Crypto As A Currency
What are your thoughts on El Salvador making crypto, at least Bitcoin, legal tender?
“Well, I think it’s a genius move. First off, no press is bad, Right? We’re all talking about El Salvador now. Nobody knew where it was a few months ago. Not only do people know where it is now, but they’re looking at real estate.
They’re going to be a huge beneficiary of this. I actually was in a Twitter chat with the President of El Salvador (not just me) when they made the law. I remember it was like the beginning of June and after they announced it, they did this whole Twitter spaces and the president was there, his brother, and a bunch of people from the Bitcoin community.“
Why Make Bitcoin Legal Tender?
“The president gets it; he gets that people want this transparent, autonomous decentralized self-sovereign form of money and access to financial services and access to wealth creation.
They want to be able to choose. So I think it’s genius from a marketing standpoint. I think it’s genius from a forward-looking, savvy standpoint, whether or not that was his master plan I don’t know. “
Internet of Value
“Look, I think this stuff is going to take over the world. Obviously I’m sort of biased, but I think a lot of people agree with me and more people are starting to see it. This is the paradigm shift from the internet of information, which is what we have now, to an internet of value. We can send information peer to peer, person to person, with almost no costs.“
Crypto’s Permission-less Value Transfer
“All we need is an internet connection; we don’t need permission. We call it permission-less. I don’t need permission to send you a text message, I just need your phone number and an internet connection anywhere in the world. With crypto, now we can do that same thing with money. I only need to know your wallet address, the unique string of characters, and I can send you money anywhere you are in the world. You don’t need to have a bank account & I don’t need to have a bank account. Now I can even send you art or representations of things from the real world that are in crypto. In the future I’ll be able to send you a passport you can verify or an identity document you can verify.“
I don’t need permission to send you a text message, I just need your phone number and an internet connection anywhere in the world. With crypto, now we can do that same thing with money.Tweet
Crypto’s Disruptive Power
“The next thing you should think about is this, the internet of information over the past 20 years has disrupted just about everything that dealt in information: mail, TV, media, social media, telecommunications. Well, if that happened with information, once we get to the internet of value, what’s going to happen? I think what’s going to happen is we’re going to see every industry or player that mediates value get disrupted because we don’t need them for that anymore. And case number one is the banks and the financial sector, because all they do is mediate value. That’s their entire purpose. And we needed them to do that for a long time, but now we don’t.“
Take everything that you just said and explain it to a 10 year old. Tell me what crypto is.
“Okay, so ten-year-olds aren’t my specialty, but I’m going to do the best I can. Crypto is money we can trust on the internet. That’s the simplest explanation of it. And then I would go deeper for the inquisitive ten-year-old who is wondering why.”
History of Money
“Money has been changing all the time throughout history. Our definition of money has moved to be what is just the easiest thing to use.
If you have something I want and I have something you want or if you have something I want and maybe I don’t have something you want, but I need what you have, how can I give you something that you can use? I can buy that thing from you and we can both be better off. Money allows us to do that. And for a long time that was gold because people realized if you want to have good money, it needs to be hard to get it. It can’t just be something you make or find on the beach. So gold worked really great for a long time.
Less than a hundred years, even as recently as 60 or 70 years ago, we still had gold tied to our money. And then in the seventies Richard Nixon took us on this grand experiment: what if we don’t have gold tethered to money at all, what would happen? And we’re in that experiment, it’s only been 50 years. Nobody knew what was going to happen when we did that. And I don’t think people really thought very deeply about it. But of course, nobody could have seen what would happen over the 50 years since. So, money has always been sort of an experiment.”
Growth of Cryptocurrency
“We’re just still experimenting. Crypto is the latest thing that we found that works better in today’s world than anything else. And I think that we’ll see that sort of come true the more and more people use it. And that’s what is happening. Crypto is, in fact, growing at the fastest pace of just about any technology in history; it’s growing faster than the internet did.“
Cathie Wood was saying stuff like that in the Bitcoin conference with Elon Musk and Jack Dorsey.
“Cathie wood is an absolute genius. She just did a podcast, I think a week ago with Bankless, which is a really great crypto podcast. I think everyone needs to watch that. The fact that she did that and said all that stuff, and it was free, was mind blowing for me. That’s just the power of the internet of information. Watch that interview; watch Cathie Wood lay out her investment thesis over the next five years and her investment thesis for crypto. I think everyone will find that very interesting.“
Investment Risks With Cryptocurrency
On another note, how do you wrap your head around an industry where scamming is so easy?
Shahar Abrams :
“Now, I’m not totally willing to accept that, because that same type of thing happens in the stock market and it’s been happening for a long, long time. Now, there are new types of scams that work in crypto and don’t work like in other places. You’ll see people perhaps on Twitter being like, “Hey, here’s my address, send me some coins and I’ll send you back twice as much.” The point of the scam is if you send someone coins there’s no way to undo the transaction. There is no Bitcoin customer support or Ethereum customer support. “
Protecting Your Crypto
“So, there are a few simple rules you can use to avoid pretty much every scam. I’ll give them to you right now.
Rule number one: Never send coins to someone who you don’t know. Period. End of story. You don’t send them coins because you can’t get them back.
Rule number two: nobody, nobody in crypto will ever ask you for your private key. That’s your unique password, that controls your wallet. Whoever has the private key controls the funds in the wallet. Now, not every wallet has a private key. You can use some applications like Celsius network, the one I talked about (part 1 – crypto passive income), that will keep that safe for you. So, you don’t have to worry about that. Nobody in crypto will ever ask you for that, anyone that does is a scammer, period. End of story.
Number three: keep your private key safe. What that means is, again, a few simple things that you need to do. You write it down on paper, you don’t store it on your computer. You never type it online anywhere. And you make more than one copy of what you write down and you make a backup.
If you just do those things, you’re going to be fine.“
Rule number one: Never send coins to someone who you don’t know. Period. End of story. You don’t send them coins because you can’t get them back.Tweet
Ways To Lose Your Coins
“People that lose their coins haven’t followed the rules. They either haven’t written it down and they forget it, or they wrote it down on just one sheet of paper and then the cleaner came and threw it out. A few other reasons: they typed it in online or they kept a text file of it on their computer (which got hacked), they gave it to someone, someone was looking at their screen while they were showing it.
All of those are great ways to lose your coins.
Those are just the basic security things. It can be a little scary, but it’s also quite beautiful because, if you just do those things, there’s no way you can lose your coins. You will be safe and you don’t need any other sort of institution. You don’t have to pay anyone. Hopefully that kind of answers the question and alleviates some fear. There are always going to be scammers in every market. I tried to outline some of the common, unique kinds of crypto scams. Just always be careful, right.”
Best Coins For Beginners To Buy
So, how does a beginner know what coins they should have in their wallet? Because there are literally thousands. How do you sift through the thousands of thousands of coins?
“What you just asked is a trillion dollar question. That’s one of the most important skills in demand right now, knowing how to pick coins. You can make a lot of money if you’re really good at that. I’ll try to give a high level overview and this is something where you should really check out the course if you’re really interested in this.
So, in one way, it’s very similar to stocks. And then in some ways it’s very different.”
Know The Differences
“So one of the ways it’s very different is, and people need to understand this, when you have a coin you don’t have equity; there’s no legal claim to revenue or cash flow of a certain company or business. Sometimes there is no company, it’s just a protocol or it’s just a coin like Dogecoin, which doesn’t really do anything except allow you to send it back and forth.
We have this whole discipline in crypto called tokenomics (token economics), which is a study of what gives a token value. And I guess I’ve lost the ten-year-old by now. So if we’re going back to the 10 year old-honestly what I would say is, if you want to learn how to research cryptos, there’s a lot of work ahead of you. Start watching YouTube videos and get my course and sign up for my newsletter. We’ll help you out a lot. “
Crypto Number One and Number Two
“But really just buy Bitcoin and Ethereum. Look, there’s a reason that Bitcoin and Ethereum are number one and number two in the entire crypto space, because money keeps flowing into them. People keep investing in them. And the market is literally telling you, these are the ones that you want. The market is telling you this emphatically. All right. So when you go outside of Bitcoin and Ethereum to all these other coins, you are saying, no, I know better than what the market is telling me. Because the market is telling you Bitcoin, number one, Ethereum -number two by a long margin.
So if you’re going to pick other coins below those, you’ve got to know something. Maybe you do or maybe you want to take that bet. Maybe you see the good risk reward or you think it’s an asymmetric opportunity. I’m all for that; I do a lot of that. But I’m just saying that’s the risk you’re taking. It’s a lot riskier. And for most people, including every ten-year-old that I would probably talk to, just buy number one and number two, and you’re going to do really well. You’re probably going to do really, really well.
Then, as you learn more and you get more familiar with it, maybe you start using it, then you can go to numbers three through 9,000 and start to look at them and start to understand what they do, what gives them value and what the market thinks about them. And then, you know, you can add some of those to your portfolio. Sure.
Starting Young In Crypto
And then I just want to add to your ten-year-old and any 10 year old who might be listening to this, I’m so excited for you because you are way ahead of the game. Even if you buy coin number 6,000 and it goes to zero, you are way ahead of the game. You’ll learn from that. And that’s a super important lesson that I had to learn, you know, in my twenties.This is good for you.
Celebrity Impact On Cryptocurrency Space
What do you think about Cathie Wood, Jack Dorsey and Elon Musk and their stances on crypto?
So first, I want to differentiate. Cathie Wood is an investor; Elon Musk and Jack Dorsey are CEOs. And they’re two very good CEOs. And I think Cathie is a great, great investor. But for me, I’m an investor. I mean, I’m the CEO of my little small company that doesn’t even compare to Twitter or Tesla or Space X. Right. So I kind of identify closer to Cathie Wood, and I’m sort of more interested in what she’s doing.
Jack Dorsey and Crypto
Jack and Elon have honestly been great. I think they get it, you know, Jack in particular has been a huge fan of Bitcoin for a while. And now he’s realized that there’s a lot going on-on Ethereum and there’s a lot going on in the crypto ecosystem and he’s gotten very excited about it.
He comes to conferences now and he’s going to make a decentralized Twitter, which is going to be really exciting. His platform Twitter, by the way, is pretty much the de facto information exchange platform for crypto. Everyone in crypto has a Twitter account, guaranteed. Jack has been a huge proponent for this space. He’s actually done work with Cathie on one of the really important topics, which is sustainability and environmental friendliness of crypto. They have invested and are putting in work to show the world how Bitcoin and crypto mining can actually be good for the environment and can actually be good for renewable energy innovation.
Elon Musk and Crypto
Um, Elon is, you know, a character, right? I mean, it’s hard to kind of define his motives. After all, he’s the richest man in history and he sorta just does what he wants. He styles himself a bit of a comedian since going on SNL. But by and large, if you actually listened to what he says, and don’t just read his tweets, he said, I mostly have Bitcoin and Ethereum and I have a little bit of Dogecoin. Because I think it’s funny. So everyone that thinks he’s like, you know, Doge father and cares all about Dogecoin. Well, like any reasonable investor, he has a lot more number one and number two.
You’ll notice this, all of these people, Jack, Elon and Cathie wood, the ones with the big bucks, they mostly have number one and number two. So if you’re a 10 year old and you get number one and number two, you’re doing the same thing as Elon and Jack and Cathie. It really doesn’t have to be more complicated. I am really, sort of, altruistic about anyone that is helping the space move forward, bringing adoption and not spreading lies or misinformation. And Elon for a bit, you know, was falling for some of the energy & environmental hate that is misplaced. But he’s since come around, even on that. And he’s been a very good proponent for the space.
About The Author
Shahar retired as the leader of the enterprise blockchain deployment team at IBM at the age of 29. He founded Road to Babylon to help others on the path to financial freedom by sharing his no-hype, principles-based approach to investing in cryptoassets.
You can learn more about how to execute effective crypto investment strategies at roadtobabylon.org.