184: CryptoCurrency: The Inside Track on Virtual Money

ABOUT THIS EPISODE

Contact info:

Josh Rhodes

Email: Josh@CryptoYall.co

Website: https://www.CryptoYall.co

LinkedIn: http://www.linkedin.com/in/JoshERhodes

YouTube: http://www.YouTube.com/Crypto Yall

Bio:

Josh Rhodes is the Founder & CEO of Crypto Y'all - Josh got his start as a real estate investor and marketing agency owner before discovering the power of crypto as a wealth building asset. Now, he helps the crypto curious safely understand how they can invest in the greatest financial technology in history.

This is Profit from the Inside with Joel Block Insights to give your business the inside track. And now here's your host, Joel Block. Financial markets are up and down and the crypto markets are especially volatile. Is now a good time to jump in? Or are digital currency assets all washed up? To answer those questions, Josh Rhoades, Josh, welcome to the show. Pleasure to be here, Thanks for having me. Hey, well, thank you very much, nice to nice to meet you. So. Um, so you're an expert in this or your specialist in this? What what do you think is the prognosis? I mean, are things are looking pretty pretty sad for a lot of people in the crypto markets? Yeah. I think one of the biggest things to remember, you know, as a as an investor in any market, is that markets move in waves, and uh, it's only really painful if you look at the market in short term time horizons. Uh that I think that's one of the things that's really difficult because investing is emotional ultimately, it's a psychological um gauntlet, if you will. So when you deploy capital, everybody wants to see it go up into the riot at all times. But that's just not how the markets work. And so once you get in there between the muscle fibers and you start to understand that, you know what the by pressures and what the cell pressures are. And then macro economics, I mean, let's let's be honest, for the first time in what fourteen years, the Feller reserve is basically withdrawing liquid money out of the market in droves and constraining the economy. So the markets usually four to six months ahead of the economy. Ironically, if you go back and look at the charts, last November is when the dollar, the d X,...

Y, the U S. Treasury Index started marching its way up, and stocks and crypto started marching their way down. And for twelve months they've been doing that on the mac you know, because because crypto is the most speculative a lot of these alternative assets, I mean, there's a lot of different alternative assets in the marketplace, but because crypto is probably the most volatile, it's the place that big investors pull their money out first, and and that causes even more volatility. True, true, Yes, the market cap for crypto as a whole um is around a trillion dollars um. Gold as an asset by itself is ten trillion, and then when you started getting into equities and the rest of the world, you're you start getting into you know, hundreds tens of trillions, if not a hundred trillion or more. So Yeah, anytime you move something with a small market cap, it moves dramatically. Yeah. Well, and that's uh, you know, because small investors can make can make big waves, and and they these individual people who are buying and selling really can can make can move markets in a big way. Yes, absolutely, come of your assessment. A lot of these whales are individual people. They may be moving five or ten or twenty million, but these are a lot like professionally run private equity funds or our hedge funds are they are these individual people. Maybe you know some of them. I mean, you know, how thoughtful are they about their decisions or what's kind of going on? What kind of people are these whales? Oh? There? You know they they exercise the same level of human greed that we're all capable of, and they know what they're doing. Um. I don't think anyone out there really has the noble mission of supporting the market more than their purse strings. Uh. There are hedge funds in VC firms that are heavily involved.

You don't see the sovereign wealth funds or the pension plans yet, which is really where the big money, you know, the kind of the wealth of nations yet simply because at least in the United States, because we don't have the regulation that would permit them to be a part of it. So yeah, you start to get in the big bag holders the central exchanges. So you know, a lot of the systemic central exchange failures of two has been what hurts has hurt the market along with funds like Three Arrows Capital. Um, they've basically liquidated themselves over leveraged. They've dumped a ton of coin onto the market, which creates you know, catastrophic cell pressure, and then um, this smart money moves in and grabs it up at bargain prices. So it's all it's all very much part of a I guess, a manipulative narrative, the same way the stock market is. The crazy thing about crypto is though you can see it all, it's the technology permits us to watch it all happen in real time on open ledgers, on blockchain and stock markets. When you know when things like end rhyme are happening. You don't. You don't see it happening until it's over and everybody's hurt and damaged. But you know you didn't see it. You didn't see the ft X deal until until it exploded. No, you certainly can't UM. But there are things like, for example, after after f t X UH fell, you could what we we were watching in real time a hacker move in and grab somewhere between two hundred and four hundred million dollars worth of ethereum. You know you could see it happening in real time. We're watching him now even swap that ethereum by the hundreds of millions in the bitcoin um actively. So there there's activities I guess, and accountabilities. Now those wallet addresses as are anonymous unless you...

...docks yourself. So there's It's not necessarily that we can enforce things better, but ultimately federal governments, etcetera. Are going to get better at UM tracking down criminals. For sure. I want to I want to go over this uh anonymous thing that you just said, because a lot of people think that crypto is untraceable, not so not so right, So explain to us a difference between traceability and anonymity. Well, without trying to get into two technical um, you know there's a level of anonymity anonymity in that you know, a wallet address, a public key technically speaking, is a collection of numbers and letters right that it's it's but it may not. It doesn't say your name, it doesn't have your your building address, or anything like that attached to it. UM. But UM you can by voluntary means or by acts of disclosure by certain centralized organizations that need to let you know where their their wallets are. UM they can be you know, docked and you can watch those wallets, but you can't just there is a level of anonymity that if you go and look on the open Ledger or on a blockchain explorer and you can see wallet addresses the top ten wallet addresses of Ethereum, for example, it doesn't have people's names next to them. So unless you reveal your identity, or unless a you know, federal agency subpoenas the IP addresses and really tracks you down to you know, on a on a technical Internet service provider level, it you can maintain a level of anonymity and you can do nefarious things with it. Because one of the wonderful and also double I guess two edged sword characteristics of bitcoin and crypto alike is that and most especially in coin,...

...but in most cases for crypto, the transactions are immutable, meaning if I send you a hundred dollars um, no one can reverse that transaction like you might be able to do on the traditional banking swift system. That's a good thing and that tyrants can't steal our money or uh keep us from engaging in commercial activities that we want to be a part of. Um, but it's also could be a bad thing if if you accidentally give a tyrant or a criminal access to your wallet, you know you won't be able to get your stuff back. So it's the ultimate expression of self reliance and individual sovereignty for lack of better. So do you think then Americans have the maturity and the self discipline to be able to manage in a system where you are really responsible? I mean, many people are kind of used to the government kind of keeping an eye on them and making sure things go right. They kind of provide the bumpers on the bowling alley lane, you know, they right. So I mean, do you think that most people kind of have what it takes to play ball in this arena. I think that most people do have what it takes. UM. What I think, what I think is happening, though, going to your federal government reliance analogy is that it's more of the frog boiling in the kettle without knowing it situation, because ever since Nixon took us off the gold standard in seventy one, and even prior to that, back to Brenton Woods after World War two, really even World War One, we've been on a monetary system that is that is corrupt and manipulated. We just don't know any better though we grew up on it, you know, like the dollar has been losing its global purchase power for as long as I've been alive, um, and anyone listening to this as long they've...

...been alive. So it you know, what's the greater what's the greater evil? Continuing to walk like zombies in a monetary system that is like sand on a seashore, you know, eroding under our feet, or acquiring a couple of more skills and a little bit more knowledge on a more mathematically sound monetary system. And I think that's the decision we're gonna have to make and ultimately it will be up to the populace to to do that based on adoption. Do you think that? Do you think that the United States is going to adopt a virtual currency in the future. Oh, I have no doubt. Yeah, CBDC Central Bank digital Currency. Yeah, I mean it's already, it's already in the plans. I mean, the White House, UM has issued statements even within in the last sixty days, UH, Federal Reserve, US Treasury, it's all happening. Senators have bills on the floor waiting get past. It will happen. Yeah, I'm with you. I think this is in the cards in the next ten years. UM. It's going to require a lot of regulation and a lot of rethinking, which is been set back somewhat because of this FTX deal here that's just happening. But but I'm I'm a pcent with you. Let's talk about regulation from it. What kind of regulation do we need to give all kinds of people, organizations the comfort level to commit into the market, and as you already referenced, to allow these bigger entities, pension funds and so forth, of the the legal right to even invest anything even if they only slice off for percent of their allocation. Yeah, I mean the ladder. The ladder is the most important priority in my opinion, UM Congress needs to do their job and just say these are come pities or these are securities. And if they would say one of...

...the other than the sec or the c f TC, and it's leaning towards c f TC right now, would be the governing agency that protects consumers and does the whole thing. And UM leads the way on enforcement of the policy set by Congress. But yeah, I think the biggest thing we need to do is say, hey, look this is uh. These are regulated commodities and it's legal in America to trade them out in the open in the marketplace. And whether your Fidelity or coin base or a licensed financial advisor, you can direct your clients to invest in these commodities at their at their own risk, at their own reward. And what when when sovereign wealth funds and pension plans get access. I'll give you an example. Uh, you tell some of these larger institutions who are already positioning. I mean they literally are just getting their race cars pulled up to the start line, like black Stone Fidelity, UM the largest asset managers on the planet. If they have, they have signaled that there's a massive institutional appetite to buy bitcoin. Just bitcoin, not even talking about the rest of crypto. Just bitcoin. If they allocated two percent black black Rock, if they if they allocated two percent of their client portfolios to bitcoin, the bit the price of bitcoin, the amount of liquidity that would flow into the space would be so parabolic um that bitcoins price would shoot beyond two hundred thousand almost overnight. So that's that's kind of where we are. It's it's just like any any access portal that's created to the larger liquidity of global wealth is going to create a symmetrical upside for people positioned...

...in CREDI I think it's good you bring this up because I think that one of the things people don't understand is the fact that the government has not modernized its regulations around these types of things. Is part of the reason the whole industry is having such a hard time getting rolling. And it's it is doing pretty well. I mean, the fact that it's in it close to a trillion dollars, somewhere between eight hundred billion and a trillion dollars that's a pretty good market cap, you know, when you consider. But the truth is that when you stop and think about it, if the government would give some guard rails and tell us this is how it's gonna work, uh, and more people could play ball, more sophisticated people could play ball, and more sophisticated people would have more sophisticated demands. Let's talk about let's talk about fd X for a second. So they're in the Bahamas. Why are they in the Bahamas? F t X International base there? Um, you know why, I think to use a word I've already used just for nefarious reasons, you know, lack of oversight offshore type activity that they wanted to you know, operate under. They do have They obviously have had a U S entity f t X U s UM, but the larger entity was you know, the international parent company. So that's who held the keys to the kingdom, and and that was the exchange. Yeah, it's like a trading exchange. That's a lot of money gets held there. And you know, I can't help but think that the auditors are going to be complicit in this problem. They they are going to get hung out to dry. Yeah, or if they're if there even were auditors. That's that's the thing, Like, we're going through the same The same gentleman who did the the transition CEO role for en Rhyn is doing is doing f t X, and he came out with a bankruptcy filing. You know, just Hey, this is what I've gotten...

...under the hood, and this is what I've found. And I mean FTX International didn't even have an accounting department. They're dealing with billions and billions of other people's money and they didn't even have an accounting department. So I thought that there was an auditor, uh, you know, for they had a separate auditor for the United States entity, they had a separate auditor for some international which by the by the way, if more sophisticated people were involved in these deals, I mean bigger companies, highly organized organizations, Uh, they would have called out something like this, like it's very irregular to have two different auditors. I mean, the only reason you have two different auditors, two different companies, is so that one auditor doesn't know what the other auditors find it out. I mean that's the only reason, you know, Yeah, I mean if you compare coin base and what they have to go through as a publicly traded company on the just just to be clear, that's a United States company. It's audited. I think it's audited by Deloitte, if I'm not mistaken, highly highly sophisticated. Uh, you know, their their processes, their internal controls they're required to maintain, uh like a wonder one. There's no leverage. That have loaned out their money whatever you give them. I mean, I mean, it's a clean, good operation. That's the model really for what should be happening. Yeah, that was the that was the anti the antithesis of what f t X was doing. Yeah, So why doesn't the United States say, Look, it's clear that people want to do this, but we have to create some guardrails. Why isn't the United States doing it? I Mean, my personal opinion is that they've they've been extremely the the U. S. Government specifically has been extremely damaging the retail investors um and have cost them a lot of money and a lot of heartache because, uh, there's a lot of turf warfare happening, happening amongst the bureaus, um in the executive branch, and it's just it's preventing the guardrails from being placed in an appropriate manner. And we know that f t...

...x is CEO was lobbying with Gary Ginsler, the chairman of the SEC, to create regulations with other legislators prior to the collapse. And so it's just, you know, you never know who to trust, You never know who who is acting for the will of the people versus power. You know, let me give you a different idea about what what I think might be going on why the government's dragging its feet. Please. You don't remember when the Internet was born. That's when we the first time any of us got email addresses. That's the first thing that used to go on a O L and then it kind of became a www thing and they were all pages. I mean, it was very very cryptic back in those old days. And the first thing that took off, the first thing was travel agencies. People who are fifty back then who now are eighty so are grant you know, like like our kids, grandparents, you know, like our parents, right, Um, those people they fell in love with the internet because they could book their own travel. Airlines started getting do you remember this, you know, yeah, like yeah, the early expedient days, all okay, exactly. So travel agents got wiped off the face of the earth. They got wiped out, and since then the Internet has wiped out one you know type of the intermediary after the next. Well, Wall Street is nothing but a giant intermediary. They've pretty much got a big fence around most of the money in the country. And I wouldn't be a bit surprised if Gainstler, who is a goldman guy, um is dragging his feet so that some of his buddies you know, on Wall Street and get their ducks in a row and start acquiring the rights to all these kinds of technologies so that they don't get wiped out. And who has been making the big investments these MasterCard American Express,...

...it's the biggest, the big agency, the big mortgage companies, all the big money companies, you know. I mean that's that's my take on why those things. I think you're spot on. I mean, you can even today, Uh, it was discovered that JP Morgan Chase has a trademark on a crypto payments wallet of their own. While while Jamie Diamond will sit on a stage in Qatar at a you know, international monetary forum talking with others about how it's an inferior asset class. So they will they will, they will show you one thing with the right hand while the left hands behind the curtain, you know, or pick in your pocket. So that so that's the deal is that these these organizations are trying to gather control. So they're they're talking it down until they have the control. Once they have the control, then they can come back and then they can talk it up and then all the consumers will buy in. Right. And that's why I want everyone listening to this in real time. And that's what I'm telling all of my members, uh in my mastermind is like hold on, survive, advance, and don't let manipulation create or force you to capitulate. Because capitulation is the tool that the big money institutions and governments used to create despair in the hearts of individual investors, um and small businesses so that they will sell their bags at a low price and the bigger institutions come in and gobble it up and then ride that that a creative wave back up to the top of the market with their liquidity. It's it's just a time to you know, dollar cost average, you know, invest in what you believe in and hold on. Yeah, people have to remember that we are at the very very beginning of the cycle with crypto. I mean, it's still even though it's sort of around ten years old, it's really kind of in the beginning. It really...

...is just kind of getting going. And uh, you think about the Internet. The Internet is thirty years old. It's not that old. I mean, the computers on our desks have only been there for thirty five years, maybe forty years the longest. That's not very long. And and so a lot of good things have happened, but they're they're not done, you know. So I just want to make sure that you know, you know, what we're talking about is not so cynical that you know, we're kind of given the wrong impression. Yeah, I don't think, um, i'm i'm I'm way more bullish on crypto simply because of the asymmittrical, asymmetrical upside that it has versus the risk. Um, you can buy bitcoin and potentially you know, enjoy a two to who knows six or seven x and the next eighteen to twenty four months, or you can buy Coca Cola and maybe make you know, nine to fifteen percent a year in the next twelve twenty four months. It's just up to like where you are too. Like individual financial landscapes matter a whole lot um. So I think individual people or even organizations who are looking to invest in this asset class, they just need to be ready to. I think everyone who bought bitcoin and held it for three years or longer at any period of time or in the profit, that's basically how to look at it. And then it's just a matter of measuring, well how much profit. And the mistake that most people make is that they buy high. They buy and they fomo in and they see they see everybody talking about it, and then they buy it when it's at all time highs. Like of everyone who owns bitcoin now bought it last year during the bull run, Well now they feel like they're they're they're stupid investors. But when a...

...reality, if they will just hold on for another twenty four months or four hundred and seventy seven days until the next bitcoin happening, which is usually the mark of the pinnacle of the bull run so far, then they'll be good. So it's just a matter of having maturity and patients. Yeah, easier said than done, by the way. Yeah, yeah, yeah, yeah, So what what's next. You've got any favorite? You know, you've got Bitcoin, which is kind of the main one, and then Ethereum, and then there's all these alt coins. To explain that first, and then we'll talk about some of your favorites. Yeah. Basically, anything that's not a bit, that's not Bitcoin is an all coin, it's an alternative coin. Ethereum being there lead sled dog. I think sixty eight percent of all other crypto are built on top of the Ethereum layer or network, so it acts like a programmable money UM. But yeah, there's there's you know, we were talking about this before we started record, and there's almost twenty two different all coins out there. They're not all winners um. But the way I tell people to look at it is they're basically technology companies. Is the way they need to be looked at. So if you're like, uh, you know, what is it? You know, is this a material, tangible thing that I'm buying, Well, yeah, you're buying probably a governance token or a security token or some native coin or token of a of a of a technology company. And what you need to look at or look for is the use case or the utility of that particular coin. What will it do? Will it save money or make profit or generate revenue for a real world business. UM. One of my favorite use cases right now is a is a coin that I'm an investor in UM. And they are in the trucking, trucking and logistics industry, and their entire role is to provide liquidity to trucking companies, of which there are a million in North America. And...

...it's a trillion dollar industry. And but no one knows this except unless you're in the trucking industry. That trucking companies they often get paid on net ninety net one eight terms, right, so their cash flow is really difficult. They've got to pay for gas, you know, drivers, all whatever, all their overhead. But if you're you know, if Walmart's you know where Walmart warehouses are paying you on a net one eighty, how do you pay the bills? And so the traditional banking system for decades have provided factoring services where they affect you effectively by the invoices from the trucking companies forward or advanced in the cash and then charge what is effectively a thirty percent credit card bill on top of that. Annually, well, this coin that I'm talking about comes in and does the exact same thing for pennies on the dollar, and they provide that liquidity to these trucking companies. So I'm looking for things like that when I look at all coins, I'm not buying the dog coins, the community coins, the things that Elon Musk is gonna tweet about on Saturday Night Live, whatever those are. The those are not use cases. They have hyper hyperbolic moments in time and then they fade away. The things that you want to look at are things that actually have a use for businesses or even the future of the crypto fabric. Yeah, you know, like you I kind of describe um. I describe these little tokens or coins as it's got to have a business plan. But the coin itself doesn't have so much value, but the business plan behind it. They're little softwares that each one does something different and just kind of figure out what they do. You know, let's talk for a second about n f t s, because I love this concept, and you know, there are it's a little harder to understand for most people. Kind of give us a little back there. N f...

T stands for non fungible token UM. Unfortunately, because we haven't really had language for it or understanding of it. Traditionally, the industry went went the way of art, and so that's why you see people spending unbelievable amounts of money for pictures of neon monkeys and cats and whatever else because really, honestly, just uh, to be frank, we had to put we had to get it down on the level to where the populace could understand what it is exactly. Ultimately, the way I look at n f T s is the way I look at the deed to my house or my properties. You know, they are a proof of property ownership ultimately, and even now we have real estate that's being sold as n f T s a k A. If you're the n f T holder, you own that property. UM. If you buy certain n f T s out in the marketplace, they come with benefits if you're you know, buying the correct n f T. And those n f T benefits might be intangible benefits, they could be direct tangible benefits that provides you streams of income. Uh. They're all over the place. Video game industry is adopting n f t s so you can own actual property inside of video game worlds. We we like to call that the metaverse UM all the way to you know, token izing real world property and providing proof of ownership of that. Um it's just a matter of owning that deed rather than it being filed down at the county courthouse. It's actually, it seems to me, uh, tokenizing real estate, which is, you know, instead of having a paper deed, you have an electronic deed, which is what that would be. Makes a tremendous amount of sense when you start going into the metaverse and having you know, buying like a pretend island and a pretend game, and a pretend war old and a pretend life. I mean,...

...to me, that starts being a little bit you know, funny. I mean, that's like turning our life into a video game. I mean, there are real applications for n f t s. And by the way, just so that everybody understands, the word fungible means the same you know, so uh dollar bills are theoretically fungible. They're theoretically fungible because it doesn't matter which one of the bank gives you, they're all the same. But a collector would tell you something different. A collector would say that dollar bill has a mistake on it, that one's worth a lot more than all the other ones. So you know, there there are and that's why they're serialized and everything else. So these n f t s really have a way of categorizing things that are not organized or categorized you know very well the way we do it now, and it really is an upgrade, and these things are going to be rampant, uh some years from now. And I can understand why they would do art because if you know, if I take a picture of you, you know, and I and I email it to you, who as the original we both do right right? Yeah, So that so those n f t s, uh, those pictures, those art pieces of art have a contract address kind of like a social security number or you know, a serial number, and that contract address, if it is in my wallet, that means the n f T belongs to me, And then you have to understand wallets. But basically they act like our permission based user name and password for everything that we own on the blockchain or on a blockchain. So yeah, n f t s are definitely going to be more and more utility based moving for you know, listen, Josh, we could probably go for a long time, but but the bottom line isn't the promise of the show is toliver the inside track, you know, the information that people don't normally get the best, shortest, fastest way to get something done. And you have definitely delivered the inside track and how a lot of this stuff works. If we have another two hour, I'm sure you deliver way way more.

But you know, people who deliver on the promise of the show, we call those people advantaged players. And you did deliver, and that makes you an advantaged player. And we appreciate you being a friend of the show and being you know, being our guest here. So thank you very much for sharing. And we'll put your information in the show notes. So if people are innested and buying or getting some counseling about how this all works, Um, are they able to reach out to you? Yeah? Absolutely, Um Crypto y'all dot com that's my website and you can join over four thousand people on a free weekly newsletter. Just go subscribe and have fun. Awesome we listen, man, thank you very much for sharing with us. I really appreciate your insights and what you had to say. Honored to be here, Thank you. You've been listening to Profit from the Inside with Joe Block. For more insights and to learn more, is it joel Block Com. How about a shout out and a huge thanks to our podcast show producer David Wolfe and the team at Auta Vita Studios. Profit from the Inside wouldn't be possible without these wonderful professionals. To learn more or to find out how you can launch and produce your own podcast show, reach out to www dot auto vita dot com. That's a U d I v I t a dot com.

In-Stream Audio Search

NEW

Search across all episodes within this podcast

Episodes (184)