What To Know About CryptoCurrencies – Episode 239

This transcript was auto-generated and may contain errors.

[00:03] Welcome to the Prosperity Podcast, fresh alternative personal finance talk for independent thinkers who prosper outside of Wall Street. Here’s your host, bestselling author, Kim D.H. Butler. Welcome to the Prosperity Podcast. Today we’re talking about one of the most talked about, the hottest topics right now in the financial world, which is cryptocurrencies. Are you there with me, Kim? Absolutely. Bitcoin, Bitcoin. Oh, wait, we’re not supposed to recommend a special one. How about blockchain, blockchain? There you go. Isn’t it amazing what has happened over the last several months? Yeah, I love it. This is an area that I have been following for a very long time. And I truly mean it when I say blockchain, blockchain.

[00:59] So before we have a discussion about the cryptocurrencies, we must understand the platform with which they operate on. And that’s the blockchain. So if this is a new term for you, I so encourage you to get on Google and look it up. Because the blockchain is what is going to transform our world in so many ways. And I am so excited for it. The blockchain is known as a distributed public ledger. What that means is think about like a big, basically an Excel spreadsheet in the sky, like in the cloud, where everybody’s activity is constantly monitored by everybody else. And you think, oh, my gosh, you know, that’s not private. Well, yes, it is, because it can be very, very personally defined. And then those things that should be public can be public.

[01:54] Like one of the things I’m super excited about is when the charities are all able to be on the blockchain, because we as a donor will be able to verify. And by the way, I’m looking desperately trying to figure out how to get my own charity on this. It’s a little early, but I’m still working on it. We can define what we want the charity to do with our money and then we can actually check on the charity and make sure they do it. So in the cryptocurrency world, because the cryptos are on the blockchain, they are public. And so they cannot be hacked. They cannot be undersold or oversold the way that the dollar can be toyed with, if you will. And there is some substance there and some transparency that will be so valuable.

[02:37] I mean, you could also think about it like a escrow company. You know, we’ve all dealt with an escrow like to close real estate or like a trust company. You know, they follow certain laws, fiduciary laws that hold them to a very, very high standard. And that’s what the environment of the blockchain is going to do in the sky. Public, available, verifiable, transparent, all really, really good words. That’s what the cryptocurrencies operate on. Yeah, it is really a new level of transparency. And it’s in fact, it’s to the point where it’s scaring governments and huge economies. Absolutely. And I hope in time it helps us get rid of things like central banks and the Federal Reserve and other entities that are actually

[03:24] causing some of the problems. You know, they have these good intentions, but the unintended consequences of their actions are horrific. And I just am a big believer that if we got rid of them, then we wouldn’t have some of the financial problems that we have. I totally agree. Well, let’s dive into some of the cryptocurrencies. Obviously, the biggest one that everyone talks about is Bitcoin. And then you have other currencies like Ethereum and you have Litecoin and you have Ripple and we could go on and on and on. So let’s demystify what this cryptocurrency world is for someone that’s brand new to it. And then then we can even dive into some more of those details. Absolutely. Well, I want to start with the bigger picture from the

[04:09] investment standpoint. And that is that these really aren’t investments yet. I believe that they are speculations or gambling. And so if somebody’s listening to this thinking, oh, good, they’re going to tell us when and which one to invest in. No. And yet hang in there with the podcast. There will be some good information. But it is super important to view these for what they are. Now, I will admit that I do own and will hopefully own more of these in the future because of what I think they can do from a monetary standpoint. But I don’t own them as investments because they are still very, very volatile. They are absolutely like gambling. And that’s fine. You know, if you are buying them for the long run or just to learn about

[04:55] them or something like that, then that’s a great thing to do. I think Bitcoin is the most well-known. And there are, you know, just Google on the web. It’s not the easiest thing in the world to do at this stage. But you can Google on the web and figure out how to buy some if that’s what you want to do. But do not do it as an investment. Do it as something to learn with. One of the goals that I have is to make the availability of purchasing our prosperity pathway in cryptos. In other words, literally, instead of charging somebody $3,500, we’ll charge the equivalent in Bitcoin or whatever it is that we choose to use. So that’s just something that I have as a goal for this year to be able to start to involve the cryptos in buying and selling service, not again as an

[05:45] investment. And Spencer, you’re a good researcher. You may actually be better at giving a quick description of each of the, you know, let’s maybe pick the top two or three. One thing that I can add, because I just looked it up the other day, is that Bitcoin does have a maximum and it’s 21 million. It’s actually a rounded number. And we’re at 16 million today, which I just think is interesting information. But why don’t you take a stab at giving us a summary on the top two or three in terms of your perspective of what they are? Absolutely. So, you know, with the cryptocurrencies, I first want to reiterate. Yes, it is speculation at this point. It’s good to have. When cryptos are going back, it had gone from we’re

[06:36] talking pennies and then it had risen up to several hundred dollars. And then we saw it kind of be in a stagnant period. And then all of a sudden, cryptos really started to climb. And after they crossed that thousand threshold, they hovered there for a bit. And then it was probably a three week run where it took off. And when I say took off, I mean, it exploded. And we saw cryptos go up by Bitcoin specifically, go up by several thousand dollars within a day, within hours. And it was shocking. And when it did that, there were a lot of people in groups that I’m in and other people, they were saying, oh, I need to get on cryptos. Should I take out a student loan or should I take out a home equity?

[07:27] And we’re like, no, no, no, please don’t do that. That’s speculation. Now, where it is right now, and I’ll just give some background. I first bought Bitcoin at about two hundred and thirty dollars. Now, I remember hearing about Bitcoin when it was less than ten dollars. And yes, I do kick myself for not getting it then. But I’m glad that I got it at two hundred and thirty. And as of today, Bitcoin hovers between fifteen and seventeen thousand dollars per coin. Now, how it works is you don’t have to buy a full coin. You can buy a partial coin or a percentage of it. So even if you wanted to buy a hundred dollars worth, you could get a fraction of a coin. So Bitcoin is it’s the big one in town.

[08:16] It’s what everyone talks about. The next big one in town or big ones we’ll talk about is Litecoin. Now, here’s a pretty neat story with Litecoin. My friend Scott is a pretty big crypto investor. And I remember he was over at my house a few weeks ago and we were looking, you know, in our crypto accounts and we were talking about Litecoin and he said, this is the coin to put a bunch of money into because Litecoin just got onto the Coinbase platform and Coinbase is a place where you can buy cryptos. And he said, because people can’t afford to buy a full Bitcoin, logically, some people just want to be proud to buy a full coin. And that’s when Litecoin was right around a hundred. Within a week, Litecoin doubled in price.

[09:10] So it wasn’t bad. And he just used emotion and logic to hedge that investment. Another crypto that’s really big right now is called Ripple. And Ripple went from a couple of pennies and now it’s gone up and it’s currently in the mid $2 price range. And it’s actually technically the second largest coin out there, the largest crypto. So there’s a whole lot to it. I probably sound a little fanatical right now. Maybe we can dive into some more of those details. Well, I think it’s a great overview and it’s just such a changing environment. People really should turn to the web and dig a little bit. You know, don’t just read the top article that you see because there is a lot of misinformation as is always the case.

[10:00] And so you want to dig and cross reference and do some good work back and forth, but I really feel like it is something to learn about. And again, I almost would encourage people to pay more attention to learning about the blockchain and learning about the individual cryptos just because that foundation is going to have such a big impact on so many areas way beyond just whatever cryptocurrency finally rises to the top. And there will probably be more than one of them, but I’ve got to believe that I will see just one major one used globally. And I’m super excited about that. You know, it may take a while, but there is just such a need because we are in such a global society right now to have transactions be more capable

[10:51] and more easily facilitated and, you know, faster. It’s absolutely insane today when you want to send money to somebody that it’s a four or five day process. I mean, that’s just not necessary. And the banks are making so much money on those floats. And this will not only the blockchain, but the cryptos and their easily maneuverability will so enable really amazing capacity. You know, the microloan environment in the third world countries where we’re talking a dollar, you know, five dollars, something like that, that makes a huge difference in somebody’s lives. That’s going to be more easily facilitated in the cryptos. There’s already various countries. Shoot, I can’t remember there. There’s a particular country that is already giving all of their

[11:45] citizens access to their social services on the blockchain. I’m going to say it starts with an E. I’m just blanking on the name right now. I read the other day that China is actively pursuing getting many of its activities on the blockchain. And so to me, that’s where the value is. And the research, the, you know, for the limited time and mental space that people have for this, to me, that’s almost the more valuable information and which particular cryptocurrency is the hot topic of the day. You know, I completely agree. It’s that is where major innovation is happening. And I only we’re just just touching where things are starting right now with the cryptos, just so our listeners know, there are tax

[12:33] implications to that. So if you do sell those cryptos, the government is going to be aware of that. So make sure you work that out with your accountant. And, you know, again, I can’t reiterate enough. Please don’t speculate. It’s something to be fascinated with it, something to be involved with. But look at the technology itself and if it works for your budget, go for it. But don’t take out a home equity or things like that. Very important distinction. In fact, we should really always be super careful when we are investing. You know, the the the appeal of borrowing to invest can be valid, but it must be done very, very carefully and certainly not an area for this kind of thing. This is play right now for most people.

[13:28] And, you know, kudos to your friend that thinks he’s got a little bit more of it figured out, but it’s a very, very fun area, very fun industry, something we’re super excited about and one that we encourage you to follow and keep your eye on in the learning area so that when the time is right for investing, we can move forward with confidence. That’s a great summary. And if you listeners have any questions, specific questions for Kim about the block chain, cryptocurrencies or other things, send an email specifically to hello at partners for prosperity dot com. That’s the special email address. And Kim will help you out. Thank you for listening to the Prosperity podcast. To take control of your money and have it work for you.

[14:22] Visit us at partners for prosperity dot com. If you liked this episode, make sure you subscribe and leave a review.