Analyzing the Price of Bitcoin - Tone Vays on The Blockchain and Us

Transcript

[Music] hello and welcome to the blockchain and us we're pioneers and thought leaders talked about their journey in blockchain technology crypto assets and the token economy and I'm your host manuel daggers this episode has support from no official sponsor but from my very own the blockchain and us newsletter get an email from me every two weeks with a very short summary of new podcast episodes so you can immediately pick those interviews you'd like to listen to to stay up-to-date just visit www.cannainsider.com/careers starting as a risk analyst at Bear Sterns

where he had a front row seat watching its collapse in a 2008 crash and he later became a vice president at JP Morgan Chase tone is famous for his technical analysis of Bitcoin and his price predictions and he was featured in the Bitcoin documentary magic money and now to the interview hi tone and thanks a lot for making time today no thank you thank you for having me on the podcast is great on your LinkedIn profile pretty much the first thing anybody reads there is to know why you're ICO forward-slash token sale is probably a scam my consulting rate is zero point one Bitcoin per hour I'll be more than happy to explain it to you so in your view why

are most I SEOs scams I just want to mention that there is a bit of a lie in that in that statement these days my consulting rate is point one Bitcoin per hour but I really have no interest in explaining to people why they're icos or token sales are probably scams those have been very very frustrating for me personally and I kind of been avoiding them even though some have asked to you know have me explain it to them okay so my view on it is this misheard over a hundred years of laws that have come about in a way of who you can solicit money from in order to fund your

speculative project like no one cares if you borrow money from your friends and family that becomes a personal matter when you're going to start your business or you're going to you know speculate on something and you want to borrow from from the family that's fine if you don't have your own money I mean the the the thing you're supposed to do is supposed to save money and then use your own money to start whatever it is you want to do it's kind of what Satoshi Nakamoto did to give us Bitcoin you know he didn't go fundraising for this you just went ahead and did it other than that you you know go to the people close to you for money if you don't have those people you can try going to the bank for money and a bank job is to assess the risk of your project and the banks don't

really mess with you know speculative startups so you have to go to angel investors and VCS that collect money from qualified investors and then it's their job to decide where to invest this money in a speculative way to potentially bring money to those high net-worth and qualified investors and what makes a person qualified is the fact that they have money they have money they can lose they have money to invest in very speculative nature and if they don't have the time or the resources to investigate these speculative projects to invest in they give their money to a professional that is supposed to do that job for them so the icos have removed that entire

structure from the equation and now anyone who wants to you know make their dream a reality and as we all know 90 plus percent of all businesses fail forget speculative businesses and technology that may or may not even work even businesses that are proven to work will probably fail 90% at a time and now you are able to solicit anyone in the world on the Internet for money for your idea and I don't see what good can possibly come from that because all of these people investing in these icos they don't understand the project they don't care about what the

company is they say they do but they really don't they're just speculating on the ico because with no regulation on trading these icos that they want to just you know make their money and sell those digital tokens to the next person so they end up holding the bag on something they also don't understand so this does come removed all regulation I'm not only financing but also securities because now anyone can just go ahead and create a security of their company in the form of an ICO you said basically what we're discussing or what you just outlined is the mechanism of fundraising right correct or you say there's no qualified

a person who actually pre-qualified the project is this even worth any money right which would t be the the traditional role of the VC correct but I mean I spoke to some VCS too and they also some of them invest in ICS so they say well you know it's a it's an interesting fundraising mechanism but the project itself that the token you know funds may still not be a scam sure but like again a VC's job is to create returns for the investors in in their VC fund so if they see an opportunity to put that money into an ICO I mean they could but what happens here is this stuff immediately gets sold to

unqualified investors in a traditional world I mean back in the 90s a lot of companies were just going public just because they had a dot-com and no actual product and look where that got us I mean sure lots of good companies came out of the the dot-com era but the average person and that up losing a lot of money because they were buying into these stocks because there was very little oversight over which of these comms will go public on the Internet and then the opposite was happening I mean Facebook delayed for as long as they could before they went public trading on the stock market a lot of these companies nowadays they're

trying to delay that back in the day you used to go public as soon as possible so that everybody can cash out and the same thing is happening now a lot of these VCS that invest so early in these icos they want these icos to be you know traded in an unregulated environment as soon as possible so they can immediately cash out onto the unqualified investor coupon it's no different than a stock going IPO but a stocks t-today don't really go IPO unless there's a company there's a product there their sales there's something there it also costs a lot of money to go IPO because guess what your company needs to have some money in order to go through the regulation of going IPO these I CEOs

don't do anything like that and the oversight that you mentioned another big function of a VC that invests in a lot of these speculative ideas is to kind of oversee what is going on there when a VC gives money to to a startup trying to create new technology that VC will have a say in that company's operations at least a little bit they'll have a board seed they can have a say in who's the is the IC o---- going in the right direction is the IC o---- waste is the CEO wasting funds none of that is true in this case au crew you have an idea you want IC o----

you got all this money there is no one overseeing what you can and can't do with that money there's absolutely no one that can tell you what what to do and there's nothing stopping you from just running away with that money the next day and we've already seen some of that and the average person is just not capable of knowing where they're investing their money in they just got to cash out before the bubble bursts yeah yeah exactly and I think that's what most of them hope they'll still be able to do but as you said before somebody will be left holding the bag and when do you think that will happen no one really knows I mean I didn't think it would get this

bad but now it seems that everyone just wants to print their own money and create their own securities they're doing it under the disguise of an application token but to me from day one an application token never made any sense it's like asking your amazon shoppers to pay in Amazon stock for the product and no other currency yeah I mean these application tokens make absolutely no sense a casino has an application token right you can't just put $100 bills on a bet you have to buy the chips from the casino for the simplicity of functions inside the casino but these chips do not have their own speculative value as a currency

they're pegged to whatever jurisdiction the casino lies in whether it's euros or dollars that's and that's a an example of an application token that makes sense airline miles our application tokens but they're pegged to a certain price of a ticket or a certain mileage of a plane they don't have speculative of value that gets traded by 13 year olds in an unregulated market I mean these things just make absolutely no sense why do you want to turn all of your users into speculators of your platform mm-hmm well simple answer is to raise a hundred million dollars Oh correct and and these days it's all about who you know and are

you able to create the media hype in order to get that money in it's not about the idea it's about fundraising mm-hmm yeah you said 90 plus percent will fail so 99 maybe 98 in this case yes I mean 90% of most businesses to fail and in this case considering I almost every single one you look at has absolutely nothing behind it other than a fancy website and a freely traded ICO that percentage has to go up to 99% kind of like the number of comms that were not that were no longer listed on a new york stock exchange after 2003 hmm

but what about that other 1% what what would that be in your view in my view it would simply be the companies that found a way to utilize Bitcoin I see Bitcoin as the one public blockchain that is going to be sustainable in the long term with those companies also have had an icy oh no I well they might have had an icy oh but they're probably not the regulatory well the regulatory environment will probably hurt them I don't I don't see it that way I see to me that there will only be one blockchain just like we only have one Internet and whoever utilized the Internet the best was able to succeed

whether it's eBay Amazon Yahoo Google whoever utilized the internet properly Facebook utilized the internet better than myspace and they succeeded so to me whoever is going to utilize the Bitcoin blockchain the best is going to succeed now my guess is it's probably not going to be a company that I see old because almost everyone that I see OS has no interest in the Bitcoin blockchain they just want to build something different right so companies that are managed to utilize Bitcoin and you know what it's probably not gonna be all that many again some of our biggest companies today are you know tech and Internet

companies but there is not many of them and others you know are building technology like for the internet right so like IBM is building chips and you know Dell is building laptops so we have something similar like that right we have multiple companies that are building Bitcoin mining hardware and these companies have been very successful and they never needed an ICO I mean their competitors might try to ICO because they need money in order to start competing it so you're right it's hard for you to compete with an established company that's making a lot of revenue unless you have a mecca to print your own money and get a bunch

of unqualified investors to fund it hmm right but then you said it before I just said there can only be one blockchain which is a Bitcoin blockchain so anyone betting on inventing their own blockchain or building on another blockchain is it's basically betting on the wrong horse I I believe so because the beauty of the Bitcoin blockchain is that it's an example of decentralization that is working prior to Bitcoin the best example of decentralization we had was BitTorrent and file-sharing and I believe recently companies like Netflix have started outpacing BitTorrent I mean eventually it looks like it's even it's

becoming easier and easier to stream your music to stream your movies and you've been paying small fees for it data you know BitTorrent and pirating that media it becomes a little more of a hassle and problematic I always said that one of the reasons I used to like to download songs back in the early 2000s is because it was just easier for me it was just easier for me to just download song and I have that song forever though those days are slowly going away and people have to realize the purpose of decentralization is that you don't have a central point of failure and if you are centralized company trying to build a decentralized

product you are the point of failure and you always will be so like so many of these concepts just make absolutely no sense mm-hmm yeah but I mean I mean if we follow that logic then every single one ICO is actually a scam and will fail pretty much in my opinion it is now a lot of the people creating these icos will absolutely disagree and it doesn't depend on the mechanism of the ICO there is a handful of examples that are using the ICO concept and they are registering as securities and they're just trying to utilize the latest technology but

they are saying that they are a security and and they're trying to stay away from certain jurisdictions but like if you have to print your own money in order and then make up excuses why you have to print your own money in order to create your company I think I don't see how your company is going to succeed yeah yeah good point atone you're also a blockchain consultant and and what are you doing in that function well I just try to explain to people what a blockchain actually is again I haven't really done much consulting lately I just to focus on my YouTube channel and I try to provide as much information for free as I can but a

few companies have brought me in to try and explain the studio I'm not from that a developer perspective because I haven't looked at code in a really long time other than very basic stuff but from a conceptual perspective like what did Satoshi Nakamoto actually invent that was so innovative and the answer is proof-of-work this mechanism of validating transactions by burning electricity and solving this Byzantine generals problem that has plagued the digital world until 2009 and the problem was how do you send a digital message

where you lose possession of that message that's always been a problem on the Internet most people never even thought it was a problem and those that did that could not figure out what can a solution be because every time you send any digital data whether it's a Word document a song a picture a text message anytime you send any digital data you're always retaining a copy there's always somebody in the middle that can see that and key and get that copy and a Bitcoin solve this problem where are the bitcoins that you send were actually leaving one computer and arriving at

another computer without a middleman and without the person being able to retain a copy of that and this is why for the first year of bitcoins existence it actually wasn't worth any money it was a very interesting experiment oh my god is this problem actually solved and once people realized what this problem might be solved the message itself became used as money because it was now scarce and it wasn't able to be counterfeit and you can't double spend it you can't send the same message to two different people one of them will disappear and the other person will hold on to it so the message itself became money and now it doesn't

have to be money it can be any kind of data but it doesn't apply to many things because almost every message that you send you don't want that message to be finite you don't want you don't want this immutability immutable property like here's an example lots of people are talking about real estate on the blockchain to me that makes to me that makes absolutely no sense why do you want a property where you can accidentally delete the ownership of your real estate and there is nothing you can do about getting it back you can accidentally send it to your neighbor and now your neighbor owns your property or people say well then create

transparency and then government won't be able to take you or your property and I would say oh really so what if the government puts puts it in the blockchain that they own this property it's now there's right like it doesn't solve that problem so putting things like real estate or medical records on a blockchain I don't understand how they make sense because they're not utilizing this property of unconfessed skateable digital assets which is which is another one of my favorite properties of Bitcoin for the first time in human existence you can own something of value that is impossible to confiscate if you took the proper measures of securing it and kept

your mouth shut and didn't tell me right I mean even if you hide the gold in your basement there is always metal detectors that can find it but not with Bitcoin because you can store that in your head and it remains valuable yeah it's quite fascinating I mean it's this what drew you originally to the idea well yes but maybe a little bit too late I first heard of Bitcoin in early 2011 when WikiLeaks was going to shut down except they found a way to fund themselves by having this censorship resistant value transfer in the form of donations when Visa MasterCard and PayPal cut them off and they had no way

of paying their electric bills until they coin actually saved them that's one Bitcoin first came on my radar but it wasn't until the incidence of Cyprus in early 2013 that really made me think when the Cyprus government just shut down the banks on Sunday and on Monday no one can get their money out by the time they decided how much money they're gonna confiscate from the people they ended up taking 50% of everyone's bank account above 100,000 euros so if you had two hundred thousand euros in the bank of Cyprus you lost fifty thousand euros and when that happen I seriously started taking a look at

Bitcoin because it you can't confiscate Bitcoin if you were properly secured and that's what got me down that rabbit hole and I've been a big fan ever since and another interesting thing after credit one of my friends for thanks for saying this on Twitter once a lot of us got into Bitcoin in those early days 2013 some even earlier even though some old coins were already coming into existence but he said a great one when when he said I got into Bitcoin because I hated the idea of the government just printing money and doing whatever they want and now all I see around me is everyone wanting to print their own money in the

form of these.i cos and old coins and everything else hmm I mean would you say that all the altcoins basically took a great idea and then just bastardized it that's my view on it so it's really hard for me it's really hard for me to respect a lot of these initiatives that rely on you know printing their own money via ICO now I understand that your idea needs funding and I understand that you don't want to give up you know 20 30 percent of your company for a measly hundred thousand dollars from a VC you'd rather go ICO if you can get like you know twenty thirty hundred million in the door and given up nothing of your company you of course

are going to do that now is that a good thing I don't know because when this gets out of control and so many people get scammed you may ruin the concept of anyone giving anybody money ever again like it really depends how big this bubble grows but from the looks of it we're gonna be the you know the the tulips of the you know the current millenium yes some not Bitcoin I hope yeah I hope so when when Cyprus happened you were still at JPMorgan already I was I already moved on to another company from JPMorgan I was at JPMorgan from the collapse of Bear Stearns in o8 and I

think I left burst urns in 2010 or so maybe 11 when the unit that I was working for was sold to another company so our entire risk division actually went on to another company and then from there a lot of us didn't like this merger didn't like the acquisition so a bunch of us quit and then went on to Moe and then split between two other companies to try and you know build a competing product but yeah we're still working you know downtown a few blocks away from Wall Street at the time and then you saw what Bitcoin did or could do in Cyprus and how did you decide to

quit working in the traditional financial sector that took another couple of years I started I started buying some Bitcoin in 2013 and I really kept reading every single article couldn't shut up about it most people you know got fed up of listening to me about it and I remember that xx the two bubbles of 2013 so the first time I i bought my Bitcoin I you know I've watched it go up to 250 bucks on that Cyprus news and then I watched it crash down to 50 bucks and then so so all of a sudden I'm sitting on a big losing

position I had to hang in there for a while and then the bubble of late 2013 came where the Bitcoin got to be over a thousand dollars and then the 2014 bear market you know wasn't you know wasn't fun at all I lived throughout most of it I still believed in Bitcoin all as it was falling all the way down I believe that you know it's gonna turn any day it's gonna turn any day and at the same time I'm writing articles for coin Telegraph where I'm a technical analyst and I continue to say well you know as much as I believe in Bitcoin the technical picture is calling for lower and lower prices but and when we bottomed out and

got stuck at the lows of 2015 I really wanted to do something with some of my Bitcoin so I started you know investing and some of the Bitcoin companies that I thought were good and that ended very very poorly because again I don't have expertise in investing so a lot of that Bitcoin disappeared so I lost a lot trying to play the VC game that I didn't have any experience in and when the market started rebounding in 2015 I was already so into this crypto space traveling and speaking at as many conferences as I could continuing to write starting to be a guest on people's podcasts and I just didn't like my job

and I was bored and I wanted to do this I wanted to quit and be a trader basically not only trading crypto but also trading traditional markets which is something I always wanted to do because my 10 years of Wall Street revolved around risk analysis and not actual trading and trading has always been one of my passions and I decided to quit my job in order to be a trader and on the side for fun you know speak at conferences attend these crypto events and you know be a guest on podcasts it didn't really work out that way I mean my trading was doing ok but I was really enjoying being a

content creator and traveling the world and speaking at conferences and that has now become almost my job to where once again I don't have that much time for trading because I travel a good nine months out of the year I speak at as many conferences as anyone in the world I would say especially in the crypto space I speak of so many of them and I there was plenty of demand on the internet that kept asking me to start my own YouTube channel which I eventually did and doing videos once a week then twice a week - now where there was sufficient demand from you to do daily videos and I mean that alone is very time-consuming

and while I get a lot of criticism for talking about trading while not actually trading that's the life I've chosen to be a content creator over a trader and if I and if being a content creator starts to get frustrating and I all this travel starts to worry noun my backup plan is like it was three here three oh wow four years ago now when I quit is - you know what I'm gonna take a break I'm gonna go offline and I'm just gonna open my little hedge fund or a single family office with a couple of friends that I know are good traders and just trade our own money

consider outside external money but I'd rather trade my own money I never wanted to trade other people's money and that's kind of my view on things when I opened my physical business as I was quitting my job three or four years ago I also did it with my own money I didn't go for external money I used my money to open a business you know it was a partnership the business you know it still exists it never made me a single dollar it was probably a mistake I should have put that money into Bitcoin or even just left it in a bank or put it in the S&P 500 but I did it with my own money and I think that's the the right way to do it you have something you try to do it

yourself I couldn't agree more it's absolutely true I mean all all the companies and startups I ever you know started and dreamt up there I always did them with my own money except once and that promptly failed so you know it's not a good thing to be given a lot of money and if you know how to bootstrap I think that's much more powerful for an entrepreneur than having a lot of money at your disposal without even knowing what to do with it and and so I absolutely see the ico point many people know you forfor the content right that you just described and mainly the the price targets of Bitcoin how do you go about making these predictions I mean I have lots of experience with technical

analysis after grad school I did I studied financial engineering in grad school and after grad school as I was looking for my first job it took a little while it took me about a year to find my job because I had no actual experience never been an intern in finance didn't do it and undergrad I didn't have any connections so when I finished grad school in Florida and came back to New York while I was looking for that first job which turned out to be Bear Stearns in 2002 like February of 2007 just as the market was coming to an end then and while in the year leading up to looking for finding that job I was a college adjunct professor

and me and one of my friends took a course on trading and technical analysis and I absolutely fell in love with it this is pretty much the same course that I now teach as my workshop as I traveled the world I think I did maybe about six or seven of them this year already and I'm gonna try to do another six or seven try to do them in as many different places as possible and the course that I took was like two days of learning how to read charts and candlesticks and moving averages and all of these other technical tools and me having some finance background the math background i loving patterns loving solving puzzles

like I absolutely fell in love with trading and I wanted to do it ever since and while I once again delaying my life of being a professional trader I have enough experience of both ups and downs with trading because I've always tried to do it on the side even while I had all these jobs even though in some of those jobs I had a lot more restrictions on what I couldn't couldn't trade and that experience plus my educational background of being a high school teacher out of undergrad than a college adjunct not afraid to speak in public having a great ability to explain things I've been a tutor throughout most of my

college career also while I was in grad school I was a I was a TA teaching my own classes like my ability to explain things and my 10 to 15 15 years now of looking at charts and reading charts and experience and trading I think make me a really good educator on helping up-and-coming traders understand what they're doing better and while there's absolutely no guarantee that learning technical analysis is gonna make you money if you don't know technical analysis and you're gonna be an active trader it's it's almost like you know going out on a race track with

professional you know car drivers with barely having the ability to drive you're gonna get yourself in a lot of trouble it doesn't mean you're gonna win but if you know how to drive a race car but you have a lot more experience and other analogy I like to use is poker you do not know what the next card is gonna come out of the deck but you put yourself in proper situations by being patient and knowing probability and statistics so that when you do put money on a hand you have a statistical advantage of winning that hand and you're not just doing it randomly so and I think technical analysis helps provide these tools for traders how is Bitcoin

different from other assets in terms of technical analysis it's really not that different and this is one of the things that currently has me in lots of you know useless Twitter debates where the bear market of 2014 played out exactly like the gold bear market that we've had since 2011 and we may or may not be out of that gold bear market the the way prices fell in gold from 1900 down to just over a thousand took a very similar path to what Bitcoin did in 2014 granted Bitcoin did it in faster amount of time but the path was about the same

and I'm watching the the same thing play out once again here in 2018 and while nobody knows if it's going to end in a similar way to 2014 because in 2014 we fell a good 90 percent so far are though the six thousand dollar low was about 70 70 in change percent so will we fall another you know 20 percent from the top which probably means about 50% more from the current six thousand dollar low my charts telling me that we will optimistic I'm hoping that we won't you know I I did go

so another youtuber did bait me into a $10,000 bet whether the price of Bitcoin would fall below 6,000 or not I said that will fall below 6,000 so I have some money riding on this I try not to bet on these things I try not to have any positions that have me profiting from the price of Bitcoin in fact if Bitcoin Falls the only thing I gain is that $10,000 bet but I'm holding on to my bitcoins so and the consulting charge and my workshops are priced in Bitcoin at point one Bitcoin so if Bitcoin Falls

to $2,000 now I'm only charging 200 yeah versus 2,000 my services cost so I gain absolutely nothing from the price of Bitcoin falling and that bet on the 6,000 is a bet I would love to lose our the pay $10,000 knowing that I have a lot of money you know stashed away because the price of Bitcoin went through the roof and broke the 10 to 20,000 dollar high but I trying to be honest with my followers and I have a pretty dedicated group of people that watch my videos and if I start talking about how big one's gonna go higher higher higher I would be lying not only to them but also to myself so I look at

the charts I try to be unbiased as possible I use all of my trading experience from before Bitcoin ever existed and I think that's important because so many people have become traders in crypto space without having ever traded any other assets before Bitcoin and these people think that they're experts and they think that they're smarter than anyone that came before them and that's just completely not true being at the right place at the right time yeah and like some of the some of the books that were written in the 1930s after the the 1929 bubble could still be some of the most useful books on trading you could ever read and it's almost a hundred years now because

this stuff doesn't change yeah what's a good book there reminiscences of a stock operator or which one time yeah that's a good one there's a couple of others I'm already man the names of those books are not in my head um I mean the books by Andreas Antonopoulos and sayfudine the Bitcoin standard is a book I would recommend in the crypto space if you are gonna pick up a book in the traditional finance and trading space I do recommend the art of execution by Lee Freeman that's probably a book you want to read and then look around I try to I did study the a lot of this trading stuff but not books I just

thought I prefer videos and I prefer learning from people and while it amazes me how the things that I teach in my workshop I have all of it written out on my website with links and for people to study and I tell people there is nothing in my workshop that you can't learn on your own for free and people still show up and it's hard for me to understand but I was also that person like it's hard for me to like concentrate and be motivated on my own I'd rather show up into this one day boot camp and learn it and get the basics and then follow up

with individual with with individual concepts that I may not understand mm-hmm yeah good point so I want to go back again to something you said you said it's very similar to gold but it's maybe faster so the timescale seems maybe a little bit compressed I mean it's this may be the only difference between Bitcoin or maybe other crypto assets and more traditional stock markets it it could be a difference I believe that because information travels faster you know every single decade around the world that these panics will also happen a lot faster because of the because of the

traveling of the information but the way that information gets processed by a human is still about the same now we can also say that computers can process that information faster which is true but at the end of the day all speculative markets are driven by fear and greed and it's still humans at the end of they'll buy and sell trigger and this bear market in Bitcoin will bottom when I mean the last big player has sold and given up and it will once again top when the last big player has bought and there's nobody left to buy that's how all of these markets pop and that's how they all go down so at the end of the

day it's still driven by human emotions and this is why while the timescale of bitcoins ups and downs might change a little bit overall it's still driven by speculators now one of the things we could potentially compare Bitcoin to is something like oil which was probably worthless you know prior to what 1880 1890 mm-hm and then all of a sudden it became very valuable and so there is this mass adoption stage where the price just goes up up up up and then it once again becomes volatile based on

speculation but it doesn't even go anywhere near the lows because of this mass adoption or a discovery that this you know natural resource went from being the worst thing to find under your shovel to being the best thing to find under your shovel so if Bitcoin does reach that one paradigm we could go straight up high enough and then all of a sudden everyone is using it and it will once again be volatile but it'll no longer come back down but because of the current move I think that there are still low-end targets and most of Bitcoin price is still complete

speculation on its future use than its current use and until it's actual Hughes starts to go up you know actually I would have loved to have been in those oil days was there a similar environment where the future expectation use of oil let's say in 1895 would drive it up and then down big until all of a sudden the car comes out or World War one happens where there's this massive demand for oil where the price goes up and stays up even though it's still volatile but but it doesn't even come close to going back to prior highs mm-hmm it's an

interesting analogy because I mean the narrative is it's I guess different but it's similarly loaded right I mean all of a sudden you had the Saudis stick up the oil in the desert and then the markets in the US crashed right so now you have maybe Bitcoin and then somebody comes up with a new version of Bitcoin and there goes the price of Bitcoin well that's the thing right it's hard if someone comes up with a better version of Bitcoin to where the price of Bitcoin goes bye-bye why would anyone trust a better version of Bitcoin if all of a sudden these block chains are now you know not very functional and people can just switch to another one no I like so many people

myself included have you know enough value saved in Bitcoin that if Bitcoin goes away I will never trust any other blockchain the rest of my life would store of value sure I'll use it as a medium of exchange but I would rather store my my savings and dollars at least I know I'm only losing 2% a year in instead of the ability to it go into zero you know tomorrow or I would store it in the SMP 500 it's that store of value property that will disappear from all blockchains if if you know Bitcoin goes away and that's and this is another reason why I

don't think it's going to happen maybe someone will come up with a better medium of exchange though I doubt it because some of the smartest computer engineers are working on Bitcoin and getting you to scale everyone makes fun of Bitcoin how it's slow and it could be expensive even though not anymore and why Bitcoin has difficulty scaling meanwhile no one is actually using their alternative if their alternative even had 20% of the amount of stress that Bitcoin system currently has it'll probably grind to a halt and already be destroyed interesting where do you think do all these other crypto assets next to Bitcoin where do you think do they fall

short I think a lot of those other crypto assets I mean they mostly fall short is because they will never be as distributed as Bitcoin around the world the beauty of Bitcoin is that it's spread around the world while it was worthless and people have always been skeptical of Bitcoin because they're always thinking it's too expensive and it's not gonna work and it continues to just work the Bitcoin system never goes down and most of these other projects they rely on a leader and most of the time that leader creates that centralization and if when people say

that all appoint 2% of Bitcoin addresses hold like 40% of all of bitcoins but it's a lot worse in any other alternative to Bitcoin it's still the most trusted the most secure it's very difficult to 51% attack Bitcoin by taking over 50% of the mining Network and we've already seen that with several alternatives that were claiming to be better just in this just in this month alone I mean they have lots of problems and the biggest problem they have is sure Satoshi solved this one problem and

that was absolutely amazing Satoshi is not with us and I'm pretty certain I mean my experience on Walsh was always working with developers and even interviewing developers and even though I wasn't actually a developer I have to surround myself with some of the best developers so I have lots of experience with that and I guarantee you that several of the people that are currently coding on the Bitcoin protocol are significantly better coders than Satoshi was because there is always someone better it's just that they were not able to get that missing piece of proof of work and creating that mining system but at this point some of the

smartest and most respected computer engineers are coding on Bitcoin and there is hundreds of them and the best an alternative can put up is maybe one or two it's just not there and people like Satoshi that create this kind of innovation they they don't come around every three months I mean it's a once in a generation you know breakthrough whose time had finally come let's take a quick break for a message from our sponsors this episode has support from no official sponsor but from my very own the blockchain and us newsletter get an email from me every two weeks with a

very short summary of new podcast episodes so it can easily pick those interviews you'd like to listen to to stay up-to-date just visit w-w-w and ask ahhmm and sign up today I want to ask one thing more about the information right if somebody's interested in this space or maybe doesn't know that much yet about Bitcoin or even if they do if they want to go deeper and learn more where do you think should they go oh wow there's so much misinformation out there on the internet you can't even go to Bitcoin comm anymore because they have you know forked in to be cash so it's really really difficult I mean I believe that

my youtube channel is one of the best and we do a morning show where we cover the latest news in the crypto space I don't do it by myself I try to surround myself by people that are smarter than me my co-host Leah Wald you know she has several degrees in economics you know she's worked all over the world started some companies worked with the World Bank and Jimmy song is a core developer who understands programming really really well and giacomo Zucco who runs the HP network out of Italy where they provide a co-working space and they hold some core developers and I try to surround myself by people that can that you know

smarter than I am to help me understand and explain this space to people another great resource I would recommend is Andreas Antonopoulos and his YouTube channel and try to catch all of his content and tres mayor and the Bitcoin knowledge podcast is also good and same thing like I know I'm naming more podcasts because I'm more of an audio/video person than reading books as I've mentioned so these are some very good resources and other podcast is called noted podcast by Michael Goldstein and Pierre Rashard another great podcast that will educate you on

on Bitcoin but other than that it's really hard to recommend good resources because I would say 90% of all the people I respected when I before as I was buying my very first Bitcoin in 2013 I have no respect for 90% of those people anymore because they've gone the ICO route they've got the old coin route they've tried to you know coerce Bitcoin with seg with 2x and try to a hard fork to a bigger blocks which one against you know some of the I mean it wasn't gonna work so I've lost respect for 90% of the people that I kind of trusted as I went

into the space which is why I'm very very hesitant in any recommendations these days mm-hmm what what makes I mean how could someone tell if an information resource has good information I just always try to listen to a counter-argument I guess and I guess always be skeptical you're dealing with the wild wild west of over new technology and I I mean I as it's funny when I left Wall Street and I was into the whole libertarian and like the anarchist kind of ideas and when I loved Wall Street I had it in my head that

maybe even myself included we're all like you know scammers and Wall Street doesn't really do anything just moving money around you know causing these bubbles and now I'm in the crypto space and I'm like wow I was surrounded back then I was surrounded by some of the smartest most honest people I still know today compared to what I'm surrounded by here in the crypto space and it's very very frustrating so I say just question everything be skeptical and when someone is pitching you an ICO or an investment idea just picture yourself walking through like the streets of New York or LA or a third-world country and someone

off the street comes up to you trying to sell you this idea that's pretty much how you have to look at it and it's quite a learning curve still though I think for many people and it can be very very daunting how to get into it right at the beginning yes I think it's a it's it's very hard to find good information out there but it's also hard to decide what is actually good information absolutely what kind of time frame do you think people should look at when when they're interested in Bitcoin I think they have to look at it from an investor time frame I mean the internet didn't develop in a year right I mean I remember hearing about the internet I would say as early as 1995 I was still in high

school when I got to college my first semester in my university we had to use UNIX commands to access university email and then in my second semester we got webmail and we were also happy because it was so much easier with an interface and look how long it took for the Internet to be a functional to the point of where you know we're having Skype calls even though Skype came early I mean the technology wasn't great it took a while you know it took a good ten years I would say unless you are planning to be a trader unless you're planning to study as a trader unless you're going to make trading your job you should have at least a three to four

year outlook if your gonna purchase and hold on to some Bitcoin at the least hold them through a halving period because every tree every about three and a half to four years the bit coy the production of new Bitcoin cuts in half and that constrains the the Bitcoin supply you know new bitcoins coming into existence creating that element of deflation which does add value on to your bitcoins now I would say that's not the most important property that gives Bitcoin value that the most important property of course is the usability of Bitcoin and it's as long as it remains with its core properties of being

censorship persistent and uncompensated and decentralized now as long as those properties remain and keep an eye on me you know any advancements so as these advancements continue to happen and Bitcoin remain without any downtime whatsoever it's you know more and more people would learn to trust it just like in the late 90s how many people were quitting their jobs and started I mean other than the dot-com bubble side of things right I mean in the early to mid 90s how many people believed that the internet would work the next day like it did the prior day

kind of like you wake up in the morning you expect the Sun to rise I wake up in the morning I expect my internet to work when my internet doesn't work in the morning it's either my router or my internet service provider the unit itself doesn't go down and that's because of the great engineering that was done behind it Bitcoin needs to bring the same confidence to people and when people are confident that the value that they store in Bitcoin will not go down the following day because of underlying technological issues that's one the value of Bitcoin should significantly rise I believe it should significantly rise but what what would be something that could bring it down down to zero oh

wow the worst-case scenarios for Bitcoin would be some kind of a technological attack at the mining structure failing a bug that cannot be resolved and or you know the breakdown of the encryption that keeps your Bitcoin secure like if someone was to design some kind of a program that is able to be so fast that you can crack other people's passwords like right now when you create a very secure password in the case of Bitcoin most of them as a combination of random 12 words or you can create your own

password but if somebody can write some kind of an algorithm that can start breaking these encryptions by breaking the the passwords that could be a major confidence loss so or every currency it's a loss of confidence but on the US dollar is no different a loss of confidence in the u.s. dollar will you know make it go the way of the venezuelan boulevard because there's a loss of confidence in the Venezuelan government so your currency goes into hyperinflation because of that so a loss of technological confidence in Bitcoin due to you know some kind of major

malfunctions yeah no different than the internet right there could be a major malfunction where our internet would just suddenly stop working and that would also affect Bitcoin though there are Bitcoin engineers there are trying to you know put we already have some satellites in space that would allow you to make Bitcoin transactions without the internet and that's another backup plan you know because one day it's possible that Bitcoin is more important than the Internet so you need a way for Bitcoin to function without expectation of global Internet running well I mean you will always need some internet somewhere in order to process the transactions but

the ability to use Bitcoin as money in regions with very poor internet usage is also important that people are working on I will say that if the government wanted to you know cause major harm to Bitcoin all they'd have to do is eliminate money laundering laws and not confiscate other people's money and I think that would be very difficult for Bitcoin because now instead of also competing on terrible government laws Bitcoin would only get to compete on inflation versus deflation debate is a deflationary currency better

than an inflationary currency that has been an economic debate for probably for centuries and right now Bitcoin has a huge advantage because it doesn't only compete on that on that debate it also competes on the fact that governments are trying to cash more and more illegal and they continue to double down on money laundering laws that Bitcoin just doesn't care less couldn't care less about that's a good point yeah with the money laundering do you think in general do you think we're past past that point where a failure is possible no I we're not everything is just technology

and Bitcoin is still pretty young but we are certainly not past that point and this is why lots of people remain skeptical on you know the future of Bitcoin there is still you know there are still outside chances we still have only a couple of manufacturers of ASIC chips there are mining these bitcoins government's still control you know electricity and there could be issues there and most of your on-ramps are still centralized but as far as the underlying technology as long as the smartest people smartest developers in the world continue to you continue to

develop on Bitcoin and make it better I think that there was significantly more upside than downside what do you think are most people misunderstanding still about Bitcoin it's not a misunderstanding I don't think most people still comprehend the importance of you know censorship resistant value transfer and the fact that you can own something that is uncomfortable even if it's simply in digital form and something I'm confiscating all has to be in digital form because if it's in physical form someone with a bigger gun will always be able to take it from you so I think it's just these concepts and until and unless people have experienced or something like that that they need

these properties it's going to be hard for them to really comprehend until there is some kind of an economic incident in their region mm-hmm but now I mean there's many people who are very much pointing on those properties right and say this is very important without having experienced the necessity for them right I mean what what is it maybe that make somebody believer in those properties and somebody else is still on the fence well right those properties have to be important to you now even though I personally haven't really experienced it but I've but I have studied and read about economics and

finance long enough to understand how important these properties are so for those that haven't experienced these because of their regional locations you do have to you know immerse yourself in the understanding of finance and markets and the history of crashes and the history of what happens how extreme do governments get when they're facing you know an overthrow that's how these things usually happen it was no different in Rome or any other economic collapse of a country yeah do you think in the in the Western world do you think were moving towards such a point or do

you think that's more just speculation I think it's a little more speculation I think it's a lot of people have been predicting the death of the US dollar for I mean as long as I remember and it's going to happen eventually look the u.s. being a world superpower in the u.s. dollar being the world reserve currency is starting to push historical limits of you know that 100-year cycle of how long a currency stays in power but there's really nobody stepping up on the horizon when the u.s.

took over from the British Pound back at you know the turn of the 20th century I mean you you saw the u.s. rising China was starting to rise over the last couple of decades but it looks like you know they're not ready to take over yet so it's possible but I mean your currency is as good as the confidence in your political system and right now the world trusts you know the politics of the u.s. more than any other you know major region or country tone did you always want to be an educator that's a good question I mean not when I was a little

kid but even as I was starting out in my you know 17 18 years old yeah I always I did want to be a teacher but being a high school teacher for one year taught me that I don't really like teaching people that don't want to listen to me and you know high school teachers have to do that they have to you know get people to listen to them when they don't want to and this is why I do what I do now and I absolutely love it because I don't I don't force anyone to listen to me and I might tell people if you don't like what I have to say then just don't listen you know don't but don't listen to my youtube channel I always find it funny

how people I my most of my youtube videos are at least an hour long and I sometimes I get you know very critical comments about something that happened towards the end of my podcast and my answer is well you hate what I have to say but yet you said through the whole thing and I really I I do enjoy it we'll see how long I enjoy it because I've gone through many changes in my interests I tend to get bored I actually started out as a geology major and looking to be a geologist when I was a teacher I was a science teacher so I went from geology to high school

teaching to financial engineering to a little bit of a college professor working on Wall Street trader for a little bit now I'm a content creator in the finance space I do have other interests I was always an athlete I'm a you know I always wanted to do like a diet and exercise YouTube channel as well so we'll see if we'll see what the future holds but the moment I get bored there's going to be a change if I have time for one very quick story when I got that Bear Sterns job I was taking over a guy I was with with that unit from the very beginning he was there like eight years and he was just quitting without a big

plan on what he's going to do next and I was so happy to take over his job but I couldn't help but ask him why are you leaving he was probably making hundreds of thousands of dollars with such a senior position and and he said to me when you are walk or commute to work becomes more enjoyable than the work it's time to move on and I never understood it until it was time for me to quit cool excellent who are your role models oh I don't usually get these questions

I don't honestly don't know I mean everyone always says you're family and that's an easy answer so of course my parents who you know immigrated from communist Russia when I was a kid so I grew up my early years were spent there so just you know picking up and leaving and coming to a new country without knowing the language I mean that's the obvious answer outside of that in the current space I mean my role models are people that just innovated on their own people that just did it and like which is why I don't see anyone coming out of this ico space it's

it's a satoshi nakamoto it is someone that you know comes up with a new economic theory it is like a doctor that you know has a breakthrough in some new medicine that usually happens by just you know a doctor that was just researching it on you on his own not some lab that spent hundreds of millions of dollars trying to get this you know cure so it's it's people like that that you know were smart enough to just go and do it or start calm with no funding and just their will and getting it done it's people like that you you mentioned that story before right from the guy who

quit his job because he was just so bored but is there a similar thing where you did the same I don't think so I don't think I'm smart enough to do something that innovative but I will say that after I learned how to trade after I learned how to trade I learned the class that I currently teach which is the basics of technical analysis and and then I took a more advanced class on options and I absolutely fell in love with options and my college friend my college roommate actually who I took that course with I mean him then spend you know almost a year perfecting one specific option strategy and we got it

to a point where this should be the only strategy that we trade and I want to trade it but it's almost like I don't want to say it's too easy of making money but money doesn't really motivate me but the stuff that we've done with our perfecting trades with options we really could write a book and even name new options tried a new option strategy that doesn't even exist right now in a financial space so I guess that's as close as I came of a perfecting a trading strategy that has insanely low risk of losing money on a given trade with pretty good reward potential and

these trades don't come around every day they only come around a few times a year but being that meticulous and coming up with something that will beat the market year after year after year probably indefinitely until we no longer are keeping our mouth shut and decide to publish it and let the world know so that's probably as close as I came but the only way it's useful is it for no one to know it exists mmm which I refer and I probably already said too much is there anything else that you would do differently if you when you look back not much because I don't like to you

know I mean hindsight is always 20/20 there there is not much I would do differently because I'm pretty happy with where I am today mhm and if it wasn't for all of the mistakes of the past I wouldn't be here today I people always say oh I wish I bought Bitcoin in 2011 and that doesn't mean you'd be in better position today you know you buying Bitcoin in 2011 you could have lost all of that Bitcoin in the mount GOx disaster and been hated the environment so much and never would have gotten back in so it's it's really hard to say so even all of the mistakes that I've made we're trying to open

businesses and investing in businesses as much as I wish I wouldn't do it because I am happy with the the current hour and time and where I am right now I don't really regret all that much cool I mean imagine imagine Satoshi had never written that white paper and there there was no Bitcoin and no blockchain what do you think would you be doing I probably would be doing I probably would be a traitor right now because I always wanted to quit my job and become a traitor I would absolutely be a traitor would I be globally known as a content creator would I still be because the the

workshop that I teach is not trading Bitcoin it's trading any asset what I have build my social media profile would I be this youtuber right now without Bitcoin probably not or I would be so much further along because it was a lot easier for me to break through as a content creator in the small crypto space versus trying to do it in a traditional space where guys like me are I on YouTube are a dime a dozen trying to you know do trading videos but I would probably be at home a full-time trader or running a little

family office or maybe even a hedge fund if I chose to take outside buddy hmm what would you trade well I've traded pretty much everything except currencies so I definitely would not be trading currencies I was day trading futures for a little while like oil S&P gold also options I probably be focusing on options trading during earnings season which has been some of my most successful type of trading I would probably focus on that it also gives you a decent amount of free time because you trade for a month and you take a two-month break do you have do you have a wish for the cryptocurrency

space for the future oh wow no I I think it's as frustrating as the crypto space is it has to play out the way it is I mean the bubbles of the dot-com and oh wait crisis they have to play out in this way so people understand and learn a lot of people blame the banks for the Oh a financial crisis but no one forced you to pay you know a million dollars for a house because the price kept going up and up and up so and a lot of these banks just got into groupthink because their competition started giving out

these are very loose mortgages without and and there are other and their investor competition started purchasing these you know credit default swaps and all of these other financial instruments that we're giving them out sighs returns for a little while until it all crashed and as a competitor in those industries you almost have to also buy into this or you go out of business even earlier and that's kind of what I'm seeing now from the ico space if if you struggle to raise a hundred thousand dollars from a VC giving up a say in your company and 20% equity and your

petter who you feel is you know is inferior with their technology but they are competing with you just raised a hundred million dollars with an ICO you almost have no choice but to also ICO because they are gonna out-compete you in the advertising world and they're gonna steal all of your business even if your technology is better so I can totally see the entire world getting into this group thing that everyone should be printing their own money and I hope it doesn't get too bad but this is just how things have to play out if they're if I did have a wish of something I mean I wish more people were

honest which is a problem in this space and you know my honesty gets criticized in that when I say I think Bitcoin is going down in price but I'm not actually profiting from its downside and people think that's absolutely silly but I try to be as objective as possible and a lot of my fellow youtubers you know they talk up their trades and this happens on TV and traditional markets as well and even though in traditional markets there is some regulation to try and stop that how can you really stop it right someone going on TV in order to you know profit from the position there or they've already taken on I mean this is not that big a deal but it's in my realm of what

I do so it's kind of important to me and it bothers me when people all around me are doing this and then I get accused of doing it as well what I actually don't so in general you think just ethics people should step up in that department a little bit or not just a little bit a lot yeah I think ethics are lacking greatly in the crypto space and it's something I no longer say about Wall Street because most of the people I met they are highly educated even though I know a degree is not as important but highly educated people they have families I mean no one wanted to see Bear Stearns go out of business why would a hundred plus thousand people plus want to lose their

jobs right nobody wanted to see that nobody wants to see an economic crash and people just end up getting into groupthink with bad investments and but most of the people that I met on Wall Street I mean they're pretty honest people they're just you know sometimes you end up in a bubble which is what I'm seeing from the crypto space yeah hopefully when it's over it'll make the people in the crypto space a lot more humble and understand how it happened in the first place what what do you see on the horizon for Bitcoin in the next few years I I do see Bitcoin becoming more popular for this value transfer I see lightning Network actually going live

for people to use within the next one or two years and it will help a Bitcoin scale greatly I mean the big wild card is the government's and their financial systems what happens with Italy what happens with the euro will the euro you know still be around as a single currency those have always been my questions for five or six years now how will the governments continue to double down and double down on money laundering laws which are very critical and why bitcoin is so popular to begin with I was always worried that the government's are gonna try to make Bitcoin illegal

and go after people but that hasn't happened yet so that's a good thing as far as price is concerned I do think that we are gonna make a low sometime this year probably September October we should bottom out in the price of Bitcoin and then we're ready to go to the upside so a couple of years from now I am expecting new all-time highs hopefully you know $50,000 per Bitcoin and higher though I think the old coin and ICO space are gonna hit a bubble and implode I do though I think it will happen in the next two years probably but it's also possible that is gonna extend some more it's really impossible to predict when a bubble will actually pop

it's mostly just luck cool own this was really fantastic I mean I have I could go on and ask many more questions it's really it's really interesting and I thank you very much for your insight like so and for taking time today oh thank you thanks so much for joining us today more info on our guests and our sponsors is in the show notes of this episode and on the podcast website the blockchain and ask.com to help people find this podcast it's important that you download subscribe and give it a top rating and review on iTunes or on the podcast platform of your choice I'm Manuel stackers and I thank you very much for listening [Music]