She's On The Money - Decrypting Crypto

Starting point is 00:00:00 She's on the money. She's on the money. Hello and welcome to She's on the money, the podcast for millennials who want financial freedom. Lately, there has been a lot of talk about Bitcoin, the popular cryptocurrency, which is having a huge moment right now but what actually is bitcoin how does it work and is it a good idea to get involved in today victoria lays her opinions on the table no oh now my name is georgia king and joining me today for our cryptocurrency chat is financial advisor victoria

Starting point is 00:00:48 divine hello vicky d hello let's get straight into it here v with a little quick fire round what i want from you is one sentence answers only here so no b tangents just straight this was not in the script but okay okay victoria do you own any crypto no i don't victoria do you recommend crypto to any of your clients absolutely not victoria doesn't everyone who gets into crypto make heaps of money they absolutely do not okay wow we've really started on a negative front but that's okay setting the tone for things to come now let's jump in with the basics v what is cryptocurrency currency and why does it seem like everybody in the world is talking about Bitcoin right now? Okay, so everybody is talking about it because it has had such a big surge in recent history,

Starting point is 00:01:34 right? So it did have a big surge a couple of years ago and then it kind of dropped off a bit and now it's had another surge again. And now what I need you to understand about this, you need to before I even explain what this is properly, is for you guys to understand the emotional investment journey and we've spoken about this on other podcasts but essentially it's kind of like stacks on that's like you saying to me georgia oh my god bitcoin you need to buy crypto and i go oh my god well georgia said i need to buy crypto and there's a lot of excitement going around but what's happening is that excitement of you purchasing because your friend was purchasing and you kind of didn't want to miss out you had a bit of fomo is actually pushing the price higher

Starting point is 00:02:16 because we're playing stacks on. And that is not necessarily a good thing because you actually don't want to buy something while it's being saturated. That's actually the point of maximum risk in investment. You actually want to purchase when it's really low. That's not to say you should be waiting for it to get to low. We'll explain exactly what it is and why I don't personally invest in it in this episode. So now I'm not super negative when it comes to Bitcoin, albeit I have just expressed a lot of negative views about it in about a 30 second period, which is quite impressive, to be honest. But the reason I don't like Bitcoin is because it doesn't fit any of my clients' risk profiles and it genuinely is such a risky asset. To me, it is not worth it, regardless

Starting point is 00:03:00 of what the returns could potentially be. So jumping right into what it is, cryptocurrency is a form of digital currency and it's based on what is called blockchain technology. So all of that is a bit of a mouthful, but essentially, a blockchain is essentially like a checkbook that's shared across an incredible number of computers around the world. In terms of where the blockchain's name comes from, all transactions are recorded in what they call blocks, which are then added to a chain of all previous transactions. It's a distributed ledger, sexy name, that records all of the transactions that have been made. Now, unlike regular types of currency like dollars or yens or pounds. Cryptocurrency is what we call decentralized, which means it's completely

Starting point is 00:03:45 unregulated by any financial authority and exists completely independently from the government or any type of central bank. Now, decentralization, when you explain it like that, does sound pretty good. It does have a number of perks, like cryptocurrency being a global currency with the same value everywhere in the world. Kind of cool, especially in 2021. However, the flip side of that is that cryptocurrency is extremely risky which i mentioned before now if we look at stats in december 2020 the total value of all cryptocurrencies was in excess of 645.7 billion dollars the total value of bitcoins came to around 421 billion dollars so bitcoin is the key player here let's be brutally honest but it's not the only type of cryptocurrency there are more than 6 700 different

Starting point is 00:04:37 types of cryptocurrencies out there, according to a website we've never referred to before called coinmarketcap.com. I trust them. Trustworthy. Let's keep it. Don't question it. Why is Bitcoin on everyone's lips? You mentioned before that it has had that massive surge, but it's not the first time we've heard of Bitcoin. It was floating around a couple of years ago, right? Yeah, absolutely. And I think it would be naive of me to say, oh, no one's going to make money with this. like I genuinely know people in real life who have made bank from buying Bitcoin. I'm not saying this is not something that if it appeals to you, you shouldn't invest your money in. What you need to understand is it is incredibly risky. Essentially, Bitcoin could disappear tomorrow

Starting point is 00:05:17 and no one will be none the wiser. At the end of the day, what happens if it gets taken down? What happens if it gets, you know, deleted off the internet? Essentially, there is no basis for it. So, if we talk about, you know, a share in a company, let's take a bank because that's quite a bland example. You buy a share of Bank A and what that share gives you is the ability to have some of their income and also have some of their capital growth. And there is a physical asset that is making that money. There are people behind it making it work. Whereas Bitcoin, and we say Bitcoin, but that's like a brand of cryptocurrency. Cryptocurrency, there's nobody actually making it work it is something that has been digitally created and we are as humans putting a value on

Starting point is 00:06:00 that and it's a currency it's a currency so you can trade on the internet with it you can purchase things on the internet it's not as common as you know being able to paypal something yeah but you can definitely purchase things one of the reasons why people on the internet especially love this and why i guess it goes so far back it's kind of a little bit underground right so you could purchase bitcoins to make anonymous purchases online so you can imagine the types of content that people are purchasing when you know you can be completely anonymous so it's not actually got good bases if that makes sense so like you know decentralization is great having you know the same value all around the world we're seeing all these positives it's great but the reason a lot

Starting point is 00:06:44 of people initially wanted it was to be super anonymous and purchase things that potentially they shouldn't have been purchasing online. And what is the value of Bitcoin right now? Bitcoin is essentially back, I guess. It has gone in ebbs and flows. But Bitcoin is back because of its recent jump in value. Essentially, it has gone up $42,000 each Bitcoin. Not a little bit, not overall. Each Bitcoin is now worth $42,000 more than it was historically, which people seem to think is the result of a wave of money from institutional investors, which was propelled by COVID-19. Right. Okay. So, tell us more about Bitcoin. It's obviously the largest form of cryptocurrency. So, the Bitcoin Market Journal, which is a real thing, estimated that there are

Starting point is 00:07:30 over 100 million Bitcoin users globally. It was created more than a decade ago in January 2009, which happens to be the year I graduated high school, Georgia, which turns out more than a decade ago, which followed on from the financial crash of 2008, which you guys would have heard of as the gfc yes it was designed as an alternative to government and central banks controlling the money and the economy so kind of made a bit of sense at the time there are no actual physical bitcoins so when you buy a bitcoin you don't actually get a piece of a bitcoin there's no actual tangible cash instead it's just balances on a public transparent ledger system known as blockchain so that's where that comes in which we mentioned before which is verified by an

Starting point is 00:08:14 incredible amount of computing power. So all of it is kind of, and you can look into it and understand it deeply. And there are going to be a lot of people commenting on this being like, Victoria, you've really simplified it. It's so much more complex. Here's how it works. I get that. I fully understand that. Please do not think for two seconds that we haven't done our research here. I don't fully understand it. But at the end of the day, I genuinely don't believe that a lot of our listeners understand what Bitcoin is apart from a thing that you're able to buy online that you know is worth a lot and is a bit of a hype right now and I think it's a bit worrying because these types of people who are saying oh my gosh well I'm gonna buy bitcoin I've done my research

Starting point is 00:08:53 like you don't understand your risk profile you don't understand your long-term investment strategy you don't understand what you should actually be putting into a well-diversified portfolio yet you're jumping straight to the riskiest asset that I believe you could purchase for sure and a lot of people would think that being well-researched means like how to chat with dad dad bought a bitcoin now it's doubled in value i'm gonna do it as well that isn't actually proper research there so you need to be yes and like please do not get me wrong i have friends and i also have you know acquaintances and people that i know who've made more than a million dollars from bitcoin we're not talking they've made a million dollars this year because they

Starting point is 00:09:35 bought it because it increased in value i know people who bought it when like i can't remember board it started off as but like they bought a bitcoin for eight bucks right and they made bank so this is back in the day like this is way back in the day like i remember when i was in high school i did circulate with the cool kids who talked about blockchain technology spent all their time in the library um and at that point they were talking about it really yeah and i remember them talking about it in online forums and being like oh my gosh this is the way of the future of me being like I don't care yeah yeah yeah yeah so at that point I literally had no idea but it has been around for a while it definitely has surged in popularity and it's

Starting point is 00:10:16 also come back again but I do believe the way it's come back is because we're seeing institutions actually invest in this because they see a future in it which makes retail investors like you are hi Georgia a little bit more comfortable with it because you're like well if big instos are backing it well obviously it's safe that does not mean that it just means they see a potential return that they want exposure to and can you talk a little bit more about the hype around this and how how much FOMO is really playing into everyone buying into this right now I think people genuinely just want to be involved in what they think is going to be the next big thing like don't get me wrong I get FOMO when people start really deeply talking about Bitcoin I'm like oh is it worth it

Starting point is 00:10:57 maybe. But at the same time, I know me personally, I would not want to be exposed to that. I'm very conservative. It is absolutely not something I should be dabbling with or even playing with. But I do know people who have done it and people who are continuing to do it and enjoying it. So we're not saying here that it is a really bad thing. I think my negativity right now is actually coming from a place of concern because I'm seeing so many people post in our community and asking comments about like how do I buy a bitcoin and like we need to educate ourselves we need to have this conversation and just say look this this is great it's a it's a form of currency it is a form of currency that you're able to invest in but that form of currency has

Starting point is 00:11:38 no physical basis you don't have a business behind it that maybe if they don't make profit and you don't get dividends like it's okay because the next year it might perform again like it could literally disappear and that's one of the risks that you're taking and I think that people assume that the share market is similar to that when in reality it absolutely isn't and if your only exposure to quote investing is in bitcoin and cryptocurrencies and things that you can actually lose significant amounts of cash like you're going to be tainted by that you're not going to feel comfortable with investing and you're going to put you know your financial future at a disadvantage because you don't actually fully understand it yeah i think the fact that it's not backed by any

Starting point is 00:12:22 anything of substance is quite scary as well when i was reading up on bitcoin it was just created by some literally like some guy off the back of the global financial crisis and it's so elusive and like he now doesn't exist and it's all it's it's weird it is weird and it is one of those things that like we can talk about it till the cows come home but i just really wanted to talk about it so that you guys know that we are addressing it at the same time as going, oh, I'm not exactly going to do an entire podcast on how to buy Bitcoin and what type of asset it is. Like, I'm currently doing this mini series of the four asset classes that you can invest in in Australia that are safe and that are, you know, going to be in line with your investor profile once you work out what that

Starting point is 00:13:07 is. So, we're talking cash, we're talking fixed interest, we're talking shares and property, those things while they carry risk when we talk about risk those risks are significantly different to the type of risk that you take when you take your hard-earned money and put it into an asset that you cannot trace on the internet it just feels like gambling to me like i am completely risk averse in every sense and to me i'm just like there's no way i would ever consider this um but obviously a lot of people are and that's why we're talking about it but i wanted to ask you be what the history of bitcoin has been like because i know a few years back it did really boom and everyone was talking about it but then it plummeted the value just went straight on down

Starting point is 00:13:48 and it was kind of embarrassing and we were like oh bitcoin look at those silly people who bought bitcoin now they're the geniuses unless they sold them or traded them or however exactly and that's what we've got to remember like bitcoin has some really high highs and some also really low lows and i think it's one of those assets that i wouldn't want my share portfolio to look like that. So if we're talking about historicals, at the end of 2017, Bitcoin traded at close to $20,000. So when we talk about Bitcoins, we're talking about one Bitcoin. Georgia, at the end of 2017, Bitcoin was trading at close to $20,000 per Bitcoin. But 12 months later, it was only worth $3,200. So if you went and purchased a $20,000 Bitcoin, you'd be maybe going home with

Starting point is 00:14:34 your bat and ball with your tail between your legs. But now two years on from that, it's trading at super high levels again. And one Bitcoin is now worth $42,000. So it is having a very up and down journey. But at the same time, it is still just as risky as it was historically. Now, there are going to be a lot of people that believe that Bitcoin is the way of the future, because as we were talking about before, it's a global currency. Like a Bitcoin today in Australia is worth exactly what a Bitcoin in London is worth. It is exactly what a Bitcoin in Africa is worth. And that's kind of cool that we'd have a centralized currency system. The scary thing for me is that centralized currency system has no basis. We don't know where it came from. We don't know how that Bitcoin was

Starting point is 00:15:20 made. And I'm sure there are a lot of, you know, really tech savvy people who are going to turn around and be like, well, Victoria. And I get that. But if I, as a financial advisor, who I would argue is relatively well-educated, cannot understand the basis of this investment or this business for me to put my hard-earned money into, it's a no from me. So, Georgia, at the end of the day, this isn't a stable investment by any stretch of the imagination. And though it increases and that sounds really exciting, it's just an indicative of how volatile of an investment this is. So, I think that what we really need to take from this is if you want to invest in Bitcoin, fantastic. But what I want you to do is go and do your research. I want you

Starting point is 00:16:05 to understand each and every single aspect of it, the pros, the cons, whether it works for you. And I think that you really need to, as a human, put yourself in the best possible position and go, is there something that I'm willing to risk? And you know what? If you are willing to risk that money and say, all right, well, if I invest in Bitcoin, I want you to be comfortable with the idea that you won't get any of that money that you've invested back and if you can't say you're comfortable with that don't do it you're listening to she's on the money with victoria divine and georgia king now please don't forget guys that the podcast is not the only space you can find victoria and the team we have a booming facebook group 130 000 people in there now how good is

Starting point is 00:16:56 that. I know. We've got so many friends. We have conversations like this one every single day, every single hour, celebrating money wins, helping each other answer money dilemmas. And it's pretty much the most wholesome place on the internet. I think it's safe to say. People post pictures of their dogs and let us know what their kids are up to. It's literally so wholesome. So join us there if you're not there already, guys. But let's get back into this chat with the serious stuff, V. We've heard a lot of hype about Bitcoin lately, but what are the dangers of Bitcoin and other cryptocurrencies? Like at the end of the day, I feel like I have covered this. So sorry to anyone listening at home and doesn't want to hear me reiterate points over and over. But at

Starting point is 00:17:37 the end of the day, it is extremely risky and it is volatile. If you're going to invest, I just need you. Like I really, really need you to be prepared to lose some or all of your money. It's not really a question for me. It's something that says you're actually taking a bit of a punt on this. You could lose everything that you put in. And I think that that is something that you need to consider and go, okay, well, if I lost it all, it wouldn't hurt me. Maybe it's a couple of hundred dollars and you go, yep, that's the risk I'm willing to take. But if it's not, my friend, we shouldn't be doing that. And to kind of put this into some level of understandable framework, I guess we can look at it from a profit and loss angle, right?

Starting point is 00:18:16 If you invested in Bitcoin at the start of last year, you would have been sitting at about 300% profit by the end of 2020. So that's not bad. That's pretty good. It's quite good. It's quite smart. But if you'd invested at the start of 2018, and so many people did, this is not uncommon. That was a very high purchase time.

Starting point is 00:18:36 And then you sold at the end of that year, you would have lost 73% of your money, which is obviously a massive fluctuation. but again it's about when you get into the market and when you get out of the market and working out how to seize an opportunity which is not always clear and i know that a lot of people lost a lot of money because they thought the bitcoin would go up and up and up and up and they left their money and watched it go up even though they should have pulled it out and you know just taken their profits and run they didn't and they lost a lot and like i'm just not i'm not a risky person my friends and literally just like anything the value of cryptocurrency is can I start calling

Starting point is 00:19:15 it crypto my cool enough the value of crypto is tied to supply and demand but it's super difficult to determine what will actually drive up and down the price beyond that which makes it super risky because we can't say oh okay no problems like this industry's done really well therefore we'll probably see an increase in price like we literally don't know what drives bitcoin or crypto for that better. Now, you said earlier that you have not invested in crypto or Bitcoin. You don't intend to. I feel like we are getting a sense of why, but are there any other reasons you haven't mentioned yet? To be honest, it just feels really risky and not something that I'm going to be adding to my portfolio in the near future or at all. I just don't believe in owning Bitcoin because it just

Starting point is 00:20:01 doesn't align to my values and what I'm looking to achieve. And I'm definitely one of those people that looks at my investment portfolio and I'd much prefer, you know, my portfolio is earning more than this, but I'd much prefer a steady income stream of 5% growth every single year than the 300% growth with the chance to lose 73% of my money. Like I just don't want to put myself in those shoes. And you don't think it's the future of finance in any way? Once I see some more serious statistics and some more big names getting behind it and really understanding what that looks like sure but right now it doesn't make a lot of sense to me and what would you say is a safer alternative if people are super excited by the high return that bitcoin seems to be

Starting point is 00:20:44 providing but they may be thinking it's not a good choice now well we're all really excited about really high returns right like if i said cause money but i said to you hey georgia put all your money here you'll get 500 return you'd be like okay but like that's really scary yeah like at the end of the day, there isn't a safer alternative that is going to give you any level near that return. If I told you the best investment in the world, it's business. Having your own business is the biggest and most well-producing asset in the world. That's what I would say. And obviously, I can't give advice, but at the end of the day, like you're not going to see something similar that isn't a safe alternative because if there was, you definitely wouldn't be getting 300%

Starting point is 00:21:29 return yeah I've um decided that I want to buy a super yacht okay so I've been thinking that I want to start a business but all I can think of is cheesemongering but I also don't really know how to do that okay this is new this is different maybe we can take this offline okay um so bitcoin is highly risky it's not going to help you buy a super yacht I mean it might but probably not in a sustainable way. If you buy a super yacht, can I go on it? Of course. Oh, thanks. All right. Well, maybe go buy a super yacht with your Bitcoin profits. So, if anyone has listened to today's show and is still thinking of going down the Bitcoin line, they've already decided, what words of wisdom would you leave them with? Do your research. Understand what platform you're

Starting point is 00:22:12 purchasing from. There are lots of fake platforms that will take your money and not produce a Bitcoin for you. Understand the basis of the investment and work out how long you are going to be invested. Also have a chat to yourself about when you're going to pull that money out because I think people get greedy and you don't think that you're going to be that greedy person but when you see the numbers going up like what's your number that you're going to take your money off the table at. Okay fabulous well said I think unfortunately it is time to end our show there but I think it could be worth having this conversation continuing it on the Facebook. Look it's really interesting it's a little bit pervy but summary of all of this I want you to understand that it

Starting point is 00:22:53 It's not something I endorse, but if you want to have chats about it, I am here for that. 100%. Just before we head off, we'd like to acknowledge and pay respects to Australia's Aboriginal and Torres Strait Islander peoples, the traditional custodians of the lands, the waterways, and the skies all across Australia. We thank you for sharing and for caring on the land,

Starting point is 00:23:12 which we are able to learn. We pay our respects to elders past and present, and we share our friendship and our kindness. And, of course, please remember, guys, that the advice shared on She's on the Money is general in nature and does not consider your individual circumstances. She's on the Money exists purely for educational purposes

Starting point is 00:23:30 and should not be relied upon to make an investment or a financial decision. Or any decision about Bitcoin, full stop, end of story. No, that is correct. And we promise Victoria Devine is an authorised representative of Australia Pacific Funds Management, Proprietary Limited, ABN 34132463257.

Starting point is 00:23:46 Whoa. AFSL 339151. You did that in one take. That was pretty good. that was pretty impressive uh big thank you of course to brian beck and jess our producer and content wizards for putting it all together and putting up with us yeah like and if anyone thinks that their four-year-old child could uh you know do the uh general general advice disclaimer for us and would like to record that on their phone i will happily have a four-year-old read that i

Starting point is 00:24:12 feel like we need to hear that it's so cute it's actually so wholesome and you know what else is wholesome and we've plugged it before it's our facebook group where our community shares money tips and tricks every single day free of judgment so she's on the money on facebook and join us facebook's not your thing we kind of don't care we're also on instagram though and we're on tiktok we're at she's on the money aus don't forget to rate review subscribe because all of that keeps us in the charts and make sure that we can keep producing this content for you each and every single week. And it'll get me closer to buying that super yacht. Yeah, which is arguably

Starting point is 00:24:48 the most important part. 100%. Until next week, guys. Bye.

She's On The Money - Decrypting Crypto

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