Trish Regan: Hello, everyone. Welcome to American Consequences With Trish Regan. I am so excited for this week’s show because I have a very special message. My guest has a very special message and it has to do with something that you may be wondering a whole lot about. And that happens to be one of the most fascinating new investing spaces on the landscape, bitcoin, which, well today anyway, is roughly around $59,000 quite near its highest.
It’s amazing. When I first began reporting on bitcoin, I can remember I was actually the very first reporter that was at the first sort of exchange of bitcoin back in 2012. It was a rainy Sunday night in New York City, and I went. I dragged my whole crew to go to a nightclub, rainy Sunday night in New York City, where they were taking bitcoin for the very first time.
And so, you could buy a beer or buy a cocktail with a bitcoin. And I thought this is really, really incredible stuff. And this could change our future for decades to come. This is our future – digital currency. I firmly believe the technology anyway behind it is the future, but there could be some bumps on the roads, down the road, and there’s lots of questions as to whether or not bitcoin itself will be the chosen one. There’s a few competitors out there.
I am so thrilled to have with us editor of Crypto Capital, somebody who actually was mining this himself back in 2013, none other than Eric Wade. Eric, welcome to the program. Good to have you here.
Eric Wade: Yeah, this is fantastic.
Trish Regan: I was watching some of the webinar that you gave on this the other day. And by the way, if you’re interested in checking it out, I want you to go to messagefromtrish.com and you can watch what Eric had to say there about bitcoin, but there’s been a lot of interest in this topic. People are just watching this quasi currency, I guess you could call it a currency, explode. Some people think it’s the new gold. Some people think it really will be our future and we’ll be able to operate in a whole different way.
But I want to peel back the layers as you do so well in the webinar and again, messagefromtrish.com. Eric’s whole presentation is there. You can see it. I really wanted everybody to get a chance to look at that, but right now, tell us, let’s go back to the basics. Why bitcoin is so interesting, why you believe in it, and why you think it will be the future, frankly, of the world?
Eric Wade: First thing I’ll say is I’ll do everything I can to not talk everyone to death. So, this first answer I’ll boil it down to me, and this hopefully will solve a lot of people’s questions about this is that I see bitcoin and blockchain but mostly bitcoin as a technology that can function as a currency and a currency that is a brilliant technology. Because oftentimes people will say it’s not the best currency there is out there.
And that’s because it’s not just a currency. It wasn’t ever designed to literally just be a currency. It’s a technology and you have to keep those together. You don’t have to, if you want to keep looking away from it or thinking of it as something that’s confusing, it certainly gives people the opportunity to do that. But if you can hold both of those thoughts in your mind at the same time, I’m not looking at a currency, and I’m not just looking at a technology. I’m looking at both.
I’m looking at this little computer program that runs by itself and anyone can join and anyone can participate and then they can make peer-to-peer transactions. And those peers could be individuals. It could be a bar, like you said, where the change our future was happening on that rainy night in New York, where people were paying for something. It could be that kind of a transaction, or it could be multinational corporations, or it could be someone who wants to send themselves value years into the future.
Because once you put value into bitcoin, and I don’t mean dollars, once you put bitcoin value into bitcoin, it will hold it forever.
Trish Regan: Yes. Assuming you don’t lose the bitcoin number, like your certificate. So, we can get into that in a second.
Eric Wade: There are user errors they can cry about.
Trish Regan: Right. I heard about this one guy who apparently has quite a bit of bitcoin saved up, but he forgot his code and he’s got one try left. And we’ll get into the security issues in a second. But I think just starting with this premise that it’s a fascination or it is a fascinating combination, if you would, between the technology itself and a currency. That’s pretty compelling. One of the things that people need to know is that bitcoin is not entirely anonymous, right?
I think if the Feds really want to go after you, they could probably track that blockchain at some point, maybe back to you, but it’s pretty tough to do it. It doesn’t make their lives easy. It’s not like they can call American Express and say, “OK, what did Eric Wade spend last month in whatever place?” So, there’s a little more autonomy to it because it is just these digits in the blockchain. And a lot of people like that.
I understand it’s kind of tough when the world knows exactly what you’re doing, where you are, how you’re spending your money, because there’s a record of it, right? People, they don’t even take cash anymore in most places. You have to in a lot of places pay by credit card. So, if one could use this as a kind of cash in the future, then that would represent a tremendous opportunity as well, would it not, Eric?
Eric Wade: Absolutely it would. And you bring up a lot of good points in that summary, because it is pseudonymous, not necessarily anonymous. On the other hand, though, if you are someone who is really concerned about privacy, you can enact as much as you possibly can with cryptocurrencies, as you could with just about anything else. I find it interesting that now a lot of people who want to remain anonymous with transactions are using other forms of currency like cigarettes, or there’s always paper currency.
But setting that aside, the idea that bitcoin or blockchain technology could be a day-to-day currency, it can. And it’s possible that the solution to that will be built on top of bitcoin. Someone will say now that we have this, for lack of a better word, this titanium core of bitcoin, this immutable ledger, what can I build on top of that? And there’s a lot of contenders to that.
There’s a lot of what you might call financial rails or something where someone will say I will create a financial company or an exchange or a payment system, and it will check in with bitcoin every 10 minutes or so. But in the meantime, I can move money around the world for pennies in fees at lightning speed. And those are being built, so that the strength of bitcoin isn’t mired down with the mundane coffee buying transactions that we all want to do.
And we haven’t even seen the final form of that yet, but it’s something that just like Visa couldn’t be the Visa it is today without the Internet. I don’t know if you remember when people had paper receipts, and those machines go “suck, suck” to emboss your card number onto a carbon. That’s not the same Visa that we have now. I would be amazed if you ever saw one of those paper receipts machine, whatever that’s called.
Visa took advantage of technology and moved their game up. Bitcoin is doing the same thing and payment systems are doing the same thing and you see PayPal coming on board, and then you see a Visa itself saying, “Well, we’re not going to move bitcoin. We’re not going to allow bitcoin to be held by Visa holders yet”, but they are taking a step toward cryptocurrencies by allowing the USBC dollar coin to be cashed in by Visa holders or at least they announced they’re going to.
So, I think we’re seeing this next move. And that’s why the webinar we’re talking about beyond bitcoin, because obviously you could probably hear it in my voice, I have a love for bitcoin and a passion for bitcoin.
Trish Regan: I’m excited. I was just thinking about that. Just listening to you, I’m excited about this. I am back to the rainy night in New York City. I was like, this is actually revolutionary. Like I am witnessing history right here, and this will change our lives for decades to come. But I love hearing your enthusiasm and you know much more about this than me, so keep going.
Eric Wade: I’m trying to get to the point that whenever anybody, almost like a 12-sided die or something that, when you look at bitcoin or cryptocurrencies, there’s other facets of them that you may not, that may not be immediately visible. And when you hear something like Visa getting involved with this dollar coin, at first, it may sound like they’re missing the point. The point of cryptocurrencies is to step away from the dollar and not be tied to something that is losing purchasing power and can be printed at will, so to speak.
So, Visa, hey, you’re missing the point, but then Visa might have an answer back to that and say, “Well, no, we really liked the fact that if something is tied to, in this example, the Ethereum network, that it is an immunity ledger and unstoppable.” And so maybe USBC is tied to dollars on one of its facets, but it’s also tied to this immutable ledger.
And then you think about these events going on in Asia that are spilling around the world with traders using leverage, overextending themselves, owning huge pieces of corporations that maybe weren’t reported Nomura may be losing a billion dollars and Mitsubishi UFJ and saying, “Hey, we might be on the hook for $300 million because one of our customer’s customers overextended themselves somewhere.” And then you think, well, with blockchain, nobody would have any exposure that they didn’t already know about because blockchain is that immutable ledger that you can’t sync it. So, sure maybe Visa is just getting their toe in the water with this dollar coin because their customers demand dollars, not because Visa demands that we all use dollars, but because their customers are demanding dollars and their customers won’t make the move over to blockchain without something looking at least a little bit familiar.
So, I know that was 100 big thoughts tied into one, but I’m thinking there’s probably this titanium core where there’s a lot of really intelligent, innovative companies out there that are thinking, “I don’t want to be the one that when a huge trader loses $15 billion from overextended leverage, I don’t want to be the one who says, wait, what? We were exposed to that?” And the answer is if it’s on blockchain, there’s this immutable titanium core ledger that’s literally, the bitcoin blockchain is literally the strongest network that humankind has ever created bar none. So, it can’t be manipulated and faked. And if something is written on the ledger, it’s true.
Trish Regan: That gets me into my concerns anyway, if there’s no sort of single actor that’s responsible for, and people worry about hacking, right? Especially this day and age, they just do, and look, we should be worried about hacking anything, frankly, because somebody could hack into your bank account probably more easily than they could hack into the blockchain system, but there’s that whole double count issue that people get worried about. Explain to me how you’ve gotten comfortable enough with the idea that this can’t be hacked and the technology can’t be manipulated. That was a big breath.
Eric Wade: Humans can be hacked. If you have very bad habits with your Facebook or with your bank account, or if you write your password on a Post-it Note and stick it to your computer monitor, you can be hacked. If you click on a link to something that you shouldn’t have clicked on and go to a website that you shouldn’t have gone to, you can be hacked.
So, then your Bank of America could be hacked or your Visa or your Facebook or something like that could be hacked. And therefore, maybe your blockchain wallet could be hacked if a hacker was able to find the human weakness in your system. So, that part of it, I think I’m agreeing with you 100% that that’s the truism in this is we can be hacked, but the nature of the bitcoin blockchain specifically, and other blockchains maybe less specifically, the nature of them is that we use the strength of no one central authority in charge.
It’s decentralized for a reason, that there are thousands of nodes and thousands of miners around the world contributing to this. And even the blockchains that aren’t identical to bitcoin that aren’t built the same way, they have 20 nodes or 100 different points of failure that you’d have to overtake the majority of before you could “hack” them. So, bitcoin itself, the reason it’s un-hackable is that it has so many participants that you would have to hack them all, or you’d have to overwhelm them all.
And then you get into the other cryptocurrency technologies like an Ethereum or some of the other major ones that are out there that may not have exactly the same architecture as bitcoin, but they have that same sort of ethos that let’s spread this out, and not only then can a hacker not just hack into the bitcoin database and change things, but a government can’t do that as well. There is no central point of failure where a government could say, let’s issue some more bitcoins or let’s water it down or let’s stop it because it will just route around it. As long as there’s an Internet and as long as there’s satellites in the sky, bitcoin can’t be stopped.
Trish Regan: Let’s get into that. OK. So, the government, look. Hey, the former president of the United States, his daughter-in-law interviewed the 45th President on her Facebook platform the other day, and Facebook took it down. And they said, “You can’t put him up.” There’s a lot of control if you would. And I don’t care what side of the aisle you’re on. I tend to be myself a little right of center and a fiscal conservative and at times pretty libertarian on things.
And so, what we have seen, shall we say, Eric in recent years is this creep of sort of big business and big government getting into everybody’s lives. And whether it’s, if you want to listen to the former president on Facebook and you can’t, or whether it’s you want to communicate with people on the Parler app and there’s a ton of pressure from government. And by the way, let’s not kid ourselves. I think some of these media companies like Twitter, etc., are trying to kill the competition.
And so, before you know it, Parler gets slapped with a lot of that negativity. Amazon pulls the plug. Google pulls the plug, Apple pulls the plug. Who’s to say that if you fast forward this kind of crazy cancel culture type thing, who’s to say that at some point, the government couldn’t say, “Well, we’re going to pull the plug on you because we don’t like your beliefs and X, Y, and Z. And we’re going to take all your money out of that Citibank account you have, because you know what? We control Citibank.”
Maybe I’m being overly dramatic here, but I think some people look to bitcoin as a workaround. And so, my question to you is how does bitcoin avoid, say, the hazards of what Parler went through? Is it because it’s peer-to-peer that it’s more safe as opposed to having to rely on an intermediate player?
Eric Wade: That could be a college thesis answering that question.
Trish Regan: But you know what I’m saying, right? In other words, if the government can come along and say, “We don’t want bitcoin. We think that this is going to undermine the U.S. dollar.” If China says this is going to undermine the Yuan, then maybe governments can come in and say, OK, we’re going to, but I believe if I’m correct in my analysis, again, you can listen to more from Eric at messagefromtrish.com.
If I’m correct in my analysis, I think that this kind of gets around that in the it’s outside of their ability to interfere. You don’t need an Amazon, am I right? You don’t need Amazon Web Services to be able to transact in bitcoin?
Eric Wade: Correct. My first, the thing that appealed to me very early and literally the first thing I can remember liking about bitcoin, because it wasn’t a worldwide phenomenon that was worth $60,000 per coin when I started looking at it. But what the first thing that appealed to me was a non-sovereign currency, that there wasn’t a central government that was saying, and I don’t know if a lot of people know that most of the currencies that are in circulation out there are liabilities of a corporation.
But that’s another rabbit hole not to go down at this time, but when you hear about that, and that really starts to soak in, is that this wacky magic Internet money isn’t an obligation of a government and therefore can’t be stopped by a government. Then you start looking at where else can I see this type of strength or this type of technology or non-censurability that can’t be stopped or can’t be censored. And the cryptocurrency industry has seen exactly what you’re talking about and tends to route around that.
So, not only can bitcoin not be stopped as long as there is an Internet, and granted humans can be stopped, your interaction. Now, someone could cut your power off or your phone line off or drain your bank account, right? Humans are always the weak parts in any system, but yes, there are opportunities for entrepreneurs to be building uncensorable systems. That if I want to chat, if I want to conduct transactions without the approval of Amazon, we have the technology now and they’re being built and they’re actually getting more popular every day because people want to be able to disagree with each other.
And there’s been a long-held belief that one of the philosophies of bitcoin is that think of it as enemies money, and what that means is I don’t have to agree with you. We can both find value in this. I don’t have to agree with a single thing you say or stand for and you can’t change my number of bitcoin I own or use or ability to use it, and I can’t change yours. We don’t have to agree.
That was built in from the beginning is that you can’t affect my interaction with this, and wouldn’t it be nice if we had a social media or a banking system or any kind of system out there, even if you want to use a GPS to track where your car is? And there’s some valuable data out there. Where’s my teenage child at this time of night?
There’s valuable uses for data and you could even make an argument in some cases for maybe encroaching on each other a little bit might have some value, tracking a package or something, but where you draw that line of, OK, I gave you permission to use a little bit of data, but now stop. That’s I think the next step society needs to take, which is where I’m willing to agree to let you use some of my data respectfully, but stop when I tell you to stop.
I think we need to get back into that category and blockchain and cryptocurrencies allow that. And we’re going to see the pendulum swing way back to where we’re not the monetized product anymore of a Facebook who makes hundreds of dollars a year per user even if you don’t pay Facebook. Isn’t that they’re monetized unit per user?
Trish Regan: I experience it all the time. Facebook will just decide to, and people don’t really understand what this is. I didn’t really understand what this is to be perfectly honest until I was kind of out on my own. And I’m like, wait a second. I don’t understand. I’m getting shadow banned? What is shadow banning?
It’s where they make a decision, some higher up somewhere, or the algorithm makes a decision that, you know, maybe they don’t like Trish Regan. And so, they don’t want Trish Regan’s audience to hear everything that Trish Regan has to say, which I find pretty offensive because I have an audience and I want them to be able to hear from me and I’m a responsible player, but somewhere, somehow they can make the decision. And to me, that’s not very in line with what we are supposed to be as a country.
And I think, Eric, one of the reasons I was so drawn to bitcoin initially was for similar reasons as you, and I’m a law-abiding citizen. I wear my masks, by the way. I pretty much do what they tell me, but I want to have the freedom to make my own decisions and to not have government or big business breathing down your back the whole way. That’s my live free or die New Hampshire upbringing.
I, like you, have been attracted to this because I think it affords more autonomy. It affords the ability for people to be more independent and to do things without people taking their data, manipulating it possibly, and trying to make money off of it. I would ask you this though. As much as you or I would use it for the right reasons, what do you do about the arms traffickers or really bad stuff?
One of the first stories I came across when I was reporting on this and I spent a lot of time talking to Ross Ulbricht and his mom Lynn, actually. And if you recall, he was convicted of money laundering, computer hacking, conspiracy to traffic, fraudulent identity documents, all these things, trafficking narcotics, because he set up Silk Road and Silk Road was a marketplace where you could use bitcoin. There were some things that were happening in that marketplace that you don’t really want happening on a marketplace in our society. How do you manage that? Or do you just look the other way and say it’s the price of freedom?
Eric Wade: There’s, yeah, there’s probably a little bit of both in that, is that again, it’s the humans that are at issue in this, the buyers, right? The providers. It’s not the currency and it’s actually starting to turn out that cryptocurrencies may be an awful tool to use for this because of the fact that the ledger is permanent. And if you want to conduct yourself in an illegal manner, you’re going to use ramen noodles or packets of mackerel or something to conduct your transactions if you have to.
But the use of cryptocurrencies for crime is plunging and the use of dollars in crime is actually rising because it’s becoming easier to get away with it with dollars than with cryptocurrencies. So, what does that say about our society that there is a demand for the Silk Roads, etc. But it’s turning out the cryptocurrencies really aren’t the preferred tool for that anymore.
Trish Regan: Is that because it’s easier to launder the dollars than it would be the bitcoin because of the blockchain’s permanent record?
Eric Wade: Absolutely. And that everybody wants dollars.
Trish Regan: Very interesting. All right. So, you know who else likes this? And I have tremendous respect for him. I just think he is an extraordinary visionary is Elon Musk, and Elon Musk is now saying, OK, you can actually buy a Tesla with bitcoin. But again, you’re getting back to the issue of if bitcoin rises drastically in value on Wednesday after you bought your car on Sunday, and guess what? That car costs you a lot more than you thought.
Is this just in your view, Elon Musk trying to duty candidate to support the currency, or is this as we get back to the use of bitcoin in real transactions, something that has a future that will stick? Although I guess I’m just thinking about what you said earlier, Eric, about the need for the overlay to help even out these fluctuations. Anyway, your thoughts on Elon?
Eric Wade: Yeah, I love hearing that. And you’re right. That is a very real what we would categorize as that’s a good problem to have when you’re worried about cashing in one great asset for – I like Teslas, but I don’t know if they’ll hold their value as well as bitcoin. Depends on what day you’re looking at the Tesla and what day you’re looking at the bitcoin, right? But I think what really going on is the strength of what Elon Musk is doing is increasing the network effect of bitcoin.
And that is very simply put if one person has bitcoin, then the network effect isn’t really that strong, right? But if two or four or eight or 16 or 32 people have it and use it, then the network effect grows and Elon Musk and Tesla and all of the other people in companies that are out there that are saying, yes, we see the value in this and we’ll allow you to cash in with it. That increases the network effect of it.
And the more people that do use means the more people that can use it. Whether or not it ever loses its volatility, that remains to be seen. I think it’s going to have to grow a bit more to become less volatile, but yeah, I think there’s no doubt that he’s increasing the network effect of it and getting more people to pay attention to it and use it whether they use it as a currency or as a store of value.
Trish Regan: Wow. I think it’s just an incredible space. One of the things that holds people up, and I’ve heard this from my readers is they’re like, wait a second, it’s $60,000 a coin. And they don’t have $60,000 to put into a bitcoin, but you don’t need that much. You can get started with a lot less money. I think it’s important for people to understand that aspect of it.
How would you, and I know you get into this and I would encourage people to, again, to go to messagefromtrish.com because Eric has a whole presentation on this. And if you like what he’s saying here, he’s going to drill down even further for you in the message that he’s got, which is, again, at messagefromtrish.com. But anyway, you can get started right with less money, Eric?
Eric Wade: Yes. And in fact, not only can you get started with less money, you should get started with less money. You should start off with a very small amount, just so you can get to know it. And there is a bit of a learning curve on this. Anybody who’s invested in any other asset class besides just cash in the mattress, you have to take a step, right?
If you go into a bank, you have to open an account. If you want real estate, then someone has to conduct a transaction and then there’s an escrow company involved. If you want art, you have to talk to a reputable dealer and you find a place to store it. Gold, right? There’s always a bit of a learning curve with any new asset class. And with cryptocurrencies, there’s a little bit of learning involved and that’s what keeps them strong is that they are different and they don’t just sit in the same accounts.
And I don’t want to bring back up what you’d mentioned earlier about bank accounts being frozen or something like that. But if I had an asset that looked and acted just like all my other assets and it’s stored in the same account as all my other assets, it would have that same weakness. So, it stands to reason that to own cryptocurrencies, you might have to stretch your wings a little bit. And that’s one of the things we try to provide is that take the first step. We’ll walk you through it.
Maybe it’s $100 is all you feel comfortable with this getting started. Maybe it’s $1,000. A lot of people think of their first foray into cryptocurrencies like maybe one position of a very highly speculative stock if you ever buy it stocks, and it’s not a stock and you don’t own equity in it. It’s different, but where it fits in your portfolio might be there. If you were to buy an amazing pink sheets flyer, you think how much would I put into that?
And if that number is $1,000 then maybe you should start your cryptocurrency journey with that because the first time you get involved with it, you should have it imprinted on your forehead of don’t put something into this that you can’t afford to lose.
Trish Regan: Yeah. That’s important. You don’t want to see people lose their shirt in this. And look, when you’re talking, this is the Wild West. I started my career, Eric, by the way in the emerging markets arena at Goldman Sachs in the emerging markets desk. And I remember in the fixed income division, so we were trading sovereign debt and everyone was like, oh, it’s the Wild West, right? Because the asset prices were all over the place because you’re talking about crazy governments in crazy parts of the world.
I always thought it was interesting to see how clients would put a certain percentage of their money. They’re not going to go all in on these frontier markets, if you would. And it’s the same thing for bitcoin. You need to understand what you’re doing, but you also have to understand and be able to tolerate risk. And it could be enormous upside and it could also be enormous downside. I would think this is one that you probably want to hold, right? Hold for a while.
Eric Wade: Yeah, it’s built to be a holdable forever. Once you own bitcoin, you can own it forever. Each individual investor has to have their own holding period. But yeah, you need to get to know that about the asset class and about yourself. Some of them can be extremely liquid so you can buy and sell and in and out. There are exchanges that allow people to buy and sell very quickly, very liquid.
But on the other hand, there’s a full spectrum of what’s out there with cryptocurrencies and literally thousands upon thousands of different coins and tokens and projects that you can buy and more coming every day. You can think of it as if you’re maybe an angel investor or a VC, however you want to think about getting involved in maybe smaller newer projects, or maybe you only want to go with blue chips like the top 10 cryptocurrencies or something like that.
And you don’t know that until you start the journey and say to yourself, all right, there’s something to this. I like the idea of a non-sovereign unstoppable, uncensorable, immutable money. So, I’ll put $100 into it and just the amount of work it’s going to take you to do that, that decision you’ve made, and then buying that $100. You’ll be going through cryptocurrency 101 and 102, and then you’ll graduate to cryptocurrency 200 in your own mind. You’ll start writing yourself notes about where you bought this on what date, and I keep a paper ledger of just about everything I do.
I’ll write myself notes. I know it’s old school, but I’ll write myself notes of, “I bought blank on such and such a day” so that I can look at it six days later and say, yeah, that made sense, or that didn’t make sense or something like that. And of course, everybody has a spreadsheet and everybody has wallets, etc. for this. But you got to get to know yourself on this and train yourself on how it makes sense for your portfolio.
Trish Regan: Yeah no, I hear you. I hear you. What about, I think some little investors, they’ve been a bit gun shy after what happened with GameStop, the Reddit traders that basically found out that Robinhood was under margin call pressure. And so, it was putting margin calls on the individual traders and they wound up not being able to trade the way they wanted to or needed to. And so, there’s a sense of distrust in the markets.
And then you look at what’s happening with Bill Hwang’s family office and Archegos and you see that as you mentioned earlier Nomura and Credit Suisse are taking these huge losses. And it’s because of these “dark pools” where you don’t really know who’s doing what, and Bill Hwang’s hedge fund was part of that. And so, you have mom-and-pop investors out there that are trying to plan for their future. And they’re saying, wait, is this a rigged system?
I guess I would get back to when you look at Larry Fink’s BlackRock getting in and taking a big stake in bitcoin, or MassMutual taking a big stake in bitcoin or Visa’s activity or Tesla. Look, I think it’s all good. It’s good for the space, but there are investors out there who will say wait a second. Are they taking this over? Wasn’t this ours? Wasn’t this our space where we could be independent and free.
And now you get the BlackRocks of the world investing in it? Scaramucci, Anthony Scaramucci, longtime friend was on the show the other day, and he’s putting a bunch of money in and has started a fund for this. Institutions now are coming on board. How do you make sure that you don’t get taken advantage of if you would, as a small-time investor?
Eric Wade: Yeah. That’s an interesting thought experiment is, are they coming to bitcoin because, and cryptocurrencies and this technology, because they want to bring their expertise and their strength to it, or are they coming because they see something that goes up in value or the store of value? And I think you even touched on this philosophy in the past is that the price of freedom in that, bitcoin and blockchain and they’re decentralized. And so, you can’t gatekeeper out a MassMutual or a Visa or an Anthony Scaramucci or something like that, and we like it that way.
Anyone can participate. And I think that what’s happening is the smarter investors that are out there, especially ones who have a responsibility to maybe sidestep some of this craziness and over-leveraged and dark pools, and I don’t know what happens is going on. I think the smarter ones are thinking well, if I do invest in bitcoin and I do pull my coins out of an exchange into my own possession, I hold my own private keys for this, and I’m not leveraged and I’m not lending them out, etc.
Then the whole rest of the world can go crazy and it doesn’t affect me. And that’s the difference, I think. And it may be subtle for a lot of people because I think you touched on it with the Robinhood problem and GameStop, etc., is there were a lot of people that thought when they bought a stock, they owned the stock and it was held in their name and their account sequestered in a little locked box with their name and their username attached to it.
And they didn’t maybe believe that no, it’s all put into a big pile and then lent out to somebody else somewhere else. Yes, we all sign the agreements when we sign up for the account, right? We check the box that says, “I read this 75-page-long terms and conditions, and I agreed to all of it, and go ahead and buy me this stock or something.
But what’s happening on the back end is maybe your stocks are being lent out and maybe they’re held all together. And I’m not saying there’s anything wrong with leverage for the right people for the right uses. That’s not where I’m going with it. Where I’m going with this is you didn’t have the option to take your coins so to speak off the exchange and hold them yourself the way you do with bitcoin. So, at the end of the day, maybe MassMutual is saying, I like that the number is going up.
I like that this is worth more every cycle, but I also like that my asset could be held in my safe and off of everybody else’s problem area, that I have that power to take it out. So, I can’t be caught up in this surprise, the tiger cub problem that’s now spreading around the world that we don’t even know how many more of these are out there. And if you right now wanted to stop participating in that, if it, if you saw yourself at risk of, hey, are my stocks being lent out and overleveraged and going to be blocked, liquidated to help somebody else clean up their mess?
Call your broker and say, “Can I have you send me all of my stocks?” And they’ll say, “No, it’s a ledger entry.” “OK. Can you send me the private key for that ledger?” And they’ll say, “No, it’s our ledger.” But with bitcoin it’s your ledger. You can pull your coins out to your own custody. And there’s been this other long-term held saying about that, someone out there knows who said this first, it’s not coming to mind, but not your keys, not your coins.
So, you have that, you have the option if you want to leverage out your bitcoin. You have the option to leave them on an exchange if you want. But you also have the option to pull them back into your own self-custody, into your own off the Internet cold wallet, air gapped, nobody can touch these wallet, and you don’t have that option with a lot of other digital or digitized assets.
So, as we went through the 80s and 90s and everything was being digitized, this is why, to make it easier for the prime broker to move things around the world as quickly as possible. We don’t have bicycle messengers with Spock certificate satchels anymore. They’re all digitized. And even though bitcoin is digitized, you can pull it out of the system if you want. And then there’s other cryptocurrencies that you could say, “I think I want to pull this out of the system. I don’t want it to sit on an exchange.”
Trish Regan: Let me just ask if you want to pull it out of the system. It’s not the same though as if you’ve got your Fidelity account and you say I’m going to cash out my stocks and then you get money in your bank account, right? You actually would have to buy something like that Tesla or somebody has got to take the currency in order for you to cash out of it.
Unless of course you bought into fund or into Larry Fink BlackRock’s or MassMutual where they’ll transact in it for you, but then that takes away sort of the privacy aspect of it. You can’t like cash out, right? You’d have to actually buy something with it.
Eric Wade: Yeah, you just went right through a nice spectrum of different possibilities that you can use all of these other different services if you want. But what I was getting at was with blockchain investments, you have the ability, and everything I say, there’s always like a little asterisk with it, because if you buy from Robinhood, if you buy bitcoin from Robinhood, or if you buy bitcoin from PayPal, as of now, you can’t literally cash out your bitcoin to a bitcoin wallet. But what I was getting at is you can download bitcoin software and you can run your own node and create your own bitcoin wallet on your own device and pull your bitcoin into that without cashing out.
So, you can own bitcoin in your own custody, and it could be your phone, or it could be a hard wallet, or it could be a cold wallet. But my point is that you don’t have to cash out to check out of the system. And by holding your own coins in your own custody on your own private key, no one can manipulate them. No one can lend them out. No one can get overextended. No one can say, “Hey, we’re going to _____ this account” because it can’t be stopped.
And that’s the titanium core that I think our MassMutuals and our Scaramuccis and people are seeing this and saying, I can get as leveraged as I want, or I could go the other direction and I could say, I don’t want to be part of this mess. And maybe there’s a cyclical nature of this that there’s a time to leverage and a time to pull back. But there’s many of our digitized investments that are out there, you give up that control. If you have money sitting in a Fidelity account or another brokerage or a Robinhood or something like that.
And that’s where that GameStop Robinhood issue came up was you couldn’t have pulled out of that and said, “I’d like to hold my assets in my own custody” like you can with blockchain. Where you can say, I don’t want to cash out. I just want to fire you as my provider, and I want to be my own custody, my own custodian of my assets.
Trish Regan: It makes so much, I don’t want to keep you all day, Eric. This is so interesting, and I know you have much more to say and people should go and they should listen. If you’re curious about bitcoin, this is the guy. Just to make it easy for everyone, messagefromtrish.com. You can find Eric’s entire video there, but I find this space fascinating. Of course, it taps on a lot of values that I hold dear.
And I appreciate the privacy aspect. I appreciate the lack of government interference with this being a non-sovereign currency because we’ve seen and we know what’s going to happen with all this spending and all this money that they’re printing and the Fed keeping rates so artificially low for a long period of time. They’re not talking about raising them for years to come. So, I would have to think that would depress the value of the U.S. dollar leading to inflation. And consequently, you are going to see a need for other things.
One last question for you, because gold has often been seen in the past as a store of value that could be really outside the dollar, and it’s where people go if they’re worried about the dollar. How would you compare bitcoin to gold?
Eric Wade: I like them both. The easiest most off the cuff quote is that bitcoin is digitized and has a store of value aspect like gold. And remember I said think of it more like a 12-sided die that there’s faces to bitcoin that you can’t see when you’re seeing whatever’s on top. Yeah, I like the store of value nature of both of them. Gold has been a recognized store of value for millennia. But try crossing the street with $2 million worth of gold in your pocket. You can’t.
And hiding it and storing it and remaining low profile with millions of dollars worth of gold in your possession is difficult. But I like gold and I like bitcoin and they both have different strengths, I think. And I understand gold lately has been everyone’s favorite to slam because we’re seeing trillions upon trillions of dollars sloshed around. What is it now, $19.6 trillion?
Trish Regan: Yeah. The money supply is like unprecedented, really unprecedented, and it’s going to keep growing.
Eric Wade: Back of the envelope, you’d think shouldn’t gold then be $4,000 or $5,000 an ounce so that gold can mimic our money supply M2 or something? Maybe it should. Maybe investors who typically would flock to gold are also looking at bitcoin. We are seeing unprecedented growth in adoption of cryptocurrencies and bitcoin well over $1 trillion in market value. And you might argue that some of that growth in value has come from what would traditionally have been a gold investor at this time, but I think they can coexist.
Trish Regan: They’ve got similarities, but they’re still very different products. And people should probably consider, again with diversification in mind, I always emphasize that because you want to not go all in on any one thing. But these complement each other in interesting ways, nitty-gritty kind of intellectual yet still investing advice. Thank you again.
Eric Wade: This was great. A great opportunity for us both to stretch our wings a little bit.
Trish Regan: So, that was a really, really interesting conversation on bitcoin. As I’ve said, I’ve been fascinated by this space for a long time, and I believe in this technology and I believe in its future, because I think increasingly as we’re in this sort of big brother world, people are going to want to get away from that. That’s just the reality and human beings are darn smart, right? The guy who allegedly created bitcoin was named Satoshi Nakamoto and it’s quite possible Nakamoto was an alias for a whole bunch of people, mathematicians that created this.
And I would just remind everybody that human beings are intelligent and they will find ways to rise above the insanity that’s going on. And when I say insanity, it’s this cancel culture combined with everything else where increasingly government has so much say over businesses and over individuals, not to mention of course the vulnerability that you have when you’re making your investments in dollars.
And the government keeps printing dollars, therefore the value of the dollar goes down, and you’re trying to save up money. Hey, what’s it going to be like if 20 years from now that latte at Starbucks, which is already inflated enough at $5 or $6 cost you $35 or $36? So, I think a lot of people increasingly around the world will seek out alternatives, and I think bitcoin is very much a contender. Cryptocurrencies in general are really something to keep an eye on.
And so, I encourage you if you’re interested in this and you want to know more, go to messagefromtrish. We just made it Trish to make it really easy for you guys since I think you all know me by now, messagefromtrish.com and you can hear more about bitcoin right there from none other than Eric. I will see you right back here next week. In the meantime, stay safe everyone. Good luck investing, and we’ll talk again.
Announcer: Thank you for listening to this episode of American Consequences. Want more Trish? Read her weekly articles Thursdays in our magazine at americanconsequences.com and subscribe for free to get all of our daily articles and the monthly magazine. We’d love to hear from you too. Send Trish a note, [email protected] This broadcast is for entertainment purposes only and should not be considered personalized investment advice.
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