American Consequences

You've reached your click limit.

You're approaching your click limit.

Subscribe to American Consequences to keep reading completely FREE, and get access to exclusive articles and our monthly magazine.

Please provide a valid email address.

Tales From the Crypto: Decoding Coinbase and Bitcoin

Episode #32  |  April 21st, 2021
Listen Now

In This Episode:

Coinbase went public last week, ushering in an era for investors to play in the crypto space without actually having to own any cryptocurrency. Meanwhile, bitcoin seems more settled in the market, hovering around $60,000. Does this crypto confluence mean that now is the perfect time to add bitcoin to your portfolio? Or is there even more volatility ahead? Daniel Roberts, Editor-in-Chief at Decrypt, joins Trish to elaborate on how Wall Street and Washington now grapple with the undeniable financial force of crypto and whether bitcoin will remain a 21st-century store of value or ever become a mainstream currency. The two also discuss the digital dollar, the crypto Cold War with China, and the unending joke of Dogecoin.

Guests:

Daniel Roberts

Editor-in-Chief of Decrypt
Dan is the Editor-in-Chief of Decrypt. He has covered cryptocurrency since 2011.

Episode Extras:

Bitcoin Highlights

  • In Satoshi Nakamoto’s original bitcoin whitepaper, the fledgling crypto intended to be a currency – but as Mark Cuban has noted, bitcoin may never make that transactional leap and could solely remain a 21st-century store of value. 
  • Though companies such as Tesla and PayPal claim customers can pay in bitcoin, who would want to do that right now? The digital asset’s finite and surging in value — that’d be akin to a mining San Francisco forty-niner throwing golden nuggets on the bar for a beer instead of paying with the pennies in his pocket.
  • In underbanked nations like Nigeria, where citizens may not have a checking account or personal computer, cryptos find increasing acceptance as a go-to payment — as all you need is a smartphone. 
  • Silk Road PTSD has the American government sweating illicit activities orchestrated with cryptocurrencies — but what’s funded illegal arms and narcotics trafficking for decades? The U.S. dollar. 
  • Peter Thiel notes that China’s already ahead of us in the crypto game with their state-backed ChinaCoin and that we need an equivalent — America, are you ready for Fedcoin?

Transcript:

Trish Regan:               Have you been following bitcoin? Welcome, everyone, to this week’s edition of American Consequences With Trish Regan. I have been following it, and you know what? I will say this… It seems to be settling out right in this 50, 55 to 64 range, which is something given how volatile it really has been.

 

The big question I think for everyone right now is, is this for real? Should you really be considering bitcoin as an investment in your portfolio? One of the things I’ve pointed to is coin. The debut of coin just came out and coin is a very interesting way to, Coinbase, of course, to play the crypto space without actually having to buy the crypto. If you buy the stock in Coinbase, you get the benefits theoretically of the business, you get the benefits of the crypto being so popular and hopefully you make money.

 

The other way to do it, the pure way to do it would be to actually just go and buy the cryptos themselves. We were speaking with Eric Wade on this recently. You can check out what his message is, actually going to messagefromtrish.com. And he really lays it out in terms of helping you to understand and navigate where to go. But there’s lots of places to go right now. So, what is cryptocurrency really? What is bitcoin really? What are the vulnerabilities of bitcoin in this environment?

 

I want to get into this because I think there’s a lot of really big theoretical questions here, a lot of really important questions and you know how concerned I am about inflation. You know how worried I am that inflation is going to completely deteriorate the value of the U.S. dollar. So, it’s really not going to matter a whole lot if you save up all those dollars and suddenly the cost of a cup of coffee is $35. Then it becomes really and truly problematic and all those savings really get eroded.

 

And that’s the risk right now, as we look at a Federal Reserve that wants to leave interest rates low through 2024. And we look at a federal government that just can’t stop spending. Joe Biden is like a drunken sailor that I keep saying to myself, is this for real? Does he really mean to spend this much money that we don’t have? Even Leo Hindery saying to us last week right here on this podcast that this was too much, it was too much, too fast, too soon. And so, you need to think about the long-term consequences of this.

 

How the heck are we ever going to pay it back? I don’t know how we do it. I’m so happy to have with us here today to break all of this down, to answer all your questions on cryptocurrency, none other than Dan Roberts. He’s the editor in chief of Decrypt.co. He has covered cryptocurrencies since 2011, which means he’s a year ahead of me. And he’s really steeped in this stuff. This is what he does day-in and day-out. Dan, good to have you here.

 

Daniel Roberts:          Thanks so much, Trish. Good to talk to you.

 

Trish Regan:               So, bitcoin is like all over the place. Fundamentally, and I understand by the way, I should point this out to anybody listening, you don’t actually, you own less than one bitcoin. You own less than one Ethereum, which is another popular cryptocurrency right now. And I should just mention that because you’re not making money off of what you may tell me next, but I’m curious sort of in your gut, what is your belief on where bitcoin is heading?

 

Daniel Roberts:          Well, I’m glad you asked. And the first thing Trish, and I always tell people as a really important caveat, is not to believe anyone who claims with certainty to know what’s going to happen next with the price. Right now, as we speak it’s around $60,000 and it could just as likely head to $80,000 in two weeks, as it could sink back to $40,000. Either is possible. Although actually, despite its reputation for volatility, it’s been somewhat stable during the kind of past three or four months of the pandemic.

 

Of course, the pandemic created a perfect storm for crypto adoption. But to answer your question, where is it headed? At the very least what I like to say is it’s not going away. You used to hear bitcoin skeptics say what if it goes to zero? It could go to zero. It’s not going to zero. That has never happened in the almost 11 years that it’s been trading, but it certainly could continue to be volatile. At this point, so many big institutions and publicly traded companies have bought in that it’s really hard to see it suddenly losing favor or collapsing.

 

Trish Regan:               So, I tend to be pretty bullish on it, but maybe not for the right reasons. One of the reasons I’m bullish on it in the near term, or at least I would say over the next year or two is in part because of our overly aggressive Federal Reserve that has made it very clear they don’t want to raise rates before 2024, and they’re out there doing all this bond purchasing. I guess that’s helping a little bit to keep the wheels on the bus, but at some point, I’m really worried about what the value of the U.S. dollar is going to be.

 

And so, I’m always looking for ways to hedge inflation. Part of the way to hedge inflation in my view, Dan, is to actually be in the markets themselves, right? Like you can’t just completely ignore being invested because there are these inflationary pressures. And if you look back to other times when we’ve had the Fed in a very active mood, you’ve seen a run-up in the markets, not necessarily in the rest of the economy, or even in real wages, but in the markets.

 

And so, I like the markets for that reason sort of begrudgingly, right? Because I don’t like what the Fed is doing, which gets me back to bitcoin. Walk us through why those of us that do not like an overly aggressive Federal Reserve will find some kind of value and sanctity in a cryptocurrency like bitcoin.

 

Daniel Roberts:          Sure. And you’re exactly right that the value proposition has been a hedge against inflation. There is no kind of central government or central bank of bitcoin. It is decentralized. And I mentioned earlier that the pandemic created a perfect storm for adoption. When you have the Fed pulling various levers, as you alluded to, when you have various governments handing out stimulus checks, and when you have things like quantitative easing in the past, all of those are seen as a good argument in favor of bitcoin, which has a capped supply. It is a digital-only asset.

 

There’s no one that’s suddenly going to turn on the faucet or cause inflation with bitcoin. It is capped at 21 million coins. There will only ever be that many. Of course, quick side note, and I don’t want to get too in the weeds, but sometimes people ask, well, wait a minute, but there’s always new bitcoins being created by the mining process. That’s true. But that amount is capped at 21 million. There will never be more than that. So as a result, you do tend to see bitcoin well –

 

Trish Regan:               Are you confident enough in the technology that this can’t be hacked, that somebody can’t come out of left field and say, all right, we’re going to flood the system with more bitcoin?

 

Daniel Roberts:          Yeah, that’s a fair question, and the answer is yes. The network is kept up by tens of thousands of nodes that have to reach consensus. And there’s code baked in to keep having the amount of new bitcoins created specifically as a mechanism to protect that cap. It’s fair of you to ask that, Trish. A lot of people retort, “Well, wait a minute. What if suddenly the bitcoin people decide let’s just make more?”

 

It’s extremely unlikely. It would completely compromise the entire sanctity of the network. And again, you’d have to have 51% of those nodes agreeing to do that. So, yes, I’m confident that it won’t happen.

 

Trish Regan:               And then the follow-up question that is the vulnerability from potential hackers because we’ve got some really smart people in this world and that would be quite a feather in one’s cap to be able to bust that whole system, not to mention all the governments that would like to bust it, which we’ll get to in a second. But how is it Dan, that you get comfortable with the idea that this can’t actually be hacked, that somebody can’t be smart enough to say, OK, I’m going to come along and manipulate this code and make myself a killing? How do you get over that?

 

Daniel Roberts:          Well, it’s a fair question because it is open-source code. You can go on GitHub. You can view the code of the bitcoin blockchain. But again, there are so many tens of thousands or hundreds of thousands of nodes that are invested in the network that any kind of proposed changes or tweaks get nipped in the bud real fast. The other thing I would tell you, Trish, too, is that when you see certain headlines, and bitcoin is such a headline driven market.

 

All of crypto, it’s so narrative-driven, but every so often you see headlines about a hack or a breach or hackers extorting with bitcoin. Those are about exchanges, centralized exchanges like a Coinbase or another company. And people erroneously see that and they think, oh, bitcoin got hacked again. There’s no hacking of the bitcoin network itself, the bitcoin blockchain. It just really doesn’t happen. It’s an immutable ledger and people nip any changes in the bud right away.

 

Trish Regan:               OK. One of the things that really encouraged me with bitcoin, I’ll tell you, so I’ve always loved it. I have been following it since 2012. I’ve been fascinated from sort of a philosophical standpoint, as well as an economic standpoint, the idea that you can have a “currency” that is not backed or manipulated by a central bank, I think is incredibly intriguing and really gets at certainly my libertarian roots.

 

But what I guess I would wonder is how do you get this? Or do you believe it ever becomes more than just an investment? In other words, does it ever really become a currency? I know that a lot of the early adopters wanted it to be that, but given that it’s so volatile, given that it’s not backed by any government entity, do you run the risk that volatility continues?

 

Daniel Roberts:          That’s the key question right now in terms of the identity of bitcoin, and sometimes Trish, I say that cryptocurrency isn’t even a great moniker anymore since so many of these coins are really not used as currency. I just call them digital assets. You’re right that right now, bitcoin mostly is an investment case. It’s called “digital gold.”

 

Recently at Decrypt, we spoke to Mark Cuban who said that bitcoin is stuck with store of value, which by the way, it’s a good thing to be stuck with. If that’s the best use case is just as an investment that’s OK. And usage for technologies adapt and change, but you’re not wrong that the original white paper proposing the technology called it a peer-to-peer electronic cash system. And right now, people are not using bitcoin as electronic cash, they’re just not.

 

Now, the reason this question is so interesting is you see companies like Tesla and PayPal coming out and saying, you can now pay in bitcoin, but who would want to pay in bitcoin? Who would want to spend their bitcoin at a time when the value keeps going up? So, I don’t really think the issue is the volatility. I think the issue is that because over its course of 10 years of trading, the price has gone up and to the right, even though yes, there have been some momentary big crashes.

 

The value has really gone up to the point where you wouldn’t want to get rid of it. You wouldn’t want to unload it. So, I think it’s OK if it never really ends up being used as a daily currency, but that could change with certain other coins. I think it’s likely to be other cryptocurrencies that end up being used as real daily currency.

 

Trish Regan:               OK. I want to get to that. I want to get to that, but you said something a little while ago that intrigued me when you mentioned that if there’s any hacking, it’s usually the vehicle on which the bitcoin is traded, like Coinbase that might be vulnerable. Let’s talk about the foundation of bitcoin itself.

 

So, this is peer-to-peer technology, which became increasingly important I think when you look at what happened in the wake of January 6 and Parler being taken offline sort of in the dead of the night, on a Sunday night, Amazon Web Services cutting its services, and then Apple saying, OK, you’re no longer on our platform, same with Google. And so, there was a business that became sort of a victim, if you would.

 

And I would stress, and I think there was actually a Washington Post report on this the other day, that there has been extremism on the right as well as the left. And they’re finding a lot of the leftist extremists right now on social media, and it’s very concerning. But nonetheless, if somebody decides to say, “OK, we’re going to cut you out of the equation,” whether it’s government mandated or business mandated, they have the ability to do that in today’s economy. Does bitcoin change any of that?

 

The fact that it’s peer to peer, that you’re not going through necessarily an Amazon Web Services, does that strengthen your thought that you own this, that you have this no matter what other players might want?

 

Daniel Roberts:          Well, absolutely, assessed to the entire kind of value proposition. And it applies to all corners of the decentralized web. We’re not just talking about bitcoin here, right, Trish? We’re talking about NFTs, which have exploded in popularity because of the appeal of verifiable scarcity and ownership. You share a piece of digital art and everyone says, “Well, why would you pay money for it? Because I can view it too.” Yes. But I own it, and I can prove that I own it.

 

And because it’s peer-to-peer and it’s decentralized I never have to worry that there’s some host that will lose it or that someone will copy it or steal it. And that is definitely part of the appeal. You mentioned AWF. Just yesterday as we record this at Decrypt, we ran a news story about another protocol that has just raised a bunch of money to build a decentralized AWF. That has been one of the most exciting use cases for blockchain tech and cryptocurrency is decentralized file storage.

 

There’s one that we use called IPFS. And we actually cross post all of our stories at Decrypt to IPFS, which is basically a decentralized Dropbox. And the idea is that, what if WordPress goes down or what if WordPress changes and decides they don’t like crypto and they delete our stuff? Well, it’s on IPFS, hosted on a peer-to-peer chain that no one can mess with forever. In 80 years, our stories will still be viewable through IPFS.

 

So, the answer to your question is that yes, of course that’s a big part of the appeal of the crypto and blockchain world. And in fact, a lot of those early bitcoiners were libertarians, I mean, Roger Bear types, but now there’s an interesting push and pull between those folks and the folks who want more regulation, they welcome bitcoin going more mainstream, more Wall Street.

 

Trish Regan:               Sure. And you’re seeing, as you get, when BlackRock, who manages basically the size of U.S. GDP, that’s how much money they have under management, when they start to get involved and MassMutual and other traditional players, they’re going to want to see more in the way of regulation because that’s what makes them feel better about things, but this is interesting. So, IPFS and it’s this decentralization. How does that work if you don’t have an internet connection? Can you not access your money? You have to wait until you can get to the internet connection?

 

Daniel Roberts:          Well, in the case of IPFS, it’s not actually about money, but about a protocol. All this stuff you can basically just understand as code. And again, like when we discussed the bitcoin blockchain and being, that code can’t easily be messed with and tweaked and hacked and altered because of the people invested in keeping the integrity of it. So yes, in the case of IPFS, you would need the Internet.

 

But of course, one thing to keep in mind is that often, when we talk about an internet connection, we imagine people in the developed world with high-speed Internet connections and desktop computers, but in many cases, and this is what so excited me about bitcoin years ago, there are folks in other countries that are the unbanked or underbanked who have been paid in cryptocurrency because at the very least they might not have bank accounts, they might not have a high-speed Internet connection or a computer, but they have a smartphone and that alone gets you onto these networks and that’s a lot of the appeal.

 

Another example is again on something like the Ethereum blockchain tokens can basically be used to represent anything, title beads, contracts. And so, a long way to answer your question, but yes, it requires the Internet, but you can just access that via your smartphone and the protocols are getting better and better, faster and faster, and more and more frictionless.

 

Trish Regan:               I think it’s going to be important in this new, brave new world in which we’re living in, where everything is traceable. Everything is trackable. I’m amazed by what Google knows about me. For example, if you’re not in a private search engine, the way that they’re able to feed you what they think you want. I actually think it’s so intrusive and it’s frankly, it’s so weird. But that’s the future. And so, they can know everything about you, including where your money is, how much money you have and what you might buy, and then some.

 

Daniel Roberts:          And in many cases, people love to kind of rail about that, but it’s a little too late to put the toothpaste back in the tube, so to speak. And what I mean there is, a lot of networks have come around that proposed to be more private. But at this point, as you said, Google, Facebook, they know so much already, Apple, that for us, for those of us who’ve existed in this world for a while, it’s a little too late to try to undo that, I think. I’ve thrown my hands up to it, but you’re right. That’s a big appeal of the decentralized web and Web Three. And again, I’m fascinated by the push and pull.

 

Now you just mentioned BlackRock. There are people who have finally decided, all right, it’s worth investing in bitcoin. It’s just one more asset type to have in your portfolio, but they want it to be more buttoned up, mainstream Wall Street, they welcome regulation. But a lot of the OGs who loved bitcoin in 2010, 2011, 2012, the whole thing that lured them to the space wasn’t regulated. It’s outside government control. Government agencies aren’t involved. So, what’s going to happen there? Are those people going to get a little turned off the more mainstream it goes? And more regulation is coming.

 

Trish Regan:               Let’s go to some sound right now. This is PayPal co-founder Peter Thiel speaking at the Nixon seminar and he has some concerns, some security concerns surrounding bitcoin that I’d love for you to address. Let’s play the sound.

 

Peter Thiel:                 From China’s point of view they want to get, they don’t like the U.S. having this reserve currency because it gives us a lot of leverage over Iranian oil supply chains and all sorts of things like that. They don’t want the Renminbi to become a reserve currency because then you have to open your capital account and you have to do all sorts of things that they really don’t want to do. I think the Euro, you could think of as it was in part a Chinese weapon against the dollar.

 

For the last decade it hasn’t quite worked out that way, but that was, China would’ve liked to see two reserve currencies like the Euro. And even though I’m sort of a pro crypto, pro bitcoin maximalist person, I do wonder whether at this point, bitcoin should also be thought in part as a Chinese financial weapon against the U.S. where it threatens Fiat money, but it especially threatens the U.S. dollar and China wants to do things to weaken it. So, it’s sort of China is long bitcoin and perhaps from a geopolitical perspective, the U.S. should be a little bit be asking some tougher questions about exactly how that works.

 

Trish Regan:               It’s an interesting comment there from Peter Thiel who points out that he is actually very pro crypto and he’s made some efforts within this space himself and he’s liked it and he’s been around it for a while, but he’s also pointing out that it does in some ways upset the apple cart from a geopolitical perspective, because if, and by the way, this is a big if, and if you listen to Jerome Powell, you don’t have to worry about bitcoin. It’s just gold, digital gold, and that’s the only role that will play.

 

But Peter Thiel is making the point that it could actually, if it is used and it may not be bitcoin as to your point earlier, it may be some other currency that emerges as something that’s more stable, but anything other than the U.S. dollar as a reserve currency is encouraging perhaps to a country like China and others in the world that may be threatened by the power we derive from being the world’s reserve currency. What are your thoughts on that?

 

Daniel Roberts:          Well, it was very interesting, and I think there was some hidden context here, and this is how we approached it at Decrypt in our coverage of those remarks. What Thiel is really saying there, and others have tried the same tack, Mark Zuckerberg and David Marcus of Facebook did this when Facebook associated people first tried to appear and defend the Libra project.

 

What he’s really trying to do there is send a message to the U.S. government to say, embrace this stuff, because if you don’t, China is going to beat us. It’s not so much that China’s going to embrace bitcoin, he used bitcoin as his example, but as we know, China has already launched its own state backed digital currency. Some call it China coin. The U.S. has basically just said, “We’re looking into it.” Jay Powell said, “We’re looking into it.”

 

People call it Fed coin, but what Thiel’s remark is really meant to do, I believe is send a warning shot to Congress and say, watch out because he knows that right now, one of the hottest topics is this cold war effect between the U.S. and China. China already unfortunately, people don’t like to hear it, is ahead of us in a number of tech areas, one of them being mobile payments, and that’s a real key area. And crypto is part of that.

 

So, I think what he meant isn’t necessarily watch out because bitcoin will replace the dollar because that’s unlikely. It’s watch out because China is taking this more seriously than the U.S. is, and they’re going to come out ahead of us on crypto innovation.

 

Trish Regan:               We’re talking right now with Daniel Roberts. He’s the editor in chief at Decrypt Media. You can follow him on Twitter @DecryptMedia. Really fascinating conversation. So yeah, China is way ahead of us. What’s been going on? Are we just asleep at the switch? Are we thinking that no one can really ever rival the U.S. dollar? I’ve been wondering for years why the U.S. wasn’t more involved in the creation of a digital currency. Maybe it’s just, they are, and they’re not telling us. Why wouldn’t we be out at the forefront of this?

 

Daniel Roberts:          Well, look, the minute that you say that this is a technology that doesn’t involve banks, the minute you open the door to cutting out the banks, you lose a lot of people right there. You really do. That’s the thing that I think people forget. They see that bitcoin has surged in price. It’s tripled since 2017 and they say, wow, adoption is increased. Sure. But a vast majority of people who have inherent trust in the existing system and banks, they hear how bitcoin works and they say, “Nope, I’m out. Can’t trust it.”

 

And so, as a result in the government, even as it has grown in legitimacy and they say, OK, we’re looking into it, there’s still, and it’s understandable, some real hesitation to kind of touch it in any way, shape, or form. Related to this in 2018, there was a big popular narrative that finally has gone away of blockchain, not bitcoin. Big banks were coming out and getting press coverage by saying, “We love the idea of blockchain tech. We’re building our own blockchain. Bitcoin, eh, we don’t need that. We’re not going to touch that.”

 

And what crypto purists said is, “Oh, wait a minute. The whole point is that blockchain tech comes along with a cryptocurrency. You have to have a cryptocurrency that exists on the rails of the blockchain to upkeep it. So, you’re missing the point.” So, all that is just to say that if anything, rather than be surprised and disappointed that the U.S. has been as slow as it has, I’m pleasantly surprised that it has even said it is looking into a digital currency and is trying to regulate it. I mean, better than nothing.

 

And of course, there’s a ton of optimism as you know, Trish right now about the new SEC chair, Gary Gensler, simply because he once taught a course on crypto at MIT. So, a lot of people think that means he’ll be very friendly to bitcoin regulation. I think maybe. But I also think it’s possible they’re assuming. And just because he knows about crypto doesn’t mean he’ll be pro crypto.

 

Trish Regan:               Very true. The digital dollar, this digital yuan thing, I’m like, who the heck wants it though? Now I’ve really got China breathing down my throat in terms of knowing every single thing I spend my money on. They’re even talking about an expiration date on some of the digital yuan. If the U.S. government were to do a similar program, the problem is, people I think if anything would be thrown straight into the arms of other cryptos that didn’t have the same kind of ability for the government to track you. Am I right? This is why people are looking to this, right?

 

One, the technology is way more sophisticated and more efficient than anything you would see in a credit card. But two, while it’s not foolproof and if the Feds really want to do their due diligence, they can probably figure out where the blockchain leads. But it’s certainly more difficult than just checking your Amex bill on any given day. So, how would a digital dollar really work except that it would be, I guess, an ease of transaction?

 

Daniel Roberts:          Well, it would likely be a stable coin and without getting too technical, what that means is something pegged to the value of the U.S. dollar, which of course some people say what’s the point then, that shouldn’t fluctuate so wildly. And right now, the most known stable coin is Tether (USDT), which a lot of people use to trade into and out of. Other cryptocurrencies, USDC, is another U.S. dollar stable coin. And you’re right. I think some people would roll their eyes, the purist, the libertarians, that’s what they love about cryptos, they wouldn’t touch it.

 

But I also think you’d get a lot of people who are skeptical about crypto, who if there was some veneer of government backing and government buy-in that’s when they would say, OK, I like the idea of this. The biggest appeal for the U.S. government is faster, more frictionless payments. Let’s remember, you keep saying isn’t the appeal of crypto the privacy protections? Sure. For some, but I think the biggest appeal is the speed.

 

With Western Union, if I want to send money to my cousin in Uganda who’s on a trip and needs money quickly, you’re going to wait three to four days and you’re going to pay a big fee. The whole original appeal of cryptocurrency was much faster instant payments and much, much tinier fees. So, I think that would also be part of the appeal of a digital dollar from the government. But you’re right. Some people would say, “No, no, no. This defeats the whole purpose of cryptocurrency.”

 

Trish Regan:               I hear you. This is why people like credit cards, right? You can buy stuff online with your credit card, but I remember, and you’ll remember this too, Dan, so some of my original reporting was back in the days of Silk Road, which was sort of an underground website where they sold all kinds of things that you’re not supposed to sell. And I remember talking with somebody who ran kind of an exchange, I guess you would call it for bitcoin, BitInstant, a guy named Charlie Shrem who wound up going to jail. Ross Albrecht who ran Silk Road also wound up going to jail. Because the feds were like, wait a second.

 

But they got them, right? Because it was illegal activity. It was like people wanted to buy things on the web and they didn’t want any record of them buying drugs or other illicit stuff. And so, they were able to use bitcoin on these websites. And that’s what the government fears, right? The government fears illicit activity. I would only say that what happened in the days of cash, right?

 

I guess at one point you just had a lot of cash that was going back and forth, and that probably was harder to get back and forth then the cryptocurrency. But that’s the fear that governments around the world have. What if you have people trafficking and weapons and drugs and other bad stuff?

 

Daniel Roberts:          It’s true, and Silk Road was a good example. I’m with you. That was in 2011. That’s when I first read about bitcoin at Fortune, and it was certainly the first time Fortune.com had run anything about bitcoin. Chuck Schumer and a couple others had sent an official letter warning and wanting the DEA to look into bitcoin. But what bitcoin believers say is the U.S. dollar is used for crime, too. And some people roll their eyes and say that’s a silly argument, but it is true.

 

There are headlines, as I mentioned, all the time about hackers extorting people and demanding bitcoin. They say, “Go to this bitcoin ATM.” Fine, but the technology is agnostic. Another thing that bitcoin flag wavers say is that bitcoin doesn’t care about your bad press. Technology can be used for good or for bad, for crime or for beneficence purposes. There are charities that now accept donations in cryptocurrency.

 

So, it is interesting. You’re right. That’s why the government first became aware, but I also think that they get concerned about KYC and AML, know your customer and anti-money laundering rules. Let’s remember the ICO boom of 2017 when Internet companies that really had no product yet were raising millions of dollars instantly by selling a new token. And then they run off with the money and it’s very understandable why the SEC didn’t like that. The SEC saw those as unregistered securities offerings.

 

So, point being the issues with crypto that the government is concerned by run the gamut, but that doesn’t negate the positive use cases of the tech.

 

Trish Regan:               Sure. No. And to your point, there’s plenty of negative uses with all kinds of currencies, including the U.S. dollar. How do people go about, I mean, Coinbase just went public, really, really interesting story. Their usage has just exploded. Massive, massive profitability that they could be looking at in the coming years if these things take off. But if you want to buy something where you’re not on say a Coinbase app, how do you buy a bitcoin?

 

Daniel Roberts:          First of all, let me just say that I think what Coinbase has done so successfully is made itself the closest thing to a household name when it comes to bitcoin exchanges. So, if you’re a regular person who’s read about this stuff for years, and finally, you’re now deciding, I think I’m ready to buy a little bitcoin, you’re probably going to use Coinbase. Even though it’s not the only joint in town. There’s Gemini, there’s Kraken, there’s Finance, there’s other exchanges.

 

And of course, now Robinhood and PayPal allow you to just buy bitcoin quickly on their apps, which I think has also pushed it to the mainstream, but there are other options. The other fascinating thing to me about Coinbase now being public, I think a lot of people will view Coinbase stock as a way to get exposure to bitcoin without having to buy bitcoin. They view buying cryptocurrency as somehow confusing or opaque.

 

So, instead they’ll just buy shares of Coinbase. And that has been also the same argument for trying to get the SEC to approve a bitcoin ETF. If they were just an ETF, then people would buy that instead of having to buy a bitcoin. But I wonder, now that Coinbase is public, maybe that kind of functions as a bitcoin ETF. Of course, the downside for Coinbase –

 

Trish Regan:               Oh, I’ve said that. It’s a great way to invest in some of these cryptos without actually having to buy the cryptos. What other cryptos, we’ve spent so much time talking about bitcoin, just because it’s the biggest and most noteworthy right now, but look, Dogecoin up 18,000%. Apparently, there’s no limit right on how much Dogecoin can be out there.

 

They can put as much as they want in the market. The hope is for it to go to even with the U.S. dollar. And by the way, it’s been climbing. What’s your thought on Dogecoin? And then I quickly want to do a round robin with you about some of the other things you like before you go.

 

Daniel Roberts:          Well, a lot of people see the price of Dogecoin rising, and they say, but wait a minute. Isn’t it a joke? And the answer is yes. Maybe that has gotten lost in the shuffle, but it truly was started as a joke, and it still really exists just as a joke. It’s an Internet meme of that Shiba Inu.

 

There’s no kind of product or business purpose behind it, but because it’s tradable on different exchanges, people have made real money with it. They’ve bought it, watched the price go up, and then sold it. And some people say that’s so alarming, but it is a wrinkle in the crypto space. And by the way –

 

Trish Regan:               Hey, there’s a little inflation out there in the economy. I guess all those stimulus checks, people have to do something with it. What else do you like? Ethereum is being talked about a lot and it could very well, we think about this space right now and don’t forget how early it is. And remember Myspace? That was like the big deal before Facebook. Who’s to say that there’s not like another contender out there that might really rise to prominence? What other cryptos do you like?

 

Daniel Roberts:          First of all, let me just caution that I don’t give investment advice. And people always ask me, “What should I buy? What should I buy?” Just like any other relatively new asset, you should only put in what you can afford to lose. I’m not out there telling people just because I work at a crypto news site that they should load up on crypto. That said, I’ll frame it this way to answer your question. Which of these cryptocurrencies do I believe in for the future? Do I believe has staying power?

 

I used to say that other than bitcoin and Ethereum, I wouldn’t guarantee and bet that any of these others will still exist in 20 years with any certainty. And that’s not to say I think every single one is going to collapse, but I just, those two, I view as safe in the sense that the network has so many people that have bought in. And in the case of Ethereum, there’s so many different business applications and use cases that those two are definitely here to stay.

 

So, that applies to bitcoin and East. Anything else, there are tens of thousands now of these altcoins and each one has a stated business purpose. And if you believe in what they’re selling, then maybe you buy in, but I think buyer beware with all these things.

 

Trish Regan:               Right. Well said. We’ve been talking with Daniel Roberts who’s the editor in chief at Decrypt.co, Decrypt Media. You can follow him @readDanwrite on Twitter. Really interesting conversation. I look forward to talking to you again, Daniel.

 

Daniel Roberts:          Hey, my pleasure. And there’s always news in this space to discuss, so we’ll chat again soon.

 

Trish Regan:               My thanks to Dan at Decrypt. Some really interesting pieces of information in there that I hope you can use. I think that if nothing else, you want to be looking at this space, actively looking at this space, because it really is in my view, it really is the future. I don’t think we’re going to be living in a world where we all carry credit cards around anymore. And I do think one of the things that he said is extremely interesting in some ways, bitcoin may turn into that digital gold. It sort of is right now, while a digital dollar is still very much a possibility in the future, just because of the ease of doing business.

 

Keep an eye on these things. Consider looking at how you might try and work it into your portfolio because you know I want you to be able to take advantage of these opportunities, doing so of course, knowing that you’re diversified and that you’re being cautious and careful because I want you all to be able to sleep at night. I say all the time, freedom is money. Money is freedom.

 

And so, you need to have it. You need to be making it in order to really enjoy your life at its fullest. You also need to live within your means. That’s a big part of it as well, but this is why it’s important to be invested right now and to be very cautious about all these inflationary measures that are going on, because they will take their toll on your savings.

 

Thank you so much for tuning in this week. I’m going to see you back online at americanconsequences.com, at trishintel.com where I have my daily podcast, and we’ve got another big podcast in the works with a terrific guest on bitcoin next week. He actually thinks it could be heading to $2 million a coin. How’s that for a tease? We’ve got more next week. I’ll see you then.

 

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. Trading stocks and all other financial instruments involves risk. You should not make any investment decision based solely on what you hear. Trish Regan’s American Consequences is produced by Stansberry Research and American Consequences and is copyrighted by the Stansberry Radio Network.

 

[End of Audio]

Read Full
Hide Full
15
30
{{ episode.title }}
Episode #{{ episode.episodeNumber }}
/

Close