Webcast: The Future of Money
In the latest episode of Fortunato & Friends, Exelon Chief Economist Ed Fortunato interviewed Professor Eswar Prasad, Cornell University Tolani Senior Professor of Trade Policy and Professor of Economics. His third book, “The Future of Money: How the Digital Revolution is Transforming Currencies and Finance” published in 2021, is available for sale now.
During the webcast, Ed and Professor Prasad discussed the future of money including Bitcoin, Blockchain, the U.S. dollar, and the effect of inflation on energy prices. Additionally, Constellation’s Commodities Management Group member, Keith Poli, moderated the webcast and offered his insights.
5:00 – Bitcoin – What is it?
Professor Prasad said that six weeks after the 2008 Lehman crash, Bitcoin appeared. The initial promise of Bitcoin was that financial transactions could be made without a centralized bank, credit card or 3rd party. It hasn’t fulfilled that promise but it has built up trust with its followers by being radically transparent with its processes. Banks and other intuitions don’t offer that kind of transparency.
No one, including Professor Prasad, knows who invented Bitcoin, it’s still a mystery.
8:34 – How is a transaction processed?
According to Professor Prasad, a certain number of Bitcoins are processed together into what’s called a blockchain. Bitcoin relies on a public key and a private key to process each transaction, and all transactions are posted on multiple computers and tracked by website codes. By contrast, Bitcoin can only be processed on a set schedule, whereas the Federal Reserve can make money anytime.
The process is very secure, but Professor Prasad said in the long run it’s not very helpful for financial transactions. From the speculative angle, however, Bitcoin is considered a “technically cool” value.
12:20 – Why has the U.S. dollar been so strong?
Ed and Professor Prasad then discussed the strength of the U.S. dollar as a currency and as a medium of exchange compared to Bitcoin and other cryptocurrencies. While the U.S. dollar has its flaws, it is still the most transacted currency in the world due to the self-correcting nature of the U.S. financial system. Professor Prasad anticipates that the U.S. financial system will still remain a dominant system as the Euro and other foreign currencies are not deep enough and public distrust in the Chinese Yuan.
20:50 – Decentralization of financial currencies/processes
Professor Prasad said the ability to do large transactions over the internet through computers isn’t in the future anymore, it’s here. Bitcoin has spawned a new group of blockchain technologies that operate without a bank or third party. These platforms are like public digital ledgers, they operate without the use of cash or paper and are very secure online.
22:46 – Inflation
Ed and Professor Prasad talked about gold losing some of its value, while Bitcoin is gaining value. Is it an inflation hedge?
They also talked about the impact of inflation on energy prices. Ed mentioned that low energy prices seem to correlate with low inflation. As the Fed starts to raise rates in 2022, he wonders what will happen.
26:00 – Q&A
Ed and Professor Prasad then answered questions from participants including:
What advice would you give to someone who wants to invest in cryptocurrencies?
Trends in cryptocurrencies and other digital currencies, including Ethereum and Tether, around the world: in Israel, El Salvador, China, and Sweden.
What will be the true test of Bitcoin?
When will digital payments become the norm? Europe, Bahamas, United States.
Listen to the full webcast to hear expert insights by visiting our Fortunato & Friends Webcast resources page.
If you find the insights shared in the webcast valuable, be sure to sign up for our next Fortunato & Friends webcast, featuring Ace Alexander, Senior Manager of Market Fundamentals – Fuels for Constellation discussing oil and gas: production, prices and predictions. Register today for our next Fortunato & Friends webcast.