Hello, in this lesson we are going to discuss the monetary policy of crypto currencies. Because at the end of the day, no matter how good a cryptocurrency is, it will inevitably, especially in the short term, have to fit in with the way the government works and maybe the government will have to adapt. I've no doubt that will be the case. But it's important to discuss the laws and regulations. And in this video, we are covering the monetary policy, first of all, what is monetary policy? What does this mean?
So, it is essentially when a central bank a central bank controls controls the supply of money. So, this can come in various forms, whether it's printing more money, more money it could be something as simple as switching so in the case of banknotes, switching notes, or coins for an updated version, which is what they've done in the UK recently they've updated the one pound coin will were in November 2017. As of creating this video, they recently swap the one pain point for a new coin. Instead of it being fully rounded. It has edges now. It's so pretty rounded, but it is a new coin.
They swapped out the five pound note for a new one and they recently just swapped out the 10 pound note as well. They'll probably do it with the 20 and the 50 as well. So the new notes they are waterproof compared to the older notes. So it could be various reasons why this four pin amount maybe the swapping them because they want to put some DLC face on there. Maybe they're implementing more security measures into the into the actual currency, a lot of the case that is the case, so controlling the supply of money so that's what a central bank can do. And they can also partially control and flirtation and this can be done to ensure stability between the T and first and a currency.
So I did say, partially control, you might come across some economists, they'll say they can fully control inflation. But at the end of the day, that's not the case, because there will be certain factors where the man made or natural that can and do occur that can make the currency inflate or deflate. So they can't fully control inflation. But they can help. Or they can direct a currency towards inflation if they want. And they usually do it around this ethos of ensuring stability, and trust in a currency.
It's sort of a way of they say it's a way of showing that the economy is growing. They say that little bit of inflation is good. Do you have your own opinion on that? Feel free to reach out and I'm more than willing to discuss it. So how does this all fit into cryptocurrencies, well, cryptocurrencies they're not regulated by a central authority 40 such as Bitcoin, but there are certain. So, some crypto is controlled more by a central authority or some like I believe it dash is controlled by a voting system.
So, for that reason, it might not be controlled, it will depend on what country you're talking about. So, when we're talking about the monetary policy in this video, we're talking as a generic term for cryptocurrencies as a whole and a lot about Bitcoin because at the end of the day, the biggest one who ensures Garan to stability. The end of the day in a conventional system, whether you think it's fair or whether you think it even works, the government ensures stability through inflation or other means, but he shows it in a decentralized decision did distributed system if something were to go wrong, especially if only one country were to implement a particular currency? Could it be one thing if the entire world implemented less a Bitcoin? Then if you know if that's the only currency then the whole thing of backing, the whole thing about stability And ensuring that really isn't a Finkle, everyone's using the same thing.
But stability is an issue because like I'm in the UK, and the UK uses the Great British Pound in the United States that you need, they use the United States dollar. In Canada, they use Canadian dollar in many places in Asia, they use rupees they use again in China. So for that reason, they need to ensure stability. But if only one country is using cryptocurrency, how did they help ensure it? So that is an issue of inflation. So we mentioned that a central 40 can help control inflation and they can use that to essentially ensure stability and for just growth in the economy.
But this Isn't controlled by a Central Party. Again, I'm not saying that's good or bad. But how does that tie into the monetary policy of today? How will policy makers think about this with conventional currency a single person or not person single 40 is liable even whether or not they're to blame for something happen that's not the point but then liable for handling this the liable for making sure it's stable that it's working, aka the government this central bank, so no one no single one is liable in a cryptocurrency especially something like Bitcoin. So how does that really tie into all of this? And in Nova, financial that we need to think about?
Who handles lost money in a conventional currency, if money like the central bank and the government actually factor this in, so money getting lost wherever physical again lost or it's got burned or it's no longer usable, whatever happened to it, so they will just print more out there after a certain year something happens and instead of 10% of the money not being usable, it's 20% they'll just print more. Whereas in a cryptocurrency, especially something like Bitcoin, where the currency is mined, and it's baked into the actual core algorithm, that only X amount will ever exist only X amount generally can be mined per year, the difficulty increases. At the moment, not much money is lost in cryptocurrencies, but what would happen in this likely scenario, but I think it's important to talk about the unlikely scenarios because those are what make them brief system what would happen if If for some reason 50% might, that's a big deal if you can't print or you can't issue, more coins, so who handles all of this?
So these are definitely important issues that we, as individuals need to be thinking about. And also the central bank needs to think about it. policy makers Polly, Titian's need to think about it, the government in general, at the end of the day, it is becoming more and more difficult to ignore cryptocurrency. So for that reason, we need to fix up we need to think about these issues. We need to talk about them. Because I don't have a solution for this.
No single person does. But we need to think about him because is not a slight change in the conventional currency system. This isn't gonna be like going to the internet, this is good, this can be more disruptive than that. So for that reason, we need to make sure we are prepared for when this does become a mass market currency that is adopted and wants to be adopted by a lot of people. And also another thing is when the next economic crash occurred, which I'm positive will probably happen within the next couple of years. If you look at stuff like the VIX and other indexes, I know the metrics, we are due for a nother crash or a number reset.
People will look for alternative, they usually go to gold, but this time they'll go to cryptocurrencies, a lot of people will. So how will the government from a monetary perspective and a tax and other just law and regulation perspective handle This. So this has been quite a heavy video. So feel free to go through it again, have a look at what we covered to something that you're not sure about. Feel free to reach out. I'll guide you through it.
And as usual, thanks for watching and I look forward to seeing you in my next awesome crypto lesson.