November 25, 2024 • 40 mins
Financial analyst Josh Jalinski joins the show to talk about cryptocurrency from an investment point of view. We discuss concerns about crypto, opportunities that may exist, and why it is always important to use critical thinking and research before dedicating your hard earned money to an investment.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Welcome to Tech Stuff, a production from iHeartRadio. Hey thereon
Welcome to Tech Stuff. I'm your host, Jonathan Strickland. I'm
an executive producer with iHeart Podcasts and How the Tech
Are You. Today, we have a very special guest joining
us on tech Stuff. He's a financial analyst extraordinaire. He
(00:27):
is the host of the Financial Quarterback. He is Josh Jaelinski.
Welcome to Tech Stuff.
Speaker 2 (00:32):
Thanks for having me. It's gonna be a lot of fun.
Speaker 1 (00:35):
Yeah, I'm really excited to talk with you today. We're
gonna talk about crypto because obviously it's always been a
big topic in tech. We have covered it multiple times
on tech Stuff, but in the wake of the US elections,
we've seen an incredible resurgence in the crypto space. And
while we've covered it from the tech side, I have
to be honest with you, Josh, when it comes to
(00:55):
financial analysis, that might as well be written in Klingon
for me, and I am not fluent in that. So
I'm glad to have you here. Can you tell our
listeners a little bit about your own background before we
kind of dive into the crypto space.
Speaker 2 (01:09):
I own an SEC registered RIA registered investment advisor firm
called Wealth Quarterback. I've been on the Financial Quarterback radio
show in war in New York. iHeart flagship station fifty thousand,
Want Flamethrower, and we have a podcast, the Financial Quarterback,
and I help educate listeners each week on tax's, income planning,
(01:30):
retirement planning, and all things investing, including bitcoin.
Speaker 1 (01:34):
Yeah, it's one of those areas that I have tiptoed
around because, as I said, I've looked at the tech
side of cryptocurrency and we've talked about the differences in
the various cryptocurrencies out there, both from the brand to brand.
You know, your bitcoins and your ethereums being the two
probably best well known. I would argue maybe dogecoin if
(01:55):
you're into the meme stocks. Beyond that, we've talked about
things like the proof of work versus the proof of
steak approach to the verifying transactions and the mining of
bitcoin being proof of work, Ethereum now being proof of steak,
although it was originally proof of work as well, and
so we kind of covered that. But when it comes
(02:17):
to investment, that's largely untapped territory for me. And part
of that is, first of all, I am no expert
on finances, but also there's certain elements of crypto that
I've always found daunting. The big one, I would argue
would be volatility. The fluctuating value of bitcoin in the
past has always been one of those things that has
(02:37):
given me pause because I think of it from a
currency perspective. If I have a note in my hand
that's worth one US dollar today and I spend it
and then I find out tomorrow it was worth ten
US dollars, it really makes me wonder is it right
to call bitcoin a currency at all? Or do you
think of it in terms of some other form of asset.
Speaker 2 (03:00):
I think it's more of the digital gold equivalent. I
think it's a hedge against the US dollar and the
Federal Reserve. So it's interesting. I'd love to hear your
tech side. I'm coming more from the macroeconomic outlook that
people for years and satoci in his white paper. You know,
I'm looking at the blocks and I get confused by
(03:21):
all the formulas, but I just remember I was actually
looking at it last night a little bit, and all
it is is peer to peer money transfers. I mean,
that's the fundamental, you know, basis of bitcoin. But it
really came in the wake of the Great Financial Crisis
of two thousand and eight, where they were Satoci whoever
he is, basically Satoshi Nakamoto. If your listeners don't know,
(03:45):
founder of bitcoin wrote the famous Bitcoin White Paper, I
recommend everybody read it so they just kind of know
what bitcoin is.
Speaker 1 (03:52):
Yeah.
Speaker 2 (03:53):
Yeah, at its simplest form, it was an answer to
a problem from a programming side for years, but also
from a monetary perspective, where in the way of the
Great Financial Crisis, people began to distrust the government, they
began to distrust financial institutions. I mean, I remember when
(04:14):
I went independent as a financial advisor in two thousand
and six, and people would say, Josh, are you sure?
How could you not work for Merrill Lynch or Morgan
Stanley or bear Stearns or Lehman Brothers or all these
companies that now don't exist. But back then, if people
were to trust you with your money, you know, you
(04:35):
had to have two first names, you know, something like that.
So I remember that was the biggest knock I would
have when I started my company, was you know, who
were you? And we would use Fidelity as a custodian
or you know, a reputable third party canstodian like Schwaber Fidelity.
But still that was a big thing then it isn't
(04:55):
really now and we have bitcoin to thank for that.
So really, bitcoin is the answer to a problem of
people having distrust in their government, distrust in the FED,
distrust in financial institutions.
Speaker 1 (05:09):
Yeah, when you had all these financial institutions, I mean
everyone who was around then can remember the outrage that
came with the bailout where you had these financial institutions
that had been issuing these incredibly risky mortgages, and ultimately
it became like a house of cards that collapsed in
on itself inevitably. I mean, in hindsight we say inevitably.
(05:30):
At the time, I think everyone just thought number go up,
and it turned out number does not always go up.
Sometimes number go down. And to your point, the idea
of a decentralized and untied to any particular fiat currency
alternative became really attractive to a lot of people where
they realized this would be an approach where you don't
(05:51):
have to worry about some institution making a bad call
and potentially putting not just your wealth, but like global
wealth and jeopardy as a result, and I think there
were really some noble intentions there. With all systems, I
would argue, we would see those intentions sometimes get a
little twisted along the way. And part of that is
(06:14):
because the digital currency opened up opportunities for things that
were outside the realms of the law, and that certainly
became a problem as well because it became associated with
the concept of digital currency. Overall, some of the problems
of digital currency have been brought about by some of
the biggest evangelists of digital currency, some of the people
who founded cryptocurrency exchanges, for example, I mean Sam Begman,
(06:37):
Freed being the obvious example of somebody who it turned out,
was grossly mismanaging customer wealth for the purposes of trying
to cover what essentially amounted to bad bets with his
hedge investment fund for Alameda Research, taking the money from
FTX and putting it into Alameda, and ultimately dooming both
of those organizations. So with all this in mind, I'm
(07:00):
curious as to what your general take on cryptocurrency is,
because one, it's still a relatively young technology, a relatively
young investment opportunity. Two, a lot of the organizations surrounding
cryptocurrency are ones that have shaky reputations. You know, the
SEC is currently involved in investigating numerous cryptocurrency related companies
(07:23):
like Coinbase, I think is one of them. So with
all that in mind, how do you view crypto as
far as an investment opportunity. Is it something that you
think requires very careful analysis? Because to me, when I
look out there, it just looks like a minefield, or
at least a really complicated path to walk.
Speaker 2 (07:41):
Yeah, I have to get my legal disclaimer. I'm not
recommending anyone invest in any particular cryptocurrency. Cryptocurrency is fraught
with risk. That being said, I think you need to
distinguish bitcoin, which is a proven cryptocurrency with a very
valid use case as digital gold, from everything else. I mean,
(08:05):
I even have problems with ethereum because I think proof
of steak has Although it has opportunities, I think that
it's fraught with peril. I don't like that we know
the founder. I don't know that there's a central actor risk.
There's attributes to bitcoin fixed quantity, digital gold, uncoonfiscatable money
(08:26):
that I like as opposed to pretty much every other cryptocurrency.
So although I guess i'd be a bitcoin maximalist or
foundationalist maybe, I mean, because certain things have certain use
cases and I'm not that big of a techie, you know. Yeah,
so I can't tell you, okay, the use you know,
but NFTs to me, you know, it was that was
(08:47):
like a scam for you know, you to have, you know,
your favorite cup of coffee with Gary Vaynerchuk or something,
and then you get the dumb looking cartoon. I mean,
there will definitely be certain use cases in the metaverse
or web three, but that really is not what I'm
interested in to me, And I think what you said
(09:08):
before a couple of things. You brought up volatility in bitcoin.
Speaker 1 (09:12):
Yeah, just because you.
Speaker 2 (09:13):
Believe in the use case doesn't mean it's going to
not be volatile. If you think about Amazon, for the
first twenty years of Amazon's existence, highly volatile. No one
would really question Amazon's viability now, same thing with apples.
So I do bitcoin like an exponential technology, just like
Amazon or Tesla. I mean, it's far bigger than that.
(09:35):
It is a far bigger potential market share. If it
just gets the market share gold gets, bitcoin could be
a million dollars of coin and as sovereign wealth funds
start to allocating. As an investment advisor start allocating. I mean,
we really don't even have clarity as an investment advisor.
I can't say, like if I was in an ideal
world diversification, right, you could say I'm going to allocate
(09:58):
one or two percent of all portfolio to bitcoin. That
would be a sensible thing, right. We can't do that
like you can with an SMP fund because we have
to get cryptocurrency disclosures, bitcoin disclosures. So once the regulatory
clarity comes that it's a respected asset classes, I think
it's just going to be even a greater amount per coin.
(10:21):
Now that being said, I think one hundred thousand bitcoin
is precisely because ETFs. Let's not forget this is the year.
You can now go in your brokerage fund and you
could buy a low cost bitcoin ETF like ibit or
GBTC or FBTC. And I'm not recommending you buy those,
but they're like a fraction of what bitcoin used to cost.
(10:43):
I mean, and I mean it's free theorey you know
with your money, you know, you pay fees on the network.
But I do find that interesting that in the asset
class that was supposed to pride itself in not having
financial intermediaries. Now it does. But I guess it's a
part of it emerging from a very nascent technology. That's
the thing you need to make a lot of distinguishing.
You brought up three big things that are you write
(11:05):
a book on this volatility and bitcoin FTX and bitcoin
criminals in bitcoin. But you have to distinguish Sambangmin Freed
FTX is not bitcoin, right, you know, sam Bangmin Freed
is a fraudster who convicted. It'd be like us saying
stocks have no merit because you know, I don't know
(11:27):
some stock broker was a fraud sight Trum, yeah, or
you know the Wolf of Wall Street. You know, like,
it doesn't mean that stocks are not a viable asset class.
And then criminals in bitcoin just because criminals use it,
I mean criminals have used life insurance to wander money,
you know. So I think as it becomes a more
(11:50):
embraced technology, what's funny is it's getting embraced now by
firms like Fidelity and Schwab and the only firm I
think that didn't embrace it was Vanguard. And there's been
a lot of negative press that they've experienced because they
haven't embraced it.
Speaker 1 (12:07):
We'll have more to say with Josh from the Financial
quarterback in just a moment, but first a quick break
to thank our sponsors. So, in the old, old old days,
a bitcoin, if you had just started back when, you
could actually have your PC potentially successfully mine a block
(12:31):
of bitcoin because it was idling and it solved the
really hard math problem first, which those days, y'all are
long gone. So don't think that you're old, like five
year old PC is going to mine some bitcoin for
you. You're up against some massive networks that are working on
those problems now. But back in the day, if you
didn't mind bitcoin, or if you had a transaction where
(12:53):
someone sent you bitcoin, you know, you had to put
those assets into a digital wallet, and more often than not,
that digital wallet would just live on a hard drive.
I mean, there's the famous story about the guy who
ended up throwing out his PC without remembering to remove
the digital wallet from his PC and like scouring the
dump trying to find this thing because there were tens
(13:14):
of thousands of dollars just represented in that digital wallet
and he didn't have access to it. So you could
have your digital wallet stored on a local machine, or
you could be using a service kind of like what
FTX was, which was, you know, a cryptocurrency exchange, but
you could have an account with that and have your
holdings in that account. One of the problems is that
SBF was apparently taking money from customer accounts in order
(13:36):
to cover the investments of our at alimated research. That
to me is another one of those those hurdles. It's
not just an element of trust with knowing that there
are some bad actors out there, it's how do you
know like the right approach. Let's say that you are
interested in investing in crypto, and you've done your research
and you figured out which cryptocurrency is interesting to you,
(13:57):
figuring out where you're going to store that ends up
the coming an issue that I think most people don't
even otherwise think about, right like, it's going to have
to sit on a physical space somewhere, whether that's under
your control or in a cryptocurrency exchange or something similar.
With the failure of FTX, I think that had brought
into question how much can you trust these other third
party entities? And it's interesting to me to see that
(14:20):
issue unfold, because it kind of makes me think back
to the two thousand and eight crisis, where again, there
you didn't know who to trust with these institutionalized financial systems.
It's a different flavor but a similar story. And now,
like the question is how do you figure out who
to trust in the digital landscape so that you can
feel confident, Like even if you made a bad bet
(14:42):
with backing a cryptocurrency that's just not doing well, at
least you would still be able to access those assets.
Speaker 2 (14:49):
Well, I mean they're the old not your keys, not
your bitcoin, you know, have have your bigcoin or cryptocurrency.
I'm a big believer in cold storage if you can
learn how to use it. Their companies like Ledger, Treasure
cold wallet where you can google or YouTube videos on
(15:09):
how to do your own cold storage for people don't know.
You know, you can hold your bitcoin right in a
little device. The cold wallet's like a little calculator looking thing.
You can have it on an exchange like Coinbase. One
method is you can also have it through a more
(15:29):
traditional financial institution now like Fidelity, which has way more
price controls and they're even holding people's bitcoin. In some
cases they have bitcoin custody for people who it's too
difficult for. So it used to be you had to
really know what you were doing. Now you can actually
hold the physical bitcoin and you don't have to be
an expert. Their company is like Unchained and Kaso, where
(15:53):
you know, you can have multi signature wallets where if
you don't trust yourself and you think you might lose
your bitcoin or you might lose your crypto. I mean
generally though, if you if you're owning bitcoin, start with
whether it's if you if it's bitcoin, start with a
few satoshi's, see if you have the wherewithal to do
(16:15):
cold storage on your own. But then there are reputable
exchanges where they subject themselves to audits, you know, like
New York has a Department of Cryptocurrency. It's a little
more stringent than others, right, but to me, you know,
I liked it. A company like fidelities into it, you know,
so you know they have certain controls in place that
were made with regulatory oversight in potential purview. You know,
(16:37):
you got a roase. A lot of these companies, like Fidelity,
we're doing it. Everybody's bullsh on bitcoin and crypto now
because they're thinking, hey, Trump's in his sec is going
to be a little easier on bitcoin and crypto. Gary
Gensler just announced that he was stepping down. Although Gary Gensler,
people forget this. He has an excellent video of his
(16:58):
MIT You ever see tho as the MIT lectures? Yeah,
those were excellent. I mean he had a deep knowledge
of it, and I think he was trying to embrace
the technology but root out the criminals. Right, So there's
a distinction there. But you know, sadly, I don't think
all of his things which got a bad rap for
were bad. Yeah, And I think he had a deep
(17:19):
knowledge of cryptocurrencies and bitcoin in particular, where you know,
it's the wild West some of these cryptocurrencies. That's why
to me, if you're just starting out, buy a few
setoci's by you know, to me, bitcoin is the more
proven method ethereums you're number two the rest. I mean,
you know, a lot of what I find too is
(17:41):
people are just trying to find the next big thing
to feel like, oh I missed out on bitcoin, right,
so I want to buy some alt coin that may
have the potential of an epic rhyme. But what is
the utility of these tokens, what's the purpose, Like, has
no purpose. I would not put my money in Doze,
(18:03):
just as a principle, Like, just on principle.
Speaker 1 (18:07):
Yeah, Doge was founded as a joke, and sometimes people
remember that and they still put their money in, which
to the point where like the creator of doge is
like I thought I was making satire and it turns
out that I made something that despite people's better judgment,
they believe in it, and you know that makes that
(18:28):
value fluctuate wildly as well. But ultimately you need to
remember Doze was created as a joke. But to your point,
a lot of these alt coins, I think they're meant
to be a way to fund some other venture that
is related to the blockchain, and the token is kind
of their way of getting investment rounds to fund whatever
(18:51):
that venture is. And like I said, the best organizations
are really transparent about it. The danger I see is
that a lot of people look at that as saying, oh,
that's going to be the next bitcoin, and even the
organizations around those ventures are like, that's not what we're
saying at all. Don't assume that we're like poised to
become the next bitcoin. We're trying to fund something we
believe in. And then of course you have your other
(19:12):
groups where it's like much more shady, where they're looking
at any opportunity and maybe even a rug pull situation
down the line. But I think you're absolutely right in
that if you are interested in looking at at cryptocurrency
from an investment perspective, going with the more established ones
makes far more sense than just hoping that some fly
(19:35):
by night alt coin that launched in the last three
months is going to repeat the success of even Ethereum.
Like Ethereum alone is pretty darn successful. It's not stratospheric
like Bitcoin became. But you know that's just the to me, like,
that's just foolish. If you're doing now, if you believe
in whatever the organization is doing, that's different. Like if
you think I'm investing and I'm supporting something I believe in,
(19:58):
I feel a lot more comfortable about that rather than
just man, I wish i'd bought bitcoin back when it
was you know, ten thousand to a dollar. Yeah, we
all do, so, I agree one hundred percent. The other
thing that always gives me pause the steps beyond the
financial aspect, is that because bitcoin is proof of work,
(20:18):
that does mean that in order for systems to be
able to mine a block of bitcoin, they have to
dedicate a truly tremendous amount of compute power to do that,
because when you're up to like one hundred thousand dollars
per coin, then there's a huge incentive to be the
first to solve that next block of transactions. And so
(20:38):
we're starting to see not starting, we have seen these
large networks form where they're even taking over old defunct
electric power plants in order to be able to get
enough electricity to do this, because at scale it makes
sense like if you are able to mine enough bitcoin,
you can actually pay for that level of operation, which
then brings in the concern about how much electric is
(21:00):
being consumed. Ultimately that comes that also goes down to
where's the electricity coming from? How is this contributing to
other factors like carbon footprint. To me, that's another one
of those things that I think people need to look
into and understand before they get in and just to
be able to answer the question is am I okay
with entering into this world? I think being informed is
(21:21):
the most important part rather than jumping in because you
just you think that there's an opportunity there, and you're
worried you're going to miss out.
Speaker 2 (21:29):
Yeah, I've thought deeply about the use of power and electricity.
I mean, I think from a fundamental perspective, right, if
government no longer has the monopoly on money, right like
at its core. Not to get too out in left field,
but if we didn't have governments fight about money, think
(21:52):
about how many wars were fought over gold. Sure there
could be wars fought over bitcoin in the future. And
I think it's very good develop that the US is
embracing it and the US government's embracing it, because if
we embrace it, we can focus on clean energy. A
lot of bitcoin minors, you know, they're big in clean
energy in places like Washington, and they're they're providing jobs,
(22:17):
and they're they're they're kind of retooling things in a way.
But I think if you had no more wars about money,
I'm not saying we won't have any more wars. You know,
here's some of these bitcoin people. They you know, bitcoin
solves everything, you know, bitcoin fixes every problem in the world.
That can be ridiculous, But what they mean is an
(22:40):
honest person who might use that kind of phrase say,
if we have think about this, If we have a government,
let's say the US, I fundamentally think whether it's Trump
Elon Vivic in this next administration wherever you kind of fall,
I think Elon On. I know, I think deeply about this.
(23:02):
The US is losing its strength in the world because
other countries don't trust that we will manage our own
finance as well. And bitcoin just the act of a
competitor to the dollar, even though it's just such a
fraction of the dollar. But the fact that El Salvador
is now embracing bitcoin and other third world countries that
(23:25):
they don't have to do everything in US dollars may
make our country behave a little better. It will It
may make us have a more sound currency, which will
fix a lot. And I think if we embrace sort
of the bitcoin philosophy, the philosophy behind bitcoin of sound
(23:46):
money at its core, I think you'd have less wars,
you'd have less electric use less. I think about how
much power war takes, you know.
Speaker 1 (23:56):
So in a way, you're saying that the the existence
of bitcoin and it's evolution and its success can help
shake the United States out of a sense of complacency
that otherwise allowed for a lot of entropy to build
up as far as as the US dollar, like, we
took a lot for granted because of where we arrived at,
(24:19):
and now bitcoin's kind of shaking that up a bit
in a way. That does come down to the very
basis of competition, right, the idea that competition forces competitors
to continually innovate and do better than before or else
risk losing.
Speaker 2 (24:33):
You know, there's the bricks currencies, there's you know, the
transpecific partnerships, which was going to be with the US,
now it's with China. I think other countries are waking
up to the fact that we can just manipulate our
currency and they're screwed, and currency wars you might call it.
You know, the big example might be okay, Russia might
(24:53):
go to more gold, or might they might go to
more bitcoin, or China might go to more bitcoin because
they say, you know what, we're just looking to diversify. Now,
I think long are I think over exaggerated. Is there
are those stories that say the dollar is going to
be worthless?
Speaker 1 (25:11):
Right.
Speaker 2 (25:12):
I don't believe we will wake up and say the
usd will be worthless, but it may become worth a
little bit less every year. It of course is that's happening,
that's inflation. But I think, what when people think they
think conspiracy theories, I'm just talking about using the dollar
in world trade. That I think in twenty sixteen, the
(25:34):
US dollar accounted for seventy percent of all war of trade.
So just you know, so many years ago, less than
a decade ago, we counted for seventy percent of all
war trade. That number to day is about sixty percent.
Ten years in the amount might be fifty. And you
know what, the US's biggest competitors is not bitcoin, It's
not the Chinese. Remember, it's the Euro, which just kind
of funny. You wouldn't have thought the Euro would be
(25:55):
such a competitor. But it's just countries looking they don't
want to be solely align on the dollar.
Speaker 1 (26:02):
We which I mean from a even just from a
national security perspective, makes total sense. I mean, like, if
you're not the US, of course, you don't want to
be dependent upon some other nation's currency to have such
incredible power over your own fate. This is Jonathan post
interview here to let you know that all this financial
insight doesn't just pay for itself. So we're going to
(26:23):
take a quick break to thank our sponsors and we'll
be right back. I'm curious when you first got into
the world of finance, did you ever dream that you
were going to see a time where a new system
(26:43):
would rise up, a digital system would rise up and
go through such incredibly fast evolution and maturity right in
front of your eyes.
Speaker 2 (26:51):
You know. I think the biggest regret I have is,
you know, my friend in twenty ten who was kind
of a pothead, you know, tech guy, Yeah, turned me
onto bitcoin. I'm like, this is ridiculous, you know. Yeah,
I'm not doing it, you know. And then twenty fifteen
another guy, Hey, you know, you got to get in.
He showed me. I think when I really saw it
(27:12):
taken off was twenty twenty. Yeah, Like that's when I
became a full on bitcoin believer. Now I'd embraced bitcoin,
like as an asset diversification play for a few years prior, like, hey,
you know, put a little bit in, you know, as
an alternative gold. I saw the value, but I really
(27:33):
began to think that it was needed when I went
to my bank in COVID. Did you go to the
bank during COVID and try to get money out.
Speaker 1 (27:39):
I did not, but I know of people who did.
Speaker 2 (27:41):
And I did all of the things that the Bitcoin
white Paper and the Bitcoin Maxi's who sound wacky warn
you of. I could not get more than five thousand
dollars cash out, and I was looked at like I
was a criminal. This was in the middle of COVID,
and if I didn't know my banker, they were limiting
people to three thousand dollars USD. And that's when I
(28:03):
really saw hm. I totally not just get it a
little bit. I embraced the whole philosophy because it just
irked me that we were in a middle of national crisis.
I couldn't get my money on my own bank. Yeah,
and bitcoin does fix that issue if you own it
(28:23):
on cold storage, you know.
Speaker 1 (28:25):
Yeah, I mean we've It's funny because your story makes
me think Silicon Valley Bank that was a one.
Speaker 2 (28:33):
Yeah.
Speaker 1 (28:34):
I remember distinctly when that story started to break because
I was in the Atlanta airport. I was waiting to
board a flight to Austin, Texas for south By Southwest,
and as you might imagine, more than a few people
who are waiting for that flight to go to this
big tech conference, were starting to have their phones blow
up in their hands as the story about Silicon Valley
(28:55):
banks collapse was breaking. But again to your point, it's
that idea of finding out that you suddenly can't get
the money that you've entrusted into and a financial institution
you can't get it back, and through no fault of
your own, you have done nothing wrong, but that now potentially,
at least for the time being, you've lost access and
(29:16):
in worst case scenario, you've lost it now. Fortunately with
Silicon Valley Bank, the government stepped in and you know, said,
don't worry, We're going to guarantee that everybody gets their money.
But that was an unknown thing.
Speaker 2 (29:27):
That was a very scary twenty four hours. I remember that,
and if it wasn't for you know, Janet Yellen gets
a lot of flak, but they really saved the banking
system that weekend. Whoever was involved in that doesn't get
half the credit they should get because I remember that.
(29:49):
I mean, people were just trying to pull as much
money out of this system. It wasn't even Soilicon Valley
people were really scared. The fear on that day, and
that's when they came out and people said, well, why
did they give Remember they said you will have unlimited protection.
Speaker 1 (30:11):
Hmm.
Speaker 2 (30:12):
People thought that was ridiculous. I think why they needed
to say that was because a lot of these banks,
you know, they have wealthy tech billionaire, tech hundred millionaire,
and somebody's one hundred million dollars on deposit. They were
trying to pull all their money.
Speaker 1 (30:28):
Well, yeah, you have tech companies that were dependent upon
it for things like payroll. You had venture capitalists who
were dependent upon it as like that was their bank
of choice so that they could funnel the investments through
two different companies they wanted to support it. Really, I
think it pulled back the curtain quite a bit on
just the money side of Silicon Valley. Like again, I
(30:50):
typically cover the tech side, not the money side so much.
I'll cover the money side with regards to how it
impacts the tech side, but I have never pretended to
really understand the money side. I've always told people I
actually have the easiest job in the world, because ultimately
tech either works or it doesn't work. It's really easy
to explain when you really get down to it. Money
to me ends up being one of those things where
(31:12):
I'm like, well, I know how it or at least
I think I know how it should work. But time
and again I am surprised and taken off guard, and
I just my hat is off to you, sir, because
I certainly could not do what you do.
Speaker 2 (31:28):
And vice versa. I I when I meet with the
tech guys, particularly within the bitcoin community, it's like in
one ear and out the other.
Speaker 1 (31:37):
Se Yeah, I just sit there and say, like, listen,
it all comes down to math problems. It's just math problems.
And you don't have to worry about your computer is
trying to fix it. You just you let it go.
That's as close.
Speaker 2 (31:48):
Unless I just don't get the form you know, oh yeah, yeah,
the formulas, but I get the philosophy. I think. I
think for me, it's it's just human nature, right, It's
fear and greed, and that's the thing that people have
to watch right now. The fear is I'm gonna have fomo, right,
(32:08):
I'm not going to invest in bitcoin now, I'm gonna
invest in some alt coin hoping I'm gonna get rich quick.
Speaker 1 (32:16):
Yeah, that'll ride Bitcoin's coattails.
Speaker 2 (32:19):
But I mean, personally, I've seen a lot of people
get hosed and lose half of their life savings doing that.
So be very careful. Don't put anything that you are
not willing to go down significantly. Bitcoin's very volatile, Yeah,
but I don't think it's volatile because you brought up that.
It's a good point. Volatility does not mean something is
(32:40):
in an invalid concept, right. It means it's an emerging
exponential technology. There will come a time if the Bitcoin
maximalists or foundationalists, if the world that they envisioned years
ago comes true, that Bitcoin will be almost like a
legacy kind of gold life like asset, and it will
(33:01):
be very slow growth. Yeah, but that's only when people
wake up. And there may come a time where people
wake up and just go Bitcoin's million dollars coin is
unreachable for the average person, and it becomes this legacy
type of sovereign wealth asset because it's only twenty one million,
that's all that ill will be mined.
Speaker 1 (33:22):
Yeah, but I.
Speaker 2 (33:24):
Believe it'll be sort of like a base layer and
there'll be things built on top of it, similar out
ethereum has, but they'll be there are people who believe
in the philosophy of hard money. They want a better money.
They want a better financial system, one that doesn't exist
off of leverage and derivatives. And that's I think fundamentally
(33:46):
the beauty of the Bitcoin protocol and the bitcoin philosophy
is it's sort of like a way of life, although
some people it's like a cult.
Speaker 1 (33:53):
But yes, yeah, I always caution really for anything within tech,
but specifically like NFTs you brought up are an example,
and various cryptos are ones that I caution people on.
I say, if someone is really trying hard to convince
you about the validity of a specific digital asset, it's
(34:14):
good to consider how deeply invested they are in that
digital asset and bring that into consideration before you make
any moves, simply because sometimes people are drumming something up
because the value of the thing they've invested in increases
with more people joining the ecosystem, and if they're a
cheerleader because they're trying to get more people to come
(34:35):
on so that their own investment ends up increasing, it
starts to look a little too close to like a
pyramid scheme. Not saying that they are, but that that
starts to get that kind of feeling. And the more
that happens, the less trust exists in that environment, and
that can lead to its own sort of disaster through
no fault of the underlying system. Right, it's when we
(34:57):
add humans to it that things get messy. So you know,
it's one of those those topics that I've I've been covering.
We launched tech Stuff a couple of months before the
Bitcoin white paper came out, so I've literally been doing
this show just as long as bitcoin has been a thing,
and I remember trying to get my head wrapped around
(35:19):
blockchain for the longest time, and I feel like I've
got a decent understanding of it. I'm still struggling as
to whether or not it makes sense to be an
underlying foundation for Web three, but I certainly understand it
as far as what crypto does and to an extent,
what NFTs were supposed to do. I think n FTS
that was unfortunate and that it turned into a speculative
(35:41):
market before we could actually see what NFTs could potentially
do outside of just an investment. The idea of having
a way of validating and keeping track of digital assets
and digital ownership. I can definitely see a need there.
I just don't think NFTs ever, I had a chance
of hitting that because speculation followed so quickly on people
(36:06):
realizing what they were. But again, that's it. That's like
adding people to a system, like the system would have worked,
except we had people. Darn people. Well, Josh, thank you
so much for joining our show and kind of providing
us your insight. Again, this is something I could never
offer my listeners myself. It is so outside of my
(36:26):
expertise and people. You should go and check out the
Financial Quarterback. That show has been going on for a
little more than forty episodes. Now you've got episodes on bitcoin.
I love also, by the way, your episode about being
wary of people who are really evangelizing investments, not just
in the tech space, but just in general, and using
(36:47):
critical thinking to analyze those pitches, because certainly in the
tech space we have seen it time and again where
people take advantage of enthusiasm, a fear of greed, and
largely of ignorant It's if someone doesn't know how a
system works, it becomes much easier to kind of fool
them into thinking this is a money printing machine. So
I think you're doing a real service by educating people
(37:10):
about these sorts of things and what to look for
and the questions to ask before you start to commit
your own wealth to these kinds of potential investments.
Speaker 2 (37:21):
No, great, that'd be fun. Yeah, we've been doing It's funny.
You've been doing it for sixteen years. Yeah, I think
I started sixteen years ago on the radio Wow, and
then we launched our you know, kind of reimagine podcast.
So right around the great financial crisis in a eight.
Speaker 1 (37:37):
All the time to get involved, right, I mean.
Speaker 2 (37:40):
And I've seen all these strange things. But yeah, that's
a good tip. As we're kind of talking about crypto
kind of closing tip, don't do anything because of guru me, you,
anybody does it. Do do your own homework, do your
own due diligence. And also position sizing. If you're getting
into something, do a small percentage of your portfolio one percent,
(38:03):
two percent, three percent. That way, if it gets cut
in half, you can still sleep at night.
Speaker 1 (38:07):
Yeah, you've got You've got the safety net there. I
think that's great advice in general, especially now that we're
entering into a world where influencer culture is having a
larger impact, especially for younger people like you see the
platforms like TikTok or Instagram, where very complex ideas and
philosophies are getting summarized and sometimes dumbed down so that
(38:32):
they fit into like a thirty second video package. And
the danger I feel of that is that it gives
viewers a sense of understanding when the topic that they're
actually tackling is far more subtle and complex and nuanced
than any thirty second message could hope to convey. Well, Josh,
thank you, thank you again for joining the show. Y'all,
(38:52):
it is the Financial Quarterback. You need to go check
out that episode that I was talking about, the specifically
the one about out using critical thinking in the approach,
because that's again the guiding philosophy of tech stuff is
critical thinking and compassion. Those two things go together. Without
critical thinking, you're a dope, and without compassion you're a jerk.
So let's use both.
Speaker 2 (39:14):
Episode thirty eight, how to Spot a False Profit in
the World of Finance.
Speaker 1 (39:19):
Yeah, it's fantastic, like highly recommended. I mean again, like
if you need to exercise that critical thinking skill, and
I'm always thankful to see other podcasters who advocate for that. Josh,
thanks again so.
Speaker 2 (39:30):
Much, thanks for having me Johnson.
Speaker 1 (39:33):
This is after the interview y'all. I want to say
again thanks to Josh for coming on to the show.
As you can see, Josh has a different perspective on
bitcoin than I do, which I think is valuable, right,
Like I think it is important to get different perspectives
and not just go through life in an echo chamber.
So I really appreciate him coming on the show and
giving me his insight because coming at it from a
(39:56):
financial standpoint as opposed to the tech standpoint, you can
come to some very different conclusions and I found it
fascinating and honestly, it was nice to get a little
bit of demystification around finance. So Josh, thanks so much.
I hope all of you enjoyed this special episode. We're
gonna have another one for you on Wednesday, so I'm
looking forward to that. We're gonna be talking to some
(40:16):
scientists about science, so make sure you tune into Wednesday's episode.
That's it for me. I hope you're all well, and
I'll talk to you again really soon. Tech Stuff is
an iHeartRadio production. For more podcasts from iHeartRadio, visit the
(40:37):
iHeartRadio app, Apple Podcasts, or wherever you listen to your
favorite shows.
Welcome to Tech Stuff, a production from iHeartRadio. Hey thereon
Welcome to Tech Stuff. I'm your host, Jonathan Strickland. I'm
an executive producer with iHeart Podcasts and How the Tech
Are You. Today, we have a very special guest joining
us on tech Stuff. He's a financial analyst extraordinaire. He
(00:27):
is the host of the Financial Quarterback. He is Josh Jaelinski.
Welcome to Tech Stuff.
Speaker 2 (00:32):
Thanks for having me. It's gonna be a lot of fun.
Speaker 1 (00:35):
Yeah, I'm really excited to talk with you today. We're
gonna talk about crypto because obviously it's always been a
big topic in tech. We have covered it multiple times
on tech Stuff, but in the wake of the US elections,
we've seen an incredible resurgence in the crypto space. And
while we've covered it from the tech side, I have
to be honest with you, Josh, when it comes to
(00:55):
financial analysis, that might as well be written in Klingon
for me, and I am not fluent in that. So
I'm glad to have you here. Can you tell our
listeners a little bit about your own background before we
kind of dive into the crypto space.
Speaker 2 (01:09):
I own an SEC registered RIA registered investment advisor firm
called Wealth Quarterback. I've been on the Financial Quarterback radio
show in war in New York. iHeart flagship station fifty thousand,
Want Flamethrower, and we have a podcast, the Financial Quarterback,
and I help educate listeners each week on tax's, income planning,
(01:30):
retirement planning, and all things investing, including bitcoin.
Speaker 1 (01:34):
Yeah, it's one of those areas that I have tiptoed
around because, as I said, I've looked at the tech
side of cryptocurrency and we've talked about the differences in
the various cryptocurrencies out there, both from the brand to brand.
You know, your bitcoins and your ethereums being the two
probably best well known. I would argue maybe dogecoin if
(01:55):
you're into the meme stocks. Beyond that, we've talked about
things like the proof of work versus the proof of
steak approach to the verifying transactions and the mining of
bitcoin being proof of work, Ethereum now being proof of steak,
although it was originally proof of work as well, and
so we kind of covered that. But when it comes
(02:17):
to investment, that's largely untapped territory for me. And part
of that is, first of all, I am no expert
on finances, but also there's certain elements of crypto that
I've always found daunting. The big one, I would argue
would be volatility. The fluctuating value of bitcoin in the
past has always been one of those things that has
(02:37):
given me pause because I think of it from a
currency perspective. If I have a note in my hand
that's worth one US dollar today and I spend it
and then I find out tomorrow it was worth ten
US dollars, it really makes me wonder is it right
to call bitcoin a currency at all? Or do you
think of it in terms of some other form of asset.
Speaker 2 (03:00):
I think it's more of the digital gold equivalent. I
think it's a hedge against the US dollar and the
Federal Reserve. So it's interesting. I'd love to hear your
tech side. I'm coming more from the macroeconomic outlook that
people for years and satoci in his white paper. You know,
I'm looking at the blocks and I get confused by
(03:21):
all the formulas, but I just remember I was actually
looking at it last night a little bit, and all
it is is peer to peer money transfers. I mean,
that's the fundamental, you know, basis of bitcoin. But it
really came in the wake of the Great Financial Crisis
of two thousand and eight, where they were Satoci whoever
he is, basically Satoshi Nakamoto. If your listeners don't know,
(03:45):
founder of bitcoin wrote the famous Bitcoin White Paper, I
recommend everybody read it so they just kind of know
what bitcoin is.
Speaker 1 (03:52):
Yeah.
Speaker 2 (03:53):
Yeah, at its simplest form, it was an answer to
a problem from a programming side for years, but also
from a monetary perspective, where in the way of the
Great Financial Crisis, people began to distrust the government, they
began to distrust financial institutions. I mean, I remember when
(04:14):
I went independent as a financial advisor in two thousand
and six, and people would say, Josh, are you sure?
How could you not work for Merrill Lynch or Morgan
Stanley or bear Stearns or Lehman Brothers or all these
companies that now don't exist. But back then, if people
were to trust you with your money, you know, you
(04:35):
had to have two first names, you know, something like that.
So I remember that was the biggest knock I would
have when I started my company, was you know, who
were you? And we would use Fidelity as a custodian
or you know, a reputable third party canstodian like Schwaber Fidelity.
But still that was a big thing then it isn't
(04:55):
really now and we have bitcoin to thank for that.
So really, bitcoin is the answer to a problem of
people having distrust in their government, distrust in the FED,
distrust in financial institutions.
Speaker 1 (05:09):
Yeah, when you had all these financial institutions, I mean
everyone who was around then can remember the outrage that
came with the bailout where you had these financial institutions
that had been issuing these incredibly risky mortgages, and ultimately
it became like a house of cards that collapsed in
on itself inevitably. I mean, in hindsight we say inevitably.
(05:30):
At the time, I think everyone just thought number go up,
and it turned out number does not always go up.
Sometimes number go down. And to your point, the idea
of a decentralized and untied to any particular fiat currency
alternative became really attractive to a lot of people where
they realized this would be an approach where you don't
(05:51):
have to worry about some institution making a bad call
and potentially putting not just your wealth, but like global
wealth and jeopardy as a result, and I think there
were really some noble intentions there. With all systems, I
would argue, we would see those intentions sometimes get a
little twisted along the way. And part of that is
(06:14):
because the digital currency opened up opportunities for things that
were outside the realms of the law, and that certainly
became a problem as well because it became associated with
the concept of digital currency. Overall, some of the problems
of digital currency have been brought about by some of
the biggest evangelists of digital currency, some of the people
who founded cryptocurrency exchanges, for example, I mean Sam Begman,
(06:37):
Freed being the obvious example of somebody who it turned out,
was grossly mismanaging customer wealth for the purposes of trying
to cover what essentially amounted to bad bets with his
hedge investment fund for Alameda Research, taking the money from
FTX and putting it into Alameda, and ultimately dooming both
of those organizations. So with all this in mind, I'm
(07:00):
curious as to what your general take on cryptocurrency is,
because one, it's still a relatively young technology, a relatively
young investment opportunity. Two, a lot of the organizations surrounding
cryptocurrency are ones that have shaky reputations. You know, the
SEC is currently involved in investigating numerous cryptocurrency related companies
(07:23):
like Coinbase, I think is one of them. So with
all that in mind, how do you view crypto as
far as an investment opportunity. Is it something that you
think requires very careful analysis? Because to me, when I
look out there, it just looks like a minefield, or
at least a really complicated path to walk.
Speaker 2 (07:41):
Yeah, I have to get my legal disclaimer. I'm not
recommending anyone invest in any particular cryptocurrency. Cryptocurrency is fraught
with risk. That being said, I think you need to
distinguish bitcoin, which is a proven cryptocurrency with a very
valid use case as digital gold, from everything else. I mean,
(08:05):
I even have problems with ethereum because I think proof
of steak has Although it has opportunities, I think that
it's fraught with peril. I don't like that we know
the founder. I don't know that there's a central actor risk.
There's attributes to bitcoin fixed quantity, digital gold, uncoonfiscatable money
(08:26):
that I like as opposed to pretty much every other cryptocurrency.
So although I guess i'd be a bitcoin maximalist or
foundationalist maybe, I mean, because certain things have certain use
cases and I'm not that big of a techie, you know. Yeah,
so I can't tell you, okay, the use you know,
but NFTs to me, you know, it was that was
(08:47):
like a scam for you know, you to have, you know,
your favorite cup of coffee with Gary Vaynerchuk or something,
and then you get the dumb looking cartoon. I mean,
there will definitely be certain use cases in the metaverse
or web three, but that really is not what I'm
interested in to me, And I think what you said
(09:08):
before a couple of things. You brought up volatility in bitcoin.
Speaker 1 (09:12):
Yeah, just because you.
Speaker 2 (09:13):
Believe in the use case doesn't mean it's going to
not be volatile. If you think about Amazon, for the
first twenty years of Amazon's existence, highly volatile. No one
would really question Amazon's viability now, same thing with apples.
So I do bitcoin like an exponential technology, just like
Amazon or Tesla. I mean, it's far bigger than that.
(09:35):
It is a far bigger potential market share. If it
just gets the market share gold gets, bitcoin could be
a million dollars of coin and as sovereign wealth funds
start to allocating. As an investment advisor start allocating. I mean,
we really don't even have clarity as an investment advisor.
I can't say, like if I was in an ideal
world diversification, right, you could say I'm going to allocate
(09:58):
one or two percent of all portfolio to bitcoin. That
would be a sensible thing, right. We can't do that
like you can with an SMP fund because we have
to get cryptocurrency disclosures, bitcoin disclosures. So once the regulatory
clarity comes that it's a respected asset classes, I think
it's just going to be even a greater amount per coin.
(10:21):
Now that being said, I think one hundred thousand bitcoin
is precisely because ETFs. Let's not forget this is the year.
You can now go in your brokerage fund and you
could buy a low cost bitcoin ETF like ibit or
GBTC or FBTC. And I'm not recommending you buy those,
but they're like a fraction of what bitcoin used to cost.
(10:43):
I mean, and I mean it's free theorey you know
with your money, you know, you pay fees on the network.
But I do find that interesting that in the asset
class that was supposed to pride itself in not having
financial intermediaries. Now it does. But I guess it's a
part of it emerging from a very nascent technology. That's
the thing you need to make a lot of distinguishing.
You brought up three big things that are you write
(11:05):
a book on this volatility and bitcoin FTX and bitcoin
criminals in bitcoin. But you have to distinguish Sambangmin Freed
FTX is not bitcoin, right, you know, sam Bangmin Freed
is a fraudster who convicted. It'd be like us saying
stocks have no merit because you know, I don't know
(11:27):
some stock broker was a fraud sight Trum, yeah, or
you know the Wolf of Wall Street. You know, like,
it doesn't mean that stocks are not a viable asset class.
And then criminals in bitcoin just because criminals use it,
I mean criminals have used life insurance to wander money,
you know. So I think as it becomes a more
(11:50):
embraced technology, what's funny is it's getting embraced now by
firms like Fidelity and Schwab and the only firm I
think that didn't embrace it was Vanguard. And there's been
a lot of negative press that they've experienced because they
haven't embraced it.
Speaker 1 (12:07):
We'll have more to say with Josh from the Financial
quarterback in just a moment, but first a quick break
to thank our sponsors. So, in the old, old old days,
a bitcoin, if you had just started back when, you
could actually have your PC potentially successfully mine a block
(12:31):
of bitcoin because it was idling and it solved the
really hard math problem first, which those days, y'all are
long gone. So don't think that you're old, like five
year old PC is going to mine some bitcoin for
you. You're up against some massive networks that are working on
those problems now. But back in the day, if you
didn't mind bitcoin, or if you had a transaction where
(12:53):
someone sent you bitcoin, you know, you had to put
those assets into a digital wallet, and more often than not,
that digital wallet would just live on a hard drive.
I mean, there's the famous story about the guy who
ended up throwing out his PC without remembering to remove
the digital wallet from his PC and like scouring the
dump trying to find this thing because there were tens
(13:14):
of thousands of dollars just represented in that digital wallet
and he didn't have access to it. So you could
have your digital wallet stored on a local machine, or
you could be using a service kind of like what
FTX was, which was, you know, a cryptocurrency exchange, but
you could have an account with that and have your
holdings in that account. One of the problems is that
SBF was apparently taking money from customer accounts in order
(13:36):
to cover the investments of our at alimated research. That
to me is another one of those those hurdles. It's
not just an element of trust with knowing that there
are some bad actors out there, it's how do you
know like the right approach. Let's say that you are
interested in investing in crypto, and you've done your research
and you figured out which cryptocurrency is interesting to you,
(13:57):
figuring out where you're going to store that ends up
the coming an issue that I think most people don't
even otherwise think about, right like, it's going to have
to sit on a physical space somewhere, whether that's under
your control or in a cryptocurrency exchange or something similar.
With the failure of FTX, I think that had brought
into question how much can you trust these other third
party entities? And it's interesting to me to see that
(14:20):
issue unfold, because it kind of makes me think back
to the two thousand and eight crisis, where again, there
you didn't know who to trust with these institutionalized financial systems.
It's a different flavor but a similar story. And now,
like the question is how do you figure out who
to trust in the digital landscape so that you can
feel confident, Like even if you made a bad bet
(14:42):
with backing a cryptocurrency that's just not doing well, at
least you would still be able to access those assets.
Speaker 2 (14:49):
Well, I mean they're the old not your keys, not
your bitcoin, you know, have have your bigcoin or cryptocurrency.
I'm a big believer in cold storage if you can
learn how to use it. Their companies like Ledger, Treasure
cold wallet where you can google or YouTube videos on
(15:09):
how to do your own cold storage for people don't know.
You know, you can hold your bitcoin right in a
little device. The cold wallet's like a little calculator looking thing.
You can have it on an exchange like Coinbase. One
method is you can also have it through a more
(15:29):
traditional financial institution now like Fidelity, which has way more
price controls and they're even holding people's bitcoin. In some
cases they have bitcoin custody for people who it's too
difficult for. So it used to be you had to
really know what you were doing. Now you can actually
hold the physical bitcoin and you don't have to be
an expert. Their company is like Unchained and Kaso, where
(15:53):
you know, you can have multi signature wallets where if
you don't trust yourself and you think you might lose
your bitcoin or you might lose your crypto. I mean
generally though, if you if you're owning bitcoin, start with
whether it's if you if it's bitcoin, start with a
few satoshi's, see if you have the wherewithal to do
(16:15):
cold storage on your own. But then there are reputable
exchanges where they subject themselves to audits, you know, like
New York has a Department of Cryptocurrency. It's a little
more stringent than others, right, but to me, you know,
I liked it. A company like fidelities into it, you know,
so you know they have certain controls in place that
were made with regulatory oversight in potential purview. You know,
(16:37):
you got a roase. A lot of these companies, like Fidelity,
we're doing it. Everybody's bullsh on bitcoin and crypto now
because they're thinking, hey, Trump's in his sec is going
to be a little easier on bitcoin and crypto. Gary
Gensler just announced that he was stepping down. Although Gary Gensler,
people forget this. He has an excellent video of his
(16:58):
MIT You ever see tho as the MIT lectures? Yeah,
those were excellent. I mean he had a deep knowledge
of it, and I think he was trying to embrace
the technology but root out the criminals. Right, So there's
a distinction there. But you know, sadly, I don't think
all of his things which got a bad rap for
were bad. Yeah, And I think he had a deep
(17:19):
knowledge of cryptocurrencies and bitcoin in particular, where you know,
it's the wild West some of these cryptocurrencies. That's why
to me, if you're just starting out, buy a few
setoci's by you know, to me, bitcoin is the more
proven method ethereums you're number two the rest. I mean,
you know, a lot of what I find too is
(17:41):
people are just trying to find the next big thing
to feel like, oh I missed out on bitcoin, right,
so I want to buy some alt coin that may
have the potential of an epic rhyme. But what is
the utility of these tokens, what's the purpose, Like, has
no purpose. I would not put my money in Doze,
(18:03):
just as a principle, Like, just on principle.
Speaker 1 (18:07):
Yeah, Doge was founded as a joke, and sometimes people
remember that and they still put their money in, which
to the point where like the creator of doge is
like I thought I was making satire and it turns
out that I made something that despite people's better judgment,
they believe in it, and you know that makes that
(18:28):
value fluctuate wildly as well. But ultimately you need to
remember Doze was created as a joke. But to your point,
a lot of these alt coins, I think they're meant
to be a way to fund some other venture that
is related to the blockchain, and the token is kind
of their way of getting investment rounds to fund whatever
(18:51):
that venture is. And like I said, the best organizations
are really transparent about it. The danger I see is
that a lot of people look at that as saying, oh,
that's going to be the next bitcoin, and even the
organizations around those ventures are like, that's not what we're
saying at all. Don't assume that we're like poised to
become the next bitcoin. We're trying to fund something we
believe in. And then of course you have your other
(19:12):
groups where it's like much more shady, where they're looking
at any opportunity and maybe even a rug pull situation
down the line. But I think you're absolutely right in
that if you are interested in looking at at cryptocurrency
from an investment perspective, going with the more established ones
makes far more sense than just hoping that some fly
(19:35):
by night alt coin that launched in the last three
months is going to repeat the success of even Ethereum.
Like Ethereum alone is pretty darn successful. It's not stratospheric
like Bitcoin became. But you know that's just the to me, like,
that's just foolish. If you're doing now, if you believe
in whatever the organization is doing, that's different. Like if
you think I'm investing and I'm supporting something I believe in,
(19:58):
I feel a lot more comfortable about that rather than
just man, I wish i'd bought bitcoin back when it
was you know, ten thousand to a dollar. Yeah, we
all do, so, I agree one hundred percent. The other
thing that always gives me pause the steps beyond the
financial aspect, is that because bitcoin is proof of work,
(20:18):
that does mean that in order for systems to be
able to mine a block of bitcoin, they have to
dedicate a truly tremendous amount of compute power to do that,
because when you're up to like one hundred thousand dollars
per coin, then there's a huge incentive to be the
first to solve that next block of transactions. And so
(20:38):
we're starting to see not starting, we have seen these
large networks form where they're even taking over old defunct
electric power plants in order to be able to get
enough electricity to do this, because at scale it makes
sense like if you are able to mine enough bitcoin,
you can actually pay for that level of operation, which
then brings in the concern about how much electric is
(21:00):
being consumed. Ultimately that comes that also goes down to
where's the electricity coming from? How is this contributing to
other factors like carbon footprint. To me, that's another one
of those things that I think people need to look
into and understand before they get in and just to
be able to answer the question is am I okay
with entering into this world? I think being informed is
(21:21):
the most important part rather than jumping in because you
just you think that there's an opportunity there, and you're
worried you're going to miss out.
Speaker 2 (21:29):
Yeah, I've thought deeply about the use of power and electricity.
I mean, I think from a fundamental perspective, right, if
government no longer has the monopoly on money, right like
at its core. Not to get too out in left field,
but if we didn't have governments fight about money, think
(21:52):
about how many wars were fought over gold. Sure there
could be wars fought over bitcoin in the future. And
I think it's very good develop that the US is
embracing it and the US government's embracing it, because if
we embrace it, we can focus on clean energy. A
lot of bitcoin minors, you know, they're big in clean
energy in places like Washington, and they're they're providing jobs,
(22:17):
and they're they're they're kind of retooling things in a way.
But I think if you had no more wars about money,
I'm not saying we won't have any more wars. You know,
here's some of these bitcoin people. They you know, bitcoin
solves everything, you know, bitcoin fixes every problem in the world.
That can be ridiculous, But what they mean is an
(22:40):
honest person who might use that kind of phrase say,
if we have think about this, If we have a government,
let's say the US, I fundamentally think whether it's Trump
Elon Vivic in this next administration wherever you kind of fall,
I think Elon On. I know, I think deeply about this.
(23:02):
The US is losing its strength in the world because
other countries don't trust that we will manage our own
finance as well. And bitcoin just the act of a
competitor to the dollar, even though it's just such a
fraction of the dollar. But the fact that El Salvador
is now embracing bitcoin and other third world countries that
(23:25):
they don't have to do everything in US dollars may
make our country behave a little better. It will It
may make us have a more sound currency, which will
fix a lot. And I think if we embrace sort
of the bitcoin philosophy, the philosophy behind bitcoin of sound
(23:46):
money at its core, I think you'd have less wars,
you'd have less electric use less. I think about how
much power war takes, you know.
Speaker 1 (23:56):
So in a way, you're saying that the the existence
of bitcoin and it's evolution and its success can help
shake the United States out of a sense of complacency
that otherwise allowed for a lot of entropy to build
up as far as as the US dollar, like, we
took a lot for granted because of where we arrived at,
(24:19):
and now bitcoin's kind of shaking that up a bit
in a way. That does come down to the very
basis of competition, right, the idea that competition forces competitors
to continually innovate and do better than before or else
risk losing.
Speaker 2 (24:33):
You know, there's the bricks currencies, there's you know, the
transpecific partnerships, which was going to be with the US,
now it's with China. I think other countries are waking
up to the fact that we can just manipulate our
currency and they're screwed, and currency wars you might call it.
You know, the big example might be okay, Russia might
(24:53):
go to more gold, or might they might go to
more bitcoin, or China might go to more bitcoin because
they say, you know what, we're just looking to diversify. Now,
I think long are I think over exaggerated. Is there
are those stories that say the dollar is going to
be worthless?
Speaker 1 (25:11):
Right.
Speaker 2 (25:12):
I don't believe we will wake up and say the
usd will be worthless, but it may become worth a
little bit less every year. It of course is that's happening,
that's inflation. But I think, what when people think they
think conspiracy theories, I'm just talking about using the dollar
in world trade. That I think in twenty sixteen, the
(25:34):
US dollar accounted for seventy percent of all war of trade.
So just you know, so many years ago, less than
a decade ago, we counted for seventy percent of all
war trade. That number to day is about sixty percent.
Ten years in the amount might be fifty. And you
know what, the US's biggest competitors is not bitcoin, It's
not the Chinese. Remember, it's the Euro, which just kind
of funny. You wouldn't have thought the Euro would be
(25:55):
such a competitor. But it's just countries looking they don't
want to be solely align on the dollar.
Speaker 1 (26:02):
We which I mean from a even just from a
national security perspective, makes total sense. I mean, like, if
you're not the US, of course, you don't want to
be dependent upon some other nation's currency to have such
incredible power over your own fate. This is Jonathan post
interview here to let you know that all this financial
insight doesn't just pay for itself. So we're going to
(26:23):
take a quick break to thank our sponsors and we'll
be right back. I'm curious when you first got into
the world of finance, did you ever dream that you
were going to see a time where a new system
(26:43):
would rise up, a digital system would rise up and
go through such incredibly fast evolution and maturity right in
front of your eyes.
Speaker 2 (26:51):
You know. I think the biggest regret I have is,
you know, my friend in twenty ten who was kind
of a pothead, you know, tech guy, Yeah, turned me
onto bitcoin. I'm like, this is ridiculous, you know. Yeah,
I'm not doing it, you know. And then twenty fifteen
another guy, Hey, you know, you got to get in.
He showed me. I think when I really saw it
(27:12):
taken off was twenty twenty. Yeah, Like that's when I
became a full on bitcoin believer. Now I'd embraced bitcoin,
like as an asset diversification play for a few years prior, like, hey,
you know, put a little bit in, you know, as
an alternative gold. I saw the value, but I really
(27:33):
began to think that it was needed when I went
to my bank in COVID. Did you go to the
bank during COVID and try to get money out.
Speaker 1 (27:39):
I did not, but I know of people who did.
Speaker 2 (27:41):
And I did all of the things that the Bitcoin
white Paper and the Bitcoin Maxi's who sound wacky warn
you of. I could not get more than five thousand
dollars cash out, and I was looked at like I
was a criminal. This was in the middle of COVID,
and if I didn't know my banker, they were limiting
people to three thousand dollars USD. And that's when I
(28:03):
really saw hm. I totally not just get it a
little bit. I embraced the whole philosophy because it just
irked me that we were in a middle of national crisis.
I couldn't get my money on my own bank. Yeah,
and bitcoin does fix that issue if you own it
(28:23):
on cold storage, you know.
Speaker 1 (28:25):
Yeah, I mean we've It's funny because your story makes
me think Silicon Valley Bank that was a one.
Speaker 2 (28:33):
Yeah.
Speaker 1 (28:34):
I remember distinctly when that story started to break because
I was in the Atlanta airport. I was waiting to
board a flight to Austin, Texas for south By Southwest,
and as you might imagine, more than a few people
who are waiting for that flight to go to this
big tech conference, were starting to have their phones blow
up in their hands as the story about Silicon Valley
(28:55):
banks collapse was breaking. But again to your point, it's
that idea of finding out that you suddenly can't get
the money that you've entrusted into and a financial institution
you can't get it back, and through no fault of
your own, you have done nothing wrong, but that now potentially,
at least for the time being, you've lost access and
(29:16):
in worst case scenario, you've lost it now. Fortunately with
Silicon Valley Bank, the government stepped in and you know, said,
don't worry, We're going to guarantee that everybody gets their money.
But that was an unknown thing.
Speaker 2 (29:27):
That was a very scary twenty four hours. I remember that,
and if it wasn't for you know, Janet Yellen gets
a lot of flak, but they really saved the banking
system that weekend. Whoever was involved in that doesn't get
half the credit they should get because I remember that.
(29:49):
I mean, people were just trying to pull as much
money out of this system. It wasn't even Soilicon Valley
people were really scared. The fear on that day, and
that's when they came out and people said, well, why
did they give Remember they said you will have unlimited protection.
Speaker 1 (30:11):
Hmm.
Speaker 2 (30:12):
People thought that was ridiculous. I think why they needed
to say that was because a lot of these banks,
you know, they have wealthy tech billionaire, tech hundred millionaire,
and somebody's one hundred million dollars on deposit. They were
trying to pull all their money.
Speaker 1 (30:28):
Well, yeah, you have tech companies that were dependent upon
it for things like payroll. You had venture capitalists who
were dependent upon it as like that was their bank
of choice so that they could funnel the investments through
two different companies they wanted to support it. Really, I
think it pulled back the curtain quite a bit on
just the money side of Silicon Valley. Like again, I
(30:50):
typically cover the tech side, not the money side so much.
I'll cover the money side with regards to how it
impacts the tech side, but I have never pretended to
really understand the money side. I've always told people I
actually have the easiest job in the world, because ultimately
tech either works or it doesn't work. It's really easy
to explain when you really get down to it. Money
to me ends up being one of those things where
(31:12):
I'm like, well, I know how it or at least
I think I know how it should work. But time
and again I am surprised and taken off guard, and
I just my hat is off to you, sir, because
I certainly could not do what you do.
Speaker 2 (31:28):
And vice versa. I I when I meet with the
tech guys, particularly within the bitcoin community, it's like in
one ear and out the other.
Speaker 1 (31:37):
Se Yeah, I just sit there and say, like, listen,
it all comes down to math problems. It's just math problems.
And you don't have to worry about your computer is
trying to fix it. You just you let it go.
That's as close.
Speaker 2 (31:48):
Unless I just don't get the form you know, oh yeah, yeah,
the formulas, but I get the philosophy. I think. I
think for me, it's it's just human nature, right, It's
fear and greed, and that's the thing that people have
to watch right now. The fear is I'm gonna have fomo, right,
(32:08):
I'm not going to invest in bitcoin now, I'm gonna
invest in some alt coin hoping I'm gonna get rich quick.
Speaker 1 (32:16):
Yeah, that'll ride Bitcoin's coattails.
Speaker 2 (32:19):
But I mean, personally, I've seen a lot of people
get hosed and lose half of their life savings doing that.
So be very careful. Don't put anything that you are
not willing to go down significantly. Bitcoin's very volatile, Yeah,
but I don't think it's volatile because you brought up that.
It's a good point. Volatility does not mean something is
(32:40):
in an invalid concept, right. It means it's an emerging
exponential technology. There will come a time if the Bitcoin
maximalists or foundationalists, if the world that they envisioned years
ago comes true, that Bitcoin will be almost like a
legacy kind of gold life like asset, and it will
(33:01):
be very slow growth. Yeah, but that's only when people
wake up. And there may come a time where people
wake up and just go Bitcoin's million dollars coin is
unreachable for the average person, and it becomes this legacy
type of sovereign wealth asset because it's only twenty one million,
that's all that ill will be mined.
Speaker 1 (33:22):
Yeah, but I.
Speaker 2 (33:24):
Believe it'll be sort of like a base layer and
there'll be things built on top of it, similar out
ethereum has, but they'll be there are people who believe
in the philosophy of hard money. They want a better money.
They want a better financial system, one that doesn't exist
off of leverage and derivatives. And that's I think fundamentally
(33:46):
the beauty of the Bitcoin protocol and the bitcoin philosophy
is it's sort of like a way of life, although
some people it's like a cult.
Speaker 1 (33:53):
But yes, yeah, I always caution really for anything within tech,
but specifically like NFTs you brought up are an example,
and various cryptos are ones that I caution people on.
I say, if someone is really trying hard to convince
you about the validity of a specific digital asset, it's
(34:14):
good to consider how deeply invested they are in that
digital asset and bring that into consideration before you make
any moves, simply because sometimes people are drumming something up
because the value of the thing they've invested in increases
with more people joining the ecosystem, and if they're a
cheerleader because they're trying to get more people to come
(34:35):
on so that their own investment ends up increasing, it
starts to look a little too close to like a
pyramid scheme. Not saying that they are, but that that
starts to get that kind of feeling. And the more
that happens, the less trust exists in that environment, and
that can lead to its own sort of disaster through
no fault of the underlying system. Right, it's when we
(34:57):
add humans to it that things get messy. So you know,
it's one of those those topics that I've I've been covering.
We launched tech Stuff a couple of months before the
Bitcoin white paper came out, so I've literally been doing
this show just as long as bitcoin has been a thing,
and I remember trying to get my head wrapped around
(35:19):
blockchain for the longest time, and I feel like I've
got a decent understanding of it. I'm still struggling as
to whether or not it makes sense to be an
underlying foundation for Web three, but I certainly understand it
as far as what crypto does and to an extent,
what NFTs were supposed to do. I think n FTS
that was unfortunate and that it turned into a speculative
(35:41):
market before we could actually see what NFTs could potentially
do outside of just an investment. The idea of having
a way of validating and keeping track of digital assets
and digital ownership. I can definitely see a need there.
I just don't think NFTs ever, I had a chance
of hitting that because speculation followed so quickly on people
(36:06):
realizing what they were. But again, that's it. That's like
adding people to a system, like the system would have worked,
except we had people. Darn people. Well, Josh, thank you
so much for joining our show and kind of providing
us your insight. Again, this is something I could never
offer my listeners myself. It is so outside of my
(36:26):
expertise and people. You should go and check out the
Financial Quarterback. That show has been going on for a
little more than forty episodes. Now you've got episodes on bitcoin.
I love also, by the way, your episode about being
wary of people who are really evangelizing investments, not just
in the tech space, but just in general, and using
(36:47):
critical thinking to analyze those pitches, because certainly in the
tech space we have seen it time and again where
people take advantage of enthusiasm, a fear of greed, and
largely of ignorant It's if someone doesn't know how a
system works, it becomes much easier to kind of fool
them into thinking this is a money printing machine. So
I think you're doing a real service by educating people
(37:10):
about these sorts of things and what to look for
and the questions to ask before you start to commit
your own wealth to these kinds of potential investments.
Speaker 2 (37:21):
No, great, that'd be fun. Yeah, we've been doing It's funny.
You've been doing it for sixteen years. Yeah, I think
I started sixteen years ago on the radio Wow, and
then we launched our you know, kind of reimagine podcast.
So right around the great financial crisis in a eight.
Speaker 1 (37:37):
All the time to get involved, right, I mean.
Speaker 2 (37:40):
And I've seen all these strange things. But yeah, that's
a good tip. As we're kind of talking about crypto
kind of closing tip, don't do anything because of guru me, you,
anybody does it. Do do your own homework, do your
own due diligence. And also position sizing. If you're getting
into something, do a small percentage of your portfolio one percent,
(38:03):
two percent, three percent. That way, if it gets cut
in half, you can still sleep at night.
Speaker 1 (38:07):
Yeah, you've got You've got the safety net there. I
think that's great advice in general, especially now that we're
entering into a world where influencer culture is having a
larger impact, especially for younger people like you see the
platforms like TikTok or Instagram, where very complex ideas and
philosophies are getting summarized and sometimes dumbed down so that
(38:32):
they fit into like a thirty second video package. And
the danger I feel of that is that it gives
viewers a sense of understanding when the topic that they're
actually tackling is far more subtle and complex and nuanced
than any thirty second message could hope to convey. Well, Josh,
thank you, thank you again for joining the show. Y'all,
(38:52):
it is the Financial Quarterback. You need to go check
out that episode that I was talking about, the specifically
the one about out using critical thinking in the approach,
because that's again the guiding philosophy of tech stuff is
critical thinking and compassion. Those two things go together. Without
critical thinking, you're a dope, and without compassion you're a jerk.
So let's use both.
Speaker 2 (39:14):
Episode thirty eight, how to Spot a False Profit in
the World of Finance.
Speaker 1 (39:19):
Yeah, it's fantastic, like highly recommended. I mean again, like
if you need to exercise that critical thinking skill, and
I'm always thankful to see other podcasters who advocate for that. Josh,
thanks again so.
Speaker 2 (39:30):
Much, thanks for having me Johnson.
Speaker 1 (39:33):
This is after the interview y'all. I want to say
again thanks to Josh for coming on to the show.
As you can see, Josh has a different perspective on
bitcoin than I do, which I think is valuable, right,
Like I think it is important to get different perspectives
and not just go through life in an echo chamber.
So I really appreciate him coming on the show and
giving me his insight because coming at it from a
(39:56):
financial standpoint as opposed to the tech standpoint, you can
come to some very different conclusions and I found it
fascinating and honestly, it was nice to get a little
bit of demystification around finance. So Josh, thanks so much.
I hope all of you enjoyed this special episode. We're
gonna have another one for you on Wednesday, so I'm
looking forward to that. We're gonna be talking to some
(40:16):
scientists about science, so make sure you tune into Wednesday's episode.
That's it for me. I hope you're all well, and
I'll talk to you again really soon. Tech Stuff is
an iHeartRadio production. For more podcasts from iHeartRadio, visit the
(40:37):
iHeartRadio app, Apple Podcasts, or wherever you listen to your
favorite shows.
TechStuff News
Host
Jonathan Strickland
Popular Podcasts
Las Culturistas with Matt Rogers and Bowen Yang
Ding dong! Join your culture consultants, Matt Rogers and Bowen Yang, on an unforgettable journey into the beating heart of CULTURE. Alongside sizzling special guests, they GET INTO the hottest pop-culture moments of the day and the formative cultural experiences that turned them into Culturistas. Produced by the Big Money Players Network and iHeartRadio.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations.
Crime Junkie
If you can never get enough true crime... Congratulations, you’ve found your people.