Full Transcript
Dr James: 0:41
Fans of the Dentists who Invest podcast. If you feel like there was one particular episode in the back catalog in the anthology of Dentists who Invest podcast episodes that really, really, really was massively valuable to you, feel free to share that with a fellow dental colleague who’s in a similar position, so their understanding of finance can be elevated and they can hit the next level of financial success in their life. Also, as well as that, if you could take two seconds to rate and review this podcast, it would mean the world. To me, what that would mean is that it drives this podcast further in terms of reach so that more dentists across the world can be able to benefit from the knowledge contained therein. Welcome to the Dentists who Invest podcast. Welcome back, everybody, to another episode of the Dentists who Invest podcast, episode number 50, the half century, would you believe, and we have got an absolutely incredible guest with us today to speak on something which is very hot at the moment crypto. Crypto is hot, the bull market does. Is it still living? Is it dead? That’s something that we’re going to cover later on on the podcast, of course, I’m super excited to bring to you the 50th episode. Like I say, tremendous that we finally made it to half a century and, like I say, I wanted to commemorate it with something special, and to do that today we’ve got Sudu in front of us, who runs Coinflex, which is a massive, massive, massive crypto exchange, and we are super privileged to have him today on the podcast. Sudu, how are you?
Sudhu: 2:11
Good James, thank you for having us, and having me.
Dr James: 2:14
No problem whatsoever, it’s my absolute pleasure. So I guess what people would like to know, sudu people that don’t know you they might just like to know a little bit about you, your relationship with crypto and how you transition from the traditional finance world to the crypto world. A lot of people will be interested in hearing that, because traditional finance seems so much more stable, I suppose, is the conventional wisdom, as opposed to the crypto world. So what did you see in there? That is something we’re going to delve into later, and also a little bit about Coinflex. To be nice, just a little bio just to start us off. If that’s good, yeah, absolutely so.
Sudhu: 2:52
Coinflex is a spin off from Coinfloor, which is the UK’s oldest GBP to Bitcoin spot exchange here in London, and my co-founder, mark, was the founder of Coinfloor. He’s been running exchanges for about eight or nine years. He left university to buy and sell crypto Bitcoin, particularly in pubs from all around London, and as that business grew bigger he formed an exchange which was Coinfloor. My background is from the traditional space. I have 20 years of trading derivatives, which are futures and options. I used to trade single stocks and kind of run a team at Merrill Lynch here in London. I used to be a senior trader at DRW and a bunch of other hedge funds and about four years ago I started sort of reading up around crypto. It was sort of early 2017 and in the online and on the press there was a lot of mention about Bitcoin. I knew nothing about it. Like a lot of people started going to meetups around London and bumped into Mark essentially, and it was a very interesting time in his thought process because he was looking to grow Coinfloor beyond just spot trading and into futures and I knew everything about futures and zero about crypto and so we kind of hit it off. We essentially did a management buyout from Coinfloor off the futures business. We spun it out to Hong Kong and launched there about three years ago.
Dr James: 4:15
That is super exciting and Coinflux is a huge exchange now Turn over 400 million. Is that correct, sidhu?
Sudhu: 4:24
Actually, 400 million is in one of our products, If you include our repo markets we trade about four billion a day. So we’re still not in the top five exchanges in the world globally, because it’s a big market Binance, being the biggest by far, and they trade around 80 billion. To give you by way of comparison, we’re in the sort of next set, the bottom set of five, so somewhere between five and 10 and growing fast.
Dr James: 4:54
That is incredible. Wow, so privileged to have yourself on the podcast today. So, sidhu, just as we said earlier, what I’d really like to touch upon, because a lot of people will be interested to hear it, this what did you see in crypto that led you to leave the security of the traditional finance world?
Sudhu: 5:12
Yeah. So for me, really, the turning point was that I started to see how you could control your own money, and what I mean by that is obviously there’s the simple case of where you can just hold your bitcoins and Bitcoin cash in your own wallet and carry it around with you, put it in a safe at home or in a safety deposit box. But beyond that, what I saw in crypto is that you could actually directly access markets yourself as an individual. So, for example, I’ll give you an example to help. So if you’re like James and you want to trade carbon futures, for example, you would have to go to IG or IB and basically open an account, and that account opening process is very, very lengthy. They ask you about your knowledge, you’ll take several weeks to KYC and stuff, and if you pass that, then you’re sort of allowed to trade carbon. Now that’s the first roadblock you have to get through. The second roadblock is that in IB, for example, may say yet your minimum trade size is 10,000 pounds. Now, these are not things that are successful to everyone, whereas in crypto, if you look at that same journey where, let’s just say, you wanted to trade on coin flex, there is no minimum. I think it’s maybe $10 as a minimum trade and to open an account, you open it directly with us, so there is no middleman sitting between us and the exchange. And those are the things that I saw in crypto, which, for the first time, I’d never seen in the traditional space. That really attracted to me that you were fundamentally in charge and solely responsible good and bad because you can’t blame somebody else for decisions you make, but you’re solely responsible for investing your your own money and trading your own money, and that’s what really attracted me to it. We call it democratising finance and it really does.
Dr James: 6:59
Yeah, that’s awesome and that’s one of the. The principle philosophies of crypto, isn’t it that you take back control of your wealth? And the principle philosophies of Bitcoin, too, that, instead of having something which is fundamentally an asset that inflates and its value decreases over time, such as cash, cash is what we’re all administered we’re practically given what are administered along a daily basis by the powers that be, and, inherently, there are some massive flaws with cash and abuse of power by the individuals who control how much that is created, and that was what inspired Bitcoin, or inspired the a lot of the space. Basically, and obviously Bitcoin is the father of the space, so it all grew from there, from taking back control, which is why a lot of people say, the true philosophers in crypto say not your keys, not your wallet, and they like to take the crypto off the exchanges, although that doesn’t apply so much nowadays, because it’s not like exchanges just go whimsically bust as frequently as they did, certainly in the in the in the early days. So so who? You have created coin flex. You believe in crypto. Crypto still has a lot of detractors out there that somehow don’t think it has a future. What would you say to those people?
Sudhu: 8:13
Yeah, I mean, look, it’s a very common mudsling that crypto has had since, you know, 2008, which was that it’s for money launders and and you know so forth. Now, in the early days, you know, there was still growth and there was certainly a lot of this going on because if you wanted to buy drugs or whatever it was you could, you know the easiest way was to use Bitcoin. Now, the good thing about 2021 is that there is a lot of blockchain based technology, like chain analysis, who we use, or elliptic, another big blockchain provider. Where they can basically because it’s on public ledgers they can go up and go back and look at where the history of these coins have come from. You know, almost like 50 hops. Now I tell you why that’s important. For example, if you’re a bank, and you’re a Barclays Bank here, and you receive money from HSBC, you don’t check as a bank that it’s fine beyond HSBC, because you’re like well, hsbc send Barclays the money, so it must be fine. Now it just be behind HSBC. There might have been Mexican drug lords or money launders or a bunch of people behind there potentially as I’m using this as an example who might have used the system. But as far as I’m concerned, as Barclays, I received it from HSBC, so everything’s good Now in crypto, we don’t take anyone’s word for it. So even if we know that you, james, are sending coin flex your assets and but you may be a stand up guy and we know each other personally, for example even then we will use blockchain technology to go back about 50 hops behind to see where these coins are coming from, and so what that means is that we have a very, very accurate way in crypto to look at coin origination, to see where there is clean coins, dirty coins, mixed coins, anything like that. And so these big firms, which are both unicorns and also used by the US government and other governments to to monitor blockchains, they basically came out with some analysis last year that saying that less than 1% of crypto transactions were suspect, which, by the way, is a way, way, way lower number than for cash. So it is definitely something these accusations was definitely something that probably, probably will could have been true at the start. Then it’s no longer the case, in my view.
Dr James: 10:26
Awesome, brilliant. And where do you see crypto going over the next few years? Where do you see it in terms of taking a greater role in our lives, becoming more fundamentally woven into the fabric of society?
Sudhu: 10:39
Yeah, look, it’s a great question. The, unfortunately, the biggest use case for crypto is payments and unfortunately, right now, crypto is way too volatile for you to use his payments, you know. I’ll give you an example If you go to Starbucks today and you wanted to pay in Bitcoin cash Starbucks, by the time you pay for your coffee, the Bitcoin cash that you sent over the value of it might have decreased or increased, right? So it creates uncertainty for the vendor, starbucks in this case and the person spending it, which is you, are I or any of your listeners. So that uncertainty basically does not encourage crypto to be used as payments, and in Hong Kong, for example, there are, there were, many restaurants accepted Bitcoin and Bitcoin cash, but again, you have to be kind of careful how you used it, because you may want to say Bitcoin, use cash, or spend Bitcoin, use cash, you know, and so it wasn’t very clear. So instead, what’s been going on in crypto is, obviously, people are using it as an investment asset. They buy it, hold it or trade it, right? So where I’d like to see crypto going in the next few years is to use as a payments as well, because until it uses payments, we can’t truly scale into into mainstream society, it’ll remain an alternative asset on the side.
Dr James: 11:55
Brilliant. There has been some momentum or movement towards that, that idea or that use case, as you said, in day to day transactions already, because I believe that visa have adopted US dollar coin. I know that they’re working with them. I don’t know much more than that. Perhaps you could go in the more detail.
Sudhu: 12:15
Yeah, one of the great innovations and growth in the last few years in crypto has been stable coins, and stable coins are essentially tokenized dollars, so you send in a dollar to, say, circle or Coinbase and they will give you one USDC. Now the good thing about that is it’s one to one with a dollar instrument, so it doesn’t fluctuate in price than, say, bitcoin or Bitcoin, cashwood or Ethereum. So it is becoming a better and better instrument for payments, which is good for the space overall. Now, obviously, competing alongside stable coins are the central bank digital currencies. My view on it is that stable coins are still by far superior to CBDCs because of the fact that they are easily movable, cross border, seamless, cheap to transaction with. But yeah, so you know, if you few years ago, if you look to stable coins, they were probably about 15 billion dollars in circulation. Stable coins are now closer to 125 billion, so a huge growth space. And, of course, as coin flex and we’ll chat on this later but we’ve got our own yield bearing stable coin flex, sd and so there’s a lot of innovation going on in the stable coin space.
Dr James: 13:28
Brilliant. Yeah, we will absolutely bring up coin flex. I wanted to know a little bit more about it, actually, because I know that coin flex You’ll be able to explain it better than me it’s a combination of a decentralized exchange and a centralized exchange is got. There is got both features, and you believe that coin black, coin flex, improves upon the current, the current options that we have in terms of exchanges. So would you like to just maybe go into that in a little bit more detail? What coin flex differently?
Sudhu: 13:59
Yeah, absolutely. So. We haven’t quite got there yet, we’re we’re still a couple of months out. But essentially, you have two types of exchanges in crypto, which does not exist in the traditional space once a centralized exchange, which is the same as life for ice, or CME, which is the same as traditional, or trade fight and on on. In crypto, we have a single decentralized exchanges where they’re fully automated, smart contract based, and they both have their pros and cons and you know a lot of people will choose between one exchange or another, one type or the other, whereas a coin flex, we want to take the best of both, and so for centralized exchanges, the, the the massive pro is the way the oldest trade in the order book, the way orders are masked, so we’re keeping that part decentralized. In our view is the best part about it is Doesn’t control your assets. So we’re basically taking the combination of what you call a hybrid of the defy and see five to make the next generation of coin flex, and what that means is that we, you’re, we buy ourselves. You know you use the term not your keys, not your coins earlier, what? Right now, if you send assets to coin flex or any other CIFI exchange, we hold your assets so we could be hacked with it, we could move it, we could run off with it in a lots of exchanges have you know, a lot of exchange users have this risk. When we decentralize the custody part, we will become one signature amongst many around the world. So we’re mitigating that risk. You know, a substantial amount.
Dr James: 15:32
Well, that’s why I mean decentralized exchanges. How long have they been around, really? Like over a year and a half. When was your name swap created? Maybe about two years ago?
Sudhu: 15:41
A little bit longer than that. They’ve probably been around about about four years or five years but really they’re the boomed in the last two to one and a half years. Yeah.
Dr James: 15:50
Yeah, and that’ll be because they align with this philosophy that many crypto enthusiasts have, which is like which is that they like to retain custody of the crypto, absolutely 100% cool. So you’ve talked a little bit about coin flex and how it’s maybe a little bit of a hybrid exchange. What inspired you to start coin flex? What did you see in the crypto world that you thought we can improve upon this? We can do it better. Let’s launch coin flex.
Sudhu: 16:19
Yeah, it’s a great question. I mean, it was something that, to this day, we’re one of the minorities in, which is called physical futures. And you know, in the traditional space physical features are huge. They don’t exist in crypto and, at a very simplistic level, what physical futures allows you and delivery is that it allows you to build very simple tokenized products that everyone can use. And what do I mean by that? It means that essentially, in crypto markets, there’s been sort of two very, very lucrative strategies that trading firms and high frequency firms have been able to make a lot of money off over the last few years. But one is called basis trading and the other one is market making. And because we have physical futures, we can actually take both of those products, the basis trading being flex usd, the mark the market making called mm plus, and tokenizing it and making it very simple for retail individuals to trade with so they can kind of send usd, see press one single button called mint and then you have flex usd and then, in the background, all this really complex repo and futures trading, futures delivery goes on, but the user can, you know, decide that he wants to understand it, or you can say you know what I’ll just trust coin flex and mint, and coin flex takes your money and and sees what kind of returns you can make for you and pays you, pays you interest.
Dr James: 17:44
That’s interesting because I know that coin flex offers a yield of 18 percent APY per year on deposited stable coins on minted stable coins, if I’m correct and that would be what goes on behind the scenes to offer this to people who are uninitiated in the crypto space this unbelievably high yield, real quick guys. I put together a special report for dentist entitled the 7 costly and potentially disastrous mistakes that dentists make whenever it comes to their finances. Most of the time, dentists are going through these issues and they don’t even necessarily realize that they’re happening until they have their eyes opened, and that is the purpose of this report. You can go ahead and receive your free report by heading on over to wwwdentistuneinvestcom forward slash podcast report or, alternatively, you can download it using the link in the description. This report details these seven most common issues. However, most importantly, it also shows you how to fix them Really. Looking forward to hearing your thoughts.
Sudhu: 19:01
Yeah, so it’s a variable rate instrument. So to be clear, you know, when you quote the, your, your APY of 17-18%, it’s literally that’s the average over the last seven days or two weeks, I think, or something like that. But it’s a variable rate instrument that basically you send in dollars, stable coins, it gets, it gets minted and it gets deployed into our repo market. Repo market is an unleveraged borrow-lend market. It trades with the first launch repo in crypto. I think probably still are the only ones. Pretty much. It doesn’t even exist as a central order book in traditional markets. Our repo trades three to four billion a day, maybe more some days, and essentially the yield gets generated in this kind of borrow-lend book between participants who buy and sell. And you and you know what’s great about crypto and democratizing finance is the first time that individuals can can get take part in these markets, because these markets have been the preserve of only the very big banks in the past.
Dr James: 20:00
I see and when you use repo in that specific context, what let’s? Let’s make that extra clear for anybody who’s listening, who maybe doesn’t have much of a financial background, what that means.
Sudhu: 20:11
Yeah, repo is essentially a short-term borrow-lend. So if, if I have dollars and I’m doing nothing with it for the next eight hours to eight months, I can basically say look, you know, this is the rate that I want to lend my dollars out to somebody who’s using Bitcoin to borrow your dollars. So there’s someone else on the other side who’s got a lot of Bitcoin and he wants some dollars to pay for bills or to trade with. He can then meet with you, pay your rate, give you a rate to borrow your dollars. He will then give you Bitcoin, so you have an asset back on your side. So it’s fully collateralized lending and then he will take your dollars and either trade with it, spend it, do whatever he wants, but you’ve got his Bitcoin, you’ve got a futures position against it in the background, so you have no market risk and you essentially just being is that you’re bringing a borrow-lend activity.
Dr James: 21:00
That is so interesting. Wow, that’s awesome. And then to get into the real nitty-gritty it’s quite often over collateralized as well to account for the volatility of Bitcoin.
Sudhu: 21:09
It is yeah totally so the the lender side of it. You know we’ll put down sort of 20% margin as well if you was interacting, so in some ways you can say it’s 120% collateral and it’s a phenomenal market that you know. It’s not something that we dreamt up out of nowhere, but it’s something that we’ve designed because we saw it work. You know, right now, to trade repo, you have to be like Barclays and HSBC and what you know, and you have to trade with the Bank of England. You, as James, do not have access to this market and in crypto, in crypto, we’ve just we’ve created a market where you can interact with the big institutions.
Dr James: 21:45
That’s so interesting and I wanted to ask as well let’s say, in the instance of Bitcoin, is a? Bitcoin can be a cruel mistress sometimes because it can be incredibly volatile. What about if there was to be in the unlikely scenario that Bitcoin had a 20% candle in one day, 20% downward candle is there a? failsafe mechanism, or is it all just a huge big balance of probabilities? That’s so unlikely to happen that it’s not really something that we have to account for, so let’s use it. In the exact example that you were just talking about, someone’s been overcollateralized for this Bitcoin. They’ve borrowed a specific amount of dollars from them, and Bitcoin has moved so far down that it’s no longer worth them repaying their dollars.
Sudhu: 22:30
Yeah, so, yeah, it’s a great question. So, from your perspective, to be clear, as the dollar lender, when you have entered into a repo trade, you’d send your dollars out, they give you Bitcoin and you get a short futures position. So you have no market risk as a lender, right? Just to be very clear that you will. Because of physical delivery, you will always end up back in your same dollar position that you started it right. So you don’t have market risk. Now where the risk that you do have is the guy that you’ve just mentioned, the guy on the other side of the trade who may take your dollars that he’s bought off you off-platform to use it for something else. Right, in that scenario, we have this margin and liquidation system going like every other exchange, where we keep monitoring everyone’s positions hundreds of times per second and if the position becomes close to being under margin, we will liquidate his position. So, in this example, if Bitcoin starts dropping and he doesn’t top up with more collateral, we will cut his position. We will liquidate him in the order book to make sure that you have no risk as the other side of the trade. So the risk that you have right here in this example, is that we you know what if it’s so quick that we can’t do it fast enough and we lose a bit of money. So that’s the risk that you have. But you know, touch wood, so far we’ve been through sort of like big 50% type corrections in a day and you know we haven’t had any losses thus far. But obviously that risk is definitely there and you have to be mindful of it.
Dr James: 23:59
Okay, this thing’s been stress tested then, and that’s the thing about the crypto world is not long before things get stress tested because obviously the price can be very volatile. Part of the fund.
Sudhu: 24:10
Yeah, I mean, look last March it was you know, it’s the March 13th where we saw like a 50% within hours, right, so you know, these sort of moves definitely do happen, will happen again, and the only way to make sure is to keep going through them and surviving them.
Dr James: 24:25
That’s so interesting and those rates are so much better than what you can get in the traditional world as well.
Sudhu: 24:32
Yeah, look, you know traditional rates are, I think you know, 0% to 0.5%, and this is where we’ve seen such great growth in FlexUSD. So FlexUSD, for example, has $325 million invested into it by lenders right now. I think since we launched it back in December, there’s probably been about $750 million put into that product and the reason why people are starting to love it is because the yield differential right 17% and 18% versus 0%, which is, you know, unheard of, and even in crypto those yields are actually huge. You know, forget fiat comparisons, because when you send money into USDC or Tether, they give you a stable coin and they pay you 0 with the dollars you send them. They will invest their dollars in sort of money market instruments and short term debt, for example in the industry in Treadfy. You know we do two things which are very helpful to crypto. One is that we invest the dollars that people send into crypto into the same crypto markets that they send it in, which is repo. And secondly, whatever interest you earn, we take a 10% fee on your interest card, but 90% of the interest you earn is sent to you every eight hours on chain. So no matter where you keep your flex, usd could keep it in your own cold wallet at home. You will receive interest on chain every eight hours, which is just great, great bit of tech.
Dr James: 25:56
And that’s so. That, in a nutshell, is why the rate is so much better than the traditional world.
Sudhu: 26:04
Yeah, rates in so much better because they’re the opportunities are better in crypto, like when retail futures traders on Binance or coin flex coming, they buy in the bike loads of futures and create yield and so that creates a sort of, you know, basis yield, which is why the high rates are coming. But I mean, let’s face it I’m the other reason why rates have to be high in crypto is because of the risk you’re taking as a lender, right, you know when you send in your assets you’re sending it to coin flex or Binance or you know, or who will be OK X, you’re not. You’re not sending it to. You know you haven’t got deposit or protection like you have in the UK and the US. You’re not sending it to State Street, which sits between you and the exchange. If you’re trading on LSE, that protects you, you know. I mean, you’re taking some real risk here, right?
Dr James: 26:48
And 18% is up there with the best that I’ve seen on the stablecoin front. What is your personal opinion on these extremely high yield crypto accounts with token decentralized exchanges that have 120% APY on their native token? What do you think about their business model? Is that legit?
Sudhu: 27:12
If you look at some of the Dex’s or DeFi swaps, where the yields are up there in the short term, the yields are legit in the sense that what they’re doing in the background is that not only are they giving you trading fees like or trading P&L like AMM plus there’s some coin flex they’re actually dropping their own exchange tokens or tokens on top to create extra yield. So if you looked at AMM plus, which is yielding like 50% right now, you know on DeFi they will give you the 50% and they would chuck in another 50% or 100% using their own token. So you can see why in that example it works right now but it’s not sustainable over the long run. Right, because you cannot just drop tokens forever that are made up. So this is called artificial or juiced yields and you can’t juice these yields forever. So, yes, yes, you can farm this, which is the term for earning this. You can yield, farm this in the short term. In the long term, medium term and long term it’s not sustainable. Whereas flex USD and AMM plus gets his yield from normal market based activities, we don’t airdrop anything to make it artificial. So it also means that you may earn 4% on it one day and 20 the next day, because it’s a market based rate and that’s why we really like, love it, because it is truly sustainable in that we can grow it alongside the growth in the crypto space.
Dr James: 28:30
So when we’re talking about those really high yield accounts, what you’re saying is you can’t just indefinitely create these tokens and drop them on the market, because that will mean that the value is diluted because it’s inflationary effectively.
Sudhu: 28:44
Correct. Imagine if you thought you know, imagine if you were on one of the swap swaps and that you knew the token drop was. You know, you know 100,000 tokens a day and you go on for 25 years. I mean you’d never hold the token right. You’ll keep selling it every time you received it because you knew there was like a billion coming in behind you. So the token price would crash and the yields would drop as well. So it’s a very tricky tokenomics model to kind of put together in the first place. But secondly, it is not sustainable beyond the short term.
Dr James: 29:17
Well, yeah, but I think that you’ve hit the nail on the head earlier when you were talking about trading those, you know, yield farmers. They’re always dipping in and out of whichever accounts they think are going to have the best yield and they might stay in them for very long a few weeks. So I suppose if anybody does want to use those platforms, they need to take more of an active management style to their trading versus coin flex, which is more passive and will be suited to someone who is more time per, shall we say, have I have. I just encapsulated it well there you have 100 percent.
Sudhu: 29:49
Yeah, I think this is. I’m going to start using that same analogy, because you’re totally correct. You cannot be on DeFi and not been watching it several times a day and managing your tokens On CoinFlex, on FlexUSD in particular, for example. You can actually even watch it, look at it once a week or once a month or even every few months, because the delivery mechanism and the rebidding means that you’ll never pay any charges on it. The worst case is you may earn zero for a couple of days or a couple of periods, but the point is that it’s never going to be negative, so you can be as active as you choose to be on it.
Dr James: 30:24
Sudo, thank you so much for that. That is clever stuff and I’m learning here as well. Sudo, what do you think the future for first of all CoinFlex is and, second of all, crypto?
Sudhu: 30:37
Yeah, so for CoinFlex. I mean, the way we see the future is that we become the home of crypto yields, and that means that if you are a lender, if you’re a yield collector, if you’re a passive what we call passive capital ie somebody who has capital they want to deploy, earn fair rates, cut out the middleman and just keep growing their kind of investment portfolio in the crypto space CoinFlex will be your natural home, and so we want to be the go-to place for crypto yields. In terms of crypto itself, I’m particularly bullish on one particular kind of Bitcoin cash. The reason being is that it’s the Bitcoin cash stood on the shoulders of giants, which was Bitcoin, as you pointed out, but it has very, very cheap payments because of the large block size it allows, and so I’d like to see more and more crypto, and it may not be Bitcoin cash, it could also be other crypto assets. It can’t be Bitcoin because it’s too expensive and too slow, but essentially, I’d like to see crypto being used for payments, because once we see that and we walk around Europe and the rest of the world and you see signs for, hey, we accept crypto, and you see it in Venezuela and Argentina and El Salvador and places like that. As more countries adopt this, we will see crypto use for payments, and that’s where I see the turning point for crypto going mainstream.
Dr James: 32:00
And on what you were just talking about there governments endorsing crypto. Do you think that that is something that’s going to continue, or where they’ll reach a point where crypto gets so big that they see it as a threat and they go all out to ban it? What’s in it for them if they permit crypto to become bigger?
Sudhu: 32:18
Yeah, it’s a great question because obviously, the smaller countries that have very high inflation or who are short of dollars or have issues accessing banking cryptos are very, very useful use case. Right, you make complete sense. Now, if you’re the US or the British government or the European government, I mean you can see crypto as a threat because you can’t control it. You landed different airports, and what it always tickles me through this day when I see signs saying if you’re carrying more than $10,000 or 10,000 pounds, you must sign a form and let customs know. And now, meanwhile, you could have a flash drive with your Bitcoin on and you could be carrying $100 million worth of Bitcoin and no one would know. In fact, you don’t even need a hash drive. If you remember your seed phrases, you can have it in your head and go to any cafe and reconstruct your wallet. Now, just a piece of paper.
Dr James: 33:12
You could just write a little piece of paper that’s worth $100 million.
Sudhu: 33:15
Right. So this is where governments are going to be totally anti it, right? So there’s lots of things in the future that will hopefully change that. You know, maybe it’s KYC and kind of better ways of managing wallets or different things like that. But fundamentally, that problem that you control your own money I think it’s going to be a problem for governments and it would be interesting to see how that plays out, because they obviously see the benefits of blockchain as a technology and through this whole CBDCs right, because carrying fiat around I mean who carries cash around right? I mean it’s expensive to create, it’s a pointless exercise when you’ve got Apple Pay and all kinds of WeChat Pay and all kinds of stuff. So it would be interesting to see how this plays out over the next few years. But you know, as you say, I don’t think it’s hard to see what’s exactly in for them outside the fact that the new generation of people want to control their own money. So, unless politicians want to be voted out because they’re being unduly restrictive, they have to start understanding the new paradigm that we’re in, I think.
Dr James: 34:19
Well, central bank digital currencies are something that’s extremely lucrative for a government, because there is no pound or dollar that can go on trace when you have a currency that exists on the blockchain and therefore there’s not a single pound or dollar of tax money that you miss out on. But, as you say, whether or not they’ll want to endorse other cryptos apart from their own central bank digital currency, that remains to be seen. Anything you’d like to add on that, or is that a good synopsis?
Sudhu: 34:47
No, it’s great synopsis yeah.
Dr James: 34:49
Awesome, cool Suru. Thank you so much for your time today. We are going to wrap up very shortly. Let me ask one more question. I’m very curious to hear your answer, and this will be on the tip of everyone’s tongue, at the forefront of their mind Are we still in a Bitcoin bull market? What are your thoughts?
Sudhu: 35:07
Yeah, look, you know, after preface this, we say you know this is not financial advice and this is my own personal, personal view. I’m super bullish crypto. I’m not sure which time frame that’s in, so obviously everyone wants it today or this month or next month. I think we are in a Supercycle and I think we’re going. We’re going to 100 or 200k in Bitcoin, for example, I just don’t know the time period. The trading pattern this year has been very similar to what I remember from 2017, where there was sort of you know when I first started tracking Bitcoin and and if that repeats itself, obviously crypto or Bitcoin is going to 100k, probably by the end of the year. But really that’s, that’s a big if and a big, big call. I think fundamentally I’m super bullish it. So you know you have to be, you have to be prepared for kind of big drawdowns and big gains because it’s it’s it’s volatile and but a hundred percent behind it still.
Dr James: 36:08
Time frame is so important? You’re totally correct. Here is some interesting time frame facts. This is the time frame that we should all be going into the crypto world as Bitcoin investors. With this in mind, if you buy Bitcoin, there’s never been a four-year period history. Well, you haven’t made money, and that’s if you buy it at the very worst time. If you buy it and you hold it for three years 97% chance you buy and hold it for two years 72% chance you buy and hold it for one year a 53% chance. So what does that tell you? That tells you that if you’re getting into the crypto market, you’re a passive holder in Bitcoin. You should, worst-case scenario, be expecting to wait four years before you’re profitable. That is the time frame that you we should go into it with. Unfortunately, with crypto and Bitcoin, because it’s such a nascent, it’s a market that tends to attract investors who are inexperienced as a gateway to further invest in, and I feel like every jitter, every Fluctuation, people panic, sell their Bitcoin. It’s a very jittery, volatile market and hence why that’s why we tend to hear stories like I bought Bitcoin, then I lost 10% of my investment Three days after it will do. It might do that, but you have to have a more broad, longer time frame before you go into the market so that you can be most likely to make Profits. That’s the best mindset that you can have have a long-term time frame. But of course, this is not financial advice, and so do you, and I would never like to lead anybody astray or for anybody to make Any bad investment decisions based off this. Please do your own research. Just our opinions. Did you have you heard those, those stats before city? I don’t know if you have. I have. Yeah, yeah, yeah. So best time frame to go into it. But you know what? S&p 500, the very worst period of very longest you would have had to wait in history to make money and be profitable in the S&P 500, was actually even longer than that. It was five years. Which is why, when people say get into indexes and bonds, your FA will usually say Five years is the minimum time frame before which you should think about drawing profits. Elsewise, you might want to think about another investment vehicle at the now silly.
Sudhu: 38:19
I think. I like to add two things to what you said. To complete agree with one is I think you know it’s definitely don’t trade futures, you know, or leverage instruments in Bitcoin, because it’s super volatile. You could lose all your deposits. So, you know, I think for early people into crypto it’s definitely worthwhile buying spot and there’s a number of exchanges you can do that in. You know, in the UK’s coin floor there’s coin base, there’s, kraken, there’s. You know you could do that. And the second thing, I think and you know this is more really I’m not a FA, but it’s you know dollar cost averaging and so you know, by an amount that’s comfortable, that you’re comfortable investing on a monthly basis. So you drip, feed your cash into into the market and you know DCA’s has has proven to be a pretty effective strategy as well. So if you combine to keep those two mindsets, you know, dip your toes and and you interest in crypto, there’s a great way to dip your toes.
Dr James: 39:12
Wonderful, so do you. On that note, we’re gonna bring proceedings to a close today. Can I just say thank you so much for coming on the Dentistry Invest podcast. There were so many gems of knowledge that you dished out there today. Thank you so so much.
Sudhu: 39:26
Thank you for having me, jim.
Dr James: 39:27
So it has been my pleasure. I hope you have a tremendous day and we shall speak again very soon. Cool See, ya. If you enjoyed this podcast, please hit, follow or subscribe so you can stay up to date with information on new podcasts which are released weekly. Please also feel free to leave a positive review so others can learn about this podcast and benefit from it. I would also encourage any fans of the podcast to sign up to the free Facebook community from which the podcast originated. Please search dentists who invest on Facebook and hit join to become part of a community of thousands of other dentists Interested in improving their finances, well-being and investing knowledge. Looking forward to seeing you on there.