Transcript
Paul Winkler: Okay. So there was something that Chad gave me here in this office and I thought, Oh my goodness, can you even imagine if this happened to you? So we’ve been talking about the past several weeks, the run-up in Bitcoin and then run down in Bitcoin and then, then run up in Bitcoin and the rundown. And, you know, just the reality of it, as I tell people, don’t even think about it because it’s basically a commodity that goes up and down in value based on supply and demand. And it’s incredibly risky. Oh my goodness. I want to talk about this article in the New York Times. So imagine yourself one day going in taking a little bit of money and this, or getting involved in a contest as it were.
Bitcoin Blunders
I think it was getting involved in a contest as a computer programmer to explain to the public what Bitcoin is and how it works. Okay. Okay. So you’ve got this virtual currency, of course, and this virtual currency is computer generated and you literally have these, these countries that produce a lot of their own energy burning up tons of energy to create new Bitcoin is very big because you have to solve these complex problems in order to create new Bitcoin. So there is a very limited supply of Bitcoin and hence the reason for its “value.”
Now this is a very valuable commodity for who well, for a lot of people that have been in the black market trading illegal goods and doing illegal activities, it’s been great because there’s no way to trace it, hence its Achilles heel. So a guy goes and wins the contest and actually explains better than everybody else. Apparently how this actually works. And what is his award? I think it’s a little bit, a bitcoin for free. Okay. Now apparently this, this particular person has a net worth of approximately $220 million.
No joke, $220 million. There’s only one problem. The password has been forgotten. He doesn’t know how to access his Bitcoin. He has $220 million with no way to access his fortune. Now there is a nice thing about Bitcoin: they give you 10 shots at guessing what your password is. If you’ve lost it, instead of three, huh? That’s good. Well, there’s only one problem. He’s used eight of them. He’s used eight of them and he’s a computer programmer.
And because he’s a computer programmer as a wise computer programmer would be, they would come up with the most encrypted, difficult to guess password that you can ever possibly imagine. And literally has two more guesses and Bitcoin, you can’t get access to your money. Can you now, is this a US citizen? That’s in this story, he’s a German-born programmer. He lives in San Francisco. So yes, he’s in the US.
There’s a similar story from the UK. The fish man actually threw out a hard drive with a trove of Bitcoin on it once again urging local city officials to let him search for it in a landfill site. This guy’s 30 year old. The programmer said he discarded the device while clearing out his home. In 2013 claims he had two identical laptop hard drives and he mistakenly threw out the one containing the cryptographic private key needed to access and spend his Bitcoins in the trash.
After all these years, he’s confident he’d be able to recover a big one. Can you even imagine he’s offered to give, I think it’s like 25% of the money to the city, but it’s exactly what that’s going to be worth. $17.8 million. Yeah. Is what it is. And he’s he’s, I’ll give it to a COVID relief fund.
It’s not really fun.
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It’s Not Real Money
Evan Barnard: So here’s my question. Cause I don’t really get a whole lot of whole Bitcoin thing. If these guys decide to cash out, do the firms that have actually created this Bitcoin have the money to, I mean, give you $220 million.
Paul Winkler: There’s an open market for us. So somebody else is willing to pay for that. I mean, there were some companies on a limited basis, very very limited basis were accepting Bitcoin in exchange for product sales. You know that they were actually doing this for a little while, but it’s not terribly popular simply because it’s so volatile.
Evan Barnard: Oh, I know I asked my brother yesterday because we got into the whole conversation about, you know, what’s been going on with the market turn to Bitcoin because my niece’s boyfriend bought some Bitcoin and doubled his money in a day. And our president told them if you’re going to be with my daughter, you can’t be doing nonsense or use a different word.
I said, Jay, I can prove to you. It’s not real money. He said, “how?” I said to you accepted in your stores. Huh?
I said, no, I go, there you go.
Paul Winkler: There. That’s exactly right. Yeah. And it’s, it’s the example that I’ve used is there’s just no way it’s too stinking volatile. I mean, you go and do all this work for somebody and then you get a piece of Bitcoin and that, that partial Bitcoin ends up being worth a fraction. Now it’s kind of like, it’s not real money. Kind of like the dollar isn’t real money either. If you think about it this way. Right. Because the reality of it is the dollar is mostly electronic, you know? So you only have about 8% of currency in physical form.
But no, there is more currency actually out there than is in my wallet. I’m six or whatever. That’s all right. I’ll start with your wallet. Oh well, but you know, it’s interesting. That’s exactly. Well, I just brought up the amount of currency that’s in physical form and it is often what I’ll use as an example is India, because if you go to India, most of their currency is in physical form. So if you look at India, it’s the other way round, it’s like 92% or 93% or something like that of the currency or of the value of their currency is in physical form. Very little as an electronic form in India.
And I was fascinated because this surprised me, it really surprised me to see an article in Yahoo finance that said India proposes a law to ban cryptocurrencies, create official digital currency. I was like, Whoa, I, you know, I didn’t think that they would go that direction, but, but you know, in reality you think about that. If they come up with their own cryptocurrency, Hey, it’s going to create a new challenger to Bitcoin, number one, right. It’s going to be government sanctioned as opposed to Bitcoin, which is, you know, we’re not necessarily seeing a lot of governments around the world, you know, trying to crawl in and jump in and get into this game because they’re looking at and going, we can’t control it.
And there was so much blackmarket activity taking place using it. Yeah. They’re not excited about it. So I think it is really interesting and it could be interesting from a standpoint of, you know, we often discount countries that are a little bit backward in how they operate and operate all in physical cash. Like it or not is kind of a backward way of doing things. As much as people say, we want to go back to the gold standard and go, you know, it’s not Nestle. You can’t let that cat back out of it. That cat’s out of the bag. You know, it’s not necessarily rent.
Over 1,600 Cryptocurrencies Exist
Evan Barnard: The whole problem that I see with the whole cryptocurrency thing. There’s over 1600 different cryptocurrencies. So Bitcoin is only the most popular, right?
Paul Winkler: What was that one that they made up this week? That was actually, it was, it was, it was a joke and it jumped in value significantly. You guys see that it’s GameStop a cryptocurrency. No it’s there was some currency. Somebody came up with something this week. I don’t, I just was something I saw in passing. I didn’t even pay much attention to it and Biden dollars. Yeah, there you go. It was a bit, it was a total joke. It was an absolute joke that they did it. Just an executive order, Biden dollars. That’s what we’re going to be spending next year. It may be, you know, how people make money in the future and it’s just coming up with fake stuff and buying it.
So that, that really kind of gets to this whole money as a conversation. If I just declare something has value, right. And then I trade what I declared has value for the car that you say has value. You know? I mean, anything can be money if people agree on it. Oh, then that’s exactly right. It was like the example in South Africa that I’ve given where people didn’t like the dollar, the $20 bill that had an older date on it and they valued it less than the dollar bills there in South Africa, they were using $20 bills, American $20 bills to buy and sell things. But they devalued and they didn’t value as highly, the older dated $20 bills versus the newer day-to-day you just go figure why, because it’s, as you said, it has value because we say it does fascinating concept.
And the reality of it is that is why it is so important not to get too excited about putting all your money in fixed income investments. You know, people say I’m some, don’t like the government, I don’t like cash and all that. And you go, well, you know what? You’re putting in a lot of faith and trust in something that is government, US government sanction. I just pulled up a webpage. All right. How to create a cryptocurrency. Yes. Everything you need to know. There you go, man. We can do that. Let’s do it. No, no, we’re kidding.
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