Cryptocurrencies- Safe Haven or Asset Disaster?

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Elysia: Hello everyone. Welcome to life is digital. I’m your host, Elysia Cadorniga. Get ready to learn about digital as we share our knowledge and perspectives on current trends, best practices, actual tips to help you grow your business in the digital age. I am beyond excited. Drum roll. I don’t know if you can actually hear it, but I’m actually here with Chip Hassenflow, and Chip is a financial advisor as well at Wealthcare Capital Management. Chip, I’ve been looking forward to talking to you.

Chip: But so I can talk a lot of things, right?

Elysia: Yeah, you have the capability to literally hold a conversation on multiple different topics over the course of a long period of time. It’s great.

Chip: It’s great. Excellent, excellent. So I do wanna say, I’m with Wealthcare Capital Management, we are a registered investment advisor, and so that any time we talk, I need to make sure everyone knows that this may not be for your particular situation, and if you like what we’re talking about and want more information, find somebody who is licensed or has a lot of information on it and contact them because we wanna make sure that everyone gets the type of service and expertise that they need for their particular life.

Elysia: Understood. We are human right. So we have opinions, maybe not so much advice today, but opinions…Yeah, no, it’s cool talking to you, especially during these times, Chip, I know we’ve been kind of talking offline for a little bit about this already, but we’re in a really interesting year as crypto continues to take Storm and affect people’s lives in different ways, also government, so I think this is a really cool whole topic to kind of unpack a little bit and really see different sides of what we’re doing here, so… What’s your initial initial thoughts? I know that’s a big question to ask.

“Let’s talk just a little about what’s going on,” – current trends in the economy.

Chip: Well, let’s talk just a little bit about what’s going on. So we’ve just come off of two years of COVID and we’ve had lock-downs and businesses have pause things, and people really have had to change a little bit on how they deal with their everyday life, and then you’re coming out of that and somehow the stock market performed through all of that, and you wake up from it, it looks like everything’s opening up, but it could, shut down, but it’s open right now, and we’ve got inflation, we’re dealing with… You’ve got a potential war going on in the Ukrainians absolutely is a war, but being for the west and the rest of the world, we’re looking at it going, “Please don’t fly over Poland, please don’t fly over Poland.” We recognize that if that happened, Poland being a NATO member, all of a sudden now, the rest of the world is dealing with this too. So our hearts go out to what’s going on there, and then the market is kind of going a little crazy. The Federal Reserve Bank is raising interest rates because they’ve held them down for so long, we’ve got a really hot housing market, and if you’re dealing with the public and they’re trying to navigate all of these things along with their own lives, you recognize there’s a lot of questions like, Oh, is there an easy answer to me having my resources, my savings, my delay goals go up and meeting my needs over a long period of time, and that’s when they start looking at potential alternative type investments and things, it could be much more volatile or… not appropriate for them. On of the big questions is that we’re looking through mud, let’s see if we can figure out what our strategy should be.

Elysia: Well, yeah, I mean, I think the biggest controversy, but the biggest polarizing thing I see right now is you got this global appeal over it, right, so you have the actual consumer is excited, interest, intrigue, but then you’re battling the government response of it…

Chip: You’re talking about cryptocurrency. Yeah, governments are wary of this, and there’s a reason for it. Historically, governments have controlled the money supply, I’m sorry, in some markets, they have attempted to control the money supply. China’s response is basically banning cryptocurrency, straight off, just saying you can’t do it. In the United States, the way we’re dealing with it is they tax it like it’s property, so it’s not a currency like many people think it is. For the United States, if you bought it at… We use an example, a dollar and you sold it at 2, now you’ve got a dollar gain and you end up paying taxes on that gain as if it’s property. So if for a person who is the usual example, they bought a bunch of cryptocurrencies and they decide that for breakfast, are gonna go to the local diner and use a Bitcoin for that, and then they go over to buy a shirt at the store, and then they… want to buy tires, later on, Well, you almost have to… You have to keep up with the cost basis for each one of those, so it’s incredibly challenging to be an everyday type of currency alternative, and then you just throw on the addition of that it’s so volatile, and currency shouldn’t be volatile like that, it should have value and you should be able to protect what that is with a little more certainty than certainly what they’re dealing with right now.

Elysia: Yeah, I’m wondering how Web3 and MetaVerse will play a role into that stability as it continues to grow. 

Chip: So we’re hoping our listeners understand what went three, that would work, but maybe it’s tokens or coins or something of that nature, and being able to buy within your virtual world, certainly is what they’re looking for. For people who play video games, young people. They might be a little more familiar with how that works.

Elysia: Hey, I’ve been on a couple of video game binges in my life, and they were probably more recent than I wanna admit.

Chip: But I will tell you, when I was in college and before I graduated, I did take up a video game that took up, I think I took a week or two of my life and I said, I can’t do that, because you really do… All of a sudden you’re paying for seven or eight hour works with that

Elysia: I know, and then you’re like, what did I just do? I just crossed this hill in this game, and it took me about two hours to crossover.

Chip: I killed all the zombies.

Elysia: Exactly. Ive done that like 20 times today, I should probably go eat something.

Video Games and Cryptocurrency

Chip: And in fact, I’m gonna mention this, I interviewed for my podcast, a professor, and when mom and dad, he was a professor and his wife had children, there really wasn’t a lot to do. When you remember having children, what do you do you feed the children, you let them sleep, but they wanted to have something they could do together, and they started playing World of Warcraft. At the end of the day, he said I had to stop because you added up all the hours that he has spent playing World of Warcraft, and it was a year worth of time, a year. And he said, I need to find a better way to spend my time… So playing for enjoyment is great, playing because you’re kind of anchored some place, certainly great, but at some point, we wanna go out experience to… You Can hike a mountain… And through a book, you can hike a mountain through a video game but certainly going out and hiking a mountain might be the right thing to do. Yeah.

Elysia: Right, exactly. So getting back to it though, I think people… I don’t speak for everyone, obviously, but I do think there is definitely this just global hesitation on whether to invest or not… I know you got the risk-takers or the people have done their research, and they actually trust that crypto will stand the test of time and build its own foundation and be more legitimate, but for those that are like, I don’t know how to actually take this and I don’t know if this is a decision for me from an investment standpoint, I can’t help but agree with them because I have such mixed feelings, I see the government working their hardest to maintain the traditional financial market the way that it stands, obviously when you dismantle something of that size that has been established for well, over a long course of time, that’s not easy. But then on the other hand, you see crypto, you see companies that work with cryptocurrency like, jump and straight into announcing their agreements to take over the Staple Center and placing the brand on that’s one of the biggest and most important sports entertainment places and that has witnessed history. Right, so it’s interesting to me in the dichotomy, between, the contradiction of it, but also all the brand awareness and all the even celebrities buying into it, so I don’t know, I’m just curious to your thoughts are on that.

Chip: Let’s talk a little bit about that because I was around for the turn of the century, and there was a lot of computer companies that were coming up and trying to build brand awareness, trying to make themselves the go-to plays for something, and we had lots of great commercials, we had lots of actors who were hired to basically promote this, even off, not on the cryptocurrency or computers. I mean, late night, if you flip on the television, there’s always some actor selling some kind of insurance, some kind of thing going on, so you have to remember these people are hired, they could believe, they can have a lot of belief in something, but the reality is, is that they are either investors who are looking to have their investment go up or they are, they’re being paid to promote something. And so when I see something like the Staple Center get a new name based on a company, what that company wants is to be the go-to place for purchasing the currency, so we just need to make sure that putting together… Seed money and marketing is like that, that is something you do to make sure that you’re aware, that doesn’t mean it’s the right thing for you. And the other thing I should mention is that many people don’t know what cryptocurrency is, so let’s back up just a little bit and just say that this is a technology that will be around regardless of whether your particular flavor of cryptocurrency will be around, and that’s gonna be the underlying technology called Blockchain, that definitely will be around because Blockchain, if we’re doing contracts in the future, it’s either you have it or you don’t, it’ll be an easy way to transfer a property, so once we determine what the property is, that could be just incredibly helpful to do. that. Where cryptocurrencies makes sense, and it may not be the United States, I’m assuming Where cryptocurrency makes sense, and it may not be the United States, but if we were in some say third world country, a country that has a lot of stability issues, a country that is known for manipulating currencies any number of things like that. And you can see how quickly this a different type of rabbit hole… But let’s not go there. We’re in some area that is not stable, cryptocurrency could make sense, your alternative would be to use maybe precious metals or something that is not the base currency, and we also have to remember that people trade cars, they trade luxury items, they own properties, these all are out there too, and what they’re trying to do is ensure that if you bought something for a particular value that it remains at that value, and the local currency may not be that answer for them. So here are the United States, it may be a little bit different, possibly, but if we definitely were in an unstable environment, so I imagine you and I were in Russia, or we’re in Ukraine, both of these areas are experiencing some real challenges, and you and I have to get across the border. Well, do we have the sack full of precious metals that we could lose along the way or go across the border, a number of things have a difficult time cashing a man or for a person like that, maybe they do need to look at some kind of blockchain currency. For the people in the United States, it may be a little different, but I hope we’re kind of getting an idea of weird that it would be useful now…

Elysia: Yeah, just from my point with the natural… It’s just a natural threat, it has on established financial markets, but with countries that might be experimenting this where there’s less of that structure already in place, they’re already implementing it for, like you said, land buy, education, healthcare, supply chain. So specifically that blockchain technology itself.

Chip: It can be anything that you can have ownership in. This building that for some reason we own and we wanna transfer a title, but blockchain eventually, like we use title companies for that now, but eventually those could be watching and they could be done, potentially less expensively and quicker, and that is what the hope is, is that we can… What is the computer revolution and very, very good at? Squeezing inefficiencies out and making things a little more efficient. Having a house and being able to transfer it to a blockchain certainly would make a lot of sense because what you’re basically dealing with is a title, and I’m the owner of it now, and you’re buying it, and now in seconds, basically, I can transfer it over and it’s recorded immediately that you are the owner and all the rights and privileges would come with that.

Elysia: It’s interesting ’cause I’m just thinking about our own application here at our company, eventually we might have to start thinking about how we accept certain currencies just in the world of digital, because especially with the meta-verse and the virtual world and people exchanging contracts and exchanging trade and service, our future, our road map is eventually we’re gonna have to design in this word, and we might have to open up our own acceptance of different currencies to be able to do so… It’s like a whole another beast in the meta-verse with all alternative coins, not just Bitcoin, but just different… all sorts of different technologies that have stemmed from this blockchain.

Chip: And there could be… You’ve just identified something where this could be very good… Now, imagine that we are here in the United States and somehow we want to send money to another part of the world, we wanna send it to… I don’t know in… Venezuela for example, and we go to the bank and we put our US dollars in, they’ve got some kind of transfer process, and I don’t know how long it takes a state… A few days to do it. Well, with a digital currency, you potentially could instantaneously. Is there a charge? Maybe there’s a bookkeeping charge, maybe it’s not and It certainly would be more elegant than the process we have to go through now… And there’s a point becoming more sophisticated and creating that elegance for the user should make it easier, should make it more efficient, and that’s what we want, we want elegance and efficiency. Because of how it’s logged, it also becomes… There’s a public part of it, so there is the ability to have it reviewed, and I’m sure that they are as some kind of services out there can hide it, but I don’t think… A lot of people think that digital currencies are strictly for the black market, for the underground economy, I don’t necessarily think that ultimately that would be the case, and I can’t stress it off that even though we’re talking about this right now, we’re kind of talking about the future right, maybe not for today, because it’s…For the average person, once again, this is a very volatile market, it’s very new, and it’s not something that is an… The advisor would typically offer… They did come out with some exchange-traded funds, mutual funds and things like that, but they’re not owning directly and to those…

Elysia: That was my next question for you, is that how that plays up in your world versus mine.

Should you be making the investment?

Chip: It’s outside of the world, because it’s not an investment as of right now, that may change… in fact, it could change after record this, I mean immediately, but the reality is, we’re a few years away from this becoming a true asset that we can truly invest in. There’s some attempt to do it now, but usually the underlying stuff is hedging and things of that nature, okay, it’s either you own it or you don’t. So there’s a reason why that the local group, that’s the stockbroker and stuff like that, they don’t have digital currencies available underneath their umbrella yet. I’m sure they’re working on it, but that part of it is because it’s just… It’s too early and for… I don’t have a single client where I would say, “Hey, let’s do this,” because it could blow up, and that’s the other part that people really need to understand is that we’re very early and you say, “Well, it’s been around for 10 years or 12, 15 years or whatever it is,” it doesn’t matter. It’s incredibly early, you can add value today, and then it can go to zero tomorrow, zero tomorrow, it really could be back quickly for that to happen. Quickly happen. So let’s talk a little bit about how this is being marketed, and just a week ago, Peter Theil is giving a presentation. Peter Theil is the founder of PayPal. Peter Theil is one of the most thoughtful people I know on the planet. I enjoy listening to his commentary on things, you may not agree with his commentary, but the point is, is there’s no doubt… He’s out there thinking about it. His partner when they started PayPal was Elon Musk. Hey! I know Elon Musk too, right? So Peter Theil is talking, he says , Yes, everybody should own some kind of blockchain currency actually specifically said one. Alright, so I respect Peter Theil, and so we’ve got people who have a lot of credibility talking about that this is… It’s arrived, but we also have people who are equally as credible on the other side saying this is the Ponzi scheme of our lifetime. Ponzi scheme means it’s a scam, and that… The reason why it has value is  because you bought it and I bought it, somebody else bought it, and we just start bidding up the price of something, but very similar, there’s no underlying true value to it, and it really could just be a Ponzi scheme.We don’t know, we don’t know yet. It will reveal itself in the future, if it does become a currency alternative, that will be interesting and certainly could be very nice to have a true competition in how you own currency owning it from a private entity versus owning it through a government that certainly would… For a government could provide some discipline to how they use currency and very… Think about how governments have paid for wars in the past. Many times, they’ve deflated currencies, they devalued currencies. If they came to individuals and said, “Hey listen, in order for us to go to this war, this is the sacrifice you’re gonna need to make,” and this is to the everyday person, and they came to you and they say, “it’s gonna cost every person %50000.” Well, certainly, I don’t know many people who are gonna be willing to short a $5000 track. So there are times where that would be very important, say World War II as an example, but maybe more… Some things may not be as clear cut and people could really kind of vote with their pocketbook, and it couldn’t be a President or who’s saying “hey, we need to go help out a certain group,” which he could immediately not to get a down a rabbit hole, but you can immediately say that there could be some companies that could benefit it, could benefit from that, could basically encourage that type of situation, and that ability to have to answer to the public could provide discipline and some real thoughts like, what do you wanna do if you feel so strongly about something, you wanna convince people to do it, as opposed to saying you have to do it, more of the carrot, less of the stick type of way of thinking about it.

Elysia: Yeah, it’s definitely… I would consider it as a passionate discussion when it comes to Crypto on both sides, for sure. Yeah, that’s very helpful, Chip. With that perspective, we still to keep in mind, we are the people, so what we’re demanding is what moves the tide, so that at the end of the day, I’m very eager to see how this all pans out… I mean, it’s interesting, it’s like the rage, all the craze around it, and it’s a pretty short Crypto for the past couple of months, and the new year has been fairly down.

Chip: And so if you looked at what we think of modern portfolio, you would have stocks, you have treasuries or some kind of bonds situation. Stocks would be the ownership of companies, treasuries or bonds would be where you lend money, so you’re either lend money to the US government, you lend money to a company and they pay you an interest rate, and then you have cash, so these three elements make a traditional portfolio now. People can say, Well, we’ve added all these other assets, okay, but let’s just go with what… This beginning part… Well, all three of those assets are down for the year, and that’s really an interesting point, we have interest rates in the bond situation, we have the federal reserve banks playing with interest rates, we wanna have interest rate rise… For good reason, they are so low right now. People who would like to be savers are forced to be investors and take more rest and they probably would historically wanted to do… And every time you raise the interest rate, it creates this accounting issue, if the new bonds are paying 3%, matures are paying 1%, you’ve got to discount the value of your bond to make it pay that 3%, now, that’s just an accounting thing going on there, but you see it in your portfolio as actually going down because you gotta make yours pay if you sold them today what the current one is paying and…Wow, that seems not to get to… In a very good way. Rising interest rates are good, they show the economy is healthy, okay, let’s go with that. And then ownership of companies should keep up with inflation, if I bought something for a dollar and all of a sudden, I just say that the money supply doubled overnight, well that thing I bought for a dollar should be two dollars tomorrow because they double money part… Well, that should keep up with inflation, but you also have all these other things going on that are earnings and how companies are working and their challenges and finding employees, and there’s all sorts of other stuff. So I always say We’re looking through mud, we’ve got a lot of rules, general truths, things that we certainly can be used is from history to help us make the decisions. But on the grand part of it, where you’re trying to steer through mud, you’re trying to steer something that just… We know how to do it, but it’s just not going to be as easy as pressing a lever and making it happen, life was certainly more complicated than just these levers… Anyway, that’s probably a reasonable way of talking about

Elysia: It… Yeah, no, that’s helpful.

Chip: For a person on January first invested in CryptoCurrency, they would be down too one that wasn’t the savior of everything.

Elysia: Yeah, yeah, I know, just my own self-reflection, when I think about my own… ’cause I have a crypto wallet, me personally, and things that I think of… To invest in, I’m really careful with it. I’m like, Okay, this is a high risk. But let’s be a little bit more strategic. Right. Who’s heading the project? How far along is that currency and it’s project or what they’re trying to accomplish, things like that, you’re kind of forging that path for yourself right now until things become more accepted and implemented in a sustainable way. So

The passion for money and love as Chip sees it.

Chip: Let’s talk a little bit about that because we all… I’m sorry for any person that works they get a salary, they get pay for that, and through that pay, you pay for your food and your housing and any other thing that you wanna do, but anything you choose not to use today is savings, and theoretically… That’s a delay, dull. And so you wanna put that away and… Yes, I said, my position is a little different than in individuals, ’cause I am basically a steward to someone’s, savings… their delay, dull. I don’t think any client would say, “You know what Chip, what I really want you to do is… I’m gonna send you to Vegas to bet, and if it works, great if it doesn’t.” No, they certainly would not want me to do that, but something that they could use for anything else, and so what an individual does, they certainly could take part of their delayed goals and do something else with it, but on the grand scheme, as a person like myself, I’ve got to really… I can’t do that, that’s not… It’s not fair to them. Even if they won, that would mean that the person took more risk, they basically gamble with someone’s future goals, and that’s just not… thats The Big Short for people. And I wanted to say, you’ve seen what that does, you could see what that puts people through, and many of those things fail and nobody wants to be on the back side of something that is that risky, they’re looking for a person to help control the risk and we certainly can do that.

Elysia: I mean, that sounds basically what you just told me was, you’re responsible… I’m glad you’re responsible with your client’s money. That’s great. Well.

Chip: There’s so many other ways of thinking about it, is the idea of working with someone is obviously to help control the risk and then to take away the risk that an individual may not be aware of, and there are so many levels of that that I have thought about, and I’m sure many other people have too, and that’s what we want to do… That’s why you hire somebody as opposed to these doing it yourself.

Elysia: Well, Chip, this has been great. I’m actually surprised my voice was able to carry through the entire podcast so far, so that’s been pretty successful. No, I appreciate you jumping on. This has been an interesting conversation.

Chip: Well, I thank you for helping me or letting me come on and be interviewed. And thank you again. This has been a pleasure.

Elysia: Do you have any last minute thoughts? Any takeaways you wanna leave the audience?

Chip: Yeah, the thing I would say is that if you would like to learn about cryptocurrency or alternatives, there are lots of good books out there, and I have read a whole bunch of them, just go to your local bookseller or go on to an online bookseller and just look it up and start reading it, you need a body, reading three, four or five books on this, it will give you an idea of how to master at least the thinking of it. And the second thing is that you may come back and recognize that it’s too early, this is a technology that may be too early for you… I have a lot of clients to ask about it, and it’s just not ready for someone like me to do, and then the second thing, the last thing I would say is, just recognize that when you say, “Oh, your ship from one or from one place to another, there are storms and all sorts of things that you have to weather to be able to get where you’re going,” it’s not always… You don’t have to gamble to get there many times, you can take less risk than you think you need to take to get exactly where you wanna go, and that is why you hire a captain to run the shop, their expertise…Their experience should be able to help you a little bit and find that person you can trust because there are good days and bad days, and the point is it’s love and money or at very much a passion, and you gotta trust your partner along the way, that’s why you bring them together.

Elysia: That’s awesome. Well, thank you so much if I really appreciate you. And thank you also for the audience. On this episode of life is digital, I’m your host, Elysia Cadorniga. Please remember to rate, review and subscribe to the show, and until next time. Don’t stop marketing.

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