Making Sense of Cryptocurrency, CBDCs, FedNow & More | Ep. 244

Intro/Outro: You know what it is. That’s right. It’s time to talk money with your money nerd and financial coach. Now tighten those purse strings and open those ears. It’s the Money Talk with Tiff podcast.

Tiffany Grant: Hey everyone. I’m so excited because I have Emmanuel Daniel on the line. Now Emmanuel is a financial futurist, so you’re probably like, what does that mean? Well, he’s here to talk to us about cryptocurrency. Fed now, which I know has been a hot button topic and cbdc, which we’ll get into what that means here in a few.

But hey, Inman, Emmanuel, how are you

Emmanuel Daniel: Tiffany? Good to be on your show and, you know, can’t wait to get down to the, the points that you just raised.

Tiffany Grant: Yes, yes. This is going to be a very informational, not just for the audience, but for me, episode. So I’m super excited, um, to get started here. So first and foremost, let’s let lay a base down for my audience.

If people are not familiar with cryptocurrency by now, what is cryptocurrency and how does it work?

Emmanuel Daniel: Um, you know, the one question that people ask, um, about cryptocurrency is that, is that the new gold, uh, is it a digital version of gold? Uh, is that something that I need to save, uh, and I need to put into my portfolio so that I can become rich later in life?

Or, you know, and, and all those things that they talk about, cryptocurrencies, that the price will go up, um, you know, uh, and therefore I must. Hold that hold, uh, crypto, uh, is that what I should do? And, and what’s this thing called? Digital finance or, you know, defi? So the thing is that, um, cryptocurrency was, Uh, essentially, um, you know, it, it came into being with this thing called Bitcoin.

Uh, and Bitcoin was, um, created by an anonymous guy who gave himself, uh, an interesting name, uh, Sahi Nakamoto. And, and he, and he created a crypto, um, you know, an algorithm that. Essentially couldn’t be broken and hasn’t been broken up to this day. And therefore, uh, it is sometimes called, uh, a digital goal, meaning that, uh, it’s a, you know, it’s, it’s like goal cannot be broken into its constituents.

Um, it doesn’t mix. With, you know, other elements easily, um, and, and so on. I mean, it, it does, you can oxidize gold, but when you purify it, uh, you know, its users are limited and, um, the value of gold is guaranteed, uh, by the fact that there’s a limited quantity of it, uh, and it cannot be, um, you know, distorted.

Um, and so in, in that, in, if you, if you use that definition Yeah. Um, you know, cryptocurrency, Uh, the original cryptocurrency Bitcoin, um, is exactly that. It’s, um, you know, it, it hasn’t been cracked into, uh, and therefore, um, millions of people around the world, uh, are trying to get their hand on it. Uh, and the way in which it is mined, just like.

Physical gold is mined in the, in, you know, the gold mines of Africa and, and you know, some far away places. Um, you know, it’s mined in the digital space, uh, and, um, using an algorithm, um, you know, in order to be able to, to capture, um, uh, Bitcoin. But then what also happened was that, Uh, the technology used to create bitcoins, uh, has been used to create all kinds of cryptocurrencies.

So the magic of cryptocurrencies. And here’s where, you know, uh, your audience needs to hang in there because, um, every one of us, Can create our own cryptocurrency. How’s that? You know, you can, I can. Um, you know anyone, your uncle can. Uh, and it’s only a matter of when we create it, uh, will the people that we want to pay, uh, to, uh, will they accept the value that we give to it?

So, so cryptocurrency has become, um, a very all-encompassing term, uh, with any number of cryptos, uh, out there. Uh, and what. Uh, some of the creators of crypto have done is they’ve created, um, applications on them, things that you can do with them. You can, uh, transact between cryptos. You can carry a certain application like, um, you know, uh, create, uh, the ability to carry a bond or a, or a piece of information, stuff like that.

So there’s a lot of things that you can do. Then you ask, what’s all this? You know, why, why do I need to care? Um, so. The original Bitcoin, uh, that’s gold. That’s like, uh, it’s worth, um, you know, um, you know, just getting your hand on a little bit of it and, and hanging onto it and seeing how that does, uh, with the rest of your portfolio.

But the rest of the cryptos, uh, they’re only as good as. Um, they are useful. So, you know, if you are in that space, um, you know, there are lots of things that you’ll be doing, including something called decentralized finance, which is, uh, you know, lending it on platforms to other people and, and so on. Uh, and if you wanna go deeper that way, uh, you can experiment a little bit.

Uh, and you need to do that because we are all moving into the digital space. Um, you know, there are lots of things now when you think about. Money. And you think about what, uh, apple has just introduced, which is, you know, the Apple Vision Pro, which is a, uh, virtual reality, augmented reality goggle, right?

Uh, and you think there’s nothing to do with each other in a way they have because, uh, the world that we are going to be living in, uh, or rather we are already in there, uh, is one where, We can switch, uh, between, uh, real life and virtual life and augmented life. Augmented meaning that real and virtual coexisting.

In other words, I can be talking to you right now, I can be talking to someone else as well in an augmented, uh, reality. Mm-hmm. Uh, and feel as if that person is, uh, right there with me just like you are. You know, so for all these new things, the new, uh, ways of living that is coming about, we need this digital, uh, currency, this digital, uh, token, uh, by which we can pay each other, transac with each other, uh, exchange, uh, you know, things of value to each other and stuff like that.

So I wanna keep it very simple. Um, I’m saying that we are all moving into the digital world, uh, things that used to exist in the physical world, like physical goal needs that, uh, digital version of it. Uh, and, and therefore we need to start thinking a lot about it now. Then the question is, uh, you know, will Bitcoin, you know, go up to a million dollars and stuff like that?

Um, now that’s a whole different, uh, ball game. Um, you know, because. Um, they, they, the price fluctuates because, In the early days of Bitcoin, um, only six investors, uh, held more than 50% of the, of the Bitcoin in circulation. But that’s now breaking down. More and more people are, are beginning to, uh, own a little bit of Bitcoin, and as that.

Process continues. Um, you know, the, the price of Bitcoin will fluctuate a lot, um, um, until it finds a stable price where, um, you know, it becomes more people, you know, uh, collect Bitcoin in order to be able to actually use it. Right now, lots of people are just, Collecting it to hold, they call it od uh, or hold it.

Um, you know, in, in the hope that the price will go up. Um, I’d say that if you have a portfolio of investments, everything from cash to, uh, you know, securities to mortgage and stuff, add this as one little bit so that you, you sort of get a bigger picture of, uh, the investment opportunities that are, that are going to be created in the future.

Tiffany Grant: Yes, yes. And you know, you have explained crypto so well just now I’m just, you know, thinking about what I can equate to it, you know, that I use on a regular basis. And it reminds me of video games, right? So for instance, yeah. Since, uh, Fortnite, they have the V Bucks and Roblox, they have the Robuck or something.

Emmanuel Daniel: Yeah, that’s right. Yeah.

Tiffany Grant: Right. And so you use your real money to get it initially, but then while you’re in the game, which would be like a virtual reality, you have to use that money in order to buy different thing. So now that you say it like that, I’m like, ah, okay. It’s like a Fortnite. You got it.

Emmanuel Daniel: You got it, you got it.

Yeah, that’s right. Any kid who’s playing a video game knows what a token is. Absolutely.

Tiffany Grant: Gotcha. Gotcha. Okay. So with that being said, let me switch gears just a tad cuz I wanna talk about, cuz there’s been talk about, um, for instance the US government getting a digital currency and then there’s, you know, people that’s like, oh gosh, they’re trying to control us.

You know, that type of thing. So what do you, what do you think about Central Bank digital currencies and um, you know, is this the right direction or are we just catching up?

Emmanuel Daniel: Well, the, okay, um, money. There was a time when we would carry holds of cash in our wallet and, you know, pay each other and, and then look for change and stuff.

And as the young people know, and the young people in your audience know that increasingly they don’t wanna do that. They wanna pay digitally, right? They wanna pay using your phone. Um, and right now, when you use your phone to tap on, um, you know, at Starbucks, Um, the back end of that is still the traditional credit card, um, that you, that, you know, that we were, were accustomed to in the physical ca period in the physical era.

Mm-hmm. Uh, and that credit card has become digital, right? In other words, you don’t need to see a physical card. You can put that information in your phone and, and your phone transacts for that so that, that. Transition, uh, is now continuing. Um, you know, it’s taking a long journey and that journey includes, uh, the money in your bank account, uh, is now available for you to use and spend in any which way you want, uh, according to your own lifestyle in a digital form.

So that’s your real money. Uh, and then that, that transitions even more. To a point where it’s not even the money in your bank account, it’s a token that you cre create that, that, uh, that gets transacted. Uh, and we just talked about, uh, Bitcoin as being one of the tokens. So what governments around the world have, uh, started thinking a lot about and, and especially because some of the larger countries, including China, have uh, you know, have experimented with this.

Is to, uh, for governments to issue the token rather than for you and I to issue our own tokens. Um, you know, and that’s what Central Bank digital currency is. Uh, it is a token issued by the Central Bank. Um, you know, and the fear is that if it’s a token issued by the Central Bank, uh, the Central Bank can issue the token and give it to you directly.

You don’t need a banking system, uh, for that token to reach you. And then when you. When you take that token and when you use it, the central bank actually knows what you’re doing with it because, uh, that whole ledger on the token, the whole, all the information on that token, um, you know, the, the central bank has access to it.

Um, and because of blockchain technology, uh, they can. They can, you know, you’ve got the whole ledger, meaning the whole history of the, of the, uh, use of that token. Mm-hmm. So that freaks a lot of people out and say, wow, I don’t want the government to know, you know, what I’m doing because cash was wonderful.

Like it’s anonymous, meaning that, um, you know, when I give a a dollar to someone else, nobody knows that I gave that dollar. And, and when that dollar goes on to and somebody else, nobody knows that it’s. You know, it’s passed through three hands and mine was one of them. So, so it, it’s, um, it’s totally anonymous.

Um, you know, and you want that with digital tokens. Now the good news is, and I say this from experience and my expertise in the industry, that the Central Bank digital currency, uh, experiment is not working very well because, uh, the governments that have initiated them, Finding themselves getting into all sorts of problems.

Uh, one of which is if you create a token just like Bitcoin, uh, then you don’t need the banking system. And then they scratch their head and say, um, so we will still pass it through the banking system and force the banks to be the distributor, the tokens. And then in the countries where they’ve, um, you know, any, they’ve already gone live with it.

The banks don’t wanna corporate because the banks make more money from swiping your credit card. Uh, you know, because, uh, they, they make a fee out of it and, and they make additional money because you probably under read, uh, you know, you owe the bank money and stuff like that. So, so they make really good money, uh, on the credit card transaction, whereas they make almost nothing on a central bank digital current currency.

Now, the, the interesting thing about the US is that. Um, the, the Central Bank, um, the Federal Reserve Bank, um, is just in the process of launching its fentanyl program and a lot of people, uh, mistake the Fed program for a central bank digital currency. Uh, and, and the truth is, and take it from me, okay.

They’re. Totally two different things. Um, fed Now is the digital value of your money that sits in your bank account, uh, being able to, uh, be used digitally, uh, to pay anyone you like instantaneously. So in the old days when you write a check, it takes three days for that check to clear. And, and two banks sit on that process, and both banks make money from the float.

That means the, the value of the money that sits in your, in, in the, uh, balance sheet. Um, you know, but in today, um, you are able to tell the bank that, you know what, pay my friend Jim now, uh, and, and the money gets transferred instantly. Uh, and for that to happen, uh, the Federal Reserve Bank needs to build a, uh, bank, uh, uh, uh, information system, uh, communication system, uh, that sits on top of your phone and in, and, and uses the telecommunication network to make that transaction take place instantly.

And that’s a beautiful thing. And guess what? Many countries around the world already have this. Uh, and, and it changes how people live their daily lives. Like you’re having a meal with someone, uh, you wanna pay that person. You, you just, you know, you, you just, uh, transect, um, instantly from your bank account to that person’s, uh, phone and then into that person’s bank account.

Um, so that’s convenience. Uh, and it’s about time. The US has this level of com convenience, however, Uh, central Bank Digital Currencies, um, and, um, you know, and, and, and the new digital payment platforms, uh, requires, uh, a totally different infrastructure, which, uh, the work on that hasn’t even started. So don’t worry about it.

Tiffany Grant: Mm, interesting. So just to clear the air.

Emmanuel Daniel: Yeah. Just to clear the air. Yeah. Cause yeah, there’s too many people asking this question. You know, this is sinister. Like, you know, that, that, uh, fat now is a precursor to Central Bank digital currency. There’s totally two different topics. Um, you know, and you wanna know where.

Payments works the best today, go to Africa. Why? Because they never had the credit card, uh, in the first place. So they don’t have the, the, the payment information infrastructure, right? The, the, the banks paying each other and all that, uh, in place. Uh, and so they keep it really simple. At the end of the day, what is the payment?

Uh, it’s actually, um, a piece of information that is transac between. You and your buddy. Um, you know, so, uh, and if you can send a text message for free, technically you should be able to send a payment information for free. Mm-hmm. And so Fed now is taking us one step closer to that.

Tiffany Grant: Awesome, awesome. So pretty much Fed now is bringing us back to the basics.

Emmanuel Daniel: Yeah, exactly. Ok. You know, why, why should, why should you be paying the bank, you know, like 3% for a, for a transaction? If not you, it’ll be your merchant, you know, and, and, and you know, it’s a cost. So payment will may not ever be free, uh, totally free, uh, but. But the first thing is that it’s gotta be convenient.

And that’s what digital is, making payments into that. Like, you really don’t have to worry from anything to, you know, a drink in Starbucks or paying your rent, uh, you know, and stuff. And you actually have more control because then you can, um, tie your payment to your software, uh, and then time when you want to make those payments plan your.

Expenses, um, you know, um, as you like it. Um, so all that convenience, uh, is what digital was meant to bring. Uh, and I think that finally Fat now, uh, brings that. Um, now the banks resist even that because they love their credit card. Uh, you know, they love the fact that you, you have your credit card on your Apple.

Uh, apple Pay, uh, and that you know that every time you pay you, you actually, uh, max out your credit and they make money from that. Um, you know, so, and they make money from the transaction fees. Uh, but the Fed now actually makes it cheaper and, and, you know, and faster. And, uh, and the only way that the, the, the Feds can, can implement this, uh, is by, by rule of law, that is they forcing it down.

The banks.

Tiffany Grant: Interesting. Interesting. So this is something that, um, the banks are fighting against because they would actually be making less money. That’s

Emmanuel Daniel: right. Mm. If, if you saw, uh, if you, if you drew, uh, um, a, a a chart of who’s involved in making, you know, in getting money from, you know, Jim to Joe, uh, you’d be surprised at a number of players in there who were getting a cut out of it.

Uh, you know, and, and digital makes that. Smaller so that fewer people need to be in the process. Uh, and actually that’s the future of finance. You, you introduced me as a financial futurist. So the big thing in FU in finance is that we are now getting into a world where the role of the intermediary that is the role of the bank or any number of intermediaries is in decreasing.

Uh, if I can. Uh, make a payment in Bitcoin between me and my friend directly, and there’s absolutely no bank involved. Then why should I need a bank, uh, to make a payment for, of, uh, ordinary money? Like, like, uh, pay my rent, for example. Why should my rent go to a bank? Um, you know, so now the thing is that because banking is.

Regulated, um, you know, that role is still there and, and, and the regulators would like to see an intermediary in there because there’s also problems of fraud and mm-hmm. And uncertainty and so on. Um, you know, but, but, uh, the idea is to reduce, um, that role and reduce the, the profits that are generated for the intermediary.

Tiffany Grant: Yes. Yes. And I’m like, have you ever done a TED Talk? Cause I feel like this is a TED Talk, and I, I appreciate you so much with breaking this all down for me and my audience, and I know I’ve learned a ton and you’ve given me some things to think about as well as the audience. So with that being said, I know you have a book out.

Um, what is that book? If people were interested in learning more about you or learning more about the book?

Emmanuel Daniel: Okay. My name is Emmanuel Daniel. So if you go into my block page, Emmanuel emmanuel daniel.com, you’ll see the book, uh, it’s, it’s called The Great Transition, uh, the, the, um, personalization of finances here.

Uh, and I have on my book cover, uh, the, the picture of an ice cube. So what I’m saying is, To everyone. Okay? You don’t have to know finance, uh, to, to understand what I’m talking about. And I say that, you know, there was a time when ICE was something that you saw out of the lakes and put it on horse-drawn carriages, you know, carried hundreds of miles to the city.

And then it finds its way into, you know, to, to keep fish fresh or or into your gin and tonic. And what is ice today? It’s. It’s something that you produce, you’re in total control of in the refrigerator, in your, in your home. Uh, and money is like that. Um, you know, the, the dollar that you have in your pocket might have sold around the world twice.

Uh, you know, subject to inflation rates, exchange rates, bank charges, all security costs, all that, all all kinds of factors that is. Really not in your control. So, you know, and you worry about inflation, for example, and, and whether the value of your money can hold over a period of time. Now, the personalization of finances, we are, we are heading in the direction, you know, we may not entirely reach there, but we are heading in a direction where one day.

Um, that you and I can transac with each other, um, you know, uh, currency or something of value, which we produce ourselves in our own refrigerators and in finance. Uh, the idea of refrigerator, uh, is like, what’s the magic of refrigerator refrigerators? It. Uh, it’s a, it’s a synthetic chemical called C ffc. So, so in that book I describe what the C f C of finance is going to look like.

And here, uh, and then here’s where I get a little bit technical. I talk about identity, um, value, uh, you know, verification and information. Uh, if, if, if the banking system, or rather if the technologies that are challenging the banking systems, if they got these four elements right, you’ve got a refrigerator in your home.

Hmm.

Tiffany Grant: Interesting, interesting. So much to think about. Well, I will.

Emmanuel Daniel: There’s so much to think about. Yeah. I mean, I, you know, just think of it as heading in that general direction where eventually you’ll have more control over your money.

Tiffany Grant: Gotcha. Gotcha. Okay. Well, I will definitely have all of that information in the show notes.

If people were interested in connecting with you, other than the book, so maybe on social media, where would they find

Emmanuel Daniel: you? Oh, just Emmanuel, Daniel, and, and on my blog, um, you know, drop me a note. Happy to, uh, happy to, you know, answer any questions because I think that by answering questions, I, I also know where the questions are coming from and sometimes, uh, I l I learn a lot, um, you know, so I’m very happy to hear from anyone.

Tiffany Grant: All right, perfect. Well, I’ll make sure I have all of that in the show notes, and I appreciate you. So much coming on the podcast and having this Ted Talk, um, with us today. Tiffany,

Emmanuel Daniel: you do a, you do a great job. I mean, you, your other programs, I’ve, I’ve, I’ve listened to them and, and, uh, you break down, you know, ideas and, you know, the, I, the biggest thing about money is.

Keep it simple. Mm-hmm. Right. So that’s what you do best and and I love your show

Tiffany Grant: about that. Oh, thank you so much. Yes, definitely try to keep it simple over here.

Emmanuel Daniel: Uh, no, no, absolutely.

Tiffany Grant: It is for sure. Well, thank you so much Emmanuel, and I hope you have a wonderful rest of your day. You too. Bye-bye.

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Sufficient.