Full Transcript
Dr James:
What is up everybody? Welcome back to another episode of Dents who Invest podcast. We are in the mid-80s in terms of episodes. How crazy is that? Almost at 100. I wonder who this century guest is going to be. I am joined today by Victoria Jones. We’re here to talk everything and anything crypto, especially the current Bitcoin market, because things are crazy out there right now, aren’t they? Victoria, victoria, how are you today?
Victoria:
Yes, I’m very good. Thank you so. I just enjoyed a nice catch-up. Not seeing you for a while, it’s been too long.
Dr James:
The last time we bumped in, you know what? Actually, we knew each other, of course, because of the podcast which we were speaking about off camera, which we shot on January, the 3rd 2021, which seems like yesterday, but that was over a year and a half ago which is actually Bitcoin’s birthday for anybody who didn’t know as well, and that was a total coincidence, a happy coincidence, of course and then we bumped into each other in the flesh at CoinFest, didn’t we?
Victoria:
We did.
Dr James:
Yes, yeah, that was pretty cool, we did indeed, what’s new in the life of Victoria since we last spoke there, and how are you filling your days at the minute?
Victoria:
Well, fairly chilled. I’m very fortunate that I got involved with Bitcoin at a fairly early stage. I first bought Bitcoin in 2016. So I followed it now for like five to six years the first bull market. I kind of watched it go all the way up and all the way down again, and so I was just like right, I’m not making that mistake again. So I was much more cautious when I felt that the price could be hitting its high at the end of last year. So I did manage to sell some.
Dr James:
So you know what it’s. A ride of passage in Bitcoin, that your first bull market. You’ll never take any out at the top or very minimal. All right, and you know. For me, I got to admit I thought it was going to go higher in about December time last year, November time, because if you extrapolated all the historical data forwards, it looked like it was going to go higher at that point, but no one knew for sure. I did cash out 33%. When it hit 60K again, I cashed out 33% of my Bitcoin position. That money, a lot of that money, is still on the sidelines, but obviously the remainder, the 66% it’s hard to watch it going through what is going through at the minute, but the one thing you must never do is sell. You know what? Here’s the one thing about Bitcoin in Ethereum and this is going to not blow your mind, but also blow your mind at the same time because it’s incredibly simple If you never sell your Bitcoin in Ethereum at a loss, you never lose money. Okay, and what do I mean by that? It always recovers if your timeframe is three and a half years at least if you project the historical data on the charts forwards. So I would suggest anybody who’s getting into crypto for the first time. If you’re not going to trade it, which I wouldn’t advise, unless you’ve got a high level of skill, if you are an investor, buy it. Put it on a ledger. Forget about it for at least three and a half years.
Victoria:
Yeah, I think if you’re just buying, if you’re still working and you’re just buying it on the side, then I think that’s a very sensible thing to do, because, I mean, I’m not a trader per se, because I don’t want to spend all of my time sitting in front of a computer screen looking at numbers. But the thing is, if you understand the fundamentals of Bitcoin and you understand how it works and why it goes through these cycles, then you start to have a bit more confidence as to when the tops are and the bottoms are, and I think this is playing out in the market. You know, the amplitude of the tops and the bottoms seem to be getting lower as people become more savvy about that kind of thing. So you know. So the huge price rises we’ve had after previous carving seem to be modified now. I think also, the other thing that’s coming into play this time is the stock market. I think the stock market topped out in November last year and the trouble is, you know, the crypto space has developed to such an extent now there’s a lot of financialization in the market. So there are a lot of people who are buying Bitcoin on leverage, especially a lot of big companies there are now, you know, crypto companies where you can deposit your crypto and they’ll give you interest, but behind the scenes, what they’re doing is they’re taking that money and they’re playing in the market with it in order to justify the interest that they’re paying you. And part of the problem I think we’ve seen recently is, you know, a lot of these companies are now having liquidity prices, and the more it happens to one, the more it happens to the others. You know, the problem is Bitcoin is so volatile. If you haven’t got a sufficient cushion, it’s very easy to get wiped out. I think there were March 2020 when they had the crypto crash. Then, as the COVID crisis started, they’d already some of these platforms had already become quite established, and I think there were some people who were pretty confident at that stage that the price is on the trajectory high, and I think they’d actually taken out some loans and wanted to buy more Bitcoin, and a lot of them got in danger of being liquidated because the price crashed so suddenly. So you know, leverage is always a tricky thing at the best of times, but in the crypto market it’s just lethal, because when it happens when you least expect it, you know it just has so many knock-on effects, and so I think this is why we’re seeing such a dramatic plunge at the moment. You know, I think a lot of people are expecting the price to go much higher. I think a lot of people were taken by surprise by the fact that it didn’t go as high as people expected, and so, when they didn’t, then it started going down. I don’t know how many people would have actually, you know, sold at that particular point. And then, of course, all these companies started getting liquidity prices, and I don’t think we’ve ever seen such a severe drop in the price of Bitcoin in all of its history. And then you’ve got all the macro factors that are going on as well. So there are a lot of things that are playing into this story, and because the macro environment is very, very different to any other time in Bitcoin’s history, I think you can’t even rely on Bitcoin’s history either to predict the future, because I think all of that is good. You know, it’s just going to be completely different this time. I mean, people always say, well, people say it’ll be different this time, and then it never is. But actually, when they’re up, you have to always be very cognizant of all the other factors that are coming into play, and it’s a really tricky dynamic to get involved. I think Bitcoin has a very good long-term future, but its beginning will necessarily be volatile. So in many respects, you know, it’s the ones who are really expert at the space who are going to be able to manage it better. You know, I don’t think the average person is going to have the time or even the interest to kind of study it at that level, and the ones that don’t are the ones that are going to get burned because they don’t fully realize what they’re dealing with. So it’s tricky.
Dr James:
Which is why, for all intents and purposes, for 99% of people, buying old is the best strategy, but it’s getting that message across to people. So the three and a half year time frame is gold dust, but, just like you alluded to, this is an interesting one. Okay, because do the old four-year cycles, the halving proceeding, the bull market continue to hold true? Because we didn’t get the traditional end to the bull market, which is like the crazy hyped up euphoria phase that we saw in the last three bull markets. Will that continue to be true? I feel like that chances of that grow slimmer day on day. I feel like, as you say, post-covid, it’s been correlated a lot to the stock market. Is that a symptom? The signs of manipulation of money that is not from retail, of money that is not from the general public, but is money that is institutional? Probably, in my opinion, but here’s the thing. Think about it like this. Here is my greatest piece of data or evidence on why I am long-term bullish on the price of Bitcoin. First of all, it is the properties which you alluded to just a minute ago when you were talking which I’m actually going to ask you to explain in more detail because some people will be uninitiated to the concept of Bitcoin and how it works. I’d love to hear your description of those, given that you are the author of Truth Decay, one of the most noteworthy books on Bitcoin, how it works and the principles behind it. Yeah, yeah. And then the second thing, as I say, what we were talking about just a minute ago is basically that, because these things, because crypto at the minute is so heavily manipulated, and because we can see these price volatility going on and the way that it is, it’s more correlated to the stock market than it ever was. Think about it. Who’s manipulating the price If it moves in these characteristic ways? It’s likely to be institutions. To move the price up and down like that. They must have a hoard of Bitcoin, right? Why the hell would they buy a hoard of Bitcoin just to crash the price to zero? Think about it.
Victoria:
Yeah, there’s a lot to unpack there.
Dr James:
There’s a lot to unpack and you know what? Here’s the thing. I’m also smart enough to know that basically no one really knows, but that’s my theory, certainly. Anyway, let’s segue into the properties of Bitcoin that you alluded to just a minute ago, Victoria, because there will be people uninitiated to the world of crypto who are listening to this podcast, and I’d love to hear your take on why you personally said what you said earlier, which was that you are long-term bullish, and for those who don’t know what the word bullish means, it means that you’re optimistic that the price will continue to go up in the long run. You’re optimistic for the price of Bitcoin Because of its properties. Why is it that you think that?
Victoria:
Yeah, so oh gosh, that’s a good subject as well. I know where to start.
Dr James:
I know where to start. Cash, isn’t it? Because, if you think about it right, are the assets going up in value? Do assets continually go up in value? Or is it that the yardstick by which you’re measuring the value of assets, ie cash continually going down in value, therefore making the assets continue to go up, and that’s the principle of Bitcoin? Now, in reality, there’s two effects at hand, because, yes, cash does go up and hence it takes more money in order to purchase assets. Therefore, their price appears to go up. But if that was the only reason driving price, then big assets would only increase at the rate of inflation, which isn’t true, because they outpace inflation. That’s the whole premise of investing. So I guess the crux of what I’d like to identify today or maybe have you talk a little bit in more detail about is why Bitcoin outpaces inflation, because there’s a few reasons behind it, and it’s really a discursive, isn’t it?
Victoria:
Yeah, I mean I think anyone who especially dentists, and I think anyone who’s got no idea what bitcoin is, or isn’t even studied in economics One of the things that they don’t realise is you know, on an everyday basis, the average person. You know you’re going to the shop and buy something. You’ll plan your household finances based on how many pounds you have and in your own little reality, it’s the value of pounds that kind of gives things value and that’s kind of historical, because that’s how it’s how it’s worked historically. You know your grandparents may well have encouraged you to save, and so much of that mentality is kind of. You know the basics of understanding how to manage your resources resources well, but what you start to realise when you run a business well, not even when you run a business, even when you get to the stage where you kind of go something’s not right here and you start doing some digging, what you realise is that those pounds that we’re exchanging on a daily basis and the pounds that we’re using to manage our household budgets, they’re messing with that behind the scenes all the time, so that what actually you think is worth one pound one day can be completely different the next, and so what that means is that we’ve kind of been in this illusion for about 40 years of the fact that you know this is how money works and you know the government has a policy of kind of keeping it at only 2% inflation. And they say that as if they’re doing us a favour, but actually you know that 2% inflation is an additional tax that they’re taking from us in terms of the value of our currency. And of course, they make themselves sound very clever and sophisticated and like they’re doing us a huge favour by managing the inflation rate at 2% and they have to be fair. They’ve managed it for a fairly long time, which has given us a lot of stability in our economy. But of course, one of the things that we’re witnessing right now is the fact that they can’t control it anymore. Suddenly inflation is going through the roof and this, my friends, is just the beginning, because you know the fact that they can’t control it is a very bad sign and is also a reflection of what’s happening in the stock market and the wider economy, which is why I say very big subject well, I feel like everybody’s pointing at Putin right now and saying it’s his fault or that’s the reason why there’s a scarcity of resources.
Dr James:
This is coming.
Victoria:
This is the flipping bill for covid well, it’s not even the bill for covid. You know this has been building for 40 years. I mean you know any once you start studying economics and you look back in history every time. It isn’t the first time that governments have done this. You know the fact that governments have kind of divorced the currency from any kind of solid backing commodity that is known as a, as a fiat currency, and you know, they tried it in ancient Rome and that, and the fact that they started messing with currency, is what led to the collapse of Rome. A lot of people don’t realize that the french revolution was a result of the fact that the french messed with the value of their currency. And so, you know, one of you kind of get this parody parody in Les Miserables of the in keeping his wife, you know, just kind of being absolutely greedy, horrible people. But part of the problem was is, you know, the french population were really suffering. You know, they’d they’d created this environment where, you know, the currency was based on what’s called assignments. So basically they revalued all the property in the country and this was used as the backing for their paid money. Now, the general population had no idea what was going on, but the people in the city who knew what was going on absolutely minted it. But the general population ended up completely impoverished and this is why the, the general population, stormed the Bastille, because they were literally starving. And you know, this is what led to the french revolution and the rise of Napoleon. And so these things have huge historical implications. And of course, it was the same in just after World War one with Weimar Germany. You know, sometimes in schools we’re taught to us about this and we’re showing the wheelbarrows of cash. You know, their currency went into hyper inflation and led to the collapse of the german economy, and that’s what directly led to the rise of Hitler. So these, these issues are profoundly important and the problem is, you know, because things have been stable for so long, we’ve kind of been lulled into this false sense of security that things are going to continue like that. But actually, the fact that inflation is starting to go to go up, the fact that the government and the central banks are starting to lose control of inflation, is actually a really bad sign. And my personal belief is that if bitcoin hadn’t been invented, we would be in serious trouble. But what bitcoin does is it gives us an opportunity to get away from all of that, because it gives us a whole new foundation for our financial system that’s never existed before. You know, technology has been created that can provide a new framework for how money works and how we interact with each other. So, and this is very tied into history because, you know, a number of decades ago, when the main currency was gold, the people who had the most power were the ones who could be the most violent and who could steal the gold back. You know there was no trust in society. You know, if you, if you, went to war with someone else, part of part of the agenda was to kind of like loot the city or loot the population in order to acquire their wealth because it was physical. And then, of course, we moved into into a system of banking so the banks could hold the gold in order to keep it safe. But, of course, because gold was very difficult to transact with, the banks came up with a system of issuing paper notes against the gold in order to give us an easy way to transact with each other. And actually, in many respects, that was a good thing, because it made us made it easier to transact with each other. And actually that’s what led to the rise of the industrial revolution, because, you know, those transactions became easier. But of course, there’s always a flaw in the system, and the flaw in the system here was the fact that once the bankers got complacent you know they they were like well, no one ever comes to collect this gold, so maybe we can just start, you know manipulating the numbers and issuing, you know, more currency. And actually that started around World War One. You know that was the first excuse that they had to really do that, because they needed a way to fund that war. And so, you know, a lot of people kind of go back to the fact that you know the fight. The final cut to currency being tied to gold is 1971, when Nixon took some gold standard. But the first cut actually occurred in Europe in order to pay for World War One. And that’s one of the reasons why World War One was so terrible, because under normal circumstances, if they’d had to use the gold of the population or tax the population more in order to fund that war, it wouldn’t have been allowed to happen. But because they used this accounting trick to create more currency. This is what allowed World War One to be so prolonged. And when a lot of people don’t realize, you know, we’re often told about the World War One reparations that Germany had to pay. And it’s just like well, where did that come from? I was always a bit puzzled about that and it turned out. You know, when they decided that they were going to use this accounting trick, they said well, why? You know? Because, when the war, why don’t we, you know, create this situation where, you know, we create more? We create more currency in order to pay the war, and then whoever loses, we can bill them in order to get us back on the gold standard. So, of course, you know, germany got the bill, which was crippling for them. In order to try and pay the bill, they started devaluing their currency, which is what led to the rise of Weimar Germany. And actually, you know, going back on the gold standard was a huge political issue during the beginning of the 20th century. But as time goes by and the argument just gets more boring, you know, whoever’s at the top of the pyramid just wins the argument. Everyone else just wants to get on with their lives. And so what happens is, you know, we kind of reach this level of complacency where it’s just like, well, it doesn’t seem so bad now, so we’ll just kind of let it ride. And so we’ve had this situation of ever increasing currency, with no scarcity, no tie to anything, solid, for almost 100 years, and it’s created all sorts of distortions and disruptions in the financial markets, and we get a sign of that every so often when we get a financial crisis. So you have, like, a stock market collapse in 1987, then another one, 2001,. Then you have the 2008 financial crisis and lo and behold, you know we haven’t had one for a while. It’s almost like we’re a little bit overdue. But you know, most of the time the general population are completely oblivious to what’s actually going on behind the scenes. But this and this is one of the reasons why we have such wealth disparities in our societies and it’s one of the reasons why it’s becoming so hard to run a business. You know, especially in a situation of inflation. You know supplies are going up. It’s very difficult to raise prices to customers without losing them all. You know countries that have been through hyperinflation before. Small business owners get absolutely devastated. So so yeah, there’s a lot there’s a lot that contributes to the story.
Dr James:
Do you know there’s so much history behind that really interesting book which gives lots of examples in history of societies that fail because they transition to fiat currency without the consent of the general public. Really great book on that. The Creature from Jack Allile.
Victoria:
Oh yeah, yeah, read it, I haven’t read it but I’ve heard about it and, you know, referenced it, but I’ve heard lots of people talk about it. But yeah, absolutely so. You know, fiat currencies have been tried several times in history Without a fail. Without a fail, they always fail, and often it’s a catastrophic failure leading to something else that’s even worse. So this is a very important topic and something people should definitely be interested in.
Dr James:
Do you know what right? You know, way back when in America, when they were initially establishing civilisations. So we’re talking, columbus landed in 1492. So we’re talking the 1500s, the 1600s, when there were the pioneers, were there the Puritans, all of those people, and basically we had this collection of states and they had no overarching central bank. They had banks within the state and sometimes, because each state had their own currency, sometimes within those states there would be one bank they’d pick to bestow the rights to print that currency. Some had fiat, some had receipt money, which is what you talked about earlier, which is money that’s fully backed by gold, not partially backed, but fully backed by gold. Okay, the fiat money states, lots of them eventually failed and had they basically had these mutinies and flipping civil wars within the state because of that, because people worked hard for this cash, the hard work was being robbed back from them by the authority that printed the money. And then what it meant was that there was disruption and, without fail, the states that were beside those adjacent to those geographically, because they had receipt money, because they had a true currency, they would continue to persist and they would continue to subsist basically, which is really interesting. And so there’s numerous examples. And you’re quite right. One of the reasons why the Roman Empire failed was because, basically, they ran out of silver to pay the troops, so they started watering down the currency. Okay, you know, the only people that could get paid pure silver and pure gold from the Roman Empire towards the end of the Empire’s days were the mercenaries that they hired from other countries. They paid the mercenaries better than their own flipping troops. Okay, that’s why their troops turned on them. Right, that’s part of the reason why they used to. They figured out a way to get little things bits of copper and plate silver over the top. Okay, the littlest thinnest bit of silver that you could imagine, right, okay. But the soldiers weren’t fooled. They were like this is fit, this is not even real currency, you know. That’s why they were bell. That happened.
Victoria:
Yeah, but it’s hugely devastating. You know, our, our financial situations make a huge difference to our level of comfort and security and happiness in life. Those are hugely important things for human beings. You know, if you go back to Maslow’s hierarchy of law, hierarchy needs, you know the one on the bottom wrong is your physiological needs to be met. And then the second one is safety. And Many people, you know, they, they, their safety is based on how much money they have saved, because they want to know that they can pay for things in the future or they’re building towards their retirement. So it’s not just about money that saved the next one year or two years, it’s about money that will last them, you know, 50 years after they retire, if they live to 100. You just, you know, you just don’t know. And so Messing with the currency is just a hugely damaging thing to do. And the thing is they’ve messed with it but kind of kept it stable on the ground so that most of us are completely unaware. And the trouble is when it starts to break down. It’s just going to be devastating for so many people because most people just have no idea that this was even a possibility. I mean, I, I started my, my dental practice in 2007, just before the 2008 financial crisis, and you know what it meant was that, nine months into my business, when I’d used it my own savings and went to the bank, you know, it was like the one time in history when no bank on the planet was lending money to anybody. And that was shocking because I was just like what I mean? I went into my bank and I kind of said, well, you know, this is the situation. I started this business. I need some money. They’re like not my problem, it’s just like no, what do I do? You know, I mean and it’s the famous adage is you know the bank will give you an umbrella when the sun’s shining, but when it’s raining, forget it. Um, and so you know, when you find yourself in situations like that, you know it’s just so, especially as a dentist, because you know you don’t really expect that. I mean, it’s hard as a student. You often build up quite a lot of debt, but you do it on the base of the fact that, hopefully, you’ll have a good job and pay it off quickly. And if you spend a few years of your career where things are running smoothly, to suddenly be in a situation where what you assumed would be okay Is no longer okay Is hugely shocking, and often it’s only those sorts of situations that make people stop and think. Go hang on a minute. What happened here?
Dr James:
Do you know what I want to flip on its head? The fact that everybody thinks that it’s safe to have a big pile of Cash in the bank. Okay, that’s the illusion of safety, all right, and really, if you’re Delegating what to do with that cash, delegating how to grow that money, then seriously there are some huge prices to pay. How does that look? That you might have someone who advises you on what to do with your welfare financial advisor and don’t get me wrong, they have a place. It’s better to go there than not going anywhere at all. When you get a good one, okay, but the same. The thing about it is that would literally cost you a fortune over time Because of number one inflation. The cast is sitting there, not moving, not doing anything, not growing in value of anything, losing value. You’re literally losing the hours that you put in to create that cash, to create. You’re losing the hours of hard work that you put into your job to earn that cash and create that cash. They’re being taken back from you. It’s as if you never worked those hours. If someone called you up and said, actually you, you know, you thought you worked nine hours last week, you only worked eight you’d be like no way in hell. You know what I mean. You’d be so indignant about it, but that’s something that happens every single day. The cost of delegating what to do with your money is huge, and that’s why this knowledge, that’s why Everything that I preach about on these podcasts and on dentistry, invest is so flipping, powerful and useful, because this is Stuff that you can use to equip yourself against that effect, effects, those effects, and that’s worth. Honestly, that’s worth six, seven figures to you. Okay, over the course of a lifetime, but it’s seven figures going to buy you a flipping hamburger when we’re 60 because of the effects that we just talked about. Who knows, who knows, should we sell our bitcoin?
Victoria:
Well, I mean just just to finish off on that point. You know, in the past, you know, governments have tried to control the influence of inflation by raising interest rates.
Dr James:
And, and so this is no they’re like zero with the minute exactly. No, that’s why you’re going with this right.
Victoria:
Yeah, but you know, in the 80s, you know they went up to almost 15 percent. I mean, I remember at the time, you know my father was literally being physically sick because interest rates were going up so quickly and they just bought the family home and you know it was at the edge of what they could afford and then suddenly, you know these, these prices were rocketing. You know that’s what they used to do in the past to try and control inflation. But the thing is, the world was much less indebted than it is now. Um, you know, if I think the the last I looked, you know world debt is like 400 trillion. Now Most people can’t even visualize what a trillion dollars looks like, but you know, if you stacked up 10 dollar notes, a trillion dollars is like the would be the size of the, an american skyscraper, and you’re talking like 400 of those. You know that’s how much debt is in the world. And so the thing is, when you’ve got debt of that magnitude, the moment you start putting up interest rates, even a little bit, the impacts are huge. And the thing and part of the problem is in the economy. You know Interest rates have been so low for so long. You know, a lot of companies have bought back their own shares. Um, they’ve taken on debt to expand their businesses sometimes not even expand their businesses, but just to continue Paying their costs, operating in in the way that they see fit, not necessarily efficiently and the moment you start to raise interest rates, even just a little bit, all of those companies suddenly find themselves in complete crisis. Um, so we were talking earlier about the fact that you know there’s starting to be some meltdown meltdowns in With some of the crypto currencies from being over leveraged. Most of the world is over leveraged. You know, property is one of the most over leveraged assets on the planet and almost everybody owns one. So, um, you know, the implications of what’s happening in the macro environment right now cannot be overestimated, um and um, and could actually be catastrophic. I mean, we’re starting to witness it in the crypto market right now. But if that, if similar effects start happening in the macro market, which is not beyond the world’s a possibility, considering that stock markets seem to have come off its all-time highs, you know we could be, we could be looking at some pretty devastating consequences, um. So so you know where do we go from there. You know I don’t want to depress everybody, but when, when you Know that there’s the potential for that on the horizon, you have to know where your escape valves are. Now. In Weimar, germany, when they started going to hyperinflation, everyone ran to gold and the price of gold absolutely skyrocketed. But Wrong with gold is it’s completely impractical. You know anyone who owns a dental practice. If they even Suggested, I mean, when I thought about it I was like there’s no way I’m going to accept gold in my practice. You’ve got all the issue of it’s heavy. You’ve got to validate that it’s real. You know it’s hard enough taking cash to the bank to cash up at the end of the day, let alone, you know, go and sell the coins. Forget it. So there has to be something that’s more practical. You know Fiat currency can create many evils, but in many respects the fact that we’ve had it has allowed our has allowed. Society to progress in ways that it wouldn’t have done otherwise. So you always have to balance. You always have to balance that, and often those are the arguments that allow it to kind of take hold In the first place. But you have to be aware of, you know well, if this collapses, where do you, where do you go next? And so the the traditional thought was that, you know, go and sell the gold and silver completely impractical. So the the thing about Bitcoin is it’s been designed as it’s digital software, but it’s been programmed, programmed Into it. It’s programmed, you know, some of the economic properties that are designed to match gold, but there are other properties within it as well that actually superior to gold. So, for example, in the past, when they were operating on a gold standard, one of the problems was there was a limit to how much you could divide it by in order to increase the amount of money in circulation. Well, with Bitcoin, okay, only 21 million will ever be created, but each Bitcoin is worth 100 million Satoshis and could be divided further with an upgrade to the software if it were ever needed at a later date. But changes to the software require consensus, so they can’t be changed arbitrarily. There needs to be. You know, the network is set up in such a way that everyone who runs a node gets a vote on whether or not changes are made to the network, and the longer that Bitcoin exists, the harder it is to make those changes, and so this is why Bitcoin is seen as the most stable and most secure of all the cryptocurrencies, because of these properties that have now been developing over the last 13 years.
Dr James:
Yeah, I want to draw a distinction in crypto between Bitcoin and virtually every other crypto. Okay, because Bitcoin works in a totally different way to lots of other cryptos. Right there, bitcoin is deflationary. That’s what it’s designed to do. It’s literally designed to be the antithesis of cash. Okay, if you could create the opposite of cash and I said that basically goes down in value persistently. Bitcoin is designed to be the opposite of that and therefore I appreciate that’s the purpose. That’s why it has the properties that it does. Perhaps we’ll save those for another podcast, but in essence, long story short, there can only be so much Bitcoin and, of course, the rate at which that Bitcoin is released halves every four years. Therefore, if there’s only ever more cash and there’s only ever less Bitcoin or less Bitcoin being released, certainly on a fixed amount overall, you can now understand the thesis of how it is designed to appreciate in value. And, victoria, based on everything I’ve just said, I’m going to guess that you’re not, and based on everything that you’ve just said as well, of course, I’m going to guess that you’re not selling your Bitcoin right now.
Victoria:
Well, I sold some of it in October, but I didn’t sell all of it because you just never know. You know, although I suspected it was the high, I wasn’t going to take the risk. So, yeah, I think it’s always kind of a case of hedging bets, I think, once you kind of get into the Bitcoin space and you realize how valuable it, is you have some that you kind of park on the side that you never sell, but you have some that you might play with to kind of try and catch the eyes and nose, so that’s different ways of doing it. I mean, when I wrote my book, it was based around the fact that, for a while, I was accepting Bitcoin payments in my business and, of course, as a business. If you start doing that, it’s really important that you understand the price cycles, because you know what I suggested was that cash is constantly losing value. What you could do is you could offer discount payments in Bitcoin when the price was low and reduce that discount as the price is kind of getting to a peak and then, knowing when the peak is, you know that might be the time at which you want to sell some. So you know you’re kind of getting a little bit more sophisticated with it when you kind of get to that level. So you need to understand what you’re doing with it and so, yeah, it does require a lot of knowledge to understand Bitcoin and know how to handle it If you don’t want to get your fingers burnt, I think the best place to start.
Dr James:
From someone who jumped in with two feet at the deep end, personally speaking myself, if I could go back and talk to myself before I bought any crypto, I would say understand traditional finance first, because you’ll understand a lot at that point, a lot more about how crypto works, because crypto is effectively an evolution of traditional finance, and that would be my suggested step and the very first book for anybody who has yet to explore finance. The very first book I would recommend everybody reading is how to Own the World by Andrew Craig, and if everybody wants a good follow up book, I’m just looking at my bookshelf right now. I mentioned the creature from Jack Allile earlier. It is an excellent book. It’s a very long book. However, it’s not the most accessible book I would suggest reading. There’s a lot to choose from over there. Yeah, you know what I’m actually going to go with? The creature from Jack Allile because it’ll explain from the bottom up how money works and it’ll explain all those scenarios that we referred to earlier about how there’s been a consistent number of societies throughout the year that have failed because they’ve given in the temptation of fiat currency, which is a banker’s dream but the public’s nightmare taxation via inflation. You know, I heard a great saying that basically, if you’re a bank and you hit us, or you’re a company and you hit a certain size, you capitalize on the gains. Okay, because the people at the top make loads of money. And guess what, if the business fails and you basically cash out and take on loads of debt and pay your CEOs loads of money, no big deal, because you can socialize the losses, because the government will bail you out?
Victoria:
Yeah, interesting, yeah, I mean, I had a friend of mine who told me he was studying game theory at university and on that basis it was actually more profitable to break the law in certain places and then just pay the fine, because actually you make so much money by breaking the rules that the fine becomes cost of business.
Dr James:
And even there’s something like that with core insurance. It’s like if you get caught, you get three points in your license and a hundred quid, fine, but the insurance is a lot more than that. Anyway, I don’t know. I don’t know enough about bending the rules in the law to be able to confirm that one, so I definitely wouldn’t action that anyone who’s listening. But it’s an example of what we just talked about. Victoria, we’re going to draw things to a close now. Would you like to say anything to anybody in the audience today who has perhaps bought some Bitcoin and their finger is hovering over that big red sell button and it’s getting jittery and they’re getting anxious and they want an excuse to push it. What would you say to those people?
Victoria:
I think it’s tricky. There are a number of technical analysts trying to argue that we’ve reached what’s up right now, and it’s quite possible that that is the case. I mean, historically, Bitcoin’s never gone below its previous all-time high. However, I do think that this time could be different because of the macro environment. So if you’re over-invested in Bitcoin, then now might be a good idea to take some off the table, just in case it was further downside to come. And yeah, maybe think about buying in, maybe towards the end of the year. That would be the point at which maybe the trajectory will start to go up again and it will feel. Once you start to see it go up and break some key resistance levels on the charts, then you can be more confident that the tide has turned. But until then it’s risky. I mean, people have said it’s bottomed out, but it’s not making a really strong recovery. It’s kind of hovering and it could continue to plunge, especially with all the things going on with various crypto businesses. So just be careful. I think in the short term there’s probably more pain to come, but in the long term you’re probably behind.
Dr James:
Here’s what I would say on that Bitcoin and ETH may be. Now is the time to action what you just said, or even think about buying more. It depends totally on your circumstances and your time horizon. You know one place that I wouldn’t go one thing, that I wouldn’t buy altcoins. I think they all look terrible at the minute and we need to understand. We need Bitcoin to pick a direction first of all. So there’s my pearl of wisdom on that one. But, toyota, you’ve been super generous the time. Thank you for coming along on this sunny, sunny day to share your wisdom with the Dentistry and Invest podcast fans. I hope you have a smashing day and we’ll catch up soon.
Victoria:
Thank you Bye.