Cryptocurrency 101

Matt Cundill  0:01  
You may also like a show about the things you may also like things like cryptocurrency 101. I admit, I have absolutely no interest in getting involved with cryptocurrency. The whole thing feels like a scam jam. And most of my Twitter inbox is full of people who want me to get involved. And of course everyone's doing it. Tom Brady and Aaron Rodgers even take part of their salary in forms of cryptocurrency. But with the podcasting 2.0 initiative and value for value, crypto is a great way to send someone a little thank you through the app. So go ahead. If you're listening on a podcast 2.0 app, you can send this podcast some SATs right now. Go ahead. I'll even wait for you. Anyhow, Scott McGregor appears to know what he's talking about when it comes to cryptocurrency. And I thought I would get a crypto 101 course from him today.

Scott McGregor  1:03  
 Crypto is a bunch of technical networks with a token on top that has value. Some of these networks are valued more than others. And a lot of that has to do with supply and demand. And so you know, Bitcoin, for example, there's only 21 million tokens. You look at, like a shit coin, like Dogecoin. And there's 21 billion tokens. And so that's one of the reasons that Bitcoin would have an elevated price and Dogecoin would have a bit of a lower price. So cryptocurrency is just a network with a token on top

Matt Cundill  1:37  
who created cryptocurrency and why was it created? 

Scott McGregor  1:37  
Well,Bitcoin, the most successful one was really kind of out of the 2008 financial crisis. So what we saw coming out of 2008 was a real kind of lack of trust in the banking system. You know, we saw all of these bankers, as you know, if you live through it, make ridiculous bets, packaging, you know, garbage over garbage, and then selling that to someone else. And that ultimately ended up collapsing the system and who had to come out and bail the banks out was actually taxpayers, you know, tax, they just invented money, printed money, and so put a lot of distrust in terms of the financial system, and the monetary system. And so out of that. One of the survivors was Bitcoin and Bitcoin isn't the you know, the first attempt at digital money over the internet, but it is the first fully decentralized monetary network that isn't controlled by a single point of failure, like a central bank.

Matt Cundill  2:43  
So I think the key word there is decentralization. So when I think about what decentralization is actually gets me thinking about what we're talking on right now, which is a podcast, which is fairly decentralized, in terms of its distribution.

Scott McGregor  2:55  
100% Yeah, I mean, you're kind of seeing the decentralization of media right now, with the Internet. You know, all of these different media outlets are, are kind of losing their luster and what are they losing their luster to individual decentralized? Journalists, reporters and broadcasters?

Matt Cundill  3:16  
So you were talking about Bitcoin being a form of cryptocurrency so what are Satoshis

Scott McGregor  3:21  
Satoshis are pieces of a Bitcoin so every Bitcoin can be fractionalized, there's 100 million Satoshis per Bitcoin. And so you can actually break up those Satoshis just like we break up $1 into pennies or or lower denomination, you know, quarters, nickels, stuff like that. And so you can do that with Bitcoin. And that's one of the benefits of Bitcoin over something like gold, where it's a little harder to cut up little pieces of gold, you know, they do it. And it's fine. We can do it in jewelry and coins and, and stuff like that. But with Bitcoin, it's digital. And so it's easier to do, it's easier to send, and you can send Satoshis, or pieces of a Bitcoin to your friends, family, or to you know, a business or something you're trying to transact with.

Matt Cundill  4:09  
So you just put your podcast hot wallet up onto the Lightning Network where I believe some Satoshis can be exchanged, like the podcast that we're on right now. Same deal. I know you just got here like a week and a half ago. But what do you see so far in there? And hopefully people will send us some SATs and give us a boost? Yeah, so

Scott McGregor  4:28  
I put my podcast up on fountain.fm the app and this is a great app for well, it's for all podcasts, but obviously it's heavy into bitcoin podcasts and podcasts that you know are in kind of the web three space. And so what I love about that is not only are you able to target an audience that is looking for content that they care about, but you're able to support podcasts that you like by sending them pieces of the Bitcoin through the Bitcoin Lightning Network and you can do that various ways you can actually just boost a podcast, you know, you did that, for me, you gave me about 5000 Satoshis. And you know, it's not a lot in terms of dollar value. But you can do that over and over. And if enough people do it, you know, it can turn into real money and real value for value, you know, you are consuming value by getting someone's content that they're spending their time and life energy to create, and then you're giving them value by supporting them with Satoshis. And you can also earn Satoshis by listening to promoted podcast as well, which I've had a lot of luck with in the last month or so.

Matt Cundill  5:36  
So the fountain app for you has been kinda like, Mardi Gras.

Scott McGregor  5:41  
Yeah, I'd say so. You know, I was looking at my stats today, my listens are up 700% this month. And you know, why is that because, you know, I'm able to put my content in front of people that are looking for that kind of content, you know, whether it's an interview with someone who is in the Bitcoin space, or it's just a news commentary piece, you know, a thought piece that I have, that I want to share with someone. So it's been extremely valuable for me to kind of circumvent, you know, some of these other gatekeepers like Apple podcasts and Spotify, it's really hard to climb the charts in terms of Apple podcasts and Spotify, because you're competing with some of the best of them, you know, I'm competing with Joe Rogan for people's time. And so if I want to get my podcast in front of people who are looking for the kind of content that I create, you know, Fountain has been, it's been a fountain of energy for me, because not only am I getting people sending me Satoshis, but having people consume the content, give me good feedback, kind of, you know, it fuels the fire for me to want to do more.

Matt Cundill  6:44  
2022 was wild, there was some ups, but there was a lot of downs. And it was quite erratic if you were dealing in Bitcoin, what happened?

Scott McGregor  6:54  
Yeah, so it wasn't just Bitcoin, you know, I want to make that clear, it was all risk assets. And one of the reasons is because of interest rates, the Federal Reserve jacked up interest rates at the fastest rate of change in human history, you know, if you think about how low interest rates were, you know, we're now up around the 4.75. And I'm talking about the US Federal Reserve, you know, we're about 4.75%, potentially, next week going to 5%. And we were at, like, zero, and so that's, that's a huge increase. It's not like back in the 70s, and 80s, where it was, like 10%, and then goes to 20. Like, that's only a double where now, you know, we went from zero to almost 5%. And so that's like, more, you know, that's more than a double, you know, it's like over 1,000% in terms of rate of change, of increase. And so that puts pressure on risk assets, and that also increases the value of the US dollar. And a lot of high risk, speculative assets are priced against the US dollar. And so if you see the US dollar going up, then you'll see things like gold going down, and then vice versa, if you see gold going up, typically you'll see the dollar going down. And so it was brutal in terms of 2022. You know, that was by far the hardest trading year of my life. And I ended the year I down on the year, unfortunately. But, you know, luckily, I had two previous years of triple digit returns, I could, I could absorb some of the losses. But yeah, so we had a real tough year in 2022. With the fall of high risk assets, whether it's a stock like PayPal, Amazon, Microsoft, you know, all of these risk assets ended up getting pretty crushed in 2022. But now what we're seeing in 2023, is the opposite where we think inflation has peaked. We think interest rates are close to peaking, if not peaked. And then you know, we see the inverse, where we see Bitcoin as one of the best performing assets of 2023, up over 100% from the January 1 low. This is

Matt Cundill  9:05  
going to date me. But if I were to open up the business section of a newspaper, would I be able to see Bitcoin traded alongside the US dollar, the euro, Canadian dollar and the North Korean one? Does it fall in line with currency or is it sort of treated like an ugly stepchild?

Scott McGregor  9:24  
No, I wouldn't say it's really like an ugly stepchild because we have major institutions like Fidelity, like BlackRock, you know, all of these people that are trying to, you know, open up the doors to this asset class, which is now well over a trillion dollars. And so I wouldn't say it's an ugly stepchild, but I would say people don't really know where to put it yet. Or, you know, is it is it a high risk tech stock? Or is it a form of money and so there's a real kind of battle right now happening in the market to be like, Okay, we get this, but is it going up now? Because the NASDAQ is going up, or is it going up now? because the dollar is falling, so it kind of falls in this gray area of organization where people are trying to figure it out. And and I think that that's good because the more people that are interested in it, the more people that try and figure it out more times than not, the more times it clicks for them, and they go, Oh, okay, I get it. So it's not like a tech stock, but it's also not like a money. So it's kind of in the middle. And then, you know, they kind of grow their understanding from there.

Matt Cundill  10:28  
So for me, the gateway hook into Bitcoin was value for value in podcasting. I said, there's no reason for me to ever get involved with this. And I say, Oh, look, here's some value for value, I do want to be a part of that ecosystem where I'm, you know, offering up some value for people who are providing me with some valuable information. So I did want to play in that sandbox. So here I am, I'm making my first deposit and $100, blue wallet, whatever that gets me, that's fine. But for many people, what is their entry point into this world?

Scott McGregor  11:04  
I think a lot of it comes just from speculation. You know, that's how I found out about it. I had my brother in law was the one that told me about Bitcoin. And he told me about it a little more in detail around March of 2020, when we saw that big a COVID crash, and he just said, oh, yeah, you should buy you should buy bitcoin. And I'm like, Oh, I don't know, I've heard very weird things, you know, I don't know about it sounds like a scam. You know, that's the first thing everyone says, I don't know, sounds too good to be true. And so that really is where a lot of people get involved, they get involved because someone they know is into it. And they say, Hey, look, you know, you have a chance to make money in this. And then once people kind of understand, oh, wait, it's a way to send value over the internet without a third party, you know, it's a trustless network where I don't need to worry if the bank is going to allow this transaction to go through. You know, it's just me sending value to someone else over the internet, and me receiving value from someone else over the internet. And there's no one else involved. It's just software and it works, then that's when they kind of go down the rabbit hole a little more, go, Okay, wait, there's a little more to this.

Matt Cundill  12:09  
Somebody mentioned to me that they don't believe that the currency is real, unless I can buy a pack of gum with it. So can I buy a pack of gum with any of my bitcoin,

Scott McGregor  12:20  
in some places you can. In El Salvador, for example, it's accepted everywhere, as legal tender. And you can just use an app on your phone, you know, you have your wallet app on your phone, and you can just go bleep, and it sends it directly. Now, a lot of people are using the Bitcoin Lightning Network. There's a guy named Jack Mahler's, who is part of an organization called strike. And they want to use the Bitcoin Lightning Network as essentially a conduit for just people to use Bitcoin, it doesn't mean that the retailer has to accept Bitcoin, they can if they want, but you're just using the monetary network, from my wallet, to your wallet, and nothing really in between, as opposed to now, you know, it's kind of complicated. Like, if I want to use my credit card, for example, I got to swipe my credit card, my bank first has to check to see if I have the money, then it has to go and let your bank know, okay, yes, he has the money. But then your bank isn't actually going to see that money for another 30 days. So Oh, but don't worry, we'll get it to you. And there's a lot of fees in between, that can occur where I get charged for using my credit card, I then also have to pay interest, you get charged for accepting a credit card. And this is all like a monetary system. You know, it's 2023. And we're using technology that was invented, like, I don't know, 80 years ago, and it's pretty much the same, you know, maybe the pipes are a little different. But it's it's pretty much the same. And so what Jack Mahler's wants to do with strike in the Bitcoin Lightning Network is essentially just use the network to say, you know, and hop over from my wallet to your wallet, it uses that Bitcoin Lightning Network as a way to confirm that the value is real, the dollars are real. And then you get it. And then you can decide whether you want to accept that money in Canadian dollars US dollars, Chinese yuan, whatever currency you want to get it on.

Matt Cundill  14:11  
How does Jack make money then? Because there always seems to be someone in the middle or some thing. And I look at my business and whether it's Pay Pal credit card stripe, it doesn't matter. I add it all up. And it's $10,000 worth of people who've grifted for me at some point.

Scott McGregor  14:30  
Yeah, well, I mean, just with fees, you know, but lower fees. And that's kind of the catch right now is yes, they're still going to be fees, but they're going to be lower, right? Like if I accept a payment from the US. A lot of times PayPal will just take a cut right off the bat, like hey, you got money, great job. We're going to take 1% of that. And then when do you want to send it to someone else or move it to your bank account? Great Pay Pal is there again? And so yes, you know, I do believe that there will be fees but ideally the fee is going to be lower. are using Bitcoin and the Bitcoin Lightning Network. Like if you think about how expensive it is to move value, let's talk gold, for example, you want to move $100 million worth of gold from one country to another, it's probably going to cost you a quarter million, or maybe even a million in terms of the dollars it takes to you know, get the gold, secure the gold transport the gold, plot, the gold, protect the gold, all that stuff, where if you want to move $100 million worth the value of the Bitcoin Lightning Network, guess what it costs you five bucks, that seems like a pretty good trade off.

Mary Anne Ivison (Voiceover)  15:37  
You may also like supports podcasting 2.0. So feel free to send us a boost. If you're listening on a newer podcast app. If you don't have one, you can see a full list of them at new podcast apps.com.

Matt Cundill  15:49  
I have more stories about fraud and shady people than I do about real life experience in sending Satoshis in Bitcoin. So my Twitter is littered with all sorts of people who are trying to get me involved. I get spam calls, telling me that I've got a wallet of $850, which doesn't exist somewhere. And I'm to log on right away and reinvest it. And I said to reinvest it immediately into the Buffalo Bills winning the Super Bowl. And they didn't have any idea what that was. So obviously, that call does not come from North America. And then of course, there's Sam embankment fried in what happened there. There were Superbowl ads and 2021. And they're not now I have a longer list of bad news than good news here. When does that change?

Scott McGregor  16:37  
Well, I think it changes with understanding of the technology. You know, it's so new right now, it's just like, when the internet came out, it was unsafe for you to use your credit card on the internet. And now people don't even think about it, you know, oh, I got saved in my Google account, I just got to put in my code, and then boom, the transaction happens. So with time and understanding comes, you know, learning and more people, more people being comfortable with the technology, but it's so new right now. And because we do have, you know, some pretty spectacular moves in some of these Kryptos, one of which was like Solana, I think was up 7,000%, from 2020 to 2021, something like that, you know, you get these big games. And so when people see dollars, that's very attractive, especially, you know, because where's all the wealth, the wealth isn't the 1%. It's all these people see this, oh, get get rich quick with crypto. And so they can get suckered into pretty much anything. And you know, you just got to protect yourself and know, okay, is this too good to be true? And if it is, that's probably a scam?

Matt Cundill  17:40  
Why would someone like Tom Brady, Aaron Rodgers and a list of others want part of their salary paid in crypto,

Scott McGregor  17:48  
I think to store their value, you know, if the currency is being debased over time, and the buying power of the US dollar is going down has been going down over time. You know, if you think about what your dollar could buy you, even five years ago, thanks to inflation, it sure is different than what it is now. And the, you know, the fact that Bitcoin typically goes up over time, you know, anyone who has held Bitcoin for four years has never lost money. And and the way that the bitcoin is distributed in terms of how it cuts its distribution by half every couple of years. You know, it's it's programmed its program money, and you can kind of see what the outcome is going to be, you know, if the growth of the network continues, if people keep transacting on the network, then okay, then I see that price going up, and I can see where that investment is going to go. Where if people are just using normal dollars, well, guess what that's controlled by the government, and they can decide to print money and bail out banks whenever they feel like it. So that's, I think, why people and you know, the governor of Florida, I think takes his salary, partially in crypto as well. And I think that's a great way to invest passively if you have that, you know, if you have enough money where a portion of it can just be left to its own devices, and maybe that's money you don't need right now, then I think that that's a good way to passively invest. It's not for everyone. But that's, that's probably the reason why, you know, they see the technology, they see the opportunity. And you know, if you look at the market cap of gold, you know, it's hundreds of trillions of dollars, and the market cap of crypto and Bitcoin is 1 trillion. Hmm. You know, I think the opportunity is there for some potential exponential gains.

Matt Cundill  19:34  
The US banking system is archaic. It has not been good for a long, long time. I can totally understand wanting that. But then in Canada, we had a politician who wandered into that fray and suggested cryptocurrency there's a lot of pushback, and I thought, You know what Bank of Canada is doing. Okay. So how do you sort of look at it between Canada and the United States in terms of reception

Scott McGregor  20:00  
I think it's really mixed. I put out a podcast a few months ago called the politicization of Bitcoin will not age well, and that's really kind of about politicians getting involved at all. And kind of, you know, saying where people should or should not invest their their dollars. And so, you know, I don't believe that any politician should be saying anything about crypto Bitcoin or any sort of investment, you know, I just bring up Ron DeSantis, because he's one of the cheerleaders trying to get those companies to, you know, to go into Florida. And I believe that they actually just passed a bill saying that they will not allow any government run central bank digital currency within their jurisdiction. So, you know, I think it's a dangerous concept for any politician to say, especially in Canada, hey, yeah, forget about these dollars that we keep giving you you should you should buy bitcoin instead, I think Bitcoin should be part of an investment portfolio because of those potential gains. But I, you know, I'm still going to transact in Canadian dollars. So I'm still going to, you know, when I buy my next car, guess what, unless they accept Bitcoin, I'm probably going to pay in dollars. So the beauty of Bitcoin is the fact that it is a worldwide asset that you can exchange for any currency. And I do believe that stable coins, and just being able to hold your value in something that isn't debased, I think is very important.

Matt Cundill  21:22  
If someone right now just wanted to get started, put down $1,000 $100 $500. What do they do? Where do they go, that you would recommend that is reputable and a good place to start?

Scott McGregor  21:34  
I think the easiest place is Coinbase. It's a pretty regulatory safe crypto exchange right now, they are going through hell with the US Securities and Exchange Commission, because of staking, and there, you know, what the SEC is calling the sale of unregistered securities, but they are slapping back at that, you know, they are really they are suing. So they're being sued by the SEC. But then they're countersuing the SEC saying, Yeah, that's fine. But we've been doing this for 10 years, and you haven't given us regulatory clarity. So we can't abide by these rules that don't exist that we're asking you for. And so Coinbase, I think is a pretty safe exchange, they also have a wallet. And so you don't have to trust any exchange. That would be my real advice to anyone is used in exchange to transact. But then hold your keys yourself, whether that's for, you know, in a hardware wallet, like a ledger or a treasure wallet that you can have, you know, it's like a USB stick, and you can manage it on your phone, you can buy and sell and do all that through Bluetooth, and it's safe. Or a software wallet, Coinbase has their own, you know, I have a bunch of money in a Coinbase wallet right now, it's mostly just Bitcoin, and it just kind of sits there, and then when I'm ready to transact with it, then I can send it to the exchange, and do whatever business I need to do. And then that way, I'm also legally bound by all of the tax things, you know, if I incur any capital gains or whatever, you know, Coinbase tracks that finances is usually pretty good in Canada as well, though, you know, there's a bit of a gray area with by Nance, I recently took most of my coins off of by Nance and just put everything into a wallet, because I was kind of afraid of all exchanges. But yeah, coin base is probably the place where most people should start. It's pretty easy, user friendly, in terms of the app, I can buy here, I can fund it with my bank account, or credit card or, you know, something like that. And then you can, you know, chart it a little bit. You can, you know, just shop the different tokens, whether you want Bitcoin or Aetherium, or something else. And so yeah, I think that's the easiest place to start, probably not where you want to live, but a good place for anyone who's new to the space.

Matt Cundill  23:52  
And of course, the next step after you make that decision, is to listen to hot wallet with you. And so what do people get when they listen to your show?

Scott McGregor  24:02  
Yeah, so you know, I do my best to interview people who are interested in active investing. It's not just about crypto, you know, although I do focus a lot on Bitcoin, in my opinion, because it's the most interesting sector of the market right now. Like there's so much innovation happening. There's a lot of exciting stuff. And so I focus mainly on web three, active investing, but I also interview authors who have made millions in the stock market. And so you know, I interview active investors, authors, and then I also will put out these kinds of commentary thought pieces of things that are just kind of on my mind at the time. You know, I did one last week where I talked about Gary Gensler and I talked about how everyone kind of looked at Gary Gensler as someone who would be good for Bitcoin crypto and the web three space, because he actually taught a course about Bitcoin and blockchain and MIT, and he's on video saying Aetherium is sufficiently decentralized. And so it's no longer considered a security. Well, now, he actually won't say that in public because there are court cases that the SEC has against people like Coinbase. And so, you know, it's a it's a big kerfuffle right now because it looks like Gary Gensler is trying to protect some of the legacy institutions like all of the big banks that were just talking about, you know, he's really trying to protect them, as opposed to allow innovation to thrive in the United States. So that's one that I just put out, and then sometimes I'll do one like recently, I talked about different ways for you to actively invest in Bitcoin web three and crypto via the stock market through some different ETFs there's a ton of different ways to get a Bitcoin and crypto exposure without actually having to own Bitcoin or crypto. And so that's one of my biggest podcasts that I've ever done. And you know, seems like the people like that one.

Matt Cundill  25:55  
Scott, thanks so much for the crypto currency 101 lesson.

Scott McGregor  26:00  
I appreciate it Matt, thank you for all you do for me and my fellow podcasters you know, you are a fantastic resource and someone who I leaned on heavily to help me find success in the podcasting space and I really appreciate that.

Matt Cundill  26:16  
My thanks to Scott for joining me on the show. Scott is based out of Calgary and has a podcast called Hot wallet which you can follow and listen to if you want to get rich in this area of your life. This episode was produced by Evan Surminski edited by Aidan Glassey and built for your ears by everyone at the sound off media company