This is the last video on our seven types of cryptoassets. Here, we're focusing on what we call crypto-fiat currencies and stablecoins. So let's review. A cryptoasset is a digital asset that uses cryptography, a peer-to-peer network, and a public ledger to do three things: To regulate the creation of new units, to verify transactions, and to secure these transactions without any middleman. Government-backed crypto-fiat currencies are feasible, but we haven't seen a trustworthy example yet. In 2017, Venezuela announced it was launching a cryptocurrency called The Petro backed by its vast oil reserves. The cryptocurrency community reacted with astonishment and a bit of anger. This corrupt and anti-democratic government had plunged its own currency, the Bolivar, into a hyperinflationary death spiral. Was it now trying to take advantage of Blockchains Association with trust, security, and immutability? According to analysts, Venezuela's Petro already has about three strikes going against it. One, there's no evidence that the Petro's actually backed by oil. Two, there's little technical information online about how it works or even which blockchain it runs on. Three, it's controlled by the same people who tanked the Bolivar. Venezuela's government moved ahead ignoring this criticism. It raised $735 million according to its officials. There was no other evidence to back up this claim. Soon, it was reported lawmakers in Iran and Russia were considering their own fiat-cryptocurrencies. These countries as you can see, have a few things in common. They are deeply authoritarian or deeply undemocratic, they have a lot of oil, and they are under economic sanctions. Why does this matter? Here's an obvious reason. Rogue governments could use their crypto-currencies to undermine international law, treaties, and sanctions. This could further destabilize their already weak economies. According to the Brookings Institute, Venezuela's Petro would undermine international sanctions and harm legitimate crypto-currencies in the process. But it also shows something important. Governments can actually do this. The most promising candidates to establish a government-backed cryptocurrency are respected institutions like The Bank of England, The Bank of Canada, and the Federal Reserve. But they've made little progress or even backtracked somewhat. They should reconsider. Crypto-fiat currencies probably won't be fully decentralized and resistant to censorship like Bitcoin. But if they implemented in the right way, they can still make markets more efficient through real time settlement, they can improve inclusion by reducing barriers to entry, they can increase transparency into our institutions, and they can make central bank policy more effective and more responsive to events. There are interesting regional applications for digital dollars with a variety of economic benefits. Consider the example, Bitt is setting in the Caribbean. The company is working with the region's financial heads to create a digital dollar standard. Bitt's founder, Gabriel Abed said, "This is what the Caribbean needs. It's the entire world in one little melting pot, yet there is no cross-border system for payments. The goal is to enable movement of money between two central banks using smart contracts and digital dollar, built by Bitt or others, following a digital dollar standard." There are economic and social reasons to make this happen. Abed said, "Remittances within the region are expensive. Forty percent of Caribbeans don't have access to banking. Three percent fees are being taxed by foreign bankers on merchant charges using credit cards." A digital dollar standard for the region could help in all of these areas. Digital dollars have another benefit namely price stability. Traditional currencies are generally not as volatile as Bitcoin has been historically. A crypto-fiat currency could help solve this. Some crypto diehards will disagree. We still believe that Bitcoin or something like it will be a legitimate alternative to traditional fiat-currencies. Stablecoins are emerging as a hybrid cryptocurrency. Stablecoins try to maintain the same value over time, almost always by pegging themselves to some underlying asset, like a fiat-currency or gold or by managing price through an ever-changing supply. Private entrepreneurs had been behind most of these so far. The largest one today is Tether or USDT. Its creators say Tether's back dollar for dollar with US dollar reserves, though analysts have questioned this claim. Others have also emerged like MakerDAO and its stable coin Dai spelt D-A-I. Stablecoins could gain traction assuming two conditions. First, if existing cryptocurrencies like Bitcoin remain highly volatile. Second, if governments don't create their own crypto-fiat currencies. So stablecoins will continue to be an interesting area of innovation. Still, there are doubts. With a stablecoin like Tether, you have to trust a single entity who now becomes the monetary authority, said Bitt's Gabriel Abed, are you better than the Federal Reserve? In the end, we do think that governments will move into this market. We believe the future reserve currencies of the world will probably be a mix of crypto-fiat currencies like a digital dollar and decentralize cryptocurrencies like Bitcoin. Regional hybrids like the digital dollar, standard, and the Caribbean have a good chance of success too, just don't count on the Petro joining their ranks.