The Chaser Report - Dom’s Craptastic Crypto Adventure

Episode Date: June 22, 2022

Over the years Dom has cultivated an impressive history of financial mishaps, and as a result has decided to provide you with economic advice based on his mistakes. Today's lesson: How NOT to do cryptocurrency. The Chaser Report Live edition is continuing hiatus from the pub until the current bouncers finish their shift. Watch them return live by buying a ticket here: https://chaser.com.au/events/the-chaser-report-live/ Hosted on Acast. See acast.com/privacy for more information.

Striving for mediocrity in a world of excellence, this is The Chaser Report. Hello and welcome to The Chaser Report. It's Thursday, the 23rd of June 2022. We're not live from the pub, Charles Firth. We are still in studio because we lost all the audio from Tuesday night. But we're doing it again. Yes. Next Tuesday, we hope that...

I have a new theory about why we didn't get any of the recording. Oh, why did it all fuck up? What do you think? I think that the producer, Loughlin, spilt beer on the equipment because it was sounded okay in the room it sounded okay in the room

show the listeners what it's like yeah this is what we managed to record 90 minutes of audio who here has been to 40X oh do you oh fucking TX no there's any

for me and arguably it's some of our best content ever are you short it's the audio not just you going for fucking deals. Yeah, I don't know. Yeah, anyway, so we're going to do it again on Tuesday.

We hope that the gear will be fixed, if not. It'll be a... We've already sold tickets, so we've got to do it. Yeah, yeah. Regardless. And actually, it'll be a good one. Chris Taylor is our special guest. Yes.

Plus another unannounced guest. Yes, well, there'll be two guests besides us in the pub on Tuesday. So the Harold, as it's now called... They've dropped the Park Hotel bit off it. It's now the Harold in Glebe in Sydney. Ten bucks a ticket. And if you're wanting a really nice... nice, diverse food menu.

You can't get that because they've also cut back the menu as well. Yeah, there's steak. Yeah. My vegetarian wife, I think it's nachos and nothing else. Guess what type of salad they've got? Oh, a Caesar salad. No way. Yes.

Anyway, we do love them because they go to some free drink the other night to apologize for various things not working. So, Charles, I have an exciting new business idea. I'm going to go into investment advisory. Oh, okay, yes. We're not going to advise people on how to make money. Well, that's good at the moment, because. Because everything's plummeting.

So people are wanting advice. Well, I'm here to give it to them. Where to put their money. Dom, please tell. I'll tell you right after this. The Chaser Report. News a few days after it happens. So, Charles, I'm not the best at making money.

Yes. And so what I've been thinking of doing is starting an email newsletter with my thoughts in any given week on just the things that look good, like a good thing to invest in. Yes. Yes, yes. And then the pitch is that the investors would get the email and do the exact opposite of what I say on the basis that every single thing I've ever done has lost money. Right.

I think I'm 100% at fucking things up. So, for instance. Yes, because that's right. Because I remember you used to own an apartment, didn't you? And you shrewdly sold it just before the Sydney property market boom, didn't you? That's an awkward topic. Yeah, so that can go in the email. Yeah, yeah.

But then the thing was, I started the thing, right about a year ago, I really wanted to just take advantage of crypto. Like you, I'm quite a techie kind of person. I'm interested in all this sort of stuff. And it was just making so much money. And so I did a little bit of research, looked around, and made a few kind of just not very big investments, because it's a little bit of money. What are we doing?

One or two million or two million. Yeah, a few mil. Just put it sort of here or there. And it was, I just kept going up and up. I was so excited. I put it in Bitcoin. I put it in Ethereum. Oh, right.

I'll put some in Dogecoin because of Elon Musk. How did you actually buy it? Because isn't it, isn't the whole point that it's incredibly hard to buy any of these things, you've got to own a wallet? I got an app for my phone, which is just a wallet app that seemed as though it was quite secure and sensible. It hasn't been stolen yet, as far as I can tell. It probably will be at some point. Yeah, okay. But so I bought it through a wallet.

By the way, there's just an email that's about to come through to you. I'm asking you to just reset your credentials. Oh, okay, that sounds good. Yeah, let's just check that out. Yeah. Oh, from Firth Crypto. Yeah. I didn't know that was a business.

Well, no, it's just, um, it, there's just been a breach. Oh, in my wallet. You'll just need to re-enter your details to get back access to it. I see. Yeah. Yeah, right. The wallet thing that I have is, I think it's called trust wallet. And so it's called trust.

So what are the chances you get to get. So anyway, well, you know, there's Westpac. Commonwealth Bank, there's trust wallets. Yeah, that's right. It's one of the big five. The big five, yeah. So anyway, so I bought a little bit of crypto, and I, to be honest, it was killing it. Yeah, right.

Within about a week, I made, about 25% on my investment. And were you doing, imagine, like, were you sort of treating your wife to extra special dinners and things like that? Oh, look, I was feeling pretty good about it. I even figured out there's this thing you can do where you put money in a, like, a little bit of a short-term loan and you get it back. a few weeks later and it's like doubled and stuff. It was just all looking really, really good.

And I thought to myself, I thought to myself, this cryptocurrency thing is really impressive and I understand it so well. I put a lot of time into it, Charles. When I check my crypto holdings today. Oh, yeah? Yeah, they're not as good as they were. Okay. We need solid numbers here, Dom.

I think yesterday was the absolute bottom and it was I think about 92%. The absolute bottom, so far. So far, yeah. I think I'd lost 92% of the value. 92% of the value. But there's still some value. I still have the same amount of crypto. Yeah.

It's just worthless. I haven't lost any crypto. I've just lost boring fiat currency, Charles, which is out of date anyway. And anyway, yes, because, you know, you just got to wait for the collapse of trust wallet to happen before you lose it all. And if I got to El Salvador, which uses Bitcoin as legal currency, they lost a massive amount of there. Oh, yeah, so how did that work? But I could still go there and pay with Bitcoin for a coffee, couldn't I? Yes, but wouldn't they now charge like eight times more?

Well, only if they wanted to, you know, reflect the fiat currency. They have to pay everyone that the left of the world works in. So anyway, so I'm still hoping that crypto will turn around. But let's just say so far. It's so clearly a scam. It's so clearly, like, I mean. Well, it might be clear to you. I'm glad that, no, but it's, it is a Ponzi scheme.

Like, it is literally a Ponzi scheme. It is, because it is, it's not even a zero-sum game. It's actually, it is actually a negative-sum game because the whole way cryptocurrency is created is through proof of work. So you've got to expend money. Yes. To make this thing that then doesn't have any value. That's right.

Every Bitcoin ever mined is a result of people buying very expensive equipment and using a fuck ton of electricity to make it. And then to maintain it, you've got to spend more money. So it just consistently gets more. and more expensive to hold. It destroys value. It does. It destroys value.

It's a Ponzi scheme, but previous Ponzi schemes were linked in some way to some real thing somewhere. Yeah. This is entirely abstract. A Bitcoin could be worth one cent. It wouldn't matter, except that it would destroy the life savings of everyone who's invested in it. So Charles,

so I did that. So that was crypto step one. Yeah, okay. All right. But then I thought the really good way to make money out of crypto. Yes. It's to get in on a new thing when it's new and when it's exciting.

It's not called NFTA. you haven't done. No, no, I haven't done NFTs. This is even stupidly than NFTs. So, because this is not very well known, this particular crypto, and there's a reason for that. You know how back in the day, you invested in Bitcoin, and we were talking about it often on the podcast. Yes, yes. You got the computers we had here at the time to mine Bitcoin over nine when it was easy and so on. Yes. And so I actually got a few Bitcoin. It was worth $4. Yes. So you actually are a paper multimillionaire if you could find the Bitcoin. This is actually a very sad story.

One fatal floor. One fatal floor. So anyway, so I thought what I want to do is get on board the next Bitcoin. And you don't want to do that proof of work. So proof of work is where you have all these big computers chugging overnight. Well, you can't really, like you can't. You can't because the cheapest proof of work computer now is like $6,000. Yes.

And it creates about $10 a month worth of crypto. So in China, they've got these giant vast arrays of these things. They don't have to pay for the electricity that they use and whatever. So that's clearly. Why don't they have to pay for the electricity? Well, it's just they get sweetheart deals and stuff. It's certainly cheaper than it would be here anyway. Or you can buy an expensive graphics card,

which is why they're incredibly impossible to buy now because of idiots of using them to mine in crypto. The Chaser Report. News you know you can't trust. So I thought what we need is a new thing. Oh, yes. And enter a guy called Bram Cohen. Bernie Maidop.

So Bram Cohen is. He's a bit of a legend in computing, Charles. I'm surprised you don't know his name. He invented a little thing called BitTorrent. Oh, yeah. So he's already extremely accomplished at destroying value from existing businesses. So this guy, Brown Cohen, invented a new cryptocurrency. So for people, for our younger listeners, BitTorrent was very big about 10, 15 years ago.

It was a way of file sharing, basically. So before Netflix came along, the way to actually get movies online was to go onto BitTorrent. And the way it worked was that everyone who was trying to download it would also be hosting it and sharing it with everyone else. So it meant that nobody had to actually host any particular file. Yeah, you just host a tiny little bit of it. It was very clever back in the day when, you know, there wasn't unlimited storage like there is now. Anyway, so this guy, Bram Cohen, thought to himself, well, we need something else.

We need a new system. He invented a new cryptocurrency called Chia. You know, like the chia seed that sounds wholesome and positive and all good. So he invented this thing called Chia. And Chia worked off a concept called Proof of Space. And it was all about hard drive space. So what his idea was, was that rather than having all this crypto bullshit, whatever, you would create these files.

You'd fill a hard drive with files. It was basically that was what your coins were. You had these basically, you fill a disk with equations that you generate. And they then just sit there. for time immemorial until the particular mathematical equation that is on your hard drive

somewhere in your hard drive becomes the one that it's like you have a whole bunch of keys sitting on your hard drive you've got billions and billions of keys and then at some point every day it's like bingo

yeah three or four locks emerge and if you have the key just sitting there on the hard drive you are the person who gets to get the coin that day right that's how it works so it is a little bit of a lottery that's true But the, what's to stop you're claiming, oh, well, I've got that key.

I've also got that key. Well, no, but it's all encrypted. So basically, the genius of this system is that it used quite a lot of data and energy to actually make the keys to actually create the particular file that serves as a key. But once you've created, it just sits there on a hard drive, doesn't use a lot of power. You can have it connected to a really cheap old computer. And so people bought hard drives in their, The world hard drive market exploded overnight, and you could not get a hard drive.

Wow. Because everyone bought Cheapen. I think at the start of 2001, so a little bit over a year ago. And so you could not buy an external hard drive. The prices just went nuts because idiots were buying dozens of them. Were you one of these idiots? I was one of these idiots. Oh, you're kidding.

So I bought, not that many, but a couple of hard drives, maybe 50 terabytes worth or something, and thought, you know, I'm going to do this. And I'll sit there and I'll be part of this new. exciting thing is Chia. Yeah. So I filled the hard drives. I had to buy quite expensive SSD drives to actually basically create the keys is the best way to put it.

And so I filled the hard drives with the stuff and thought, well, this is really exciting. And then Chia launches. And the value of Chia when it first launched was, I think about $2,000 US. Right. And it was looking like the most exciting new gold rush that was possible. I thought, wow, this is incredible. If I just get one of these chea coins. And it was good because you were creating no productive value.

No. I was feeling a hard drive that could have had been used for some worthwhile purpose. You could have been... With shit. Curing cancer. That's right. You could have been part of the setty. Yeah,

could have been finding out of life. Instead, I had a hard drive just basically full of gobbledygook, basically. Right, okay. Thinking, but one of these days, my ship's going to come in. I'm going to open up the chair app. It's going to say you have one cheer coin. Yeah.

And if I just had one, $2,000 would pay for the hard drives them put, right? done, I never got one. I never, I never, never got one. But what about now? But now, it has an estimate of the time taken to win one chair coin in the app just to manage your expectations. And it got to be higher and higher and higher. I think now it's about 600 days or something to get one cheer coin.

That's one problem. So one problem is this thing became so popular that it became impossible to get a chair coin. Yes. Another problem was that people in China have. hacked it and figured out how to farm it. This is basically where there's a giant pool of keys. Everyone who has one of the keys gets a very small amount of money. So that kind of destroyed it.

But can you guess what the biggest problem is with the whole thing with Chia? Has the value of a Chia coin plummeted? They're now worth $40. That's off today. Right. They're now worth 40 US dollars. So my question is, does anyone want to buy 50 terabytes worth of? of external hard drives.

That are full of useless. Wait, we can format them. Yeah, okay. And they'll be, oh, yeah, we'll be just as useful. Yeah. So what I'm, the point of the story is, don't buy crypto. Yeah. Don't think you can smartly find a way to, you know,

lightning doesn't strike twice in the same place. And most importantly, never, ever, ever take financial advice from me. Dom, thank you. That's something that I, well, now that you've said don't take financial advice from you, I'm going to do the opposite and take my financial advice from you. It's very confusing. Our gears from road microphones, we're part of the ACASC crater network.

We'll catch you next time. See ya.