We delve into how Bitcoin works, and why you haven’t missed out, yet. Listen in on Spotify or Apple Podcasts!



About Indestructible Wealth: I’m Jack Gibson. I’m your wealth strategist and I’m here to help you make some money. The Indestructible Wealth Podcast is for young entrepreneurs who want to make, keep and grow wealth to enjoy now, and for years to come.

Episode #26 – Did You Miss Out on Bitcoin?

Transcription:

Welcome to the Indestructible Wealth Podcast. This is the place where we help young entrepreneurs to make, keep, and grow wealth that you can enjoy now, and for years to come. I’m your host Jack Gibson, a serial entrepreneur, founder of multiple seven and eight figure businesses, and wealth building strategist. Each week I’m going to share my tips, resources and secrets, to help you create a plan and build the life you’ve dreamed of. 

All right today, we’re going to talk about Bitcoin. I can’t believe I’m 26 whatever episodes in, and I haven’t talked about Bitcoin and the blockchain so we’re going to do a little bit of a blockchain for dummies to start off with and trust me I’m not that much further ahead of my understanding of the blockchain and cryptocurrency than you guys, but in the land of the blind the one eyed man is king and essentially I guess what that means, it took me a long time to figure that out what that meant.  you just need to know a little bit more than who your audience is and all of a sudden you’re the king and you’re the expert. 

So we are headed on a 5 days Gibson family adventure tomorrow morning, super excited to go. All of our trips got canceled this summer, so we decided to finally take the opportunity to head up to Northern Michigan. Everybody says how beautiful it is. We’ve lived in Michigan for I’ve been here for 20 years or so, maybe more and still haven’t taken a trip up north in the summer to really see all the cool things that are up there. So we’re going to hit the Michigan adventure, which is going to be like a mini Cedar point. Then we’re going to go to the sleeping bear dunes, I guess it’s like some super huge sand dunes where you can run up and down or probably won’t do that. I’ll just look at them. And then we’re going to go to Boyne mountain where we go skiing, but we’re actually going to go mountain biking. The kids are stoked to do that. Just want everybody to come out unscathed. If possible, And then we’re going to head up to Mackinaw city bridge where we’re going to take the bridge across, that cool experience I know you guys have heard of, but something really a tourist day to do in Michigan and take the ferry across to Mackinaw island. So it should be super fun. Sure that the kids and the 2 boys are going to get along. Great the entire time. They’re just 2 little best friends that love to share with each other and they never punch or argue or anything. So it’s going to be great. And like in a car in a hotel with them for 5 straight days.  God, say a prayer for me and I’m going to need a lot of them. It should be fun. I don’t mind it that much, it’s just, I’m just embracing the moment. This stage is going to go so fast. So we’re just trying to enjoy every moment and embrace the good and the bad. And it’s going to be just a matter of time before they’re off going to college and the house is going to be completely quiet and I’m going to be bored and I’m going to be missing them completely annoying me. 

So anyways let’s get into the blockchain. I wanted to give you guys a little education on what the blockchain really is in case you didn’t, you still try to wrap your head around it. You probably do know 2 things about it.  First, it’s potentially the next big thing and that you should have somehow got involved with it like a few years ago. But like most of us, you don’t have  20/20 hindsight vision, but you think maybe I should get involved with this before I miss out. Second, you really wish you understood how it works. It becomes a lot easier to pull the trigger and trade your heart and cash in for an alternative investment like crypto when you have some clarity. I think a lot of people aren’t pulling the trigger because they simply just don’t understand. And anytime there’s a lack of clarity, that’s the main reason why people don’t take action. I think laziness is probably number 1, but this is definitely a close 2nd. So I’m going to break this down with a couple of analogies. This is the best that I heard to wrap my not so super intellectual brain around it. 

So as for its definition, Blockchain is a public digital ledger that’s used to record transactions across many decentralized or a lot of different computers in what’s called a peer to peer network. And then these are where transactions are added to a block. That’s really super kind of boring, isn’t it. 

So let’s go on to the analogies and skip the definition. So the first analogy is something that you guys are going to definitely understand:  Google docs. Obviously a lot of you use this. So when you work with let’s say Microsoft Word or Excel, or keynote on the Mac and working on a document requires lots of back and forth. So if you’re working with a team in a collaboration somebody works on a document and then the other person has to wait for the author to send the file back, email it typically before the recipient can make edits or add the comments. So then you’re making a change and then adding in an addition or a comment and then emailing it back to your team. Then they make their changes and email back to you and so on and so forth and it becomes a real pain in the ass. The only way around this is to look over the authors whoever’s writing on it, their shoulder, which wouldn’t work so well, as you can imagine. However, with Google docs, you and everyone else who has the rights to the documents that have been shared with, can access the file and collaborate in real time. So everyone can access it and view it. Even if you’re on different computers in completely different parts of the country or the world even, and what’s seen cannot be denied by anyone and one person can’t make a change without everyone else seeing the change. So then my friends is how blockchain works. Of course, instead of it being a shared document, it’s a shared ledger, more like, say Microsoft Excel being shared, amongst other people where everybody has access to that document. 

The analogy I like best that really helped me understand it involves people living in a fictional village. This isn’t so fictional actually, because this actually happened several hundred years ago on a remote island country. So the villagers, composed of about 10 families, would farm hunt and gather their goods and they trade them with each other. They trusted each other quite well. If the farmer didn’t have any rice to trade for the hunters meat, a hunter would let it slide and they’d wait for the next rice harvest, but the villagers started making too many promises and it got a lot more difficult to keep track of these promises. So the village appointed ledger man to the rescue. It sounds so cheesy. Doesn’t it? Ledger man. Oh man. Like some type of superhero. So he would keep track of all the services exchanged among the people to keep things fair and honest. Now it worked well for a while and the villagers trusted ledger man. However, ledger man with his newfound power, he started charging a small fee for a scorekeeper and then unfortunately he started to accept bribes and he went on to unfairly raise his prices after much fighting and chaos. The villagers ousted ledger man, get the fuck out ledger man, you are a crook! They came up with the perfect replacement. Everyone would keep a ledger. They called it the smart ledger system. So here’s how the smart ledger system works. This is just like crypto and the blockchain. 

Villagers from all the families would gather at the village square throughout the day at these gatherings they would trade their goods and everyone would keep track of every promise made in their own separate ledger. Once a week, each villager would read out one another’s ledger to check for any discrepancies. If there were any, the villagers would all cross check every ledger and would choose the most commonly entered record as the correct one. Blockchain works exactly like the smart ledger system, except that the records are stored digitally. So banks, lenders, and institutions though, that what happens is they use a centralized system that can be manipulated and kept away from the public. As we’ve seen in the Enron scandal and the Arthur Anderson accounting shady bookkeeping that led to the company’s demise. Okay, so centralized systems can be compromised, whereas a decentralized system it’s very difficult for that to it can’t happen in this case in blockchain prevents that unless the systems hacked, which Bitcoin has never been hacked in the actual system of Bitcoin has never been hacked since it was started back what, 10 years ago.

Remember blockchain. Isn’t a device. It’s not a machine. It’s not a cryptocurrency. it’s a system, a method to keep track of information. So with that said all cryptocurrencies Bitcoin, Ethereum, light coin, every cryptocurrency out there works on top of a blockchain platform. I hope this helps. Does this help you guys? This really helped me when I understood the smart ledger system and how ledger man became compromised. Manipulated the system. This happens a lot in centralized systems today that we all take part in. The problem that we all have had since the beginning of time is that humans cannot be trusted. So we utilize these central third-party intermediaries. for example, when you go to sell a house, you have a title company that is essentially a third party central authority that is helping to speed up and make a transaction between 2 of you who are not trustworthy. Essentially it’s making sure that the transaction goes through and without any errors and without any manipulation. So the blockchain is completely disrupting a lot of these systems and third-party intermediaries like banks, real estate agents, these big investment financial firms, blockchains coming around and doing it faster, cheaper, more efficiently and it’s allowing us to transact with each other in a trustful manner peer to peer. So now that we understand the basics about blockchain, let’s talk about Bitcoin and did you miss out on Bitcoin specifically? I’m going to answer this the way I answered this question that came up in my Instagram story. Fuck No, you didnt’.   You did not miss out. Bitcoin is still in its infancy. Right now, Bitcoin is trading around as I record this, I think it’s at $39,000 per coin, considering it was $3,500 in March of 2020. You me and pretty much 99.9% missed out on that incredible run-up. However, if we take some time to really understand Bitcoin, then you’re going to realize we’re still in the early earning of a nine inning game. 

Bitcoin is the only money in the history of money that humans have used that satisfies all 4 of these rather important criteria. It’s completely decentralized so  meaning that no one person or group of people control it, it’s a peer to peer payment system. So let’s talk about how decentralized the us dollar in the year 2020 saw a 23% increase in its supply. How the fuck does this happen? This is due to the federal reserve, the US government central bank that controls the money supply. So they have an unrestricted license to print money and there’s no checks and balances. So when they print money, it’s essentially they call it quantitative easing in which the only thing it eases is the value of the dollars in your bank account. It’s not like the US central bank is the only one to do it though throughout history and even today every single fiat currency which is a government fiat, means government produce currency has been through this hyper printing press at some stage.

This is important to understand. It’s why no Fiat currency has ever survived. You guys know me. I’m a positive, optimistic person. This is not doomsday. It’s the reality, Fiat currency is government issued currency that is not backed by a physical commodity. Like gold or silver but rather the government that issued it throughout the course of the last several thousand years, they will always eventually dBase their currency because they need to do that in order to raise money and that’s how they tax us in addition to other taxes. But they’re taxing us by producing more by printing more money. Point 2, Bitcoin has a fixed supply. There will be 24,000,000 coins and there never will ever be more than that. So written into the original code that cannot be altered no matter how many, how badly some powerful forces want to alter it is this finite number of Bitcoins. So our dollars obviously don’t have a fixed supply. But let’s take a look at the only store of value that has had a very limited supply, although not fixed, which is gold. If we look at gold across the long time of history, it’s the only store of value that’s always held up. Gold has always held up and it’s store of value over multiple thousands of years. That’s pretty impressive. That’s pretty rare. Well why, because it’s rare and because it’s indestructible, now it can be lost or stolen but it can’t physically be destroyed and because it’s so rare, it’s very hard to produce more gold. Only a small amount of new supply enters the global system for a year. Less than 3% is mined per year, less than that even and added to the current supply. So that keeps the value intact. If all of a sudden a huge mine were to be discovered and increased the supply of gold 1 year by 50%, then we’d have a huge drop in value of all gold in fact, we probably dropped by about 50%, but that hasn’t happened and they don’t think that’s even remotely possible that would ever happen. The 3rd value of Bitcoin, it is easily transferable. It can be paid instantly to anyone in the world within about 10 minutes, depending on how busy the blockchain kind of platform the Bitcoin platform is, could take a little bit longer.

 

However, thinking about this, let’s compare it to gold. Gold is a great store of value.   However it is definitely not easily transferable. Paying anyone in gold is not only difficult because it must be physically transported. And especially in large amounts, it’s not easily divisible, imagine paying someone with a bullion, like a larger Bricker gold, figuring out how to calculate the value and making an exact payment is extremely complicated. Even like a small little coin I have a little coin, I have a couple of little coins of gold. Even those have $2,000 in value. So it’s really hard to break it down into smaller amounts that can be used in commerce and to be traded. That’s why I also have some silver because if the shit ever hits the fan, it’s very unlikely that we’re going to be transacting in gold. It’s too difficult. And it’s not very divisible. So certainly dollars are easily transferable. You can wire to somebody across the country, across the world, but however the dollar has this big problem that we previously described, which is called the printing press. We got that. 

Now #4 on Bitcoin. It is completely safe and completely verifiable. The only way anyone can steal your Bitcoin is to have your private key in order for anyone to hack the system and send fraudulent Bitcoin, they would just have to have access to tens of thousands of computers or the nodes all at the exact same time. Wow! That’s impossible. They’d have to have access to like 51% of the computers that are running the Bitcoin mining, the Bitcoin network, which would be impossible to carry that type of theft. Because Bitcoin satisfies all 4 of these points and the government is printing money on a massive scale never before seen in the history of our country and not only retail investors, the everyday investors like you and I, but major companies are now buying Bitcoin as a store of value. Apple is considering buying Bitcoin. Tesla bought a bunch, micro status strategy has bought a ton and he’s very public about it. And eventually central banks if they haven’t already, which is very possible they already have, but they will have to, they will be forced into buying it because they don’t want to be buying it later when it’s super high. So will Bitcoin be volatile? Yes! You can absolutely bank on that and you can buy it and watch it drop 30% the next day. That can absolutely happen. But if you hold on for the next 5 years, I don’t see how you won’t be up quite a bit in value. Let’s just say you buy an at $50,000 or $40,000 where it is right now, then it drops down to $30,000 or even $25,000. Then in 5 years it’s up to $200,000 and you’re up 300%, 400% would that be so bad? You’re not going to care in 5 years from now that you had a short term disruption and that you lost a bit of money. Could you have timed it better and bought it at $30,000? Yeah, of course, but we don’t know it’s just very hard to time it and to buy in at the right pricing. We did just have a big correction so I think now is a really great time to get involved if you’ve considered or thought about it. Then now is probably the best time because Bitcoin was at an all-time high of $64,000 it dropped down to $30,000 that’s a 50% drop. That’s the time you want to be buying in, don’t be buying in when it keeps moving up. Buying when it goes sideways or when it drops. 

So I would say your best bet is just keep adding it to your portfolio every month when your income rolls in trust the process and ignore the volatility and I know that there’s a lot of other crypto coins that are out there. There’s a lot of alt coins out there I do have a lot of them, but the bulk of my portfolio over 50% of my crypto holdings are in Bitcoin and Ethereum, the top 2, the big dogs. Those are the 2 where they’re probably not going to go up 10000% from where they are right now, but these are going to go up, you’re looking at a 100%, 200%, 300%, 400% returns over the next few years. There’s nothing wrong with that kind of return, you guys. So I would definitely say if you have not bought in and got any cryptocurrency exposure then I think right now this is your like the red flag alert, the code red alert. Come on, get in, even if it’s just a little bit, you guys can need to add this to your portfolio because this is about we’re in the early innings and about 5 years from now you’re going to definitely be like, oh man, I should have bought, oh man, I should’ve gotten in back then. 

So don’t feel like you’ve missed out the we’re still in the very early stages of mass adoption. Only a very small percentage of people throughout the world own Bitcoin and own cryptocurrency. So the best is yet to come. Here we go.

That’s a wrap for this episode on the Indestructible wealth podcast. Before we part ways, I want to help you to take advantage of 2 incredible tax saving strategies that could help you save a lot of money.  All you have to do is leave me a 5 star review – if I’ve earned it – and comment in iTunes, Stitcher, Spotify, or wherever you tune in. After you’ve done that simple step, just email me a screenshot to [email protected] and I’ll send you everything you need to save money on your taxes for years to come.  If you’d like to dive deeper into your own wealth building strategy, check us out at myindestructiblewealth.com and follow along on social media. Also, please share this podcast with anyone who’s looking for guidance on their own wealth building journey. Until next time, remember our mission here is to help you make, keep, and grow wealth you can enjoy now, and for years to come.

 

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