wants to focus on and what it wants to optimize.

So when a project team goes to create a currency like that a payment coin like that they have to choose what to prioritize.


So the four biggest factors that they mostly take into account are first is decentralization and this is a key aspect and narrative of the cryptocurrency community.

Decentralization is almost always talked about whenever a new currency is launched that you know aims to be a distributed ledger based currency.

And if a coin wants to be decentralized they have to crack.

What I think is the hardest problem which is how to distribute consensus in a way that no single actor could ever have control over their network.

And it still remains the hardest thing to do because we constantly see proof of work based networks being 51 percent intact and that means that they are being attacked by actors who control more than half the hash rate on these networks.

Therefore you know they're not decentralized and the hackers it's to a limit but they can rewrite history so to speak and replace transactions in older blocks essentially they can steal people's funds.

And it does happen.

You know it didn't stop happening after the first few did.

So it's a major major major issue to conquer and it's probably in my opinion it's the hardest one.

So the second one is real world usage also extremely hard.

Less than decentralization but also extremely hard and it is one of the main drivers for the legitimization of a coin.

You know if a coin wants to appear legitimate to the public to the crypto community it has to convince people and show you know that it has real world usage not a lot.


Not just aiming to have real world usage and developing these cool applications and slow and sorry small block times and quick transaction confirmations.

I'm talking about actual people using the coin you know app downloads in the App Store not bought of course value being transferred actual stories of people using it in their day to day lives.

That's another big problem the crack.

So you want more people to be using it.

You have to convince them they would be able to use it in their day to day lives.

And again I'm repeating myself this is the chicken and the egg problem.

You got to have something happen before you can get more people in your network.

And this is a very hard for these developers and these you know project teams to accomplish and I for example let's take bitcoin which is arguably the most used crypto currency out there.

And even bitcoin.

I know from personal account I've talked to a few people even Bitcoin is rarely used in developed countries but there are still employees who receive their salaries in bitcoin all over the world for their cryptocurrency exchanges that offer to pay their employees in crypto currencies.

And some employees take up on that offer.

There are people in less developed countries who are using crypto currencies for remittances.


Sending money back to their families because it's cheaper it's faster it's more convenient than using traditional methods so we do have some real world usage for crypto currencies but not enough to be considered widespread use of these currencies and to be actually qualified as money that can contend with fiat money.

So the third problem is the even distribution problem the wealth distribution problem.

So projects they sometimes want to distribute their coins evenly meaning that most of the coin supply will not be held by very few people.

And a side note here is that some projects prefer to do that not all of them right there are projects who kind of want to keep most of the coins for themselves and convince other people that they have value so they would buy them really quick get the price up and then these project teams can sell their all of their currency and just get out and you know not continue development on this project because all they wanted to get rich quick.

There are some bad people who do that.

That's the reality.

But there are also many who don't.

Many who genuinely are working day and night to get their currency to succeed.

So one of the problems is even distribution some project teams want their currencies to be like the People's currency so to speak.

This is obviously very hard because early supporters of the project will undoubtedly buy up large amounts and they will care more about their own usage or profits than giving it giving it out to other people for the sake of even distribution.


It's a basic economic incentives that each of us have each of us has.


So I want to take an example with a project called Bitcoin gold which is another fork of the original bitcoin but it is unrelated to Bitcoin Cash.

It was launched with promises that everyone will be able to mine it without the need for specialized equipment.

But it was discovered that the team had secretly mined an enormous amount of coins without telling anyone.

And before bitcoin gold launched they did that before bitcoin gold launched so that they will have a lot of coins before anyone else.

So you know to create value for themselves essentially out of thin air and the last problem is you know easy to use and we want zero or minimal feed we want very low fees on a crypto currencies because nobody wants to pay a 10 dollar fee when they buy a three dollar coffee.

That's the problem that we had in bitcoin a few years back where fees skyrocketed.

You can you can send a transaction for bitcoin that was worth like 20 30 dollars even one dollar and some time sometimes fees.

You know they got up to being 50 dollars just for the transaction fees.

And if you wouldn't have paid the fee your transaction just didn't go through.

That was a huge problem back in the day and big back in the day you know just a few years ago but still you want low fees.

So in the design of a cryptocurrency you have to implement a fee mechanism that will still incentivize people to secure the network through mining and retain their profitability.

But you want it to still be usable and acceptable by people who just want to use the currency as a network.

You don't want to just be with your miners.


You don't want to just bring value and profit to your miners and you don't just want to get your users the lowest fees possible because then you wouldn't have miners securing the network.

You've got to strike a balance there.

And that's a big challenge.

So it's been a long one.

I know.

But let's talk a bit about several other cryptocurrency and other payment coins that exist on the market today.

We'll start with Dash and I.

You're probably some of you who already know dash probably thinking OK so dash not the biggest crypto currency and it's a quiet one.

I do know.

And Dash is one of the earliest attempts to create something new out of what was only Bitcoin back there.

Dash was launched in 2014 and most of its code was borrowed from the bitcoin code.

Like we talked about being open source and everything.

So there were two big advancements with Dash the first one being private transactions and that means that the you can look at the blocking to find out every activity bank by each.

Each address right.

Like in bitcoin but in dash you had the option to shield the transaction.

It's called shielded transactions so outsiders could not look at what was happening and who sent how much cash to whom.

And this was a big step towards privacy in crypto currencies which afterward.

You know it launched a new wave of coins that are based entirely on privacy like Monaro.

Also in 2014 ze cash 2016 lots of privacy oriented crypto currencies launched thereafter and it did.

You could say start start a new wave of privacy focused project teams.

So the second concept of dash which is a big reason why I wanted to present it to you guys is the concept of master nodes master nodes are nodes in the network which in which 1000 Dash had to be deposited.

Still it still works and locked up so you know if you lock up a hand a thousand dash it's around one hundred thousand dollars worth right now.

And it had to be deposited and locked up in these nodes could confirm transactions and mostly private transactions because the fees on these would be a bit more.

And these nodes would receive passive income from it.

So you would lock up your dash and receive a little bit of passive income from confirming transactions.

And it does sound a little bit like staking right for those of you who do know what that is we will go in-depth on that too.

But you know that dash introduced this concept and it is not like running a miner right.

It's not like confirming transactions with an actual miner because miners use computing power they use power it costs money to operate them right there's ongoing costs in the dash master nodes thing you just put your dash in there and it generates passive income so well dash did innovate in two impressive ways.

You got to give it to them.

They'd never really caught on.

They never really managed to create a very strong community that is developing their project that is moving the coin forward.

And it actually fell from its glory.

You could say and it kind of lost its early mover advantage and today not a lot is being talked about Dash in development on dash is very very little and it doesn't appear like it's going to take over any other premium coin payment coins anytime soon especially Bitcoin.

So dashes to ensure it doesn't.

Sorry dashes the future doesn't really look as bright right now but it's important to know dash and the innovations that happened with it because they are so so important for our future and what happened after dash.

So we'll start talking about ripple or XRP and why is are those separated.

And I'll let you know in a second.

So I know it's a bit controversial but bear with me because it's very important to talk about ripple.

So the company ripple labs they were founded in 2012 by two block chain entrepreneurs Chris Larson and Jed McKillop.

And their idea was to create a block chain network to facilitate payments in fiat currencies between financial institutions.

So less of a people's currency more of a financial institution payment method.


So the network basically uses.

BLOCK chain a block chain to bridge the gap between traditional financial networks in order to say 10 payments across the globe.

And you know it's it works faster than today's systems.

They prove that it does and in order to send these payments the native token on the repo block chain is X R P and XRP currently is the token and ripple as the company that's the device that you need to know about and all of the supply of XRP all of it that will ever be was created when the network was created.

So it all happened at once.

There is no mining no new no amount of the currency is being created.

It all happen at once.

And the amount that was created at the beginning of the network is 100 billion X R.P..

That's a lot right.

But it doesn't really matter.

The amount that is out there at matters what is the total worth the total market cap of it all.

So we said XRP isn't mined unlike Bitcoin or litecoin or ethereum.

It's not staked also because staking is a form of increasing supply and the supply of XRP is fixed and will only ever be one hundred million.

So most of the extra P today is not on the market.

Actually it is in the hands.

It is held by the repo company.

Most of the extra P out there.

Last I checked it was between 50 and 60 billion.


So more than half the supply and XRP can be held by anyone in wallets like right not just the company Ripoll not just its customers the financial institutions everyone you can pause this video in minimize it open a new tab XRP wallet you know in your favorite search engine download the wallet get some XP on your favorite crypto exchange and you have excerpt so it can be held in wallets just like bitcoin like coin a.m. or any other crypto currencies in you know like I said it's also tradable on public exchanges so going a little bit deeper into the XP thing.

So it is a topic of controversy throughout its short history.

Many people in the cryptocurrency community are constantly criticizing ripple with some main arguments right.

The first one the main argument is the allegation that XRP should not be considered a cryptocurrency like Bitcoin because it is very centralized.

Most of the supply is controlled by the company.

Ripple in no one can validate transactions unless Ripoll authorizes them to do so.

And additionally rebel finances its activities by selling XRP to the market.

And that is sometimes perceived as a behavior that takes advantage of regular people that want to make financial gain in the crypto market in the crypto space.

And you know these people say that the repo company is just in the world you know using the their their their value and their power to grow their company own on the back of these people who are you know just individuals and the claims of these of the people that are going against ripple is that this is against the values and the core values of the cryptocurrency market and community.

And you know movement as it's came to be.

So there are quite a few more in you know controversial topics regarding Ribble it's not the only one and what I will advise you to learn about ripple if you do choose to go out there learn all sides of the argument hear people criticizing ripple hear people defending ripple try to to decide for yourself because decision for yourself as you know we encourage here in CO intelligence academy tend to be the ones who take you you know to to bring you to to the best parts.

That's in our experience that's our approach.

We will never tell you what to invest in or what not to invest in.

And this is how we do things.

So moving on to stellar which is kind of you could say the cousin of ripple of XRP so stellar is a payment transfer protocol and network it was launched in 2014 by Jed McKillop who previously co-founded both ripple in Mt. Gox right.

Some people call it empty Gox or I don't know.

I call it Mt. Gox.

So Jen Michela bright the co-founder of ripple he went on he left ripple to launch stellar and stellar network and he was also the founder of Mt. Gox.

We haven't yet talked about Mt. Gox Mt. Gox was the biggest Bitcoin exchange in the world.

It was hacked in 2014.

What is considered the biggest bitcoin theft of all time.

Eight hundred and fifty thousand Bitcoin were stolen that day.

The price went down very very sharply might have been the sharpest it ever did.

But we're moving on to stellar right now.

And stellar is mostly focused on facilitating cross-border payments and making it much easier to send money over the Internet.

And there are many developments on the network to allow for for this you know to move past the basic functionality of just sending the networks native token.

It's a it's a network on which much development is happening.

The transaction fees on stellar are extremely low.

They do exist but they are extremely low.

They effectively are close to zero.

And it's not something that you will ever notice.

And you know it doesn't matter how much you send you can send five million dollars you can send 50 cents.

The transaction fee will be the same.

And the way the network achieves consensus is a bit similar to other payment coins but not entirely.

It's not proof of work like we know in bitcoin.

It's not proof of stake in.

It's not something that we would even call Nakamoto consensus right.

Proof of work.

It uses its own mechanism which doesn't quite look like anything we've talked about or anything you probably know if you're just turning on the space meaning that new tokens aren't mined but they are all pre minted.

All of this throws out there just like examples.

They are all already out there and stellar also claims to work towards the decentralization of the network through technicals such as making the protocol robust enough to be operating in a distributed way like Bitcoin and also distributing the control over the network or in other words the authority to approve transactions.

But in reality if I wanted to prove transactions today as I'm recording this video I need to be allowed to do so by the controllers of the network by the people who currently control the stellar network so they don't have the decentralization front at least not as some purists would say so stellar is built in a way that allows for further development on the network.

They've built it like I would say very modular like and for example if you've watched our stable coin session there are stable coins on top of stellar right.

They have developed stable coins and they're continuing to and they allow people to facilitate payments with less worrying that the value of their transfers will be fluctuating a lot and that's opposed to using the networks native token which is called X L M or stellar lumens right lumens also and they are freely traded on online markets exactly the same as Bitcoin.

Bitcoin Cash like coin.

All of these difference between stellar and ethereum in the likes of it is that stellar doesn't prioritize smart contract ability but rather efficient payments.

So stellar once as its goals its priorities at facilitating payments and cross-border payments over you know computing functionality like ethereum does and that's what they've chosen to do and that's the prioritization factor that we talked about at the beginning of the session.

So we finished looking at the individual currencies and we will now take a look at the entire thing we talked about in the perspective of a market and market cap.

So here we have this diagram.

I would say of all of the coins that we talked about today and two that we didn't which are Bitcoin Cash and light coin.

And we will talk about Bitcoin Cash in our fourth session.

And we already talked about like coins so in general if you follow your followed intelligence academy for enough you'll know everything you should about all the coins here.


we can see Bitcoin is obviously the largest one.

And it also is the largest circle here the largest one by market cap.

I don't know how updated these numbers are.

They're not using an API but we have a general sense of how the market is looking at.

Right now I think bitcoin is as much more than that it's more like 160 billion by now because of the recent very very big price movements.

But keep in mind that there are very very many variables that are impossible to see just from this diagram like how many coins were lost.

You know people losing their private keys people burning coins there is the process of burning which is sending coins to an address which points can be spent from and therefore this is kind of accurate view the most accurate accurate we can get according to market statistics.

But there are a lot of factors that don't go in here.

So after bitcoin we see that ripple or X or has almost ten billion dollars even probably more than ten now in value.

And remember that most of that is still controlled exclusively by the company ripple and it is used to fund their development.

And you know they use these funds however they see fit we can also see our spinoffs Bitcoin Cash Bitcoin SFE.

Oh yeah.

I didn't mention Bitcoin last week.

Again two very big payment currencies and they have very impressive numbers.

These are not small numbers.

It's a lot of value in these networks and it's still much less than the big brother.

You know Bitcoin your original bitcoin you could say some people call it Bitcoin core but that's more of the software anyway you can see also stellar on the side with a quotation quote unquote just 1 billion dollars total value and dash.

Also with around 1 billion of value after experiencing a pretty big rise dash there was like as dumb as the time I'm recording this.

While ago there was a pretty big rise in SUV and dash and all that.

So this is how the market looks like right now.

These are kind of the this is kind of the scale of these coins.

It's not completely to scale because you know one billion or 10 billion.

The ratio between these circles I know but it's it's a big picture of the market to see that Bitcoin is still the largest guy we have repo very large.

We don't see ethereum here note because ethereum is not a payment currency.

This is just a diagram of payment currencies.

So we've reached you know we're reaching we're nearing the end of this session and I want to talk about a little bit about what we've learned so very very small introduction to blockchain forks you know open source software code can be copied how forks look how they happen in crypto currencies is it's also open source.

Again we will have a future mini session on forks.

So say stay tuned.

Sign up for updates join our WhatsApp group.

You'll be note you'll get a notification whenever a new session goes live.

So we started with Dash and we saw how they innovated in two key points right.

The master notes part where people are earning passive income by locking up 1000 dash and the second part is the private transactions where the amount that is transacted is hidden from the public.

So it increases the personal privacy for users of dash.

We talked about ripple.

We talked about XRP how the company controls the token how it uses it to facilitate transfers and mostly between banks financial institutions.

That's the way repo works.

And we talked a little bit about the controversy of ripple as well of XRP and we moved forward and took a look at Stella and Stella which is in some ways is another attempt at achieving some of what ripple set out to do you know the founder of Stella was the co-founder of Ripple a lot of the same core values there but in a more open way right sir Stella wants to do so in quite a bit of more open her way where everyone should be able to sit and cross border payments and use you know stable coins and the network for extremely cheap fees on stellar are close to nothing.

So we have reached the end of this session and to conclude I want to thank you very much for participating for listening.

I really hope you enjoyed.

I'd value your feedback if you want to connect with me on LinkedIn Twitter.

Go ahead do so I don't bite and join our WhatsApp group.

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Visit our site to sign up for the Academy if you haven't already.

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You know stellar XRP dash all that.

We'll we'll be in the video description for you to take a better look at.

And again I want to close this by saying thank you so much for listening.

I really hope you enjoyed it.

I'll see you in our next session.

So bye bye.


World Markets Trading Desk