456. Eswar Prasad Explains the Crypto Phenomenon and Why Cash May Disappear, with Host Dan Hesse
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What is the main topic discussed in this episode?
And now, The Mentors Radio, one of the most popular and unique shows on the air today. Here each week, remarkable CEOs and leaders, including host Tom Lurie and Dan Hesse, and their guest, will mentor you, challenging your thinking about life and work. sought after for their ethical leadership and advice, and for helping others succeed throughout their careers, now these same CEOs, the mentors, want to help you achieve your highest level of profitability, success, and personal fulfillment in life, at work, and in business. Learn more and check out the show notes at TheMentorsRadio.com. That's TheMentorsRadio.com. And now, here's your mentor.
Welcome, I'm your host, Dan Hesse, and I'm with Dr. Ishwar Prasad, a professor of economics at Cornell, a senior fellow at Brookings, and the former head of the IMF's China division.
What is cryptocurrency and how does it differ from traditional money?
We're going to discuss his book, The Future of Money, How the Digital Revolution is Transforming Currencies and Finance, which was chosen a best book of the year by The Economist, The Financial Times, Foreign Affairs, and by my favorite magazine, The Week. In The Future of Money, Dr. Prasad argues that we are at an inflection point where technology is redefining what money is, who issues it, and how it moves, pushing us toward a world with less physical cash and an ecosystem of fintech and crypto innovations that will reshape everything from household payments to the global monetary order. Welcome, Ishar. It's a real privilege to have you on our show.
Thank you so much for having me on, Dan.
Before we get to the kind of the meat of your book, just a level set for everybody.
How does Bitcoin function as a decentralized payment system?
If you could explain to our listeners one of the concepts they read about all the time, which is cryptocurrency. What is cryptocurrency and what is Bitcoin and what would differentiate Bitcoin from, let's say, any other kind of cryptocurrency?
So it's worth thinking about where we are in the evolution of money, Dan. So for a long time now, since the establishment of central banks in most countries, most money that is used for transactions and as a store of value has been issued by national central banks that are backed up by governments. now when bitcoin emerged on the stage it was attempting to do something completely revolutionary which was to enable payments between people between businesses between businesses and people without relying on a trusted intermediary like a credit card company or a commercial bank or using central bank money So Bitcoin was the original cryptocurrency and it aimed to basically set up this sort of payment system that would be decentralized, that is, it would not go through any centralized institution or trusted third party.
And the technology underlying Bitcoin is really quite remarkable. Essentially, if you think about what Bitcoin was trying to do, it sounds mind-boggling. You know, if I was trying to buy you a cup of coffee, Dan, and use a payment medium where, you know, there is no regular payment provider involved, and in fact, where if it was not a cup of coffee, but we were undertaking a digital transaction, where we could do it with a digital identities rather than real identities, it sounds basically impossible. And what Bitcoin did was take a lot of cryptographic and computer science related tools and created technology for doing this. Now, when you hear about a cryptocurrency, it sounds like everything is obscure and obfuscated.
But the remarkable thing about Bitcoin is that, in fact, All of the transactions using that cryptocurrency are actually available on a public ledger that is maintained on multiple computers around the world so everybody can see every transaction.
What challenges does Bitcoin face as a payment mechanism?
And that transparency, which I think of as a radical transparency, is actually what ends up making Bitcoin very secure in transactions. Now, along the way, unfortunately, the revolution got subverted because it turns out that while the Bitcoin technology is remarkable, the ability to use Bitcoin to make payment transactions is actually not great. It turns out that the Bitcoin network can handle only a limited amount of transactions per second.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:07–1:00
2
What is cryptocurrency and how does it differ from traditional money?
1:00–1:48
3
How does Bitcoin function as a decentralized payment system?
1:48–4:16
4
What challenges does Bitcoin face as a payment mechanism?
4:16–7:39
5
What are stablecoins and how do they compare to Bitcoin?
7:39–9:04
6
How do central banks influence the economy and monetary policy?
9:04–10:43
7
What are the implications of central bank digital currencies (CBDCs)?
10:43–12:40
8
How is the role of cash changing in today's economy?
12:40–42:12
Speakers
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