This year’s Wild Crypto Debate

We do a crypto debate podcast every year. Here’s this year’s joust which got a leeetle bit rowdy as these financial advisors hash it out. Enjoy! For those of you who are new to my blog/podcast, my name is Sara. I am a CFA® charterholder and I used to be a financial advisor. I have […]

The post This year’s Wild Crypto Debate appeared first on Sara Grillo.

Episode Transcript

(00:00):
What's everybody. It's Me Sarah g with the
Smack and I am back. And today, I
have a rumble
ready to go whoa. Just wanna do a
quick few quick intro, Steven Lee,
a lecturer at California State College University.
Hey, Steven.
How's it going?
Doctor Steven. Excuse me.

(00:21):
James Gil, a crypto ent.
Hey, James.
Hello. Hello.
Scott Za,
my homeboy and is ser. I... What are
you president or Ceo? Which important title do
you have? Something. Financial adviser.
President.
What yeah.
You're the president Scott, My gosh. That sounds

(00:43):
important.
Not not running for that office yet.
And Robert Wright of advocacy well. Y'all. So
first we're gonna start with. Is crypto scam
or what? Well, I I guess, I'll I'll
jump in here because that... That's why I...
I'm here.
I was in financial services, you know, with
Fidelity investments for over 6 years, but Have

(01:05):
transitioned into a tag primarily on the Crypto
space.
And a lots...
Happened in the last 12 months, and I...
It's been very exciting for me.
I know Scott's probably has it has a
different view on it, but, well
the we have the bit queen Etf. We
have the 30 meat etfs now,
a crypto has become 1 of the most
important

(01:27):
drastically impact the presidential campaign with single issue
voters in in swing states. It actually might
be the issue that that decides the the
election
Well, hold on. I'm sorry, James. That actually,
you froze when you're recording that. Can you
just say that part again? Yeah. Yeah. Gladly.
So
what what I was just saying before I

(01:47):
froze, like, a lots happened over the last
12 months.
We we had the bitcoin Etf. Which was
the most successful Etf launch that has ever
existed that that's ever happened. Ethereum Etf.
And Crypto has be is becoming a very
important issue you where it it's looking like,
it's gonna decide the presidential election with single

(02:08):
issue voters in in swing states too
and they're very interesting to to see that
that dynamic so much to the point where
for a few weeks, Biden even changed his
tune on Crypto, but kind of revert back
to his old crusty ways.
And, you know, we we have,
institutions are are coming in,
I I know it's not the greatest measuring

(02:28):
stick, but we're we're seeing black rock, Fidelity.
People,
coming into the space,
franklin Temple is is launching Token funds.
Black rock law launched the the the bid
fund Right? We're starting to see real world
assets become token and
the only way for that to happen is
via and through crypto

(02:50):
I know the target audience of this podcast
are financial professionals and your clients are gonna
expect you to have an opinion,
not just an opinion on on crypto, but
to be informed about crypto, like,
Gone are the days where,
you don't
have to stay in in the know how.
We have a massive wealth transfer right now

(03:10):
happening. And in my opinion, having a negative
view and not understand though is only gonna
cause, you know, advisors to start losing clients
and assets under management.
I'm not say that this isn't a pass
for all of crypto. I understand there's reasons
to be skeptical,
working in crypto there... Like, as crypto native,
you know,

(03:31):
I feel like we've done
a a good job that can always do
better
calling out the the good from the bad.
We're starting to see the S e see
starting to to change its tune because it
it keep... The Sec keeps losing lawsuits
to the point where
lawyers of the... From the Sec have had
to dismiss themselves,

(03:52):
and and resign for being caught by the
judge lying
in in some of these cases, you you
can look at debt box versus the the
Sec.
Gary Gen has has had,
and and acts grind, and and he's he's
losing badly.
I I think crypto here to stay and

(04:13):
You know, we we can... We'll probably dive
into into the nuances here, but
I... I'm I'm excited. It's it's been in
a good 12 months.
Yeah. Well, and to add on some of
the things that James talked about it. I
guess, first, we have to establish what, like,
crypto cryptocurrency is. And what crypto is. Right?
It's just the active encrypting. So the active
encrypting means that you're able to make network

(04:34):
sprite. Right? That's sent the basically, that's in
essence what you're trying to do. And so
it's taking that encryption technology that we all
like and enjoy. So when we send text
messages to 1 another, Right? And we want
those text messages to be private. Right?
We like that. We like the element of
privacy that our conversations have that element. Of
privacy. So now we're taking that same technology

(04:55):
and applying it to tokens.
Right? And so, essentially, that's all a any
currency is Right? So if you take a
dollar bill out of your wallet, right? All
it is is a promise to pay
from the Us government. Right?
We have what's called fiat currency, which Fiat
means by decree. Right? Our currency is only
valuable by decree of the United States government

(05:17):
that dick states that it is.
Right? There's not really any underlying element that
decides its value other than the United States
says you have to pay your taxes with
this currency and you also have to in
the marketplace
exchange with this currency. So if you have
a business in the United States, you have
to accept
American dollars. Right?

(05:38):
But in places like
Zimbabwe, for example, their currency is basically meaningless
even if it is fiat. Right? A 20000000000000
dollar Zimbabwe a dollar, right? Or they're everywhere.
And it's basically worth about 18 to 20
dollars in the United States.
So
what
cryptocurrency can do in terms of it, its

(05:59):
function is provide the privacy
that we all enjoy in other aspects of
our live in the context of monetary policy.
Where right now, we're having to deal with
what is called fiat currency, which is easily
manipulated by those who control
the money. So,
cryptocurrency in essence for those who are advocates
of cryptocurrency is method for freeing

(06:22):
monetary policy from
from the government and putting back into individuals
through crypto. Right? So that's probably what I
would say is the pitch for
why crypto cryptocurrency is valuable.
Does anybody have a response?
Alright, Scott. Come on. See it.
Say the word. Just a bunch of rocks.

(06:43):
There we you go. Yeah.
So... Yeah. The... It's interesting to hear you
guys talked about is kind of the same
thing that we we talked about before in
the past. I mean, to me, the... There's
there's 2 different sides of it and Robert,
you touched on a little bit in this
b in the beginning. You've got sort of
the the encryption side of it the technology
side of it, and then you've got the
token side of it or currency or whatever

(07:05):
we're calling at these days. Okay And
so, you know, the technology side of it,
I've never been
against that. I mean, at the end of
the day, Technologies technology, and I can see
that in all aspects of, you know, daily
life down the road. If we get to
that point and technology
progresses and who knows how that will integrate
with Ai and everything else as we move

(07:26):
forward, but to the issue I have is
taking that technology
and then applying it to a completely
made up asset.
Don't even wanna call it an asset out
of thin air that represents nothing at the
moment. It's not backed by anything other than
someone's ability to...
Pay you a price for something that you
have. So, yes, it's a negotiated

(07:47):
market, much like you're buying a selling a
stock or a bond,
But... And if you're using it as a
currency, which people are calling it currency still
tokens, currency, whatever again, you wanna label it.
It's a spending resource like a fiat dollar
or any other fiat currency.
Those currencies that are fiat currency are backed
by the government. So they will continue to

(08:07):
tax you to a hundred percent if they
need to to back that. You know, there's
nothing backing this type of
cryptocurrency out there
today. And as we've seen in the past,
these things come and go
based on who wants to roll out a
new token today. And who wants to, you
know, roll out a, an imaginary thing made
a thin air rocks, if you will.

(08:28):
So, you know, at the end of the
day, I'm or against how it's being applied
in the market
and
against the idea that this... You know, we've
went through many iterations. This a store of
value. We were told. Okay. Now it's a
currency. And, okay, then, you know, exchange it
just because, you know, Etfs are now being
created
and some regulation
in minimal amount of regulation is is around

(08:50):
it. And not not anywhere near what needs
to be going forward.
If this was gonna be a regular asset
of some kind back by something.
And I think it also just continues to
be even more complicated
with the recent supreme Court ruling on on
rule making with the Sec and other government
agency and how that's all now gonna play
out, which we didn't know in prior podcast

(09:11):
podcasts and when in Crypto, you know, first
hit the scene. So, you know, to the
extent that can the Sec and make some
of the rules
regarding some of these things going forward or
other agencies, we'll will have some impact as
well, and not even talking about the underlying
value
of of
I don't even wanna call them assets. I
don't even don't know what to call them,
but I'll call them rocks for lack of

(09:31):
anything else.
So that's kind kinda of my 2 cents.
Nothing's really changed. Well technology
support, I think it could be applied in
a lot of things. In fact, I was
listening to a, a video the other day
and is a big proponent and and and
big... A lot of new technology in the
farming sector that, you know, farmers may wanna
use some of this to, you know, account
for transactions between farmers and,

(09:53):
vendors and land that's being bought and sold
sort of
between parties versus, you know, through normal means
and you know, even through, like, private equity
on the road that might be buying up
a lot of farmland in the. That these
things can be applied as far as a
technology, you of keeping a ledger and, you
know, this stuff, you know, confidential and everything
else. So I think there's a lot of

(10:14):
of
everyday uses for it, but just to apply
that now to these imaginary tokens and say
they have some sort of value just because
today, somebody's willing to pay you x for
it, doesn't mean tomorrow they are at least
with a company. There's assets. There's things you
can go in and and seize goodwill. There's
there's trademarks. There's there's all kinds of things
that can have whether they have value or

(10:34):
not as as irrelevant, but there's physically something
there unlike, with tokens. You
Well, I guess a couple rebuttal, but I
wanna give Steven the floor. Hope so. Fair
fair enough. Fair enough. But I 2 rebuttal,
but I think maybe James, and then than
me. I think you still have the fraud
problem,
which is my big. And I don't remember

(10:56):
timeline wise
last
last year, did we have the
podcast right before the all the Beck Freed
stuff came out?
I think it was before. Right? Before. I
was talking about fraud fraud and...
Yeah. And I had raised it and
I wrote 1 of the... In 1 of
the chapters I wrote.
With Jeff Ko in our book that came

(11:17):
out late 20 21
warning about a whole bunch of other stuff,
but 1 of the chapters was on Crypto
and I talked about fraud
And so that goes hand in hand with
regulation, but it's really tricky as Scott mentioned
with the recent Supreme Court decision.
Basically doing away with Chevron Defer. Right, as
we would call it in the legal field.

(11:38):
And so
I don't know. There's a lot of questions.
I mean, that's the practical
problem that I see with crypto is fraud.
How do I know that you're not just
gonna walk away with whatever I fuels. And
and right now, I think we use fiat
currency mainly.
To fuel the value at least
of the tokens,
but that leads to a larger theoretical issue

(11:58):
that I have, which is
why
why is it that
token... That seems to me that tokens
necessarily,
must be peg to a fiat currency
in terms of value. Maybe peg is the
wrong word, but it relies upon, for instance,
I'm not... And maybe James can chime in

(12:21):
here, but I I have yet to come
across
instances where
Tokens
are
the value of tokens are in something other
than fiat currency.
Whether it's bush specials a corn, other commodities,
anything other than fiat currency, and I I

(12:41):
don't know if that is
away forward.
I guess to put it differently. If I
don't have any Us dollars or
British pounds or any other fiat currency
there's not really a way for me to
get tokens. Right?
Unless I produce my own, but I can't
get Bitcoin. Right?
And I I don't know. I don't know

(13:02):
if that's an inherent limitation.
I don't know. It's a big question, Mark,
because that also leads to another, theoretical question
that I have as far as governance.
So because the nature of cryptocurrency, is it
gonna be sufficient
for 1 government, even hours.
To
basically say, okay. This is what the regulation

(13:23):
is gonna be.
Does cryptocurrency...
Does does it success necessarily
Let me rephrase that. Does
cryptocurrency success
and
becoming common throughout the whole world?
Nec, like a global government.
Because on 1 hand, I think it does.

(13:43):
But on the other hand, I'm not so
sure.
So
That's what I'd to say about it. Go
ahead. Yeah.
I don't have a simple answer for you,
Steven, and and, you know, you you brought...
Also try to address some the things that
that Scott brought up. Like,
I think...
So
part of the the thing that makes it

(14:04):
hard is
crypto
cryptocurrencies,
sometimes we get stuck on the name when,
you know,
I think when Bitcoin first dropped... You know,
it came into the scene, you know, it
was thought of it could be a currency,
you know, it could be exchanged for value
and it that does happen, but on a
very small scale and really,

(14:25):
it's kind of transformed more into a store
value. Right? But ethereum
is very different. Right?
Stable coins have now emerged as a new
use case. And so, like, these things
As a mental framework, I would invite you
to look at the Boris tech platforms.
Tech

(14:45):
is ever evolving and changing and improving from
things that weren't working in in the past,
you know, and a lot of the way
that a lot of these
crypto
projects work, you know, is is that they
are
decentralized, they have different groups and their open
source.

(15:06):
Now to the fraud point that that you
brought up, Steven,
yeah. There there's been some some fraud issues.
You know, in the
example of FTI
placed that solely on Gary Gen
because of the attitude that he's taken with
with Crypto.
Basically, what what's happened
is he's publicly pig gone out and said,

(15:28):
hey, come in and and register
and projects coinbase kraken and others. Like, okay.
Let's go and register Gary and he goes
and tells them. Yeah,
I'm not gonna let you do that. And
so it's forcing these companies
to go overseas and
retail investors then to to, you know,
go on these platforms
where they're they're not in under any jurisdiction,

(15:50):
and we we have F t
you know, the debacle that was F t
happened.
You know, we're... And we... We've had people,
like, He Pierce... I mean, we're not in
crypto We're not asking for a free pass.
We're asking for regulation. We're asking for rules
to play, and the parties that b, have
said, no. Like,
we're not gonna let you. And so it's

(16:11):
forcing retail to go to to these shady
places. And, you know, I and there's also
I I would also, you know, inviting you,
like,
there are
parties,
and companies that I think are our person
more reputable, like, your coinbase basis and crackers
and as soon as you know, an issue
arises such as F x, like they immediately

(16:31):
be...
Launch, a proof of reserves, you know, just
ways to to come and and and verify.
To 1 of Scott's points, like, like, yes
my argument would be you can't have blockchain
without crypto. Like, you can't have the distributed
ledger
without the crypto token. That that's why it...
It's there to...

(16:53):
And and we we we can go, you
know, into the details of that a little
bit later.
But and another point that I think you
brought it Steven and you just,
you know, something that that that I've heard
a lot more is just kind of, like,
a,
well what some of refer to as a
hard money versus, like, AAA spend money where,
you know, we are starting to see interest

(17:13):
from,
central banks, you know, using
Bitcoin again, as a store value, you know,
hold it on
on their balance sheets, but then, you know,
using traditional fiat,
currencies for day to day spending, you know,
and that's what we're seeing in places like
El, oh, El Salvador that have adopted bit
bitcoin. Right? Like, having something that's gonna hold

(17:35):
and maintain its store value, but then having
something else just to be able to spend
on the on a day to day basis
to, you know, but at least you have
that bitcoin or, you know, that
cryptocurrency
to, you know,
maintain,
maintain its value.
Probably but I'll I'll I'll kinda turn the
time over to you. Yeah. So so a

(17:57):
couple rebuttal that I have So on the
fraud point, just because just because we're there.
Is there something that cryptocurrencies can do fraudulent
wise that can't be done with other forms
of currency like cash?
Like, what what specifically is cryptocurrencies ability. Because,
I mean, because Fd, that was money laundering.
Right? And there's lots of methods that money
laundering it. Money laundering happen

(18:19):
outside of cryptocurrencies that we would still find
useful. Right? So different financial institutions who hide
money for different criminal organizations.
For a long time, it was insurance. Right?
So, a lot of criminals would buy whole
life policies,
refund those high... Whole life policies and and
essentially lau their money that way, but we're

(18:40):
not set now saying that insurance is bad.
Right? So the existence of fraud doesn't miss
necessarily negate the value of the thing. Right?
Because there can be fraud in a lot
of different circumstances and things that are valuable.
So I think if you're gonna say, oh,
well, cryptocurrency is a problem because fraud exists,
you'd would also have to say that well,
we can't have cash

(19:01):
because lots of fraud exists with cash. Right?
So adding, fraud exists with payment apps like
V and Paypal and cash app. Right? There's
lots of fraud that occurs, but we wouldn't
sit there and say, well, V is bad
because fraud exists. Right? So I think that
that's kind of a a non s
when we apply,
cryptocurrency is bad because fraud exists with

(19:23):
cryptocurrency. That it doesn't really... They're they're
fraud can exist in lots of different capacities
with things that we do find valuable. Right?
So I think right away, we have to
acknowledge that the existence of fraud doesn't make
something less valuable. It just means that people
with any tool can use that for evil
purposes. Right?
The existence of a hammer because someone decided

(19:44):
to hit somebody with it does not
delete its value that sense. So in terms
of saying the problem with cryptocurrency is fraud.
Now you could say, I guess, to be
the difficult advocate, you use say fraud at
scale. Makes Right? It's easier to scale fraud
with digital digital currencies. Right? But,
to Scott's point as well, I wouldn't call...

(20:05):
Cryptocurrencies and asset as well. Right? So the
way that I define an asset is income
producing. Right? So so things that produce an
income for an investor. Is is how I
would define an asset. I think that's pretty
textbook pretty pretty academic.
But that doesn't mean that I would say
that
you cannot invest in things that aren't asset
Right? So currencies, t,

(20:25):
gold, for example, gold, I don't think is
a... I kinda consider more in the commodity
space.
But... Yeah. So it's just because it's not
an asset. It doesn't necessarily mean that it's
not not valuable. Right? It doesn't produce an
income. So maybe it's not going to be
the correct investment objective for some clients. However,
so it is going to be an an
essential monetary objective for lots of clients who

(20:46):
are trying to get out of the fiat
currency system.
And then Steven, you talked about peg value.
I think a lot of that is just
tradition at this point.
I think most people peg it to the
dollar because it's easy to conceptualize the dollar
versus to conceptualize a bitcoin. But to your
point, like, 1 bitcoin is still worth 1

(21:08):
bitcoin
And if you really think about it, your
fiat dollars
are
so dev.
That an abstract alternative currency
is worth about 50 to 60000 of those
dollars. Right? Like... So if you really, like,
wanna take into account how bad the dollar
is doing, it's doing really bad against the

(21:30):
abstraction.
Right? Like, If we think of bitcoin as
most people think of it as an abstraction,
like, dollars are really
underperforming an a an obstruction that is bitcoin.
Right? Like, that's...
That should tell us everything that we need
to know about the dollar valued. Right? And
whether it's backed by something. It's it's really
not backed by anything other than the Us

(21:51):
government's ability to convince us that it still
holds value. Right?
It loses 3 percent of its value every
year, the you know, if you do reverse
72 of that, about every 20 years, your
dollars worth half as much as it was
before. So, And that's why we're financial advisers.
Right? Because we we know that they need
to grow our clients monies to out

(22:11):
inflation. So
this is just... Perch chance and other mechanism
for accomplishing the same goal that advisors are
trying to accomplish, which is to get us
out of this poor monetary system.
So
there's a couple other points too, but I
think I'm eating up a lot of time.
So well...
For me, the fraud... Going back to the
fraud issue. With... Not the fact that you

(22:31):
can scale fraud massively.
It's the fact that there's little to no
recourse
for def fraud the consumer, the retail investor.
It's That's my name.
Right what say say
If I if I go not marketplace. And
I... And I give somebody 20 dollars, they
don't give me the item.
Right?
I mean, it's gone.
No. It's not gone. You have

(22:53):
Those things they don't have recourse.
They're hire hiring an attorney to the errors
there's consumer protection laws surrounding it. You can
go to a government agency, and they'll and
they'll go after the person.
There's a lot of things you can do.
Going back to V and Cash app and
things like that. Right? There are there are
structure
institutional structures in place,

(23:15):
to not completely eliminate, but to at least
give you recourse in the event that you're
def fraud. There's no such thing that I
know of in the crypto space. Well, probably
the greatest recourse against Fraud has actually been
the credit card institutions. Right? So when people
transact credit cards,
the fraud protections that the the credit card
companies provide are probably greater than any government

(23:36):
bureaucracy has ever been able to... Sure. Right.
Because essentially, what the credit card company says
is the value of having you as customer
is worth more than what we lost in
the fraudulent transaction. And a lot of times,
they can't prosecute those those crimes. So essentially,
we just have a large institution that just
decided we'll absorb the fraud. We'll absorb the
cost of fraud because it's so little to

(23:56):
our profit and revenue.
Right? So there really isn't a solution. Like,
we can... There are instant government
institutions.
They don't they haven't really solved fraud in
any of those... Capacities though. There's still penny
stock fraud, there's still, you know, lots of
equity fraud, bond fraud that still exists. But
none of those types of fraud

(24:16):
diminish the value that those things provide. Right?
We wouldn't say, oh, because a company
listed itself and then pumped its stock and
then dumped it that all stocks, their or
are bad. Right? That just does not follow.
But there's recourse against the people that do
that. Right? Maybe Sec every week comes out
with new
litigation releases of people that of institutions it's

(24:38):
suing for doing stuff like that. If I...
The credit card company isn't gonna do anything...
Symptoms of en. Right? Right. But there's nothing
that the critical company is gonna do. Very
verify if I go on a platform,
and I... And I exchange my money for...
Some cryptocurrency and the person just walks off,
and they're... And and I'm def defeated. The
credit card companies aren't gonna do anything about

(24:59):
it, though. There's nothing there.
There's nothing standing in the way of me
being def fraud, like there is on credit
card transactions. Right? If you throw up a
website and say, I'm gonna sell you a
widget, and I buy a widget.
With my credit card,
and you def me. There's no real really
no widgets. Thanks for the money loser, and
you walk off
So but the credit card company is my

(25:20):
recourse. Right, as well as other alternatives that
are available to me. No such on the
crypto space. The major point though is that...
And that doesn't exist yet. Right? So when
rates came about, they kind of created and
and absorbed the the fraud situation within transactions
transactions. That doesn't exist yet with crypto.
Yeah. That's my problem exist. But also
the the the government it... The... There's lots

(25:42):
of...
There's lots of items that we deem valuable
that have fraud
that also have no recourse that we would
still continue to see valuable
despite the fraud. Does that make sense? So
so of our that the existence of fraud
does not dev value
cryptocurrency as a technology and an alternative to
our current monetary bond. No, no. I'm saying

(26:03):
the lack of recourse right now. That's my
problem with it. As soon as whatever the
institution is, as soon as it's there,
I don't have a problem with it because
I know I can go through XYZ channels
to get my money back if I'm defeated,
then I have no problem. Then then largely
the other stuff goes away, I think. So
essentially, is there... Whether that would be a
government institution institutional or a private

(26:25):
Correct. Or a combination... Consumer abs absorb that
fraud, it would be more valuable. Not that
its value is reduced by virtue of the
fraud just that it will become more valuable
when they solve... Yeah. I think it's a...
I think right now... Putting money or whatever
into crypto is problematic
for the individual because of the lack of
checks balances, whatever you wanna call it protections.

(26:46):
Yep.
Against to fraud the consumer. That's my problem.
I'm not saying it can't happen. Yeah. I'm
saying right now,
Right? That... That's my main issue with it.
Yeah. I understand better. And and I mean,
to to your point, Steven, you know, there...
The... This is a a known thing.
And just like like, the Internet. Right? There
there was a lot of fraud on on

(27:06):
the Internet, and that's not to abs absorb
or excuse the crypto space. It's just it's
an emerging technology.
We are seeing right now layer two's being...
You know,
if you are not familiar on encrypt others,
usually, like, you have a layer 1, like,
bitcoin ethereum, then you have Layer two's are
built on top of it for those, you
know, who might not be too knowledgeable about
space, but we're seeing layer 2 who are
coming in,
building to to solve that exact issue. You

(27:28):
know, coming in, They they call themselves ky,
for, you know, trying to attract institutions to
to be able to to come in and
interact on that. So it is known issue.
Again, it... It's a very young
tech
space platform, and, you know, the... As these
problems arise, you know, there are found... Our
builders you are coming in to to
address them.

(27:51):
But I think part of the challenge too
is just even listening to You Jim,
James and Robert described it. I've heard, like,
3 different versions of it. It's technology.
It's currency, its store value. I think this
is all very confusing to the general public
as well. Because when they go to invest
in these
cryptocurrencies for lack of a better name, you

(28:12):
know, what are they buying? Like, to my
point? I don't view them as buying anything
right now. Are they buying the technology are
they investing in the technology?
Are they using this as a store value
if it's a store value then I look
at it more like, Okay. There's an asset
here, it's growing its storing value.
If I'm using as a currency, then why
can't I go get my gas at the
corner, you know, gas station and by

(28:34):
goods with this. So it's not a replacement
to the Fiat currency.
At best, it could be a store value,
which I disagree with. More likely, it's a
technology that just happens to have some sort
of monetary investment that somebody has to make
attached to it to be part of this
movement, if you will. When you said it's
a technology, think of it as a technology
platform. So in people's minds when they hear

(28:56):
that, oh, I should think of this as
like, a Microsoft. Or should think of this
as like a Google. Okay. Well, that's fine.
But I could go physically invest in Google.
They have products that they sell for money
that they derive revenue from. That they could
pay dividends to shareholders. So it's all of
these things that are very confusing to the
public in the public, I think at large
right now is just looking at this as

(29:18):
a trading and a gambling type of vehicle
because it hasn't been clearly defined. Yeah. It's
gotta have widespread access. That's the other thing
I was gonna say.
But it goes hand hand with that. Right?
Like, if I'm a farmer in the middle
of Rural America,
how do I... Or or let's say I'm
4 an or, I'm homeless,
how do I get into... Like, how do

(29:38):
you even
I don't even... I don't even think the
conceptual
is there for crypto? I think it has
to have widespread
access to the book. Well, brokers. Right? So
how does anyone invest in stocks? They invest
brokerage firms??
Nobody nobody's going down and getting physical certificates
anymore. They all go through Correct. So like,
you know, organizations like Coinbase base and and

(29:58):
what F kicks. Used to be. Right? With
Dan, Cash app.
Yeah. That's credit unions
services are offering this this ability for the
average person to be able to
to to purchase those tokens. So, that's largely
how most assets are purchased or through brokerage,
so... But that's that's an asset.

(30:19):
So you're buying an asset through a brokerage.
You know, if I'm buying a store value
if I'm buying a currency.
I'm not buying my currency through a brokerage
for them to turn around and then spit
it out the other side, and I gotta
buy these like gold. Right? You still go
through a broker for gold, which I wouldn't
necessarily consider an app. Again, right Asset. Really.
You life physical goal. Gold is a physical

(30:40):
thing. I mean, just because investment products have
been created from gold. Doesn't mean, okay. I'm
going to buy gold. I mean, not all
gold products that have been created in the
investment world are physically backed by gold. Some
are and some are not patents.
Patents aren't a physical thing. Patents are also
an obstruction. Right? So so patents are an
obstruction that have value, but it's not an

(31:01):
asset per s in that it's income producing.
It has the potential to income... Produce income.
Right? So I guess,
asset versus versus differential or what we call
alternative assets. I guess if we put it
in... Let's call it an alternative asset.
For the sake of argument documentation. Right? So
you have assets, income producing traditional stocks, bonds,
you know, mutual funds, etcetera, right, income producing,

(31:24):
alternative assets, gold, patents, things like that. Those
are also obstruction.
Right? So those have a physical value.
A patent has a patent on a product
or something that somebody can then go derive
revenue from.
This has no
mechanism to derive any revenue from. It's just
simply parties that are buying and selling with

(31:44):
1 another, deriving the value between 2 parties,
of nothing that physically underline the actual thing
that they're trading. Well, cash
Flush back on that value either. Sorry. Go
ahead, james. Yeah. I was gonna say, k,
you know, just just to address
part of that point Scott, I think,
yes. III have made a lot of these
different... And characterization, and that's just me kind

(32:06):
of looking at the space broadly
without, you know, getting in the the specifics
of, like, here bitcoin versus different Ethereum and
how they're they're very different. Like I would
say Bitcoin the way it functions and it
works, much more store value. Ethereum,
ethereum it it does
derive. Like,
I can buy
ethereum. I can stake it with it, you
know, which is just locking up, and I

(32:27):
can earn yield from that.
That comes from the fees that people are
paying to participate
in the ethereum network. Same with, Salon and
a lot of the these other L 1
chains.
Right? So if if I'm earning a yield
based off of the usage of the network,
Like, like, it is deriving,
in income. It it it it is a

(32:48):
a yield, you know, The best that I
can equate this to in my mind is,
like, this is
the same thing that credit card companies are.
Visa,
Mastercard, American Express. These
these networks that are being created, the
technology.
The the difference there is that no 1
is
investing in Visa,
and they're not producing coins

(33:10):
to be able to use their product via
a credit card, basically, you're exchanging. They're taking
obviously, risk, counterpart party risk with that. They're
obviously, we just talked about fraud. They're having
fraud, you know, products attached to that. So
people are not gonna be def fraud it.
So
to the extent that they're acting as a
network to facilitate
transactions, you can buy goods and services with

(33:32):
these products, these coins.
For lack of a better name. Then, yeah,
that could make sense down the road, but
that's not what's going on here. What's going
on here is is that that might be
being built, but these coins and these
imaginary products are attached to this technology
that's being created in these networks that are
being built. That really don't need to be

(33:54):
there. Visa Masks mastercard don't have a coin
for me to go use my credit card
at the corner gas station.
Well, so you're... But you spoken her the
terms here. Right? Let me let me let
me kind of talk about some terms. So
when you say imaginary?
There's a difference between something that's imaginary and
something that's abstract.
Right? So a contract is an abstraction.

(34:15):
Right Right? But a contract can have value.
Do you agree with that? A contract can
have value? Yeah. Contract can have value. Right.
Right. So a contract can have value, But
a contract is also limited an obstruction Right?
It's not necessarily a physical thing. It's an
aggressive... It's a it's a physical
agreement between 2 parties. Even though you're physical
amount and hold a sheet of paper Every
so of that contact was and it's still.

(34:37):
It's still an abstraction that doesn't actually have
physical
physical elements to it. The only value that
it has is by virtue of the enforcement
of that... An enforcement is an obstruction. Right?
So obstruction versus imaginary.
Unicorns are imaginary.
Right? So
cryptocurrencies aren't abstraction. They're not imaginary. They exist,
they're things that you can purchase, they're real

(35:00):
Right?
There are things that you can purchase and
networks that you can participate on, just like
a website. Right? A website not real. Like,
outside of that computer that website does not
exist.
But it's not imaginary. It's an obstruction. That
makes sense. So cryptocurrencies aren't imaginary. They're an
obstruction, just like lots of other obstruction that
we participate with and society. So I think

(35:20):
a a lot of the terms that you're
using kind of con inflate what what it
is and kind of mis interpret what in
it is. Right? A website does have value.
So if I have w w dot Scott
z alaska dot com, and I say, hey,
Scott, I will sell you this website, and
you say, hey, I'll buy it for a
hundred dollars, and I sell it to you
for a hundred dollars. Did we actually exchange

(35:42):
anything?
We absolutely did. Right? Because there's a abstract
realm that exists in the virtual world where
that
address has value. Right? There's lots of abstraction
that we can invest in
that aren't imaginary like unicorns and, you know,
aliens and stuff like that. Right? So think
that I...
Oh, sorry. You go steven? I... Just really

(36:03):
quick. I think the more interesting question is,
let's say that somehow Scott winds up with
some cryptocurrency.
And Scott gives you the cryptocurrency in exchange
for that domain.
Was there anything actually exchanged?
Yeah.
Yeah. It's a taxable event. Ask the Irs.
Well, but but above that, like, excluding the
government and everything else. Right? So... Back back

(36:25):
when the Native Americans used to trade with
the Europeans. Right? It was it was very
difficult to to trade you know, different types.
Right? Which is why we have medium of
exchanges. Right? Because if I have a car
and you have an apple, how how do
we determine the difference in that value. Right?
So
they used to trade with beads, and they
used to trade with, like, little little coins

(36:45):
or little shells that used to come up
on the shore. And that was actually hard
money. Right? It was very difficult to acquire
those shells.
And then it was only when the European
europeans started fa those shells by using glass
and and sm glass. That they
that they flooded that that market and made
that currency soft and useless.

(37:06):
Right? So gold if If we have that
same transaction, and we... And... You gave me
a piece of gold, we used a medium
of exchange to represent the value of that
transaction.
Right? And cryptocurrencies have the capacity to do
that, or they have the capacity to facilitate
other forms of median of exchange.
Like Gold does now. Right? So gold, the
major problem with it as a medium of

(37:27):
exchange between individual transactions as its weight, Right?
So while it can maintain its store value
across time and has it difficult with its
transaction value across space.
Right? Because of its weight. And the more...
You know, the the larger something valuable is,
the harder it is to transact in gold
across that space. Right?
So cryptocurrency essentially
solves that space issue that Gold has. So

(37:49):
you get the privacy of a cash
transaction with the value of a gold transaction,
which is that that is going to maintain
its value across time. Right? Because that was
the largest problem with gold is a medium
change is that Yeah, it kept its store
value across time,
but it it was very difficult to transact
with as you gotten into higher and higher

(38:10):
weights. With Bitcoin, essentially doing the same thing,
but now that you're using technology to solve
the space problem. Right? So but medium of
changes, regardless of whether they were gold, silver,
you're tokens, coins,
medium of exchange provides value in that, we
can interpret value and the interpretation of value
is valuable in and of itself.

(38:31):
Yeah. And and, again, just to Scott point,
like,
I feel like we we just keep getting
hung up, like, I'm gonna just use a
theorem as a as a very specific example.
Without the token, there is no ethereum network
that
allows for the distributed ledger,
instant transactions to to happen. Know, an on

(38:51):
ethereum ledger,
for example,
a lot of
transactions using stable ones using,
digital
representations of Us dollars that are backed by
treasuries
take place, and we are seeing,
people choose to use
stable coins
on ethereum or Salon, you know, these other

(39:11):
L ones to transact because it's whole hell
of a lot cheaper,
then,
using traditional payment rails, and it's a whole
lot quicker instead of t plus 2,
it, you know, you you're gonna have to
wait about 10 minutes.
So I'm wondering...
Based on Scott's point, I'm wondering if

(39:31):
let's say that there's an institution. And maybe
it's the credit card companies that ultimately this
if this is even gonna happen.
What happens if Visa or Mastercard says, you
know what? We're gonna have this large stockpile
of
Bitcoin or whatever
cryptocurrency.
And so,
when you sign up to our platform
and you place money

(39:52):
into
this into this crypto vehicle.
We're gonna mail you this circular little thing
that's gonna have the bitcoin logo on it,
and see they're gonna be Rfid or magnetic
or whatever, like, strip on it or whatever.
Right? And you can take that little thing
with you. It's almost like a credit card,
but with a bare bonds. And that's kind
of a very primitive way, that's how I
think about Crypto somewhat.

(40:14):
I know that's encrypted and it has, like,
the ledger and everything else. But from a
practical standpoint,
At least once we get to the point
where I can take that little coin, and
I can go in into anywhere and I
can just pull it up to whatever the
reader is, and I can purchase goods with
it.
Right? I'm wondering if if that... If we...
If if things gravitate towards that, then

(40:37):
Scott, do your problems
conceptually with this go away.
To some degree... I mean, but the problem
with it still is is that at the
end of the day,
I'm sitting here in my mind thinking could
any of this even exist if there wasn't
fiat currency. So everything always comes back to
the fiat currency?

(40:57):
Won't gold existed as a medium of exchange
before fiat currency.
That that's true. But again, it's still valuable.
It's still a physical asset today that people
value.
Again, people only value it in the context
of
fiat currency.
Right? Right. Like, people aren't exchanging with gold,
but people you in in context. Well Yeah.

(41:19):
I I agree. And Was even more so
when we run the gold standard, obviously, you
know, it was paying to it. So, I
mean, Tell It needed the fiat currency at
that point the other way real existed as
a medium of exchange long before fiat currencies
fiat currencies is because the government wanna control
of the monetary devices that were used exchange.
Because if you can control the 1 of
devices used for exchange,
you control everyone. It and that brings up

(41:40):
an even larger problem. I mean, the United
States and, you know, big develop countries,
are they gonna give up that control over
time to, you know, again, some centralized
version of a currency,
almost probably no. I mean, there's gonna be
emerging countries that this would be appealing to
that either don't have a reliable currency or

(42:00):
you know, their currency is is not valuable
or there's issues with fraud that are beyond
what we're even conceptual
today where that might make sense, but
just today where everything is peg to, you
know, some sort of currency, mostly of Us
dollars.
You know, at the end of the day,
I'll just go spend dollars. I mean,
and then this... Like, what does this exist
for? This exist then again back to my

(42:22):
point of somebody's putting this in there, not
because they want to store their dollars because
they can store their dollars a lot of
different places, money market funds, investment, stocks, bonds,
you name it. But if they're just storing
dollars,
this is this is just going up and
down there, this is not storing anything. This
is just like, This has volatility like any

(42:42):
other invest
asset, but this isn't an asset at this
point. It's just something that to your point,
Robert, is arbitrary. That happens to be tied
to the Fiat currency, mostly the Us dollar
that people are being able to peg that
2 to be able to trade with 1
another, But what are they trading right now?
That's the unknown? So

(43:03):
I guess in the function of of money?
Right? So talk talking about the function of
money. Are 1, you're right in that third
worlds and and emerging
countries are using cryptocurrencies because they're are a
lot more cheaper than
than traditional the financial sectors, especially for remit.
Right? If I'm doing work the United States,
and I have a family in Mexico if

(43:24):
I have a families Zimbabwe or if I
have family somewhere else, going through the traditional
financial markets is burdensome.
Right? Even Western Union and all those
organizations, it's really costly and burdensome some to
be able to to support my family that
lives in another country. Right, Bitcoin?
Ethereum,
easy. I make my paycheck. I buy my

(43:44):
ethereum. I transfer my ethereum across their network.
They can go cash their ethereum for local
currency.
Dot. Right? That's huge. Right? I think there
was something to say that, like, over 300000000
dollars just within the last year was done
in,
sort of making that up, but it was
a large amount. I don't know the exact
number, But that's huge. That's that's a new
exorbitant and then amount of value, And that's

(44:06):
real value that real families feel and some
of the most
humble families that exist on our planet and
feel.
Right? The...
Those effects can't go
can't go on unnoticed. Right? So... Yeah. But
that that's... But that's different though. I mean,
like, if if we took the Us dollar
out of this, said, okay. Let let's peg
this to, you know, a emerging country's currency

(44:28):
that's not really stable at all. You do
you think that this would be what it
is today? Absolutely not? I mean, it has
to have AAA
fiat currency that's backed by a stable.
Government or stable country or both for this
to even be in existence
today to be what whatever again, you wanna
call it not an asset, but an arbitrary

(44:49):
idea. Yeah. I just... I disagree agree that
it needs fiat currency. I
I disagree that it needs fiat. Currency for
for 2 reasons. Right? Gold existed before fiat
currency. Right. So so gold We're not moving
backwards.
But that's not what I'm saying. But gold...
Not moving backwards. Just starting at a different
point. So gold was used as a medium
of exchange

(45:09):
between
individuals before governments came in and control it.
Right? So
that was a technology.
Gold as a medium of exchange to be
able to express value between individuals across time
and space. That's real valuable. That's valuable. That's
a that is technology.
Right? Just like armor and sailboat we're also
technology. Right? So Bitcoin is the gold of

(45:30):
our era. Because right now what we have
is we have
large government institutions that control our monetary policy
completely.
And Bitcoin is
us saying, we no longer want to participate
in that. Yeah. Don't get clear All that's
nice and it sounds all great, but the
reality is is no large developed country, like,
the United States, Europe or others. Are gonna

(45:51):
say, oh, yeah, We're gonna give up that
monetary control. Let bitcoin and other
coins if you will, become the global currency
that we all trade in. No. This is,
I think, yes. A lot of money going
into this, and, yes, It's in its infancy
and see how all this plays out, but
no country is gonna do that. If that
was the case, the Us government would issue,

(46:11):
you know, basically,
cryptocurrency have large they might examples that is
happening? So when the Europeans first came to
the United States, they didn't transact in European
monetary gold and silver tokens.
They transact with what the native Americans
perceived as valuable,
which were shells and beads and things like
that. Right. So you have to you have
to take

(46:32):
historical examples in which there's AAA different technology
or an alternative technology that shifts what's being
used as a medium of exchange in society.
We are... None of us are gonna be
alive
when everybody is shipped it to Crypto
to pay and have value basically. That's in
server.
That that's an assertion. You have no clue
whether it That's true or not. That's just

(46:52):
an necessary.
The only assertion I have based on that
is the fact that
when the governments are gonna give up control
of their monetary policy
is when that... There's there's a possibility for
something like that to exist. But they they
don't have to give up control. Just like
the spaniards didn't give up control in their...
Yeah I understand what you're saying number, and
I just have a there with them, but...

(47:12):
Well, to Lots of historical examples that you're
saying that it's not gonna happen, but there's
historical examples in which medium of exchanges throughout
history had to But that's different than central
monetary control. Just because there was other mechanisms
in the past to exchange value.
That does not mean at that time, there
was a central government control using a fiat

(47:34):
currency in a monetary
system where they had control of that system.
So No government is gonna use allows spaniards
in the 1600 didn't have fiat currency.
Yeah. But it it... It's different than it
is today. I mean, everything... Again, we're moving
a little off of this difference.
What's that? Scale. That's the difference. Well, you
also...
Existed, it had to shift to accommodate a

(47:55):
different type of society.
It's also a funny
know.
What's that sorry?
Fundamentally different society though. Like, back then, you
still had nations that were warring with each
other rig, like, the developed nations were consulate
war and they were still fighting over, like,
c supremacy and, like, all sorts of stuff
that's largely been settled now. Right? Like, we're

(48:16):
not bombing England and all this other stuff
isn't going on. It's... We are we are
progressed to a more civilized society, and I
know that's an ana
to say that. But the the society that
we have now is very different than it
was in the 16 hundreds. You don't have,
like, worrying. Well, you do in in the
developing nations, but
Right. You... It's just it's so different than

(48:37):
it is now.
Yes.
I think Scott's point is you can go
back and hit tree bam. Right. Right. But
that's just another assertion. You're just saying, oh,
by Us. Being different. It was also different
back then. Right? So the year 1000 was
also dramatically different than the year 1600,
and the 1600,
dramatically different than 1800.
Different technologies emerged in different... Mediums of exchange

(48:59):
emerge. If you really think about it, the
the Us dollar didn't exist till 17 and
76.
Right? Or even broadly after that have to
figure through something out. And even then it
wasn't really adopted until quite some time. So
our dollar is still relatively very new. Right?
In historical context. So... Right. But the power
behind it is unlike anything the world has

(49:20):
ever seen. I think it's Scott's point. I
won't disagree with that, But I but I
will disagree that that just... Like, the the
the British empire also in its time was
the greatest power that ever existed. It is
now Right.
Right So empires can fall. Right? Sure can
climb and fall. So if empires can file
climb and fall. Their currencies climbed and fell

(49:40):
Right? The Us currency is not some sort
of mystical currency that can never fail. Right?
It can also be subject to all the
things that have ever happened throughout history with
empires. Right? The American Empire currency can also
fail. Right? So Bitcoin can be an alternative
currency just like gold is an alternative just
like Shells, an alternative just like other forms
of meeting exchanges throughout historical society have changed

(50:03):
and adopted. Right? So we're just in Bitcoin
infancy. It's basically only a decade old. Right?
So with the... And it's a dodge... Try
to push that rock over the... Yeah. But
trying to push that boulder up the up
the hill, though, I think it's way harder
now.
Than it was to disrupt than it was
back then. I think because the enforcement is
crazy,
powerful. Right? Our country is ridiculously powerful compared

(50:26):
to any
to any empire in the past. Like, it's
it's beyond
beyond comparison. And so I think that's. Another
country tries to adopt Bitcoin in any former
fashion
Like, what, the the Us is just gonna
bomb them?
Well, there's a there's a whole bunch of
stuff, like, the... The... The Us can just
lean on any country. Right? Can sanction them,

(50:46):
It can do all sorts of stuff. K.
To just... And and and it's... And the
power that our government has, I think is
beyond anything that the world has ever seen.
Well, what I think, you know, I mean,
again, we're just... We're talking now specifically about
about Bitcoin. I think we're you know, global
we are starting to see
people become more attracted a bitcoin again because

(51:07):
it's decentralized nature. No 1 country
controls it.
And the the fort, like, like, our the
the global...
I'm trying the...
Countries banks are losing faith in the Us.
Like like, look sort of. Yeah.
You know like like coin. You lose mike
our debt now. You can China used to

(51:28):
buy 22 percent of our debt and it's
they they they're down now to 6 percent,
like, no but started. It isn't un unsustainable.
Yeah. I'm not I'm not arguing that. I'm
just saying that it's... I I don't think
it's a linear scale. I think. I think
the effort required to disrupt is exponential. I'm
not saying that Bitcoin or Crypto won't do
it. I'm just saying that I think the

(51:50):
effort that needs to be put into it
is way more than.
Are doing won't versus a can't. So I
was argue you against can't. You're just saying
it won't. That's right. Or or at least
right now. That's just a difference of opinion.
But as far as like, as far as
Can, I highly yeah? I yeah Yeah. That's
I have to do so. Now will it?

(52:10):
Right.
That's what I'm saying. Yeah. My that's... Yeah.
I think that's a good characterization. Mostly, I'm
in the... I'm in the won't or currently
won't camp. Right. Right. Not the cans can't.
I know in the. A little bit more
white pill. I'm in the can and will.
I think I think the building
dramatically revolutionize the way that we do money
in the future, especially in a hundred years.

(52:32):
No, and I do hope that that happens.
Right? I'm very... I've been pretty outspoken, and
I hopefully will be at day when I
write a book on it
against the whole idea of central banking. It
had its place, but...
Hey, amen. It's it's 35 people in a
room. Happy to endorse. Like, there's 35 people
that decide what the what we can charge.
I agree with you ask Steven, and and

(52:53):
they're never right about any It's crazy. It's
35 people that were just appointed that have
economics degrees. They're more powerful arguably
than our senators are. Yep.
It's crazy or that book? It's just 35
people that decide, oh, okay. Are we gonna
raise rates lower rates? What are we gonna
do? And then everyone has to abide by.
It's crazy.

(53:14):
It's absolutely. And I and I too late
printer or too early, and they get it
wrong all the time, and it's just... I
really hope that crypto does disrupts.
That process and the... And that the central
bank largely goes away.
But there's a lot of obstacles to it.
That's that's why I guess might sum up.
Yep. Fair.
Yep. Fair. I'm not I'm not gonna distribute
you at all Steven. I just, I I

(53:35):
am an opt,
and, you know, that that obviously heavily influences
my my bias and I I see those
issues, but I'm seeing a lot of just
wonderful,
very talented founders coming starting to tackle a
a lot of these issues.
Sure. You know,
I... I'm not gonna defend all of Crypto.
Like, I would say, like, 90, 95, maybe
98 percent of, like, all the projects tokens

(53:57):
out there are complete garbage. Like, I
I really struggle with, like, the the meme
coins and, like, the, like, Caitlyn Jenner coins
and all that stuff. Because again, like, there
there is no value there. Like, it it
is completely pointless.
I think a lot of people, you know,
who are trying to delve into a lot
of these
French projects, a lot of them
many people do know what they're getting involved

(54:19):
in, but I think in coordination with the
Sec, these governing bodies,
you know,
disclosures, you know, things like the the space
can meet be made a a lot better,
but,
you know, I don't I
I don't blame people who are
speculating
on on things. I'm not saying it's right,
but I also don't blame them because, like,

(54:40):
let's be honest. Our public markets are dying.
Like, the the number of available publicly traded
companies
is is
is declining
almost here. Right? And also, just just the
fact of, like, when a company goes, you
know, Ipo, it's, you, retail buying in, and
it's like,
you know,
they're kinda getting a shaft because all of
the return,

(55:02):
institutional investors and the credit investors that
I and other, you know, re... Retail investors
can't participate in and can't make... You know,
and and can't take advantage of that. You
know,
credit investors are basically dumping on retail, And,
you know, yes. Like, there there are
returns to to be made there, but

(55:22):
just
with the lack of access to investment options.
I mean, we're... If you're not in encrypt...
For those who aren't involved in the crypto
space, I mean, 0 day options, day trading
forex, like, people are are out there knowing
that they're getting the shaft here.
Alright, guys. I think we gonna wrap it
up here. We've been added about an hour.

(55:43):
Oh time. That was longer than 20 minutes.
Stick with rocks.
Just a reminder that nothing in this podcast
can be interpreted as a product
insurance
or investment recommendation of any sort. Nothing in
this podcast can be interpreted as legal or
compliance advice.

(56:03):
For any
recommendation specific to your or your clients,
personal situations, please consult a consultant,
adviser or attorney.