WEBVTT - Demystifying crypto and whether it's worth investing in 0:00:07.800 --> 0:00:09.959 Hello and welcome to It All Adds Up the podcast 0:00:09.960 --> 0:00:11.879 where we chat about money, how to get it, how 0:00:11.880 --> 0:00:13.920 to spend it and how to invest it. I'm money 0:00:13.920 --> 0:00:14.760 editor Dom Powell. 0:00:14.910 --> 0:00:18.270 And I am senior economics writer Jess Irvine. And today 0:00:18.270 --> 0:00:22.490 we're going to talk about the wild world of cryptocurrencies. 0:00:22.680 --> 0:00:24.480 Yeah, we figured it was time to take a look 0:00:24.480 --> 0:00:26.970 at crypto as it's an asset class that people often 0:00:26.970 --> 0:00:30.690 ask us about and it's inherently quite confusing and also 0:00:30.690 --> 0:00:31.740 quite controversial. 0:00:32.250 --> 0:00:35.910 Yeah, definitely a bit confusing. Definitely confusing for me. It's 0:00:35.909 --> 0:00:39.180 also an extremely volatile asset class with the price of 0:00:39.180 --> 0:00:43.980 major cryptocurrency Bitcoin down 50% in the past year. But 0:00:43.979 --> 0:00:46.140 hopefully by the end of this episode you'll have a 0:00:46.140 --> 0:00:49.530 better understanding at least of what a crypto currency is 0:00:49.860 --> 0:00:53.339 and if it's something worth investing in. But first, Dom, 0:00:53.460 --> 0:00:56.580 I believe you do have some personal experience when it 0:00:56.580 --> 0:00:59.700 comes to investing in crypto. We're not calling you a 0:00:59.700 --> 0:01:03.150 crypto king, but can you, can you explain how you 0:01:03.150 --> 0:01:05.190 got into it and how did it go for you? 0:01:05.790 --> 0:01:09.089 Yeah, so sort of for my sins, I guess I 0:01:09.090 --> 0:01:13.830 invested in crypto in the early part of 2017. I 0:01:14.100 --> 0:01:16.559 think I remember reading about it online. I just read 0:01:16.560 --> 0:01:21.000 something about Etherium, which today is the second biggest cryptocurrency, 0:01:21.360 --> 0:01:22.830 and I was like, Oh, this is a bit interesting. 0:01:22.840 --> 0:01:25.050 What's this all about? Went down a bit of a 0:01:25.050 --> 0:01:28.979 rabbit hole and ended up buying some Etherium at around 0:01:28.980 --> 0:01:31.890 the start of 2017. And they like pretty much for 0:01:31.890 --> 0:01:33.810 the rest of that year I was like full on 0:01:33.810 --> 0:01:38.700 like crypto trading pretty much every day, constantly looking at 0:01:38.700 --> 0:01:40.860 my portfolio like it was a full thing. 0:01:41.370 --> 0:01:44.520 Were you buying and selling sort of day to day? 0:01:44.709 --> 0:01:47.540 Yeah, I like loads of different cryptos. Like I went, 0:01:47.550 --> 0:01:50.580 I went really deep on it for that year. I 0:01:50.580 --> 0:01:52.830 don't like to admit this because, you know, it was 0:01:53.490 --> 0:01:55.620 I was like working full time that year too. So 0:01:55.620 --> 0:01:58.440 until my old boss. But you know, it was it 0:01:58.440 --> 0:02:00.030 was pretty full on. And then at the I had 0:02:00.030 --> 0:02:03.570 this sort of I guess I told myself when I 0:02:03.570 --> 0:02:07.140 started investing, I was like, okay, if your portfolio ever 0:02:07.140 --> 0:02:10.320 hits like a certain level sell no matter what, just 0:02:10.320 --> 0:02:13.139 sell like you will have. That's enough just to sell. 0:02:13.139 --> 0:02:15.540 And I hit that level at the end of 2017 0:02:15.540 --> 0:02:18.450 and I sold everything and I haven't touched it since. 0:02:19.080 --> 0:02:22.080 That's an amazing level of discipline for you to just 0:02:22.440 --> 0:02:25.050 have that number and you got to walk away from 0:02:25.050 --> 0:02:27.600 the casino, or if it is a casino. 0:02:27.990 --> 0:02:30.600 Pretty much was a casino really to be on, especially 0:02:30.600 --> 0:02:32.760 at that time. Like there was no sense to any 0:02:32.760 --> 0:02:35.790 of the valuations that anyone was giving, any of the 0:02:35.790 --> 0:02:37.800 things that I was investing in. And half the things 0:02:37.800 --> 0:02:41.010 that I invested in today don't exist. Like that's an 0:02:41.010 --> 0:02:45.540 indication of while the crypto market was, but it was 0:02:45.540 --> 0:02:50.100 purely luck because like, like I timed the market almost perfectly. 0:02:50.130 --> 0:02:52.170 Like literally the day after I saw it, everything started 0:02:52.169 --> 0:02:54.120 going down and went down for the next year. 0:02:54.690 --> 0:02:58.320 And I think we should recognise that's incredibly fortunate. Yes, 0:02:58.800 --> 0:03:00.780 there is a golden piece of timing. 0:03:00.780 --> 0:03:03.150 I've said to people like I will never invest in 0:03:03.150 --> 0:03:05.280 anything seriously again because I don't think I'm ever going 0:03:05.280 --> 0:03:07.760 to get as lucky as I did with that. Like 0:03:07.770 --> 0:03:11.490 it was just complete luck, complete privilege to have the 0:03:11.490 --> 0:03:13.560 money to invest in the first place, all that sort 0:03:13.560 --> 0:03:16.109 of stuff. Like I don't proclaim to be an investing 0:03:16.110 --> 0:03:19.710 genius and you know, you should not look to me 0:03:19.710 --> 0:03:21.690 for any sort of crypto advice. In fact, these days 0:03:21.690 --> 0:03:23.910 I don't invest in crypto and I think that it's 0:03:23.910 --> 0:03:26.130 kind of dumb, but, you know. 0:03:26.639 --> 0:03:28.680 Ooh, controversial. Yeah, that's. 0:03:28.860 --> 0:03:31.470 That's my that's my sort of done the full 180 0:03:31.470 --> 0:03:34.800 on it since since 2017 the market has also changed 0:03:34.800 --> 0:03:38.580 pretty significantly since 2017 as well so there's a lot 0:03:38.580 --> 0:03:41.070 of different factors but yeah that's my, that's my crypto journey. 0:03:41.370 --> 0:03:43.590 So it's fair to say you don't hold any crypto now, 0:03:43.590 --> 0:03:46.230 there's no crypto currency in your digital wallet or whatever 0:03:46.980 --> 0:03:48.390 it is. That's the way you know. 0:03:48.390 --> 0:03:51.570 I mean, there's probably like some scraps of things like that. 0:03:51.720 --> 0:03:54.180 I just haven't got around to selling, but nothing of 0:03:54.180 --> 0:03:57.810 any value whatsoever. Yeah. Do not you don't invest and 0:03:57.810 --> 0:03:59.309 have not invested for a number of years. 0:03:59.640 --> 0:04:03.360 So I'm similar, I'm the same, I don't hold any crypto. 0:04:03.630 --> 0:04:05.820 My story is that back at probably the time that 0:04:05.820 --> 0:04:09.540 you were in your pyjamas wide eyed with coffee, huddling 0:04:09.540 --> 0:04:12.080 over your laptop or however that the trading works. 0:04:12.090 --> 0:04:13.680 That's fair. That's pretty accurate. Yeah. 0:04:13.800 --> 0:04:16.320 I remember writing a few columns just sort of basically 0:04:16.320 --> 0:04:19.980 saying crypto is not a thing and sort of picking 0:04:19.980 --> 0:04:23.460 holes in a few of the arguments, particularly around scarcity, 0:04:23.730 --> 0:04:25.710 I think because I think it was even earlier than 0:04:25.710 --> 0:04:28.770 that when I wrote a column about Bitcoin and I'd 0:04:28.770 --> 0:04:31.650 never really got the scarcity, I was like, Well, okay, 0:04:31.650 --> 0:04:33.900 you might run out of things. You can mine on 0:04:33.900 --> 0:04:37.049 that particular blockchain, but you can just have another cryptocurrency. 0:04:37.050 --> 0:04:40.469 You could there's an infinite number of cryptocurrencies you could start, 0:04:40.470 --> 0:04:43.590 So where's the scarcity in that? But let's, let's just 0:04:43.589 --> 0:04:46.710 start with, you know, what is crypto? And I keep 0:04:46.710 --> 0:04:51.839 saying cryptocurrency, they always currency, what is crypto dumb? And 0:04:51.839 --> 0:04:53.460 we're going to arrive at a point where we both 0:04:53.460 --> 0:04:55.799 sort of recognize whether it's something or talk about, whether 0:04:55.800 --> 0:04:58.020 we think it's something that should be in your investment portfolio, 0:04:58.020 --> 0:05:00.890 because I do see a lot of younger investors going, Oh, 0:05:00.900 --> 0:05:03.030 I need to have, you know, a responsible 10% of 0:05:03.029 --> 0:05:06.300 my portfolio should be in crypto. So I'm well-diversified. I 0:05:06.300 --> 0:05:08.279 want to I want to get to that. But let's 0:05:08.279 --> 0:05:10.740 for anyone who hasn't bought it or sort of is 0:05:10.740 --> 0:05:13.560 struggling still to deal with what crypto is, what is 0:05:13.560 --> 0:05:13.950 it done? 0:05:14.640 --> 0:05:18.180 Well, I think it's important to to divide crypto into 0:05:18.180 --> 0:05:20.729 two different sort of camps. You've got things like Bitcoin, 0:05:20.730 --> 0:05:22.349 which is the one that most people know about, and 0:05:22.350 --> 0:05:26.490 Bitcoin is effectively just a store of value and a 0:05:26.490 --> 0:05:31.589 way to transact value like it is very often likened 0:05:31.589 --> 0:05:35.310 to digital gold because it is, as you mentioned earlier, 0:05:35.310 --> 0:05:37.409 it has this sort of scarcity built into it. So 0:05:37.410 --> 0:05:41.040 the original programming of Bitcoin says that only 21 million 0:05:41.040 --> 0:05:44.339 coins can ever be mined. So therefore once you hit 0:05:44.339 --> 0:05:47.370 that number, that's it, there isn't any more. And this 0:05:47.370 --> 0:05:51.420 mining process, which is sort of how almost all cryptos 0:05:51.420 --> 0:05:56.400 are made these days, is basically to create cryptocurrency. You 0:05:56.400 --> 0:06:00.570 have to get a computer to sort of crunch increasingly 0:06:00.570 --> 0:06:04.950 difficult calculations. And all these computers all around the world 0:06:04.950 --> 0:06:08.580 are all competing to be the first every 10 minutes 0:06:08.790 --> 0:06:13.230 to crunch these calculations. And that sort of forms the 0:06:13.230 --> 0:06:15.270 basis of crypto in the sense that that's what makes 0:06:15.270 --> 0:06:18.090 it valuable in a sense, because it requires a great 0:06:18.089 --> 0:06:21.450 deal of sort of energy and and production to create 0:06:21.450 --> 0:06:24.750 this crypto. And also, while all those computers are crunching 0:06:24.750 --> 0:06:28.170 the numbers, they're also validating this network which sort of 0:06:28.170 --> 0:06:32.430 cross-references and cross-check all the transactions being made every second. 0:06:32.730 --> 0:06:34.800 You know, it's, it's all sort of this big web 0:06:34.890 --> 0:06:38.490 of computers put together. So that's sort of the basis 0:06:38.490 --> 0:06:42.210 upon which cryptocurrencies are formed. And those sort of features 0:06:42.210 --> 0:06:45.870 give us something like Bitcoin, you know, theoretically a lot 0:06:45.870 --> 0:06:50.130 of some attractive attributes in the sense that you can't 0:06:50.310 --> 0:06:52.919 fake it, like you can't fake a Bitcoin transaction because 0:06:52.920 --> 0:06:56.039 all these computers are constantly cross-referencing and checking all the 0:06:56.040 --> 0:07:00.000 transactions at once. And you know, there's a certain limited 0:07:00.029 --> 0:07:03.060 number of them that are hard to produce, etc., etc. 0:07:03.060 --> 0:07:07.080 Hence why you see this digital gold similarity. And then 0:07:07.080 --> 0:07:08.909 you've got the other cap, which is sort of Etherium 0:07:08.910 --> 0:07:10.739 is the most sort of prominent one, which are these 0:07:10.740 --> 0:07:14.040 sort of cryptocurrencies which are programmable. So they have sort 0:07:14.040 --> 0:07:15.840 of like a software layer to them where you can 0:07:16.260 --> 0:07:18.720 put all these sort of features and sort of put 0:07:18.720 --> 0:07:22.710 all these terms and conditions attached to the transactions. And 0:07:22.710 --> 0:07:24.960 people say that, you know, all theoretically in the future 0:07:24.960 --> 0:07:28.140 you could use an a theorem network to completely automate 0:07:28.140 --> 0:07:31.200 the transaction of a house, right? You could just go bang, 0:07:31.200 --> 0:07:33.990 it's all written into a contract, you do the transaction 0:07:33.990 --> 0:07:37.650 and all this sort of conveyancing legal mumbo jumbo is 0:07:37.650 --> 0:07:40.050 all sort of baked into this transaction. So that's sort 0:07:40.050 --> 0:07:42.060 of the other camp of of cryptos, which are less 0:07:42.060 --> 0:07:45.630 about just the singular transfer of value and more about 0:07:45.630 --> 0:07:49.200 the actual sort of programming, you know, future of the 0:07:49.200 --> 0:07:51.210 Internet sort of thing, which which a lot of people 0:07:51.510 --> 0:07:54.180 claim that it will be. So those are sort of 0:07:54.180 --> 0:07:56.580 the two different camps. Obviously, that's a lot of information 0:07:56.580 --> 0:07:58.620 to take in. It's kind of really hard to explain 0:07:58.620 --> 0:08:03.630 crypto succinctly. It's such a bonkers and confusing area, but 0:08:03.630 --> 0:08:05.580 that's about as best as I could do. 0:08:05.880 --> 0:08:08.400 But fascinating. No, that's great. I was listening to an 0:08:08.400 --> 0:08:12.060 interview between Ezra Klein and the founder of Ethereum, which 0:08:12.060 --> 0:08:14.310 was sort of going into some of those other uses. 0:08:14.820 --> 0:08:17.070 And I'm wondering with that sort of software that you 0:08:17.070 --> 0:08:19.620 can build into a theory, is that open source? So 0:08:19.620 --> 0:08:21.390 can anyone like you say on a set up a 0:08:21.390 --> 0:08:23.550 real estate agency and I'm going to use the theory 0:08:23.550 --> 0:08:26.400 of to sort of do the transactions or is it 0:08:26.640 --> 0:08:28.920 within the control of a theory as such that they 0:08:28.920 --> 0:08:32.550 will innovate and come up with the new programmable use? 0:08:32.730 --> 0:08:36.420 No, it's completely decentralized, completely open source, like everything's open 0:08:36.420 --> 0:08:39.390 to everyone. No one controls it, which is another big 0:08:39.390 --> 0:08:43.140 sort of draw of crypto is that in theory this 0:08:43.140 --> 0:08:45.420 is all again, in theory, sometimes this doesn't actually work 0:08:45.420 --> 0:08:49.110 in practice at all. No one can determine how Ethereum 0:08:49.110 --> 0:08:51.180 network runs or anything like that. It's all very sort 0:08:51.179 --> 0:08:54.449 of collective and, you know, done together. 0:08:54.900 --> 0:08:58.500 Okay. But to participate in whatever innovative new sort of 0:08:58.500 --> 0:09:01.020 a fancy thing exists, you might need to have some 0:09:01.020 --> 0:09:03.750 Etherium because that would give it value. Or could you 0:09:03.870 --> 0:09:06.900 use another digital cryptocurrency. 0:09:07.470 --> 0:09:11.640 Well to do anything on sort of like the Ethereum blockchain, 0:09:11.640 --> 0:09:14.490 the network that it runs on. To do anything on that, 0:09:14.490 --> 0:09:17.280 you have to pay a fee. And typically those fees 0:09:17.280 --> 0:09:19.650 are in theory, so you have to have the currency 0:09:19.650 --> 0:09:21.449 in the first place to to be able to sort 0:09:21.450 --> 0:09:22.500 of operate on the network. 0:09:22.740 --> 0:09:25.260 Interesting, because that's where I'm sort of like, well, maybe 0:09:25.260 --> 0:09:29.220 it could arise that there are sort of ecosystems around 0:09:29.220 --> 0:09:33.809 particular cryptocurrencies where you're actually going to need the underlying 0:09:33.809 --> 0:09:38.219 cryptocurrency to participate and therefore there's value in that. 0:09:39.120 --> 0:09:41.250 Yeah, well that's sort of what gives something like a theorem. 0:09:41.250 --> 0:09:42.839 Its value is the fact that if you want to 0:09:42.840 --> 0:09:46.000 participate in the network, you actually have to hold the 0:09:46.020 --> 0:09:49.440 currency itself in order to pay the fees. So that's 0:09:49.440 --> 0:09:52.800 why the sort of, you know, that sort of token 0:09:52.800 --> 0:09:55.920 or that coin as they're called, as value, it's a 0:09:55.920 --> 0:09:58.679 very sort of especially if you come into it from 0:09:58.679 --> 0:10:00.809 sort of a very sort of traditional finance background, there's 0:10:00.809 --> 0:10:03.540 a lot of things that are quite confusing and there's 0:10:03.540 --> 0:10:05.670 a lot of like stuff that. I think it sort 0:10:05.670 --> 0:10:08.750 of benefits from the fact that people don't understand it. Yeah. 0:10:08.820 --> 0:10:10.920 Like it is one of those sort of markets. It's like, 0:10:10.920 --> 0:10:13.020 you know, the depths of the financial system, right? Like 0:10:13.800 --> 0:10:15.570 the fact that no one really knows how the hell 0:10:15.570 --> 0:10:18.330 it works. It sort of works to its advantage in 0:10:18.330 --> 0:10:20.250 the sense that people can just be like, Oh no, 0:10:20.250 --> 0:10:21.650 it's great. It's going to be the future of the Internet, 0:10:21.690 --> 0:10:23.730 It's fine sort of thing, where in reality it might 0:10:23.730 --> 0:10:25.590 not be, but it's so complicated that no one really 0:10:25.590 --> 0:10:26.130 questions it. 0:10:26.190 --> 0:10:28.290 Yeah, I'm sort of like, I don't see a world 0:10:28.290 --> 0:10:30.540 where I have to have Bitcoin to go buy my coffee. 0:10:30.570 --> 0:10:32.699 Yeah, well, that's probably never going to happen. 0:10:32.820 --> 0:10:36.209 I feel like cash is working pretty well for me 0:10:36.210 --> 0:10:39.090 for that. But other worlds that don't exist and we 0:10:39.090 --> 0:10:41.939 can't see the future in which there's fancy online things 0:10:41.940 --> 0:10:44.579 in which would operate off crypto currencies, in which case 0:10:45.059 --> 0:10:47.760 you will need them. And if they're limited, then it 0:10:47.760 --> 0:10:50.270 would make sense to get in early to have some. Yeah. 0:10:50.580 --> 0:10:53.790 So I'm suddenly turning into a crypto. I'd be like, Oh, 0:10:53.790 --> 0:10:57.000 I've got to go get some. But but let's just 0:10:57.000 --> 0:10:59.250 cool down and can you just talk us through what 0:10:59.250 --> 0:11:03.750 I mean, what has happened with crypto pricing? How high 0:11:03.750 --> 0:11:06.750 did it get? It's totally crashed in the last couple 0:11:06.750 --> 0:11:10.620 of months or years. How volatile is it. 0:11:11.040 --> 0:11:15.130 Like extremely volatile. Like over the course of, you know, 0:11:15.270 --> 0:11:18.089 possibly this conversation, you could see the swing of like 0:11:18.090 --> 0:11:20.980 a of a major crypto like Bitcoin over Etherium, you know, 0:11:21.030 --> 0:11:23.400 go up or down by $100. Like that's not uncommon. 0:11:23.400 --> 0:11:26.220 Like it's a massively volatile market. You know, back when 0:11:26.220 --> 0:11:29.070 I was investing in like 2017, it was more volatile. 0:11:29.070 --> 0:11:32.520 Like it was really, really like, you know, all over 0:11:32.520 --> 0:11:35.400 the shop all the time. And I think we it 0:11:35.400 --> 0:11:38.819 hit its peak last year also partially due to COVID 0:11:39.179 --> 0:11:40.620 and a lot of the stimulus that was around a 0:11:40.620 --> 0:11:43.290 lot of people getting into investing and crypto for the 0:11:43.290 --> 0:11:47.310 first time, I think Bitcoin got pretty close to if not, 0:11:47.790 --> 0:11:53.380 it hit 100,000 AUD like it was. Like, really, really high. 0:11:53.679 --> 0:11:55.750 And then since then, it's fallen by like 50% or 0:11:55.750 --> 0:11:59.230 more like it is completely plunged. And that was in 0:11:59.230 --> 0:12:02.260 about November last year. So certain markets have taken a 0:12:02.260 --> 0:12:04.840 real significant downturn. 0:12:05.080 --> 0:12:07.150 Which has really pulled the rug out of one of 0:12:07.150 --> 0:12:10.390 the arguments people sort of thought at a time back 0:12:10.390 --> 0:12:12.069 in the day when sort of interest rates were really 0:12:12.070 --> 0:12:14.319 low and sort of there was sort of this theory 0:12:14.320 --> 0:12:17.950 that central banks can't control the the value of money 0:12:17.950 --> 0:12:19.630 and we need to have this independent thing. It'll be 0:12:19.630 --> 0:12:22.270 a hedge. And, you know, in uncertainty, when all global 0:12:22.270 --> 0:12:25.270 currencies fall apart, we'll have this sort of more secure 0:12:25.270 --> 0:12:28.150 thing and it will be a hedge against times of uncertainty. 0:12:28.150 --> 0:12:30.429 And so, you know, one of the things are going down, 0:12:30.429 --> 0:12:33.310 it would go up or like has it that it's 0:12:33.309 --> 0:12:36.069 some sort of defensive element of your portfolio that might 0:12:36.070 --> 0:12:40.360 outweigh other turbulences turned out to be completely untrue. 0:12:40.750 --> 0:12:42.550 Yeah, well, it just turned out to be complete crap 0:12:42.550 --> 0:12:44.260 because what happened is a little like the, you know, 0:12:44.260 --> 0:12:48.670 the traditional finance people got into crypto as well, and 0:12:48.670 --> 0:12:52.780 then the crypto decided following exactly what traditional finance did 0:12:53.020 --> 0:12:54.640 and people just sort of traded like a tech stock. 0:12:54.640 --> 0:12:57.040 Now like it pretty much car. Like if you look 0:12:57.040 --> 0:12:58.960 at the price of bitcoin, it kind of tracks what 0:12:58.960 --> 0:13:00.069 the Nasdaq does. 0:13:00.580 --> 0:13:03.310 I mean, the thing that gives crypto such bad name 0:13:03.309 --> 0:13:05.890 is all the sort of spruiking and we've seen recently, 0:13:05.890 --> 0:13:09.010 like Kim Kardashian is being fined for being involved in 0:13:09.010 --> 0:13:12.160 sort of spruiking. And I think Matt Damon has an 0:13:12.160 --> 0:13:15.370 ad for a cryptocurrency and some of the advertising is 0:13:15.370 --> 0:13:17.650 around like, you know, yeah, I know you don't understand it, 0:13:17.650 --> 0:13:19.060 but just but anyway. 0:13:19.090 --> 0:13:21.460 Yeah well like don't don't miss out don't be behind 0:13:21.460 --> 0:13:22.089 sort of thing. 0:13:22.300 --> 0:13:25.780 Yeah. The sort of FOMO aspect of it but okay 0:13:25.780 --> 0:13:30.670 so volatility aside and you know spruikers beside what are 0:13:30.670 --> 0:13:32.890 some of the reasons why you might want crypto in 0:13:32.890 --> 0:13:33.730 your portfolio. 0:13:34.150 --> 0:13:35.939 Well I think like the number one reason and like 0:13:35.950 --> 0:13:37.449 I think a lot of people sort of recognise this 0:13:37.450 --> 0:13:39.400 with crypto is the fact that it's can have a 0:13:39.400 --> 0:13:42.319 massive upside, right? Like you know, look at what will 0:13:42.400 --> 0:13:45.310 happen to me in 2017. Right. That's insane. Typically you're 0:13:45.309 --> 0:13:48.490 never going to see like a massive increase in value 0:13:48.490 --> 0:13:51.390 over the course of a year, as you know, we 0:13:51.400 --> 0:13:54.569 did back then. And it's not uncommon that, you know, 0:13:54.580 --> 0:13:57.540 for certain cryptos, you could see them rise, you know, 0:13:57.540 --> 0:13:59.830 100 or 200% over the course of a year like 0:13:59.830 --> 0:14:04.000 that typically doesn't happen for equities. Right. Like, that's pretty rare. 0:14:04.000 --> 0:14:08.110 So obviously, that's the number one upside and why people 0:14:08.110 --> 0:14:10.840 have a lot of it or want to think that 0:14:10.840 --> 0:14:13.540 they should have some in their portfolio is because of 0:14:13.540 --> 0:14:16.120 the of the potential upside. And then I suppose on 0:14:16.120 --> 0:14:18.610 top of that, you got diversification like it is. You know, 0:14:18.670 --> 0:14:22.570 it is distinctly different to equities and commodities and things 0:14:22.570 --> 0:14:25.450 like that, like it is a truly sort of unique 0:14:25.450 --> 0:14:27.730 asset class in the way that it functions and all 0:14:27.730 --> 0:14:31.810 that sort of stuff. And also, I guess as we 0:14:31.810 --> 0:14:34.120 sort of mentioned earlier, like people did view it as 0:14:34.120 --> 0:14:36.790 a bit of a hedge to, you know, traditional markets, 0:14:36.790 --> 0:14:39.310 but that's not really true anymore. So that's sort of 0:14:39.310 --> 0:14:41.020 that can be a kind of be a reason why 0:14:41.020 --> 0:14:43.600 you might put it in your portfolio. And I suppose 0:14:43.600 --> 0:14:45.820 maybe the last reason would just be that there are 0:14:45.820 --> 0:14:47.860 some people who out there who think it is going 0:14:47.860 --> 0:14:51.489 to be the next version of the Internet. I don't 0:14:51.490 --> 0:14:53.290 personally agree. I don't think it will be the next 0:14:53.290 --> 0:14:56.050 version of the Internet, but there is sort of like 0:14:56.050 --> 0:14:59.020 a decent sized camp that think that things like Etherium 0:14:59.020 --> 0:15:00.760 and all that sort of stuff is going to be 0:15:00.760 --> 0:15:04.060 sort of the basis upon what the next iteration of, 0:15:04.090 --> 0:15:06.430 you know, the World Wide Web will be. It's this 0:15:06.430 --> 0:15:09.790 sort of term web3, which gets bandied around a lot 0:15:09.910 --> 0:15:13.900 without much meaning. And, you know, I think that that's 0:15:14.110 --> 0:15:16.630 sort of going to be the next frontier. So, I mean, 0:15:16.630 --> 0:15:17.980 if you if you sort of buy into that and 0:15:17.980 --> 0:15:19.750 you think that these people might have a bit of 0:15:19.750 --> 0:15:22.270 a point, then, you know, putting some in your portfolio 0:15:22.930 --> 0:15:25.600 obviously kind of makes sense because you could be at 0:15:25.600 --> 0:15:27.550 the forefront of a next of the next big thing. 0:15:27.640 --> 0:15:30.760 But that's obviously up to you to decide, as with 0:15:30.760 --> 0:15:31.510 every investment. 0:15:31.630 --> 0:15:34.360 Of course, and it seems like on the risk spectrum, 0:15:34.360 --> 0:15:37.540 like of investments, it's way out there on the frontier 0:15:37.540 --> 0:15:41.950 of something that is high risk. Yes. Compared to shares 0:15:41.950 --> 0:15:44.740 compared to property, you know, work out. You know, there 0:15:44.740 --> 0:15:46.810 are other places to put your money, essentially. And if 0:15:46.810 --> 0:15:48.850 you if you do sort of park some money there, 0:15:48.850 --> 0:15:51.100 I think it probably won't to be money that you 0:15:51.100 --> 0:15:53.020 didn't want back in in a hurry. 0:15:53.440 --> 0:15:57.160 Yes. And definitely not one for sort of anyone who's 0:15:57.430 --> 0:16:00.370 sort of environmentally conscious in terms of their investments, because 0:16:00.850 --> 0:16:03.760 crypto as on the whole is really bad for the 0:16:03.760 --> 0:16:07.690 environment like the Bitcoin network does, I think has a 0:16:07.690 --> 0:16:11.340 carbon footprint, annual carbon footprint equal to that of Greece. Well, 0:16:11.560 --> 0:16:15.070 as in the country Greece. So that just gives you 0:16:15.070 --> 0:16:17.200 an idea it is not good for the environment and you'd. 0:16:17.200 --> 0:16:19.090 Have to think that investments that are not good for 0:16:19.090 --> 0:16:21.490 the environment are sort of not going to produce value 0:16:21.730 --> 0:16:24.400 over time. While like stocks, the companies that are heavily 0:16:25.030 --> 0:16:28.480 have those imposing those externalities on society are not going 0:16:28.480 --> 0:16:34.000 to do so well. Well, that's my opinion anyway. Yeah. So. Alright, 0:16:34.000 --> 0:16:36.760 well let's wrap it up. Do we need to buy 0:16:36.760 --> 0:16:39.040 crypto in our portfolio? What do you reckon? 0:16:39.280 --> 0:16:40.690 Well, I don't know, Jess. I think you're the one 0:16:40.870 --> 0:16:43.090 to ask the other sort of the passive that was 0:16:43.090 --> 0:16:44.830 sort of, I mean I worry about it after this chat. 0:16:44.830 --> 0:16:46.450 How do you, how do you feel about putting Bitcoin 0:16:46.450 --> 0:16:46.940 into your book? 0:16:47.130 --> 0:16:50.110 Look, I struggle I still struggle to see as an 0:16:50.110 --> 0:16:52.770 asset class what it is because I know. Property, you 0:16:52.770 --> 0:16:55.739 get rental returns and capital appreciation. You know, if you 0:16:55.740 --> 0:16:58.680 don't get the good upside to the price, you're at 0:16:58.680 --> 0:17:01.380 least getting some rent shares the same. You're owning an 0:17:01.380 --> 0:17:03.479 actual company and they're going to distribute some of the 0:17:03.480 --> 0:17:06.660 profits to you. You know, bonds, they're going the government's 0:17:06.660 --> 0:17:09.960 going to pay you a fixed rate on that. What's 0:17:09.960 --> 0:17:14.040 the income generating potential of of crypto? I don't think 0:17:14.040 --> 0:17:17.070 there is or not one that I can imagine just yet. 0:17:17.070 --> 0:17:19.320 You're sort of it's it's sort of like a commodity, 0:17:19.320 --> 0:17:21.900 as you say, or like gold and you really taking 0:17:21.900 --> 0:17:24.870 a bet on, you know, how the asset valuation will go. 0:17:25.080 --> 0:17:27.840 I don't quite understand it, but I'm also I'm just like, 0:17:28.560 --> 0:17:31.440 perhaps we can conclude that I am crypto curious because, 0:17:31.980 --> 0:17:37.050 you know, there are relatively intelligent people who seem to 0:17:37.050 --> 0:17:40.169 be very deep in this ecosphere. And I'm aware, you know, 0:17:40.890 --> 0:17:44.100 sometimes you can't see what the future is, but I 0:17:44.100 --> 0:17:46.199 don't know in a world if they're inventing Web3, I 0:17:46.200 --> 0:17:48.360 still don't know what that is, but it sounds pretty good. 0:17:48.359 --> 0:17:50.550 Maybe I'll have a happy life anyway. I'll just enjoy 0:17:50.550 --> 0:17:53.189 being a consumer on whatever the platform is. But am 0:17:53.190 --> 0:17:56.670 I going to need some crypto to participate? I don't know. 0:17:56.670 --> 0:18:00.750 I'll probably be dead by then, so I'm not rushing 0:18:00.750 --> 0:18:03.390 out to to get crypto. And I I'm not sort 0:18:03.390 --> 0:18:06.450 of saying that anyone should do what I do or 0:18:06.450 --> 0:18:08.939 whatever and get your own advice, but I sort of 0:18:09.240 --> 0:18:11.369 don't see it as something that's going to be necessary 0:18:11.369 --> 0:18:13.350 for my life. 0:18:13.680 --> 0:18:17.040 Yes. I mean, I, I mean, as I sort of said, 0:18:17.040 --> 0:18:19.440 I think I've done my dash when it comes to crypto. 0:18:19.440 --> 0:18:22.229 I'm pretty happy with what happened. And these days, I 0:18:22.230 --> 0:18:25.770 think like firstly, do research and do more research than 0:18:25.770 --> 0:18:27.989 you would for any other investment. Like if you're going 0:18:27.990 --> 0:18:29.790 to look at crypto, you need to sit down and 0:18:29.790 --> 0:18:33.869 you need to really read everything, get a really balanced 0:18:33.869 --> 0:18:37.230 perspective because there's just so much sort of nonsense out 0:18:37.230 --> 0:18:40.200 there that people push. So do a lot of research. 0:18:40.200 --> 0:18:42.030 And then if you really think you want to invest 0:18:42.030 --> 0:18:44.610 like my sort of, you know, again, not providing any 0:18:44.609 --> 0:18:47.040 financial advice, but I think just common sense would dictate 0:18:47.040 --> 0:18:49.050 that the things that you would want to look at 0:18:49.050 --> 0:18:51.060 would be things like Bitcoin and theory and like the 0:18:51.060 --> 0:18:53.250 big ones. They're sort of been around for the longest. 0:18:53.760 --> 0:18:56.730 They relatively stable. You know, those would be the sort 0:18:56.730 --> 0:18:59.909 of the obvious choices if I were to make a choice. 0:19:00.660 --> 0:19:03.840 Excellent. Well, we'll expect you to be well dressed and 0:19:03.840 --> 0:19:06.570 out of the house now that you're no longer a 0:19:06.570 --> 0:19:10.410 crypto investor, which is not to denigrate anyone who is 0:19:12.240 --> 0:19:16.290 making some. Maybe I might be stereotyping there. Alright. 0:19:16.680 --> 0:19:19.830 And now we've got our listener question of the week, 0:19:19.830 --> 0:19:21.810 as we always do, and thank you for everyone who's 0:19:21.810 --> 0:19:24.210 been sending them in. We've got a inbox that is 0:19:24.660 --> 0:19:27.330 nice and full of questions but always keen to hear more, 0:19:27.330 --> 0:19:29.910 so please do keep on sending them. And this one 0:19:29.910 --> 0:19:32.790 is from Kirsten, who says that she has a large 0:19:32.790 --> 0:19:36.629 mortgage and she has been investing extra cash into an 0:19:36.630 --> 0:19:39.870 ETF and not paying extra off her mortgage. She also 0:19:39.869 --> 0:19:42.810 says that she has a three month emergency fund. However, 0:19:42.810 --> 0:19:47.460 she's worried that she'll come off her 1.84% fixed interest 0:19:47.460 --> 0:19:50.160 rate was the end of next year and her repayments 0:19:50.160 --> 0:19:52.770 are going to go through the roof. So she's asking 0:19:53.160 --> 0:19:56.429 should she pause her investing now and shovel all of 0:19:56.430 --> 0:19:59.070 that extra cash into her mortgage between now and the 0:19:59.070 --> 0:20:02.040 fixed rate comes off because she's trying to not be 0:20:02.040 --> 0:20:05.100 too terrified about this fixed rate cliff, which is approaching 0:20:05.460 --> 0:20:08.669 for her and many other borrowers. And Jess, what's your 0:20:08.670 --> 0:20:09.389 thoughts on this? 0:20:09.720 --> 0:20:12.389 Yeah, Kirsten, you're speaking to me because this is pretty 0:20:12.390 --> 0:20:15.750 much exactly the situation that I'm in. Even that rate 0:20:15.750 --> 0:20:18.480 is my my mortgage rate, and it rolls off in 0:20:18.480 --> 0:20:21.060 the middle of next year. And I'm currently, you know, 0:20:21.060 --> 0:20:22.590 because I'm a bit of a budget her I do 0:20:22.590 --> 0:20:25.710 know I'm generating cash surpluses every month and I'm like 0:20:25.710 --> 0:20:28.619 well what do I do with that given that I 0:20:28.619 --> 0:20:30.600 know I'm going to hit this cliff where I'll be 0:20:30.600 --> 0:20:36.030 refinancing to sort of maybe a 4.55% interest rate that's 0:20:36.030 --> 0:20:39.990 going to eat into my buffer a lot. I am 0:20:39.990 --> 0:20:42.360 confident that I can still when that happens, I'll be 0:20:42.359 --> 0:20:45.300 able to pay that. So with the surpluses that I'm 0:20:45.300 --> 0:20:47.159 generating now, I've got to decide do a will, do 0:20:47.160 --> 0:20:49.440 I start trying to throw it at the mortgage or 0:20:49.440 --> 0:20:55.140 do I keep investing? I you know, the main thing is, 0:20:55.140 --> 0:20:56.939 is when you hit that cliff, are you going to 0:20:56.940 --> 0:20:59.940 have the cash flow to be able to pay your mortgage? 0:21:00.300 --> 0:21:02.580 And if you're not, you might want to be squirreling 0:21:02.580 --> 0:21:04.590 away some cash because you're going to need into your 0:21:04.590 --> 0:21:07.860 cash savings. The focus should really be on making sure 0:21:07.890 --> 0:21:10.290 stress testing yourself. Are you going to have the cash 0:21:10.290 --> 0:21:12.899 flow to meet your mortgage repayments when it goes up? 0:21:13.560 --> 0:21:16.050 And if you are and I'm fairly confident that I am, 0:21:16.050 --> 0:21:18.870 I am still continuing to invest because, you know, you're 0:21:18.869 --> 0:21:20.760 making that assessment of do I think the long term 0:21:20.760 --> 0:21:23.370 returns of of investing are going to be better than 0:21:23.369 --> 0:21:26.730 paying down my mortgage? You know, and I can't see 0:21:26.730 --> 0:21:29.390 the future, but I do like to still be, you know, 0:21:29.400 --> 0:21:32.460 investing some money and getting some sort of ticket on 0:21:32.700 --> 0:21:35.850 whatever returns the share market will do. Whilst, you know, 0:21:35.850 --> 0:21:37.679 the cost of my mortgage is really low. So I 0:21:37.680 --> 0:21:41.790 think it's going to to change when I do because 0:21:41.790 --> 0:21:43.679 I'm just not going to have a cash surplus anymore. 0:21:43.680 --> 0:21:46.590 Basically with interest rates going up, my repayments are already 0:21:46.590 --> 0:21:49.260 going to be about $1,000 more per month. All right. 0:21:49.270 --> 0:21:52.310 Pretty much my monthly cash surplus that I've. In investing, 0:21:52.460 --> 0:21:56.030 so I won't have a choice. My only thing for 0:21:56.030 --> 0:21:58.429 Kirsten is if she. If she's. She's trying not to 0:21:58.430 --> 0:22:00.770 be terrified. But if she is feeling a little bit uncomfortable, 0:22:00.770 --> 0:22:03.739 maybe that three month emergency fund might need to be 0:22:03.740 --> 0:22:06.500 a little bit bigger. I've got a six month basic 0:22:06.500 --> 0:22:10.670 living expense emergency cash buffer, so I feel pretty confident 0:22:10.670 --> 0:22:13.609 in that. And so maybe you might just feel a 0:22:13.609 --> 0:22:16.010 little bit more comfortable sleep at night if you had 0:22:16.010 --> 0:22:17.780 a little bit more cash, you know, sitting in the 0:22:18.050 --> 0:22:21.020 in the offset rather than investing more. But then, you know, 0:22:21.020 --> 0:22:23.990 shares are down. It's you know, it's hard to not 0:22:23.990 --> 0:22:26.540 want to be trying to get some buying opportunities there. 0:22:26.540 --> 0:22:28.820 So it's hard. But my main thing is get a 0:22:28.820 --> 0:22:32.180 really laser like focus on your expenses and convince yourself 0:22:32.180 --> 0:22:34.550 that you will be able to afford your stress, test 0:22:34.550 --> 0:22:37.250 your finances to make sure you can afford the repayments 0:22:37.250 --> 0:22:40.400 when when they go up. And then, you know, either way, 0:22:40.430 --> 0:22:42.440 it sort of depends on how how you're feeling. If 0:22:42.440 --> 0:22:45.350 you're getting pretty stressed about it, maybe not locking all 0:22:45.350 --> 0:22:47.600 your money up in the share market or again, pocket 0:22:47.600 --> 0:22:50.990 analyst doors, why not do a bit of a bit 0:22:50.990 --> 0:22:52.790 more squirreling, a bit more investing? 0:22:52.910 --> 0:22:55.820 I think it's it's good that that person's got that 0:22:55.820 --> 0:22:57.860 three month emergency fund in the first place. Right. Like 0:22:57.859 --> 0:23:00.260 that's a good starting point, especially when you worried about 0:23:00.260 --> 0:23:02.630 interest rates going up because like a lot of people 0:23:02.630 --> 0:23:04.430 be worried about interest rates going up and they wouldn't 0:23:04.430 --> 0:23:07.280 have that sort of emergency fund. So I think you're 0:23:07.280 --> 0:23:09.200 in a good spot. Start with and then it's just 0:23:09.200 --> 0:23:10.460 about how you manage it from there on out. 0:23:10.790 --> 0:23:11.149 Yeah. 0:23:11.540 --> 0:23:13.970 And to bring us home, it's just this budget tip 0:23:13.970 --> 0:23:14.420 of the week. 0:23:14.840 --> 0:23:16.910 So my tip this week is just to make people 0:23:16.910 --> 0:23:20.810 aware of something called a no interest loan scheme. So 0:23:20.810 --> 0:23:23.899 this is for people who are earning under 70,000 or 0:23:23.930 --> 0:23:26.020 who have sort of access to a health care or 0:23:26.030 --> 0:23:29.390 pension card. So it's at that lower end. If you 0:23:29.390 --> 0:23:32.659 hit a massive expense like the washing machine breaks down, 0:23:32.660 --> 0:23:36.320 the car breaks down, there's actually an availability to you 0:23:36.320 --> 0:23:39.860 to get a no interest loan of up to $5,000 0:23:39.859 --> 0:23:43.160 for cars, up to $2,000 for appliances or medical bills. 0:23:43.550 --> 0:23:47.540 It's run by NAB Bank in conjunction with the Good 0:23:47.540 --> 0:23:51.230 Shepherd Organisation and I'll give you the phone number. But 0:23:51.230 --> 0:23:53.449 instead of going to a payday lender, putting it on 0:23:53.450 --> 0:23:55.970 the credit card with 20% interest or whatever it is, 0:23:56.300 --> 0:23:59.330 you can actually borrow the $2,000 and pay it back 0:23:59.330 --> 0:24:03.260 in small chunks over time with absolutely no interest applied. 0:24:03.260 --> 0:24:07.100 So if you're really in an emergency type situation, you 0:24:07.100 --> 0:24:10.830 don't have that emergency savings buffer. This is one to 0:24:10.840 --> 0:24:13.100 to look out for and I'll just give the number. 0:24:13.100 --> 0:24:15.440 You can call them the Good Shepherds No interest loan 0:24:15.440 --> 0:24:21.470 team on 13 6457 or just Google no interest loans 0:24:21.470 --> 0:24:24.139 and Good Shepherd and find out more information about that. 0:24:24.800 --> 0:24:27.170 Thanks everyone for listening again this week. I hope we 0:24:27.170 --> 0:24:30.350 managed to demystify the world of crypto a little bit 0:24:30.350 --> 0:24:33.260 for you. If you've left it just as confused as 0:24:33.260 --> 0:24:36.109 you are. I'm sorry we did our best. 0:24:36.680 --> 0:24:39.109 And I do tend to think that the best piece 0:24:39.109 --> 0:24:41.239 of financial wisdom is not to invest in things you 0:24:41.240 --> 0:24:45.110 don't understand properly. Absolutely more research to do. If we've 0:24:45.109 --> 0:24:46.369 tempted you in some way. 0:24:46.910 --> 0:24:49.790 We'll be back again next week, as usual. And thanks 0:24:49.790 --> 0:24:50.209 for listening. 0:24:50.220 --> 0:24:56.040 Thanks for listening. This episode of It All Adds Up 0:24:56.040 --> 0:24:59.790 was produced by Chee Wong. The information discussed is general 0:24:59.790 --> 0:25:02.490 in nature and does not take into account your personal 0:25:02.490 --> 0:25:06.450 financial situation, goals or objectives. You should always do your 0:25:06.450 --> 0:25:10.110 own research or get professional advice before making any major 0:25:10.109 --> 0:25:14.190 financial decisions. If you like today's episode, hit follow in 0:25:14.190 --> 0:25:17.370 your podcast app. Leave a review and recommend it to 0:25:17.369 --> 0:25:20.850 all your friends. You can submit your listener questions in 0:25:20.850 --> 0:25:25.920 text or audio format at italladdsup@nine.com.au .