47 minutes | Oct 6, 2019
EP36: Buy, Borrow and Die: Bitcoin Style
I am in a financial position that may seem somewhat unusual to you. You see, the IRS rewards me for my real estate investments by taxing me less. If, on the other hand, I keep my income in the bank, or invest it in traditional equities or bonds, the IRS shows me no mercy! Admittedly this is by design. I am a real estate professional. One of the great benefits to that designation is that all of my passive losses flow through my personal tax returns. In other words, all that depreciation and mortgage interest I get by investing in real estate not only builds my net worth, but SAVES me money in the form of tax mitigation. Not a bad deal right? To illustrate the power of these completely legal tax advantages, remember that with bonus depreciation even limited partners often end up with K1 losses of 50-100 percent of invested capital. Those losses add up in a hurry! With that perspective in mind, why would I EVER consider investing in anything that is not tax advantaged? Think about the returns I would need to get in order to simply break even with the tax breaks I’m getting from investing in real estate. The returns would need to be HUGE. I’m not going to get that through Vanguard ETFs! In fact, I truly believe that the only way I can get higher tax equivalent returns on capital is by investing in asymmetric risk type investments. For me, that means a little bit of bitcoin. You may think I am crazy, but I actually don’t even consider investing in bitcoin all that risky. Sure it’s volatile, but I’m pretty darn sure that 5 years down the line anyone who buys bitcoin today will be pretty happy. I’m less sure about all of the alternative coins/tokens. They may have more explosive returns or they may simply go to zero. But bitcoin going to zero?—ain’t going to happen if you ask me. Now I don’t overdo it with my bitcoin portfolio. For one, it’s important to have discipline and value add real estate is my bread and butter. In fact, I bought bitcoin with only about 5 percent of my investable assets this year. Aside from its riskier nature, buying bitcoin does not save me any money! It’s not tax advantaged. So what’s a bitcoin HODLR to do? How about “Buy, borrow, and die”? That’s the mantra of the ultra-wealthy. The idea is that you can borrow against most assets that you own and invest in something else. You don’t get taxed on your loan and you’ve got a way to create liquidity out of an asset that is sitting around waiting to appreciate. If you invest those borrowed funds into real estate, not only do you get the benefit of investing your capital in two places at once, but you also get the tax advantages! You can do this with all kinds of assets. Traditionally, the wealthy have done this with brokerage accounts and other real estate but also with gold and fine art. The good news is that these days you can even do it with bitcoin and that’s what this week’s show is all about. Zac Prince is the founder of a cutting edge company called BlockFi. BlockFi is essentially creating financial products from the cryptocurrency ecosystem including the origination of loans and even savings accounts that pay cryptocurrency in interest. In this week’s Wealth Formula Podcast, Zac tells us all about it and gives us his take on the massive infrastructure that is creeping slowly but surely into the bitcoin ecosystem. Whether or not you buy bitcoin, you are going to want to understand what’s going on in the digital ecosystem because soon it will be part of your every day reality. Don’t miss this show!
54 minutes | Sep 8, 2019
EP35: Cryptocurrency and Asymmetric Risk with Teeka Tiwari
Up to 10 percent of my liquid assets are in very risky stuff—specifically digital assets and startups. A lot of people people think I am being irresponsible—particularly because I have a captive audience with whom I have influence. Now if I was shooting at the hip and telling you to put all your money in this stuff, I would understand. But even highly volatile investments (ie. gambling) may have their role in your portfolio. To be clear, every year, I allocate no less than 80 percent of the money I invest into real estate through Investor Club. There are many “wealth advisors” out there who would tell me that’s nuts too—that I would be better with a substantial portfolio of stocks, bonds, and mutual funds. Ain’t gonna happen. One of the great benefits of becoming financially literate is that you get to make your own decisions and feel confident about them. You don’t need someone with a three month long accreditation course to tell you what makes sense. In my opinion, residential real estate isn’t risky if you know what you are doing or invest with someone who does. People have to live somewhere regardless of the Dow Jones Industrial Average. Real estate in the hands of an ambitious immigrant with no money (my dad), ultimately paid for my upper middle-class upbringing and my education through medical school! Why would I consider it risky? The only time my dad got in trouble was when he invested in the stock market. Now, let’s go back to this buying digital currency thing again. You and I know this is seriously risky. But you know what?— a lot of people have gotten very wealthy off this stuff already and it’s still in its early days. So let me ask you this. Say you invested $20K into a variety of cryptocurrency projects today and lost it all. Would that kill you? Alternatively, say your $20K became $2 million—is it worth it for you to at least have a chance of this happening in your lifetime? That’s the kind of analysis you need to do for yourself when considering investments of the asymmetric risk profile variety. Chances are if you are a follower of Wealth Formula Podcast, you are already doing fine. You make a great income and have all the basic things you need to live a happy life. But what if you had exposure to something that could put you in another league of wealth entirely? Would it be worth putting a little capital at risk to make this happen? It is for me and that is why I invest in cryptocurrency. This is not foolish—this is calculated risk. It is the kind of risk that the wealthy take all the time. It’s how millionaires become billionaires and how ordinary people can make money that they never imagined possible. In fact, even the largest, most respected university endowments like Yale and Stanford are getting in the game with small allocations in the digital currency space just to make sure they don’t miss out. And why now? Well—because no one is talking about it. The bull market of 2017 had everyone and their mother investing in cryptocurrencies. Two years later, technology is better and institutional money is starting to get in, but investors don’t seem that interested. That’s exactly why, if you have not gotten exposure to digital assets, now may be the best time to take the leap. The more you read about this stuff, the more excited you will get! To help you understand what is going on with cryptocurrency and whether you should consider getting in Consensus Network. He’s a former Wall Street guy with serious credibility with institutional investors and family offices. He is also a great teacher so make sure you tune into this week’s show. P.S. To find out EXACTLY why investing in cryptocurrency makes sense NOW, make sure to sign up for Teeka’s upcoming webinar HERE.
72 minutes | May 26, 2019
EP34: Bull Markets in the Least Ugly Economy in the World!
I am a lousy trader. I’ve said it before and I fully recognize this fact. That’s why, I try very hard to stay focussed on investing rather than trading. Nevertheless, I still get trapped in behaviors that I invariably regret. For example, you may know that I am a believer in bitcoin. I truly believe this will be one of the best investments of my lifetime over the course of the next few years. That’s why when it dropped to $3100, I should’ve bought some more. But, I didn’t because I got greedy. I figured it might drop even more so I waited. The end result was that by the time I bought more, it had actually doubled in price. Now, over the long run I still think that’s not a bad price at all. Especially considering I believe that we will see $100,000 bitcoin within the next couple of years. However, I was kicking myself because I was timing something instead of just recognizing that it was a good time to buy. In the heat of the moment, it’s hard to remember Warren Buffett’s wisdom. Here’s a good quote for you. “It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” The point is recognize when you have a good opportunity and can buy a quality asset at a fair price and just do it! Now some of you may disagree with me that bitcoin is a “quality“ asset. We can agree to disagree. However, let’s focus on that principal with another example. One of my friends is a famous home designer and is particularly well known amongst Hollywood celebrities. He told me about a house he once put on sale in Los Angeles. At the time, it was the most expensive house per square foot in all of Los Angeles. He had a very motivated buyer who happened to be the daughter of a well-known tech billionaire. My friend said that dad had three questions before he bought the house for his daughter. 1) Was the house in a desirable area? 2) Did the house have a great views? 3) Was the house built well? The broker assured him that all three answers were a resounding yes. The billionaire went on and bought that house for his daughter at full price. And, that house which was the most expensive house per square foot in LA at the time (in 2007), sold for a significant profit only 10 years later even after the housing correction. The moral of the story?—most of the time when we think we are saving money, we really aren’t. It may be more expensive to buy a higher quality asset or an asset that is in a higher quality area. However, over the long run, you will come out ahead. Think of it this way. Ikea furniture is not going to appreciate. So, if you can afford it, buy something that might appreciate so that, someday, you have something of greater value. This is the kind of perspective you get over time. That’s why it’s a good idea to listen to people of been around for a while. Tyler Jenks is one of those guys. He’s been in the financial industry since 1971. That’s before I was even born! Tyler can speak on a broad base of financial topics with perspective that is both unusual and multidimensional. From the S&P 500 to gold and even to bitcoin, Tyler is a wealth of knowledge as you will see on this week's Consensus Network.
48 minutes | Apr 28, 2019
EP33: Crypto thaw and Crypto Law
This past week or two got a lot of people excited. Bitcoin broke through $5K and seemed to be headed to $6K. The usual bulls were out stomping on the grave of the crypto bears. But then the New York Attorney General filed a complaint against Bitfinex, one of the largest crypto trading platforms. It had to do with a stable coin called Tether and how Bitfinex dipped into its funds to cover other shortfalls. This is an old story that the AG has finally moved on so it should not have been a surprise. That said, any news in the digital currency world seems to create a PTSD like response and because of that, bitcoin fell to near 5K as of this writing on April 26th. Is this the end of the bear market? I certainly don't know but my hunch is that we have a bit of sideways activity to come before any clear resolution. Some technical traders believe the bottom is in and even the most notable bears are conceding their call for bitcoin hitting sub 2K before a bull run might not come to pass. In the meantime, the only thing to do is to watch, wait, and learn so that's what we are going to do. This week on Consensus Network, we discuss how regulations and laws are affecting the crypto landscape for better and for worse.
66 minutes | Apr 14, 2019
EP32: The Separation of Money from State
It’s funny how long lasting paradigms perpetuate without question for centuries without being questioned. It used to be in most places, specific religions were mandated by the government to its people and heretics were persecuted. Of course that still exists in many parts of the world but the point is that a large part of the world does not see that as simply status quo anymore. If you live in the United States, for example, you would likely feel very uncomfortable with the idea that the government chose your place of worship, what you ate or drank, and what you wore. Why is that? The answer to that, again, is that we tend to let outdated paradigms perpetuate without questioning them. They become part of conventional collective reality that few even think about questioning. Then, one day there is an awakening. The separation of church and state was one of those awakenings that has occurred gradually over time. Similarly, while this may sound like a bit of a leap, I believe that bitcoin represents the first modern step in separating money from state. I have been watching and studying this space closely and I have come to the conclusion that bitcoin is real and it’s not going anywhere. And when you look around and see the infrastructure that is being built around bitcoin at the institutional level, that belief is no longer outlandish. A lot of smart money believes it’s here for the long term as well. I’m talking about university endowments and even some pension plans. Bitcoin is not a fad. It’s a movement that is unstoppable. It doesn’t matter what the price of bitcoin is today. Its value is in what it’s going to do to the world tomorrow and, in that sense, is grossly undervalued. In my opinion, you will regret it if you don’t take time to understand bitcoin and its implications now. For that reason, I have invited a former Wall Street guy turned bitcoin purist for an interview on Wealth Formula Podcast today. His name is Tone Vays and you are going to want to listen to this week’s show so you can start the process of learning what will, in our lifetimes, become a new reality in our economy.
43 minutes | Mar 17, 2019
EP31: Blockchain, Crowd Wisdom, and AI with Cindicator
As the story goes, in 1906, the great statistician Francis Galton observed a competition to guess the weight of an ox at a country fair. Over 800 people entered that contest. Galton, being a numbers guy was curious about how the crowd faired with its guesses. What he discovered was that the average guess, 1,197lb, was extremely close to the actual weight of the ox at 1,198lb. No one person had made a guess as good as that of the combined wisdom of the crowd. Since then, there have been lots of examples of this kind of crowd intelligence and it has become a science unto itself. Meanwhile, another kind of intelligence has become sort of a buzz word in the technology space over the last few years: Artificial Intelligence. So what happens when you take crowd intelligence and combine with artificial intelligence and blockchain? The answer is a project called Cindicator. Cindicator has applications in just about everything you can think of predicting. Sound interesting? If so, you will not want to miss this week’s episode of Consensus Network.
52 minutes | Mar 3, 2019
EP30: Dentacoin? What?
Let’s talk about some things happening in the crypto space right now. Nasdaq launched real-time information on two new indices linked to the crypto asset market —Bitcoin liquid index (BLX) and Ethereum Liquid Index (ELX) were both incorporated into the Nasdaq platform on February 25th. This is sort of like the Nasdaq composite with the end goal to bolster mainstream adoption by fusing crypto assets into traditional entities like the stock market. Bitcoin surpassed PayPal in yearly transaction volumes in 2018 with $1.3 trillion dollars more then doubling PayPal with just over $500 billion The CBOE/Van Eck ETF ETF wil have a decision on it made by April 5th—this was extended of course because of the government shutdown. Of course, BAAKT, the platform owned by the new york stock exchange owners—Intercontinental exchange—is still delayed with launch expected “later this year”—partnership with starbucks-not wanting to do it during a bear market. That it for me this week. This is Buck Joffrey signing off.
42 minutes | Feb 17, 2019
Ep29: Power Ledger: Peer to Peer Energy
We’ve had a lot of high profile folks on the show lately that represent the “bitcoin maximalist” crowd. In other words, they believe that bitcoin is the only worthwhile blockchain and that every other project/token out there is a “shitcoin”. There is all sorts of terminology for this—the bitcoiner, the multicoiner, the nocoiner, and then there is the full spectrum in between. What am I? Well, it’s funny because a couple of years ago I would have been one of those people who said, “blockchain not bitcoin”. Why?…Because I didn’t understand bitcoin as well as I do now. “Blockchain not bitcoin” really means “I have no clue what I’m talking about but I will give you my opinion anyway.” On the other hand, I’ve come to realize that there is, indeed, and overabundance of needless projects and tokens. So, I would call myself more of a bitcoin maximalist in the long term. However, in the next couple years I actually believe people stand to make a lot more money with the right alt coin than with bitcoin itself. One of my favorite projects is Worldwide Asset Exchange (WAX). WAX is trading at 3.5 cents right now. WAX will get to 35 cents way before bitcoin does its 10X in my opinion. In fact, when bitcoin has its next 10X bull run, I believe WAX will be up closer to 100X. On the other hand, bitcoin is more likely to be around in 10 years than WAX. Anyway, I think you get my point. The reality is that there are some really good projects out there that are already using blockchain that are making things more efficient. Peer to peer energy is one of the interesting use cases that I have spoken about on a few occasions. So, as we pick our alts to HODL for the next bull run, we will start exploring some useful blockchain use cases and quality projects. One of the areas in which blockchain appears to be emerging as a very useful technology is peer to peer energy production and consumption. The clear leader in this area is a Project Called Power Ledger who’s cofounder is our guest on Consensus Network this week.
47 minutes | Jan 27, 2019
Ep28: Does Crypto Need Rules?
I’ve been off the air for a while with Consensus Network through the holidays. The good or the bad news is that there isn’t a lot of movement in bitcoin prices. Infrastructure continues to grow and projects continue to develop throughout crypto winter. Even though prices aren’t moving dramatically, the technology and laws around it are. My guest today is at ground zero for all of those developments. Her name is Amy Wan. The last time I interviewed her, it was for Wealth Formula about real estate crowdfunding. She’s consistently been at the forefront of technology and the next big thing. She is now using her law skills to work with, of all things, smart contracts. This conversation was very interesting. We top off the show with some important news as well so make sure to listen to it. Shownotes: Amy Wan’s journey to cryptospace Smart Contract What does does Sagewise play? Governance & EOS On-chain & Off-chain governance Amy’s take on Hedera Hashgraph Twitter.com/amyywan Sagewise.io
68 minutes | Jan 6, 2019
27: Crypto 202 with Chris Coney
We are in a bear market with cryptocurrency. There is no doubt about that. How long will it last? I have no idea.However, one day a bull market shall return just as the dotcom’s did after the bubble burst in the late 90s. Then we will see the blockchain versions of Amazon and Apple skyrocket in value. In the meantime, it is winter.Now is the time where you learn about projects and buy them at a steep discount. The truth is that the vast majority of these cryptocurrencies will never recover. But the ones that do will come back with a storm.So how do you spend your time if you want to be part of this eventual boom? You learn. You become part of the conversation.You can’t do that if you don’t speak the language. That’s where my guest this week on Consensus Network really shines. He is one of the best teachers in blockchain I have yet to encounter.His name is Chris Coney and he will help you make sense out of a lot of fundamental but difficult concepts in distributed ledger technology. Chris Coney’s background When did Chris start to buy Chris’s take on Bitcoin Maximalism EOS Proof of stake & proof of work Cryptoversity 2.0 How the Crypto Revolution is Bigger than the Internet Search “the cryptoverse” on YouTube for more of Chris
13 minutes | Dec 19, 2018
Ep26: Weekly Cryptocurrency News 12/19/18
Consensus Network Weekly Cryptocurrency News 12/19/18 Cryptocurrency Market Capitalization: $125 Billion Bitcoin Price (Coinbase): $3791 Crypto Come Back or Dead Cat Bounce? Bitcoin was up just under 7 percent this week. According to theblockcrypto.com, senior market analysts believe that this might be the result of traders closing out short positions. According to Math Greenspan of eToro, “Closing short sell positions creates an upward pressure on prices. Evidence: BCH is up the most.” BCH or Bitcoin Cash has proven itself to be BTrash over the past month. Frankly, there is NO other reason for this rally right now. In fact, the global markets themselves are shaky. I do not subscribe to the idea that bitcoin is yet an uncorrelated asset. In times of uncertainty, people sell off speculative assets. Most of the world views bitcoin and especially other cryptocurrencies that way. My vote: dead cat bounce. There is no reason for a recovery right now. Is the Bear Market Scaring Off Institutional Money? According to Bloomberg, JP Morgan analysts believe that the protracted cryptocurrency bear market is driving away institutional interest. The report sites decreasing interest in the open contracts on bitcoin futures at the Chicago Board of Options Exchange. Last month was apparently the lowest level of interest since the futures trading began in December of 2017. A similar sentiment was recently reported by Coinshares CSO Meltem Demirors. In my view, that is what makes this crash “different”. Many crypto enthusiasts boast about seeing these kinds of corrections several times and not being phased by them. However, we were on the precipice of seeing bitcoin go mainstream. The crash, mainly triggered by a ridiculous battle between bitcoin cash rivals has hurt the ecosystem at large and I suspect will delay an ETF and other advancements of bitcoin within the Wall Street Ecosystem. Startup to Focus on Accepting Lightening Network Merchant Payments OpenNode, a startup backed by Tim Draper, raised $1.25 million to help build a new bitcoin payment platform that focuses on ease of use. The software essentially makes it very easy for merchants to accept bitcoin. What makes it different from Bitpay and Coinbase Commerce is that it allows for merchants to accept bitcoin through the lightning network— a second layer that allows for cheap instantaneous transactions of bitcoin off-chain. You can learn more about lightening network on our recent interview with Samson Mow of Blockstream. I love the technology and it will be interesting how it plays out. I’m also interested in understanding how bitcoin taxes will be paid if it is actually used for transactions. In other words, when you pay someone with bitcoin that has gone up in value, will that be a taxable event. If you pay someone in gold, it is a taxable event. This could be a problem for mass adoption of bitcoin as a payment system in the US.
52 minutes | Dec 16, 2018
Ep25: Nic Carter and the REAL Value of Blockchain
I don’t know if you’ve noticed, but people are overusing the word blockchain. In fact, a recent article I read exposed twelve publicly traded companies that reaped huge valuation rewards simply by adding the word “bitcoin” or “blockchain” to their name. Now listen, this technology that is coming through is special. I have no doubt about it. But even actual blockchain projects may not have a real reason to include distributed ledgers. All of this, of course, is going to flush out over the next decade. Our job, in the meantime, is to understand the technology as well as we can and to try to understand for what it is best suited. My guest this week on Consensus Network has a special set of skills. His ability to think at both a macro level and as an analyst evaluating projects is impressive. His name is Nic Carter and he is going to help us navigate through the rapidly changing world of distributed ledger technology. Shownotes: Nic Carter’s background What’s is Coin Metrics? How is Coin Metrics different than bits activity and other competitors Castle Island Blockchain, blockchain, blockchain… When will the impact of institutional interest reflect the market? Learn more about Nic Carter https://medium.com/@nic__carter https://coinmetrics.io/
16 minutes | Dec 12, 2018
Ep24: Weekly Cryptocurrency News 12/12/18
Consensus Network Weekly Crypto News 12/12/18 Cryptocurrency Market Cap: $111 Billion Bitcoin Price (Coinbase): $3463 SEC Decision on Bitcoin ETF Set for February The Securities and Exchange Commission (SEC) has postponed their decision on a bitcoin ETF again to a final deadline of February 27, 2019. The ETF in question is the one everyone was excited about because of the sponsors, the Chicago Board of Options Exchange (CBOE) and VanEck SolidX. The big issue of concern voiced repeatedly by the SEC is that the market is exposed to manipulation and that not enough safeguards have been put into place. Here’s the deal—it ain’t going to happen. That’s my prediction. The SEC is going to error on the conservative side. A lot of people have lost a lot of money lately and there is no rhyme or reason to the movement of bitcoin price right now. That makes market manipulation an easy argument to make. That said, all markets are manipulated to some extent—especially the commodity markets that bitcoin would fall under. I am convinced that this ETF will not get through by the deadline. I think that the SEC is seeing this market grow in real time and infrastructure getting put in place for it to become more transparent. But bitcoin is not ready for prime time…yet. I hate to say this because I, like so many others, was so optimistic about this ETF going through virtually guaranteeing the existence of bitcoin for the next 100 years. I still think it will happen but I would not get your hopes up for it to happen in the first quarter of this year as some of my fellow podcasters and newsletter writers have predicted. On the other hand, there is plenty of other institutional movements in bitcoin to look forward to including the launch of Bakkt in January and Fidelities involvement that could prove to be even more important. Be ready for winter to last a while folks. BlockFi raises $4 million to Help with Crypto Credit Cards BlockFi, who’s founder and CEO Zac Prince was previously featured on Consensus Network scored another round of investments from some big money investors including Fidelity. Part of the funds will be used to build out products including a crypto backed credit card and potentially a credit card that offers bitcoin rewards instead of miles or cash back. BlockFi is also planning to offer an interest earning savings account for cryptocurrency. Of note, despite the bear market, BlockFi has grown substantially year over year activity. I look at players like Fidelity still getting entrenched in this market and still see this as long term Bullish for Bitcoin. Coinbase to Pivot Towards More Alt Coins Coinbase is looking to add 31 new cryptocurrencies to its fiat exchange. Notably the list includes EOS, which ought to be given it is the primary competitor of Ethereum, and XRP. Now XRP (AKA Ripple’s cryptocurrency) is somewhat controversial because there is a strong case that it is a security so most exchanges that care about US regulatory laws are not really getting it involved in their projects—Gemini is a good example of that. Certainly this is a way for there to be more growth an liquidity in the cryptocurrency markets and certainly a way for Coinbase to make more money. However, when I look at the list, a number of the projects qualify as what I not so eloquently describe as “shitcoins”. So what am I doing? I’m doing nothing right now. I think bitcoin still has potentially 50 percent to drop before we hit the bottom. When that happens, I may start to buy. But we have not seen true capitulation yet in my opinion. We have not seen a quick and dramatic slide to bottoms that no one thought possible. That’s when we hit the bottom in my opinion.
52 minutes | Dec 9, 2018
Ep23: How to Scale Bitcoin with Samson Mow
If you follow the crypto world like I do, it seems almost a little bit ridiculous sometimes with all of these personalities threatening each other and massively volatile digital asset prices. My friend Teeka Tiwari calls these conflicts the “nerd wars” and thinks we should ignore the noise. I tend to agree in the larger scheme of things. However, I do think that this kind of chatter hurts the evolution of this asset class. In times like these it is important to understand that underlying all of this stuff is a world-changing technology—blockchain—and it was all started by one white paper authored by Satoshi Nakamoto. That white paper gave us one of the most elegant ideas of the century. It’s called bitcoin. Over time, it is my opinion that we will see bitcoin evolve into something of tremendous significance. However, we aren’t their yet and part of the issue is that we are still in the early stages trying to understand how we can unleash all of its potentials. As a payment system, it has run up against some challenges with regard to scaling. How do you keep this elegant system intact while making it something that can be used for everyday transactions? This question ultimately led to a major schism in the bitcoin community in August of 2017 which led to the split between bitcoin and bitcoin cash. I have been trying to get someone to intelligently speak about the issues surrounding the scaling of bitcoin and I was fortunate to find one of the brightest minds in the field, Samson Mow from Blockstream. Listen now to hear how he thinks bitcoin should be scaled. Samson Mow’s background “Bitcoin is like a tank, or an aircraft carrier” Lightning Network What does Blockstream do? Liquid Network Bitcoin, not blockchain Blockstream.com
18 minutes | Dec 5, 2018
Ep22: Weekly Cryptocurrency News 12/5/18
Consensus Network Weekly Crypto News 12/5/18 Cryptocurrency Market Capitalization: approx $124 Billion Bitcoin Price (Coinbase): $3713 SEC Meets with VanEck SolidX/CBOE to discuss bitcoin ETF…Again We have been talking about this bitcoin ETF for some time now that involves a couple of major players including the Chicago Board of Options Exchange (CBOE). A lot of people believed that given the CBOE involvement that this ETF would eventually find its way through the SEC. So representatives from all of the involved parties met again on November 28th. As you may recall, the last meeting occurred October 9th at which time the attempt was made to convince the SEC that the market is mature enough to support the ETF. Of course that was before the market plummeted from news surrounding bitcoin cash and the war between Roger Ver and Faketoshi, Craig Wright. I’m not sure that was good for their case! This most recent meeting was in attempts to present the case that bitcoin is a commodity like silver or gold which already have ETFs. Furthermore, the case was made that several qualities of bitcoin and the bitcoin market make it less susceptible market manipulation than other commodities. The full presentation is on the SEC website. Suffice it to say that the case is compelling but I’m not sure the SEC is going to let it happen with all the money that has been lost in the cryptocurrency market this year. My guess is that we will see Bakkt, ErisX and Fidelity bring in more money and make this a larger more liquid market before the SEC will go for an ETF. We will continue to follow this story carefully. SEC Penalizes Floyd Mayweather Jr. and DJ Khaled for Illegal ICO Promotion: Boxer Floyd Mayweather Jr. and DJ Khaled have large Twitter followings—something which I do not. Both Celebs were also paid to promote ICO’s on their Twitter accounts and did not disclose payments. Mayweather was paid at least $300K over the course of just a few months and DJ Khaled was paid $50K. Why anyone would take financial advice from Floyd Mayweather and DJ Khaled is beyond me personally. The SEC has banned them from doing any further such promotions, ordered disgorgement of promotional funds received and tacked on interest and penalties for both celebrities to pay. Of course these two guys were not the only ones doing this. There are bloggers and podcasters in the space that were doing the same that will almost certainly be under investigation by the SEC. Frankly, we need this if the blockchain space is to succeed. We need to purge this world of as many charlatans as possible and focus on the technology. Things like this make the industry look bad and we need do a better job of self-regulating the industry if we are to be taken seriously. One good outcome of the crypto blood bath is that all of these guys are suddenly silent and BS ICO’s are disappearing every day. We need to purge these elements to move forward. I would like to point out that I seem to be the only one to have STARTED a podcast in the bear market. Hopefully that shows you my true conviction! Bitcoin Declared Dead!…Again. Several media outlets that have no clue what they are talking about have yet again declared bitcoin dead. This time, the focus has been on the idea that the price of bitcoin has dipped below a point at which miners will continue to secure the network. This has been characterized as the bitcoin “death spiral”. The problem is, it’s just not true. Bitcoin adjusts its difficulty according to the hash rate—for every minor that turns off, mining becomes more profitable for the remaining miners. Bitcoin Mining difficulty dropped by 15 percent Monday—which was the second largest drop in ASIC history. Decreases in difficulty make it cheaper to mine. The math isn’t quite as hard for the computers to solve. Now also remember that some major minors are located in China with ridiculously inexpensive costs of electricity. Other minors are being subsidized by their governments or are using very inexpensive renewable energy. We all seem to forget that bitcoin didn’t start out at $6000. It is software designed to adjust to demand. It will find its way.
57 minutes | Dec 2, 2018
Ep21: The Conservative Investor’s Case for Bitcoin
One of the favorite words in crypto-Twitter these days is “Institutional”. What does that even mean? What is the big deal about these institutional investors coming in and why in the world do we care? There has been big money in the crypto markets for a while in the form of hedge funds, family offices, and wealthy individuals—all of which tend to have a greater appetite for risk than say a pension fund or a University endowment. The latter are more conservative because their primary objective is to not lose money. Crypto certainly is a good place to do that as we have seen in the past few weeks. So why would Yale University’s endowment lead the charge into diversifying into blockchain? Why are other Universities following suit? Well, the issue is that there is risk in participating in this technology but there is also risk in not participating. Say for example an endowment put 1 percent of its assets into blockchain (still a lot). If that one percent went down to zero, which is highly unlikely, the overall effect on the portfolio would be negligible. On the flip side, if that one percent returned 1000 percent over two or three years, which absolutely could happen, that small risk would lead to noticeable improvements in the overall yield of a fund. This is what you call an asymmetric risk profile and cryptocurrency is the quintessential example of that. Frankly, as an individual, I have small investments in dozens of projects for the very same reason. Certainly, there are some that I have greater conviction in that I consider less risky, such as bitcoin, that I am willing to buy a little bit more of, but the vast majority of alternative coins out there are still quite risky in my humble opinion. This week’s podcast features an interview with Kim Snider. Kim comes from the traditional financial world where she was an expert in options trading. After a successful career, she retired. However, seeing this asymmetric risk profile opportunity was enough to get her back in the game. In this interview, she will tell you why you should invest in bitcoin even if you have no clue how it works.
14 minutes | Nov 28, 2018
Ep20: Weekly Cryptocurrency News 11/28/18
Consensus Network Weekly Crypto News 11/28/18 Cryptocurrency Market Capitalization: $138 billion Bitcoin Price (Coinbase): $4196 Bitcoin Upturn or Dead Cat Bounce? Bitcoin broke through the $4000 level and flirted with $3500. Today, everyone is getting excited because the market is up. In fact, bitcoin is up almost 20 percent since yesterday. I’m not a trader. I’ve made that very clear in the past so I don’t buy and sell on short-term market movements. However, I am looking for a bottom because my long-term view on bitcoin and blockchain is very bullish. So, I’m eager to buy more when it’s on sale. Now just because I’m not a trader doesn’t mean I don’t respect the abilities of those who are. Tyler Jenks was on the show a few weeks back when bitcoin was sitting in the mid $6000s and was about as sure as anyone that it was going to plummet in the short term. To be honest, I didn’t believe him until he literally called it the day before on Twitter. It was like watching Babe Ruth point to the rafters and hit it out of the park. Now Tyler says that this really is short term and, even if it goes back up to $6K, it’s going easily sub $3k before it takes off. Tyler is seriously bearish on bitcoin price but highly bullish on bitcoin’s future so he’s looking to buy in as well. But he thinks we are going lower before we go back up. One of the things I have learned over the years is that it’s not a good thing to be the smartest guy in the room. You want to surround yourself with people who are smarter than you at various different tasks. Tyler is a technical analyst and can identify good times to buy better than me for sure. So, I’m just going to buy more when Tyler tells me to buy more on his YouTube channel. You should check it out. It’s way over my head but fascinating nonetheless. So… bitcoin price may be headed south, but don’t let that fool you into this narrative that bitcoin is dead. While this uptick in bitcoin price may be a dead cat bounce, bitcoin has shown over the years that it has at least nine lives. We’ve talked about the institutional frameworks that are now being built and those are not slowing down. And people are not slowing down their use of bitcoin. Bitcoin transactions have actually reached their highest level since mid-January. In fact, the number of daily transactions on the bitcoin blockchain is approximately the same as Mastercard. Why is this significant? What gives Bitcoin its value? What gives anything value? Ultimately it’s faith in the system and the bitcoin blockchain is not being utilized any less than it was at $20K bitcoin. I don’t know when, but I am quite sure a bitcoin bull run will happen again and this time it will include big money institutional investors that will take it to new highs. I truly believe that we are seeing a tremendous transfer of wealth happening from scared retail investors selling to institutional ones who are buying from over the counter platforms like genesis. Individuals are selling and institutions are buying and they are going to make most of the money…like they always do. SEC Chairman Comments Cast Doubts on ETF Approval Jay Clayton, chair of the U.S. Securities and Exchange Commission, speaking at Consensus: Invest Conference reiterated previous concerns about the cryptocurrency market’s exposure to market manipulation. This was one of the reasons cited by the SEC in multiple rejections of ETF applications. Many were optimistic about the CBOE/Van Eck Solid ETF being considered by the SEC, but Clayton suggested he did not think that had yet been accomplished. Of course, the CBOE application addresses this problem with pegging the eta prices to over-the-counter trading such as Genesis Trading but given the recent events in the cryptocurrency world, I would personally be shocked if the application is in fact approved next year although eventually I think it is inevitable given the interest from institutional and retail investors. Ohio Accepts Bitcoin for Tax Payments The Wall Street Journal disclosed on Sunday that Ohio will become the first U.S. state to accept bitcoin for taxes. The guy behind this is Josh Mandel, the forty-one-year-old State Treasurer of Ohio who wants Ohio to be the national leader in embracing blockchain. Mandel says he believes in “leveraging technology for the democratization of finance”. In case you are wondering, Ohio will be using BitPay as a payment processor that will immediately convert bitcoin into US dollars. They do not currently plan on HODLing although that could actually be the smartest they could do given the price of bitcoin right now!
67 minutes | Nov 25, 2018
Ep19: Hunter Horsley with Bitwise Management on Buying the Market
There is blood in the streets of blockchain and I won’t be surprised if there is more. I suspect that it will get worse before it gets better. This whole thing started out with a consolidation and an uncharacteristically low volatility in crypto. The question was whether it was going to break up or break down. For those of us looking solely at the macro picture, the involvement of institutions and the potential for an ETF made us believe things were going to break for the better. In the meantime, the technical guys, the guys who just look at the charts, were calling it the other way. Tyler Jenks, who was on this show just a couple of weeks ago called this sell-off. But he also believes it’s going down towards $1000 before we are out of the bear market. Maybe he’s right. For better or worse, we shall see. The interesting thing I’ve noticed is that a lot of these guys who called this sell-off and still see it heading south are, overall, very bullish on bitcoin. Tyler thinks after the sell-off it will head up into mid-six figure territory. In other words, what we are seeing here is a very psychological event that really has no fundamental reason. Sure there was the bitcoin cash hard fork and the threat from Faketoshi about dumping one million bitcoin but that shouldn’t drive billions out of the market should it? It’s all emotion and automation at this point. A lot of people program stop losses to lock in their profits so when the price starts drifting down, their bitcoin automatically gets sold off. You saw that a lot around $6000. Below that is the abyss. Very few people planned for it so the price is in free fall. It’s important in times like this to understand, though, that this is not the first time bitcoin and crypto have been pronounced dead. It’s happened multiple times before. This time, there is institutional infrastructure built for this thing to succeed in the long run so the likelihood of “death” is really very small in my estimation. Furthermore, underlying all of this volatility is a new technology that will have seismic effects on the world. If you believe that, you may still believe that bitcoin prices will be over $100,000 per coin over the next five years. I am in that camp. If that’s the case, does it matter if you bought in at $6500 or $3500? Either way, you would do quite well. I know it’s hard to think rationally when your brain tells you to run away but that is what separates good investors from the bad ones. Warren Buffett said, “Be fearful when others are greedy and be greedy when others are fearful.” There is a lot of fear out there right now so, again, it might be time to get greedy pretty soon. That said, if you don’t want the hassles of dealing with wallets and trading platforms, there is a way to just buy the market when you think it’s bottomed out or stabilized. It’s through a company called Bitwise Management. This week on Consensus Network, I interview HunterHorsely, cofounder and CEO of bitwise. If you’re thinking about taking advantage of this crash but don’t know where to start, don’t miss this episode. By the way, it was recorded before this crash so never mind the talk about the stability of the markets! Shownotes: Hunter Horsley’s background Big institutes getting into cryptocurrency in 2018 What’s holding back the investors What’s the cost if I DON’T invest Bitcoin vs everything else Bitwise Hunter’s typical investors Bitwiseinvestments.com
53 minutes | Nov 18, 2018
Ep18: Institutional Interest in Cryptocurrency with Michael Moro
It used to be that bitcoin was just for quirky libertarian computer scientists but somehow the virus has spread gradually into big money. How something that was never advertised goes from nothing to over $100 billion market cap in 10 years and ushers in an entirely new digital currency asset class is mind-boggling to me. So, it is particularly interesting to people who watched it happen. Michael Moro has been involved with bitcoin trading before the infamous Mount Gox hack and has watched it mature to where it is today. In this episode, he will take us on that journey and use that perspective on the future of institutional interest in cryptocurrency. Shownotes: What caused the bitcoin cash fork problem? hashing power’s effect on price Michael Moro and Genesis When did the institutional money come in? What is Genesis about? The benefit of over-the-counter trading platforms The new Genesis Capital: a lending platform More on Michael Moro Genesistrading.com Genesiscap.co
11 minutes | Nov 14, 2018
Ep17: Weekly Cryptocurrency News 11/14/18
Consensus Network Weekly Crypto News: 11/14/18 Cryptocurrency Market Capitalization: $188 billion Bitcoin Price (Coinbase): $5588 Bitcoin Bloodbath! Bitcoin prices fell by almost 10 percent today all the way down to $5555.34 on Coinbase. Listeners of this podcast heard Tyler Jenks with Lucid Investments last week hint at some of the chart analysis that indicated a potential drop in the market. Well, I guess he was right. Now Tyler also suggested bitcoin prices could go A LOT lower (around $1000). If that happens, I will do ANYTHING Tyler tells me to do! Is Satoshi’s Vision Causing the Bloodbath? Now, what could be causing this selloff? The only real instability in the market at large is the pending hard fork of bitcoin cash tomorrow. Bitcoin cash was of course a hard fork of bitcoin itself led by, among others, Roger Ver AKA bitcoin Jesus and Craig Wright AKA Fake Satoshi. Wright has claimed to be Satoshi Nakamoto himself, author of the bitcoin white paper but has never provided any evidence to that effect. Now, Ver and Wright are facing off on a hard fork of bitcoin cash—Ver supporting software called ABC and Wright supporting software called “Satoshi’s vision”. An email from Wright to Ver was circulating on crypto twitter and showed the following excerpts from Fake Satoshi: “Bitcoin (Cash) will die before ABC shits on it. I will see BCH trade at 0 for a few years…Side with ABC, you hate bitcoin (cash), you are my enemy. You have no fucking idea what that means.” Talk about Drama. I thought American politics was bad. This is crazy! At any rate, this is the primary instability in the market and many trading platforms have frozen bitcoin cash trades until the issue is resolved. I would have thought that money would have fled into bitcoin from bitcoin cash to avoid instability the same way it did when money fled from tether, the stable coin that could never prove it’s peg to the US dollar. But that’s why I admit I am a terrible trader. Something is going on here that I don’t understand. But fundamentally, my belief in bitcoin has got me seeing this as a buying opportunity. Warren Buffet said, “Be Fearful when others are greedy and greedy when others are fearful.” There’s a selloff going on and I am buying. I already bought at around $5600 today and will buy again we get close to $5200. I am NOT a trader but my long term view on bitcoin is still very bullish. I should point out that even though Tyler Jenks predicted this sell-off, he also believes bitcoin will eventually be worth $500K. If you are willing to hold for a few years, it may be an asymmetric bet to buy now. SEC Chief Puts Decentralized Exchanges on Notice Last week the securities and exchange commission newly appointed cyber chief Robert Cohen put distributed exchanges on notice. Specifically, he announced that they filed a case against ether delta creator Zachary Coburn. Decentralized exchanges are basically exchanges without centralized operations. Instead, trades are executed on smart contracts on the blockchain. Cohen pointed out that using blockchain to create a decentralized trading platform does not remove the responsibility of the creator. Cohen made it clear that a platform is operating in the United States must be compliant. It is not clear how the SEC plans to deal with anonymously created decentralized exchanges which are essentially impossible to shut down. Anyway, the big news today is the bitcoin sell-off. I’m keeping a close eye on it. Follow consensus network on Twitter to get real-time updates.