Chelle Radio

In this weeks episode Trivelle, Konrad, Rory and Nishal have a discussion about Facebook, Bitcoin, JPMorgan & Binance.Here are the links for this weeks episode:- https://www.theblockcrypto.com/2019/05/06/bitfinex-and-tether-respond-to-nyag-saying-that-there-is-no-ongoing-fraud-and-no-victims/

- https://www.bloomberg.com/news/articles/2019-05-06/fidelity-said-to-offer-cryptocurrency-trading-within-a-few-weeks

- https://www.coindesk.com/hackers-steal-40-7-million-in-bitcoin-from-crypto-exchange-binance

- https://www.coindesk.com/jpmorgan-has-quietly-rebooted-the-blockchain-tech-behind-its-jpm-coin

- https://www.theblockcrypto.com/tiny/facebook-reverses-its-policy-barring-cryptocurrency-ads/

 

 

Enjoy listening!

In today's discussion Nishal, Trivelle, Konrad and Kyle talk about Burger King's new "Real Meals". Why Instagram is removing its "likes" feature. As well as Bitfinex covering up an 850$Million Loss and Ethereum!

 

Here are the links to the articles we were discussing. 

 

- https://www.coindesk.com/when-tether-warnings-are-marketing-tools

- https://www.youtube.com/watch?v=QCndsLAMFdk

- https://www.newsbtc.com/2019/05/02/elon-and-amazon-give-ethereum-the-nod-why-is-eth-still-bearish/

- https://www.dailymail.co.uk/femail/food/article-6982067/Burger-King-releases-Real-Meals-based-variety-different-moods.html?ito=social-facebook

- https://www.coindesk.com/bitfinex-ny-prosecutors-tether-850-million-allege

 

Enjoy the Episode!

Kyle, Konrad and Trivelle get together to chat about VC companies, how you can now use bitcoin to shop on Amazon using the Lightning Network as well as Samsung's Recent investment into Crypto worth a whopping $2.9Million!Here are the links we were talking about: 

- https://www.coindesk.com/you-can-now-shop-with-bitcoin-on-amazon-using-lightning

- https://www.coindesk.com/tennis-star-serena-williams-reveals-investment-in-coinbase

- https://www.coindesk.com/samsung-invests-2-9-million-into-crypto-hardware-startup-ledger

 

Thank you for listening and enjoy the episode!

A fun discussion about crypto and the market.

In this episode Konrad and Rory talk about the current state of the Real Estate markets within North America as well as the ups and downs of the cryptocurrency market.

Kyle Fraser:                  Hello and welcome to Chelle Radio, where we focus on providing you with an avenue to learn more about investing in finance, especially within the real estate and crypto industries. I'm your host Kyle Fraser, the content specialist here at Chelle Service Capital. And this is episode three of Chelle Radio. Today we will be talking to Konrad Kubicka-Fitzpatrick, about the current downtrend in the crypto market, Charlie Lee and Litecoin, benefits of a decentralized business structure, and how Fortune 500 companies are implementing blockchain within their data systems. Stay tuned for another great episode.

Kyle Fraser:                  So the crypto markets are down about 70% since the beginning of the year, do you have any explanations of why this is and is there a possibility of this decreasing even more? Or can we see a sudden increase soon?

Konrad:                        So the cryptocurrency markets have reached their peak value in about mid January. The months leading up to this is when we really started seeing the really fast increases in prices of cryptocurrencies and the total value of projects was growing. At this point, there was a lot of excitement about what these projects could deliver. 2017 was the year of the ICO and the bitcoins forks, like the alternative versions of bitcoin coming out and there was a lot of optimism of these, and also these companies were issuing tokens, they're kind of printing new tokens essentially which, the moment they start trading, that value applies to all tokens and all of a sudden, there's a very large amount of value that's existing in the market.

Konrad:                        Everyone was getting excited about all these different projects and all of their potential. These projects were reaching in the billions of dollars. Today, EOS is worth several billion dollars, they were just a few weeks ago a token running on Ethereum. One of the things that we're seeing is that there's this incredible promise, this take all or take none promise, that these projects have taken on, that they're going to be able to do everything, but one of the things that we've been seeing is that these projects are failing to deliver.

Konrad:                        There's technical reasons behind this, that the technology is not able to scale and reach the pace that is needed for these companies to really succeed, but another big issue that we're seeing in hindsight is that all these companies raised all of their money upfront. This totally goes against the traditional business model that we need where you need to be earning profits to succeed and as investors realize you have a potential for profit, VCs or angels might give you seed money to start off and if you show some more success then you'll get more money and it's kind of like, you show some success, you get some more money type thing. Whereas, with ICOs, they were showing a promise and they were essentially getting all their money up front.

Konrad:                        Now this is a mismatch of incentives because the founders, or the people building these projects can cash out because they're millionaires before their business has even launched. So this is a very poor model, to incentivize the completion of a business, or of a project. So a lot of these founders are already rich, cashing out, we even saw people like Charlie Lee selling all of his Litecoin, that drew a lot of red flags and that made a lot of people upset, questioning his ambitions and his dedication to the project, now that he's no longer financially incentivized.

Konrad:                        Now whether this is the single cause, probably not, but there are a lot of things that are bringing down the prices in 2018. Yes, we are down about 70%, so it could be a mixture of profit taking, prices appreciating very quickly, so a lot of people could have taken profits and left early, and then you have people who bought late, or are panic selling, combined with founders cashing out, increased skepticism of whether a project will become completed or not, people are looking more critically at projects.

Konrad:                        So basically, a lot of the optimism has kind of washed away and there's a bit of like a rude awakening to the struggle, to really achieve some of these nice ideas that may never even come to existence.

Kyle Fraser:                  Off of your mention of Charlie Lee selling all of his Litecoin, do you think this was an honest move, of trying to become a more decentralized cryptocurrency? What are your thoughts overall?

Konrad:                        So, Charlie Lee, main founder and figure behind Litecoin and driving the Litecoin Foundation, did sell all of his Litecoin. He sold all of it very conveniently at the peak of its price and around the peak of the cryptocurrency market. This was one of the things that some people argue was a sign that the top was in and that people were cashing out, walking away. Charlie Lee, for sure, did this. He says it was to make sure that the project was more decentralized so that it wouldn't be led by a single figurehead, I'm sure this is ... it's really easy to want to convince yourself maybe to cash out for a couple hundred million dollars. It's really hard to stare a couple hundred million dollars in the face and not reach out and grab it and Charlie Lee certainly did do that.

Konrad:                        Now, the point that you don't want a single person to be in charge of the project because you want it to be centralized, I think that's a kind of all right argument, except the fact that the project was created by a single figure person, so now you're kind of just abandoning it. It's very different from what Satoshi did because Satoshi was an anonymous person or group. So there was no mass attention of this person, there's this figure that can be identified, it was just this pseudonym, there's this group of people, who knows who did it? It could potentially still even be involved, maybe under their actual identities, it's completely unknown, but I think Charlie Lee could have maybe done it in a better way. I don't know, he could have maybe thrown some of those profits into hiring a PR firm to help him handle the situation. I'm not sure that that was necessarily handled the best way.

Konrad:                        Ethereum, it still has Vitalik in charge, essentially, Vitalik and Joseph Lubin, are the figureheads of Ethereum and honestly, I think if they started selling all their Ethereum, there'd be a red flag, like why are these guys cashing out? Surely if you think the project is going to succeed, you would rather hold your coins for the future. You wouldn't want to disrupt the supply and demand of exchanges by dumping everything you have, if you're such a large shareholder.

Konrad:                        I mean, think of it. Let's say Apple's CEO, Tim Cook, starts selling all of his Apple stock before the next iPhone launch. Do you really think the next series of products coming from Apple are going to be that great? If Jeff Bezos starts selling all of his Amazon stock, do you think Amazon is going to be poised for a big sell off? Why would somebody ... Elon Musk is buying more stock, that's someone who I think really believes that their company or their product is going to succeed. So I think having an incentive is good. If you have any belief in capitalism, which anyone in financial products, or financial markets, probably does have, then you would know that incentive does drive innovation and it fuels growth, it fuels ambition. If you walk away from your incentive, then I feel like you're kind of walking away from your dedication to your project.

Kyle Fraser:                  On the whole debate about being decentralized, verse centralized, can every industry benefit from a more decentralized structure?

Konrad:                        Yeah, so centralized versus decentralized, this is definitely the core debate, philosophy and question in cryptocurrency markets. Bitcoin is a decentralized monetary system, meaning it's not controlled, or its future is not decided upon by any single entity or group. Whether this can exist for all other markets, all other situations, is really up for debate. Smart contract platforms, like Ethereum, Cardano, EOS, believe that almost every corporate structure, government relations, many things can be replaced by smart contracts. On the political spectrum in this area, they're like anarchists or libertarians and they believe that you can basically have a society that can function the way our society functions now, with all of these existing services and whatnot, but you wouldn't have any government or centralized authority in charge. It would just be a bunch of individuals communicating, trusting one another, through blockchain based cryptographic systems, where you don't have to trust anything, everything's just automatically verified, smart contracts, everything, everything runs that way.

Konrad:                        So if I go to a store, if I do a deal with a service, I can deal directly with the person who's facilitating the service and based off of reputation and whether their actions meet a certain set of requirements, then value can be exchanged and the services can be exchanged, or goods. That's basically the future. Now, whether that can happen is completely up for debate. First off, there's technical limitations, scaling. How many transactions can you handle? Visa handles about 2,000 transactions, I think it's a second or something like that. Some cryptocurrency networks can handle a dozen, maybe like a hundred. They're still very, very low and nothing that compete on a national scale. For example, if Ethereum is doing a couple really hot ICOs on the same day, it might get super backlogged and transactions might not go through. Anyone who was in the crypto space in the winter can remember how CryptoKitties basically froze Ethereum, things just weren't getting through, transactions were getting locked up, fees were massive. The same thing happened with bitcoin around that same time.

Konrad:                        So you can't really have ... well, this society, even if everything else were to work perfectly, with the technology. The technology is just not able to handle a large society functioning this way. So let's pretend now that that technology does make it possible, limitless scaling is in place, who's going to enforce all these things? One of the things about decentralization is that it doesn't require enforcement. With bitcoin, the way transactions work, and the way transaction validation works is that if you act accordingly, if you act correctly, you will be rewarded by either getting a small block award, or just your transaction will go through and everything will be nice. If you try and act maliciously, then you would have had to have used a large amount of energy to attempt to act maliciously and you wouldn't succeed because acquiring a 51% [inaudible 00:11:22] on bitcoin would be nearly impossible. Then you would have just wasted all that resources that went into capital, and energies from that capital, like the computers and you would lose. You would just lose that money, so that's why it hasn't happened, that's why bitcoin has never been hacked and why I don't think it ever will.

Konrad:                        The reason just purely decentralized enforcement works for bitcoin is because the only thing that's exchanged is money, which is non-tangible, and energy inputs. So it's very easy to enforce that because either value's exchanged or it is not exchanged. Bitcoin is exchanged or it's not but if you start having smart contracts for more complex things like services or like, "Okay, I'll do this service for free." Or, say I'm fixing your house and the smart contract is such that if your house is fixed then I get paid. Then the service man does something faulty and has to come back after two days and if there's no central authority to say, "Hey, you know what? Okay, yeah, I'm the company, you hired me and this is my employee and he didn't do a good enough job. As company policy, I'm going to send my employee out there and fix your house again." The company would handle that or a centralized third party would handle that enforcement and that work would go.

Konrad:                        In a decentralized world, what would really force this person to go, otherwise a potential loss to his reputation? Because he could be doing that business for someone else because he is his own business now. He would have this central company controlling him so if a [inaudible 00:12:59] world with consumers and freelancers and smart contracts are coordinating them, then the freelancers might have a bit of an advantage over the consumer if they can get away with this kind of stuff. Now, there's other things like, "Oh well, what if they have a reputation score?" Or I thumbs them up if they do it good and I thumbs them down if it's bad, well there's also an issue with decentralized rating systems because rating systems can be manipulated. You can have fake accounts, bot accounts, either artificially boosting or artificially sabotaging reputation scores for whatever reasons. Now, if you wanted to try and verify these transaction scores by determining how authentic they are, so you investigate the profiles, then all of a sudden you have privacy breeches.

Konrad:                        So having a system that the only enforcement is on one reputation, I think is a little bit scary because it kind of like what [inaudible 00:13:55] doing and it's also a little bit worrying for the same reason, but also, whether it's feasible and practical in terms of serving the punishment and reward function that a centralized party might offer in this kind of situation, I don't think that it's necessarily sufficient. That's for services, let's say for product disputes. Let's say I send you something on Ebay or if I pay for something on Ebay and it's ... let's say I get a faulty product, or it's a scam product and it's not what I thought I was paying for, Ebay could reimburse me. PayPal could reimburse me, there are other people I can go and complain to and these things have been handled before. There's a law precedent for it and there's no real law precedent for ibots selling on a smart contract platform and it didn't go the way that I agreed upon, and the other person basically manipulated the transaction and got the better deal, kind of screwed me out of my money or my value, or my service.

Konrad:                        Who's going to enforce that? Who's going to make it right or even it, or restore justice or whatnot? If you don't have this central authority in place, then how can you be sure that these situations are a low risk situation? I'm not going to want to use a decentralized service if I know that 30% of the time it's going to go the wrong way. Whenever you go to Amazon, you don't expect there's a 30% chance that you're going to open up an empty cardboard box, that's never on your mind. If that ever did happen, you'd email Amazon and be like, "What the heck?" And they'd be like, "Oh, I'm sorry, here's your proper device," and then you're good, you're good to go.

Konrad:                        So if you have a smart contract world, and it isn't automatically settled within the smart contract, then you need someone else to step in. You need the courts to step in, you need some sort of third party to step in. When you have that, it's not decentralized any more. You have this other party, some people who are critical of smart contract platforms, will call this the oracle problem and this is valid.

Konrad:                        So, there's the argument that right now, there aren't many applications for decentralized products. Now, with improved technology, with proper legal precedence, and if legal systems can adapt to this, then maybe decentralized systems can be more widespread, because there are ... the benefits that the true believers of decentralized systems, that they advocate for, are good reasons. Lower costs, faster executions of transactions, verifiability of transactions, less people involved requiring to take fees, which is also ... so there's time and cost and efficiency there. When you have less cost and efficiencies, there's more profit being awarded to the service or good provider and there is less cost to the consumer, so there's a greater consumer and producer surplus in this kind of a system, because there's less fees.

Konrad:                        So that argument is valid if all the other things can kind of work. If you can overcome the oracle problem, if you can overcome the technological restraints. So then if you have a system that can function with low risk, it could maybe work. But up until those kinds of solutions come through, or those kind of precedent actions come through, it doesn't look like anything that's too near term.

Kyle Fraser:                  How are the bigger Fortune 500 companies starting to incorporate blockchain into their data systems?

Konrad:                        Well to start, they are not ignoring it. That's a good point because when the last massive technological revolution came in the '90s with computers, internet and whatnot, and a lot of companies said, "Hey this is a fad," or, "Hey this is not going to affect us." It may not have affected everybody, but it affected probably almost everybody, if not everybody and some people were really late to the boat. There's always the ones I could point at like Kodak and whatnot and some of these companies that really took a massive beating that were doing quite successful before the digital revolution, or the internet computer revolution, or whatever, and they missed out.

Konrad:                        The Fortune 500, the S&P, the NASDAC, all of these groups of companies have really changed. If you look at what companies were the top dogs 20 years ago versus now, now it's basically all the tech companies. Internet companies weren't even really a thing 20 years ago, before the dotcom bubble was kind of introducing the concept. But successful internet companies who were actually earning money weren't a thing, let alone internet companies that were earning billions of dollars in correlating revenue.

Konrad:                        So a lot of companies start saying, "Hey, you know what? Something is coming, we don't know what but we don't want to get swept up behind like some of the other guys did, or like we almost did last time." Now, how exactly these companies are going to incorporate the technology, not sure. This is a new technology, we know some things it can do well but we don't know everything it's capable of. Just like how in the year 2000, you would never have expected something like, I don't know, Shazam, or Snapchat to have existed.

Konrad:                        There are just so many other technological applications that have to exist before it gets to some of those later applications. It's kind of a pyramid, you need this base layer and for the internet we can say that's like internet itself, computers, mobile computers, web browsers, programing language that can support web pages to be built on it. I'm not the most tech savvy person, but you need this base layer of support technology and then you have stuff built on top of that and built on top of that, whatnot, and then you get these ... at the very top, these furthest down the line from the original technology.

Konrad:                        You have those companies that are furthest down the line and the furthest adaptation or application of that technology, so how blockchain will look like when it's taken far down its line, we're not really sure. One thing we know that it does do well is it allows the transfer of value to be done with minimal third parties. That's interesting, but how can these companies benefit from internally sending money to one another? Because they have offices set up all around the world, if they want to send money from their office in America to their office in Japan and they want to do that without all these massive fees, like you do in the traditional banking world, how can they do that but benefit from doing it on private blockchain because sometimes they want to keep some information away from the public because bitcoin is a public blockchain?

Konrad:                        What if some companies, like banks, want to get on board, they can't use a public blockchain because there's regulation, making sure that certain information is held confidentially, but then private blockchains suffer from this oracle problem as well. They will eventually have some sort of dispute because the validation of the network is too internal, it's too centralized, they just don't work. So if private blockchains can take off, or they can really distinguish themselves from private databases, this is something that isn't really figured out. Companies want to get on board, for shipping companies that are tracking their products all round the world, or companies that have a lot of their products or their inventory in shipments continuously, it's really good to be able to track that better, for more accurate product management. This can lead to better product delivery times, lower costs, and more efficient distribution of materials and production capacity, whatever.

Konrad:                        So, there are a lot of benefits to how this could work, we're not really too sure. Some of the other tech guys, like IBM, Microsoft, they're looking at trying to get onboard of supporting kind of the crypto ecosystem. There was like the development of Linux, I believe that was made by IBM, IBM or Windows, I'm not sure, but now they have Hyperledger, which is supposed to be a public blockchain made by IBM and it's supposed to be open source, people can build products on it. So that's one way that's IBM's getting involved.

Konrad:                        Microsoft bought GitHub which is the online repository and almost like social network for code-sharing communication and bounty hunting for problem solving. Like, "Hey, I have a problem with my code, I'll look it up on GitHub." Say, "Hey, here's two Ethereum reward if you can solve this program, we'll implement it, you'll get the Ether reward, we're both happy, I have my problem solved, you have money."

Konrad:                        Microsoft really wanted to be onboard for this open source culture of development innovation, so they bought GitHub. Microsoft try and diversify itself from being just a software, just Windows, or even just a hardware provider, like with Xbox and all the Microsoft tech, Surface tablet, phone, laptops, whatnot. They're really trying to get themselves into the online social network, social community world. This is their attempt to break into that along with blockchain. So we see the tech leaders trying to support the community, trying to kindle the flame. They're not sure what direction it's going to go, but they kind of want to be adding fuel so no matter what direction it's going, they're kind of still helping.

Konrad:                        These other companies are trying to harness that technology to improve their businesses, whether it's the transfer of value or the management of your inventory or products. No one's really sure exactly how this technology will be able to mass adopted, but that's something that they're really looking into. In terms of what I believe to be the most likely case of successful adoption, I mean successful as in it becomes the majority of the way something's done, I would say for securities. The improved efficiencies of fees is what really brought me to crypto. I was a day trader, day trading with a four figure account, it's kind of expensive, makes day trading kind of frustrating because you have this break even, not to mention things are trading between 9.30 and 4.00 so you're bored in the evenings or weekends.

Konrad:                        So crypto, 24/7 trading, way lower fees, settlement execution, or handled simultaneously, you don't have to wait multiple business days to play your money out, terrific and I think that anyone who's involved with the exchange of financial products, as long as they're not the one facilitating the exchange, I think that they will like these features and almost all financial products are going to eventually become running on the blockchain. They're going to be tokenized, it'll allow for greater divisibility of assets, which will allow for people to diversify better if you can own 1% of an Amazon stock, it may mean that more people are going to be buying Amazon stock because the more people can get in.

Konrad:                        When Amazon stock's 1,400 bucks, or something like that, American, if you have someone half way round the world in a poor country wanting to get in on some of these eCommerce giants, they can't. Not even to mention brokerage fees and restrictions for global citizens to participate in a domestic exchange that is not their country. Then, just their size requirements, you need at least enough money to be able to buy the stock or several of them, to be allowed to do that.

Konrad:                        So you could have more people that can access financial assets that they wouldn't have previously been able to, due to cost barriers. The assets themselves will trade faster and cheaper and anyone who's in the business of saving money will be excited about that. There will probably be some pushback from maybe some brokers or for some middlemen but most of the people will be benefiting and most of the people will want that benefit and will want that change. So that's why many people are really excited about security tokens because it's something we already know works, securities, financial instrument, and we're just transferring that value in a more efficient way.

Konrad:                        I discussed before how bitcoin is a decentralized system that does work because value, money, or a financial instrument, can be exchanged and can be enforced on a blockchain very easily. Money is sent, money is not sent, it's really easy. That could apply not just for bitcoin or for a cryptocurrency but for traditional assets and that's something I think we're going to start seeing in the next [inaudible 00:27:03] years.

Kyle Fraser:                  Thank you for listening to another great episode of Chelle Radio. If you're interested in learning more about myself or Konrad and the rest of the team here at Chelle Service Capital, you can visit us at www.chelleservicecapital.com. If you're interested in learning more about our own cryptocurrency, you can visit www.chellecoin.com.

In this episode we talk about the biggest news on Ethereum, some of the benefits from early adoption of this technology and some Bitcoin price predictions with some interesting topics we also touch on. 

Kyle Fraser:                  Hello, and welcome to Chelle Radio, where we focus on providing you with an avenue to learn more about investing and finance, especially within the real estate and cryptocurrency industries. I'm your host, Kyle Fraser, the content specialist here at Chelle Service Capital, and this is Episode Two of Chelle Radio.

Kyle Fraser:                  Today, we will be talking to our currency trader, Konrad Kubicka-Fitzpatrick about the latest and biggest news on Ethereum, some early adopters, as well as some future price predictions for Bitcoin considering its downtrend recently. Stay tuned for a great episode.

Kyle Fraser:                  Can you tell us a little bit about the biggest news with Ethereum?

Konrad K-P:                  Thursday, June 14, 2018, Director of Finance at the Securities and Exchange Commission stated that he does not believe Ethereum to be a security. He believes that Ethereum is decentralized enough for the Ethereum token to not be considered a security.

Konrad K-P:                  Now, what is a security? A security is a representation of ownership in a publicly traded company, a creditor relationship with a governmental body or a corporation, or rights to ownership as represented by an option.

Konrad K-P:                  Basically this has a lot to do with all the ICOs that have been done. The public will give a company money in some cases, and a company will, in exchange, give the investor some tokens that are to be used in the company's project, as a utility token.

Konrad K-P:                  But because so little of these tokens are actually being used for the utility purposes, and many of them are treating them as an investment, a lot of people are skeptical of saying that a lot of these ITOs are basically unlicensed, unregistered security offerings. Which are illegal.

Konrad K-P:                  Now, Ethereum being named or not being named a security is quite a big deal, because many many ICOs are built on Ethereum and Ethereum has become quite this foundational project for the entire cryptocurrency market.

Konrad K-P:                  By saying that Ethereum is not a security, it provides a lot of stability, or a lot more stability, to the market. Investors looking to get into Ethereum can now feel a little bit more confident about regulatory risk for approaching the project.

Konrad K-P:                  So overall that's pretty good news for the cryptocurrency market. Up until that news broke, the market was on this downtrend for a while and then it seemed to have halted around there and it's beginning to move up. So this could be some news that drives the market forward once again.

Kyle Fraser:                  The last I heard about Ripple, it was on The Ellen DeGeneres Show. Can you tell us a little bit about the news with Ripple?

Konrad K-P:                  The Ethereum security discussion with the SEC official did shine a lot of negative light towards XRP. Some of the things that the official said, and I'm retweeting this from Nathaniel Pauper's Twitter, very good source of information there.

Konrad K-P:                  He said the SEC officials said that the key in determining whether a digital asset is a security is the role that a third party plays in the asset. Do they play a key role in the maintenance of the asset? Do they retain a stake in the digital asset?

Konrad K-P:                  Another Tweet he said "But Hinman, the SEC official, said that if a token is guided by a third party that holds lots of tokens and that takes actions to increase the value of that token, it is probably a security. That sounds a lot like the description of Ripple in XRP."

Konrad K-P:                  The reason Ripple is being criticized, Ripple is the company. They have Ripple Net and they also have XRP, which is their token. Ripple Net is a messaging service that banks can use to send money around, kind of replacing and circumnavigating the SWIFT system.

Kyle Fraser:                  What is the SWIFT system?

Konrad K-P:                  The SWIFT system allows banks in other countries to communicate with one another and send money to one another. Now, the SWIFT system is like a group of all banks willing to participate for these types of exchanges.

Konrad K-P:                  And if a bank in Canada, let's say RBC, wants to communicate with a bank in The Philippines, they can't directly send money to one another. There's a lot of intermediaries that have to stop in, facilitate the exchange, exchange currencies. That's why if you ever try and send a wire transfer to somebody it can take quite a long time, like a week to two weeks sometimes. And it'll cost you like a lot of money.

Konrad K-P:                  It's not like doing a regular e-transfer from let's say RBC to TD. That would be pretty much no fees, near instant, very very easy. Very few intermediaries there.

Konrad K-P:                  The SWIFT system is for international payments. It's long, it's expensive, and it's what Ripple is looking to replace.

Kyle Fraser:                  Why is Ripple being criticized?

Konrad K-P:                  The reason that Ripple is being criticized somewhat in the crypto space is because Ripple holds a massive percentage amount of their tokens. Like Jackson Palmer, great figure in the space, showed some data on how I believe it's like 90% of the XRP tokens are held by the top account holders.

Konrad K-P:                  Most of the XRP that are held these top 90% are held either by Ripple employees or by the Ripple company itself. So because the firm holds so much of this token, they do really have a stake in this token.

Konrad K-P:                  We quite often see promotional activities done by Ripple where they donate money to charities and whatnot. While these are charitable acts, they are also marketing acts. They're giving away tokens that they created and now have value.

Konrad K-P:                  It's kind of like they're giving away money they printed. Which many of these things are, in that case that.

Konrad K-P:                  There is questions of whether or not the company itself has a stake in this token. And if they do, then the token itself is very much like a security.

Konrad K-P:                  The ruling of whether or not XRP will be a security will be pretty important for the industry, because if Ripple isn't named a security then a lot of projects ... it would be hard for a lot of projects to be named securities.

Kyle Fraser:                  So when you're talking about this stuff, I get a real sense of passion about it. And I just want to kind of know what really interests you with cryptocurrencies and Bitcoin in general.

Konrad K-P:                  Like the financial opportunity is terrific. But also the global financial opportunity. I'm really attracted to how it's inexpensive for people to join the global financial economy, lack of restrictions on setting up a Bitcoin account and making a transaction.

Konrad K-P:                  Today we have expensive transaction fees, we have minimum payments on bank deposits, SWIFT banking system makes it extraordinarily expensive to send money outside of your country or outside your currency zone.

Konrad K-P:                  And the promise of Bitcoin is to eventually allow for microtransactions, which can help people make very inexpensive payments. So people in poverty living off a few dollars a day, if they need to make a small fraction of their daily earnings and make a purchase with that amount, it wouldn't be feasible to make a bank account and send like an e-transfer.

Konrad K-P:                  But it may be feasible to send a small Bitcoin transaction once the coin scaling solutions are further in place. That's something that's very attractive about it.

Konrad K-P:                  With Bitcoin is that censorship resistance, the government can't say hey, you know what? I don't like your or I don't like your political views, I'm going to stop you from being able to make any purchases.

Konrad K-P:                  This is something we're already seeing happening in China. Many other totalitarian type governments are definitely looking to do something like this as well. The censorship resistance is terrific.

Konrad K-P:                  It's very safe, hack-proof. Bitcoin has not been hacked. There has not been a 51% attack. You cannot really say this for some of the larger companies like Visa, Equifax. Even the NSA was hacked. It's pretty ridiculous, like central points failure.

Konrad K-P:                  And then there's the possibility for other use cases. So Ethereum allows for the development of decentralized apps. You can build an app on Ethereum very easy, makes it very easy for entrepreneurs to build something low cost entry. It's a good point across all of crypto.

Konrad K-P:                  And a lot of interesting applications have been built on Ethereum. Solve identity issues, we're looking to solve issues buying real estate and exchange of property. Both in the physical exchange of properties and also in the registration of property.

Konrad K-P:                  There's a lot of really interesting use case that can be put out there. It's kind of like saying, with the internet, it's exciting because there's a lot of really interesting websites you can build. And then at some point in time, in the 80s or 90s, I could say hey, this website's cool, this website's cool, this website's cool.

Konrad K-P:                  But in the end, it's really the opportunity to build a seemingly limitless collection of applications and use cases that people can use. It's really hard to predict right now. We don't know when it will come, but there's a lot of exciting things that can come.

Konrad K-P:                  And that's what I'm excited about with Ethereum and those other platforms, allow people to build and create something.

Kyle Fraser:                  Can you tell us a little bit about Bitcoin maximalists?

Konrad K-P:                  Bitcoin maximalists, there's this philosophical reasoning behind it and there's also, from what I understand, a great deal of technical reasoning behind it.

Konrad K-P:                  But it's basically that true digital scarcity is either most achieved or only achieved by Bitcoin. Bitcoin's really the only currency that matters, in their views.

Konrad K-P:                  A lot of projects, even like Ethereum and a lot of ICOs, are scams or unregistered securities that are kind of bogus and the only thing that really matters for this decentralized future of the internet, or at least decentralized exchange of value, is Bitcoin. Everything else is wrong.

Konrad K-P:                  That's Bitcoin maxilism. There's a lot more people can look into. If you want to look at some traders and some people talking about it, a good resource could be Tone Vays. He has a YouTube channel where he has daily videos with a lot of other people in the space, some traders, some Bitcoin core developers. And they discuss their views and react to market news from the perspective of Bitcoin maximalists.

Konrad K-P:                  I think it's good to hear that kind of thinking, because there's a lot of different competing ideas and directions and velocities in the crypto space. It's nice to get an idea of how what everyone is thinking, or what all the different groups are thinking.

Konrad K-P:                  Because then that better helps you understand where the market can go and how things can move on. You don't want to just limit yourself to one view. You ought to challenge your views.

Konrad K-P:                  So yeah. That's Bitcoin maximalism.

Kyle Fraser:                  Can you let us in on some future price predictions for Bitcoin?

Konrad K-P:                  When Bitcoin had futures launched on CME, which is one of the largest issuers of financial products, derivatives, futures, whatnot, it was a really big deal for the market. And that was December 17th and pretty much ever since then Bitcoin has declined.

Konrad K-P:                  Now, there's a really interesting chart I was looking at. And you compare gold from when gold futures were added, I think it was like 1974, and there's this super sharp run-up, just like with Bitcoin we had in the fall of 2017. Like kind of the irrational exuberance phase.

Konrad K-P:                  And then a sharp correction downwards. And then the price tries to go back up, and it goes back down. And there's kind of like the peak, down, attempt to go back up, and then down further. We had that happen with Bitcoin.

Konrad K-P:                  I published on My TradingView, at Fitzpugh 59, and you can see the price goes from the 1.0 level, which is the peak, down to the 0.382 level, back up to 0.786 level. And both gold and Bitcoin do this.

Konrad K-P:                  And then they went back down further. With gold, there was this extended low and steady decline period that lasted for about 20 years actually. Up until the 90s. And after there's this long period and then a couple of intermediate highs in there.

Konrad K-P:                  And once the run-up started to begin and it started to pass these intermediate highs in the channel, gold went on this massive run-up. And it was like a few hundred dollars at this point, in the mid-90s I believe it was. And then it went up to over $2,000. So there's massive run-up for gold again.

Konrad K-P:                  And then since that peak in the financial crisis, it went down and it's settled at about like $1300 now, give or take maybe like $50.

Konrad K-P:                  Now, the run from gold's most recent peak in the 2000s to its peak when futures were first launched, if you [inaudible 00:12:37] trace levels and you drag it over the entire period, the gold peak is like the 1.0 level, sorry, in the 70s. And the peak in the 2000s is at the 2.272 level.

Konrad K-P:                  These are consistent relative levels that can be ... they're very comparable. So if you kind of chart out Bitcoin the same way, and it is following the same pattern now, the downside target would be 5K for this.

Konrad K-P:                  And then after it hits 5K, it will slowly start to recover and it might still kind of hang out in this low zone between 5K and like 8K. And then once it starts breaking up maybe past 12K, like it seems to be the nearest highs that are really kind of keeping us down because we've had double [inaudible 00:13:22] there, then that's when the next bull run could really start.

Konrad K-P:                  And if Bitcoin, if $20,000 for Bitcoin is the 1.0 level, then the 2.272 level would be about 44-45K. And I don't expect Bitcoin to follow a 20 year bear market like gold did. Even a multiyear bear market. I don't necessarily think it's too likely, the way Bitcoin had from 2013 to 2015-2016.

Konrad K-P:                  I think it's because of how much attention has come to Bitcoin, and also how quickly that attention spreads because of the internet. And also how accessible it is to invest in Bitcoin, because the internet.

Konrad K-P:                  So I think the bear market and correction will occur faster and the return to a bull market can also come faster. So 44, 45K is the end of year price prediction based off of gold. Which behaved very similarly with the bringing on of futures, [inaudible 00:14:18] exuberance, price decline, steady bear market, recovery past intermediate highs leading back up to 44 to 45K.

Konrad K-P:                  I think that this is a sign that we could see Bitcoin in the medium term. And we can provide links for that as well.

Kyle Fraser:                  How can we actually get to these higher price points for Bitcoin?

Konrad K-P:                  The main thing that is really stopping Bitcoin from having high prices is how many people are having it. Investing in it, buying it, storing it, using it, exchanging it, etc.

Konrad K-P:                  And how are we going to get to more people using it? Well, you're going to have the early adopters and the early investors. And then you're going to have the people that follow the crowd and then leave when things start to kind of get not exciting anymore, the way we saw a lot of people leaving the space in the first half of 2018.

Konrad K-P:                  But same with the internet. The internet wasn't that great. Computers weren't that great when they first started out. A lot of people were skeptical. And it was because the internet and computers in its current stage was just not feasible, not convenient, not practical. And as a result, it wasn't very functional.

Konrad K-P:                  Today, Bitcoin is functional, but it's not like super great at certain times. In the winter of 2017, if you wanted to buy a $3 coffee, you'd have to pay like a $40 network fee just to make that Bitcoin transaction.

Konrad K-P:                  Which is ridiculous. It's not feasible and people wouldn't use Bitcoin as a peer to peer cash system with fees that are 20% of your purchase. Fees have gone down. There is less network activity and less transactions happening on Bitcoin right now than there were then.

Konrad K-P:                  But also technological innovations for Bitcoin, like SegWit and Lightning, are being more adopted. So these kinds of transactions can become a lot cheaper.

Konrad K-P:                  So functionality can improve. Like the naysayers in the 80s and 90s about computers, they kind of didn't see forward how the technology could evolve. So Bitcoin's technological limitations, we can assume, based off of how technology evolved, that those technological limitations will be significantly improved in the coming, let's say, decade.

Konrad K-P:                  Okay. Technology is there. What do we really need? Well, with computers, you could do things, but what really had computers taking off was when you had to use a computer. You could say wow, I can't imagine like I used to have to write letters to somebody and send it across the world and then you got to wait and all this stuff, when you can just send an email and they get it instantly. Or like a text message.

Konrad K-P:                  You can check Wikipedia for doing your homework. I couldn't imagine doing that homework now without the internet. And that's what we really need for cryptocurrencies.

Konrad K-P:                  We need it to be easy, convenient to use like computers are today and how they have been with the advent of Windows 95 and Apple and whatnot, making it really easy to use computers. We need it to be easy and we need it to be like the convenience factor, like wow, I can't believe there were times I didn't use this before. How did I ever live without this?

Konrad K-P:                  That's what we're [inaudible 00:17:18] cell phones are like that today. Computers like that today. That's where we need cryptocurrencies to be for them to have the price that reflects their adoption.

Konrad K-P:                  So that's how we'll hit six digit or higher prices, is when everyone's using it and everyone can't imagine a world where they don't use it.

Kyle Fraser:                  Do you think a country like North Korea would benefit from adopting a currency like Bitcoin?

Konrad K-P:                  Well, a state controlled cryptocurrency would be very attractive for a totalitarian government. Because a state controlled currency, first off it wouldn't be decentralized like Bitcoin. Because Bitcoin is censor resistant and any totalitarian government does not want people to be able to do things freely.

Konrad K-P:                  They want to be able to control things. So you'd have a state backed currency that they could manipulate and they could control who is able to spend what, who has what, they can monitor that. And even use big data to further analyze it and control and monitor their citizens.

Konrad K-P:                  This is something China does want to do already. And North Korea, if they had the technological means, it's probably something they would do as well.

Konrad K-P:                  But the people of North Korea would very much want actual Bitcoin, because it is censor resistant. And because it cannot be tampered with the way governments can.

Konrad K-P:                  Bitcoin is very attractive in Venezuela today, in mid 2018. Venezuela is still in the midst of its incredible political and economic crisis. Government is removing political dissidents, it is printing money, it is destroying the economy. Hyperinflation causes people to have no wealth, no ability to buy food or basic goods.

Konrad K-P:                  And Bitcoin is kind of like the only safe haven for that. When your currency is losing half of its value every single day, like a cup of coffee will cost you $100 this morning but by the time you finish work the cup of coffee could cost $200. Your money is literally losing all value. It has no value.

Konrad K-P:                  Like we were seeing in Germany or Zimbabwe, people are burning buckets of money instead of firewood because it's cheaper to do that. That's what happens when you lose absolutely all faith in the monetary system, because it's tampered with by corrupt central authorities.

Konrad K-P:                  So buying volumes for Bitcoin in Venezuela are increasing, because people want Bitcoin to protect their wealth, to be able to conduct transactions, and be able to basically build some sort of wealth or value while their country is completely taken over by this horrible economic situation there.

Konrad K-P:                  Citizens like North Korea would want it, because North Korea does have a lot of poverty issues. They're a very private country, so it's hard to speak on their monetary policies. But I assume they're as controlled as their government policies are.

Konrad K-P:                  And if people are starving and starving to death and malnourished, I don't think that their economic situation could be great. So I would imagine that while it would be unlikely that it would be allowed, citizens would embrace Bitcoin.

Kyle Fraser:                  You've got some cool news about Bitcoin and Lightning. Can you tell us a little bit about that?

Konrad K-P:                  There was a new game that came out, I believe it's Pokemon or a game like Pokemon, where you pay a very very very small amount of Bitcoin. I think it's you pick a couple satoshis. A satoshi is one hundred millionth of a Bitcoin.

Konrad K-P:                  Like for example, if one Bitcoin was worth a million dollars, a single satoshi would be the equivalent of a penny.

Konrad K-P:                  What we're seeing with this video game is that you can pay a couple satoshis to play. Which is like a fraction of a penny, it might be like a few hundred satoshis. But it's like fractions of a penny to play a single time.

Konrad K-P:                  What's really important about this is that this wouldn't be feasible with regular currency. Because it's too expensive to process. First of all, you can't even process 0.6 pennies for transactions. It just wouldn't happen. It would be wroted off. Which would nearly double the transaction.

Konrad K-P:                  A single penny transaction over the internet wouldn't even be feasible. Like no merchant would do it, because Visa or PayPal fees would just be far more than the transaction.

Konrad K-P:                  This is done by Bitcoin's Lightning network, which allows you to create a payment channel and all the payments that occur within these payment channels are pretty much instantaneous and free, or very low cost from my understanding. And they do not appear on the official Bitcoin blockchain.

Konrad K-P:                  Which, as I mentioned earlier with expensive coffees in December, all the transactions on the blockchain have a fee for being processed. Now, on these payment channels, think of it as being like on the side.

Konrad K-P:                  The thing of the Bitcoin main network, main blockchain, has been the highway. Right? So every time you drive on the highway you have to pay tolls to the highway.

Konrad K-P:                  Let's say then you get off the highway and you drive on a side road. You can drive on that side road pretty much instantly, quickly, and limitlessly, because you don't have to lay tolls for the highway because you're on the side road.

Konrad K-P:                  And then the only time you pay the network fee is when you close the Lightning channel. This would be like when you get back on the highway. What you do is you pay for some sort of signature that says hey, I left the highway and got back on here, here's my payment. Lightning channel's closed, all the transactions within the Lightning channel are settled between other players involved.

Konrad K-P:                  This is terrific because it allows for really really cheap payments. Now, this video game, Pokemon, once cent Pokemon whatever, it's probably not going to be like the thing that brings cryptocurrency to the masses. Like this use case that people can't live without.

Konrad K-P:                  But what it is doing, it is proving that Bitcoin's efficiencies are better than traditional currency. Because you couldn't do something like this with traditional currencies.

Konrad K-P:                  So it's really showing that hey, you know what? We have all ... there's going to be all these terrific ideas that are going to be coming out in the coming years. Taking advantage of these feasible micropayments, which is a brand new concept, and we're going to see a lot of really interesting ideas be developed from this.

Konrad K-P:                  We can see some really exciting things coming from financial systems for people in poverty. People who live on a few dollars a day cannot afford to send microtransactions, because a traditional banking system isn't feasible for that.

Konrad K-P:                  But with Lightning network, people who live on a few dollars a day can regularly send and receive micropayments for either basic services or products, for pretty much anything.

Konrad K-P:                  So this is really exciting, I think, for banking and banks, and also for developing new products and new services using Bitcoin and Lightning.

Kyle Fraser:                  Thank you very much for listening to episode two of Chelle Radio. If you're interested in learning more about our own cryptocurrency, you can visit www.chellecoin.com. And if you'd like to hear a little bit more about myself, including Konrad, you can visit www.chelleservicecapital.com.

Kyle Fraser:                  Thanks for listening.

Kyle Fraser:                  Hello and welcome to Chelle Radio, where we focus on providing you with an avenue to learn more about investing and finance, especially within the real estate and cryptocurrency industries. I'm your host, Kyle Fraser, the content specialist here at Chelle Service Capital and today we have Konrad Kubicka-Fitzpatrick, who is our currency trader here at Chelle Service Capital. He's got a wealth of knowledge and is ready to teach.

Konrad K:                     I appreciate the introduction, Kyle. So my name is Konrad Kubika-Fitzpatrick and I am a currency trader here at Chelle Service Capital. I trade cryptocurrencies, mainly the top trading players like Bitcoin, Ethereum, Bitcoin Cash, Litecoin and there are a few others in there but those are the ones I trade mainly for spread and also for their structure and relevance on the universe of cryptocurrency market.

Kyle Fraser:                  Cool. So how did you actually get into crypto currency trading?

Konrad K:                     I think actually, well trading is actually how I got into cryptocurrencies. I got in pretty backwards compared to most people. Traditionally when I found this space, a lot of people will hear about BitCoin or one of these interesting projects and then they'll be interested in the governance of it or the decentralization aspect of it. But how I got into it was, when I was in university I was in a trading competition, I liked that. I was trading companies tied to metals and to oil because in 2014/2015 there was a bit of a recovery in the global quality prices, and I was interested in that especially with how they were tied with macroeconomics, so I started trading those. And trading those on my own small accounts I was incurring things like costs, obviously time constraints, stock markets are open from 9:30 a.m. to 4:00 p.m. here in Toronto as well as New York and they were closed on weekends. So this was a bit of an issue because if you want to trade something at 5:00 you can't really do it and if I want to withdraw the money for my stocks I actually had to wait three business days for this to happen.

Konrad K:                     So when I first heard some news about cryptocurrencies my buddy kind of just quickly explained to me that it's like 24/7 cash that isn't run by anybody and I kinda didn't really look past that. So what really was attractive to me at that point in time was low fees, 24/7 trading, instant settlement, as in I could sell my coins and cash them out pretty much instantly which I couldn't do with stocks. So that got me really excited and then I started researching some use cases, looking at the Ethereum white paper, IOTA white paper, Bitcoin white paper, and really realizing the power of decentralization and how this could really disrupt a lot of our traditional systems and business that we have today.

Kyle Fraser:                  So, how can you actually compare the early ledgers and systems of history to Bitcoin currently?

Konrad K:                     So in the book Sapiens, which is a really interesting book, describes the origin, early stages, recent stages, and present stages of man. So what was really interesting was, and I'm kind of summarizing here, I don't have the text in front of me so I can't remember exactly, but it was described that the first instance of writing, the oldest writing that archeologists were able to find was a recording of who owns what property and who owes what amount of taxes to, at the time, the central government. I was reading this book just as I started falling down the rabbit hole of bitcoin and really becoming infatuated with this idea of decentralization and seeing how centralized businesses were controlling so much of the city's resources and movement of wealth that they needed a new system to come up with this. What system did they come up with? Well, writing. Writing stuff down on tablets, storing them and having other people being able to access them; was able to expand what could be done within a single person or a group of people's heads.

Konrad K:                     And these are sort of interesting because it's the origin of our written language systems, our numerical systems, our monetary and tax and government systems. And because Bitcoin is able to provide a trusted and verifiable account of who owns what at what point in time and you do not require a third party to monitor, oversee, and validate this, it's really interesting how you can argue that the stage of time up until we had language, and then there was a point in time after language was invented until Bitcoin was invented or third parties were no longer necessary, and then if in the future there could be a point in time where kind of everything will be decentralized that will be like the third stage of history if you wanna look at it purely from a centralized versus decentralized versus neither point of view. That's a really interesting aspect of how humans have evolved around these centralized systems and how we're for the very first time breaking that. This test of whether Bitcoin will succeed is really interesting and kind of monumental in the grand scheme of things.

Kyle Fraser:                  So where do you personally see the lifespan of Bitcoin?

Konrad K:                     You can still argue it's in a bit of a testing phase. It is supposed to be a peer-to-peer cash system, that is how it was originally proposed in its first white paper. It's not necessarily being used as a peer-to-peer cash system right now. We don't have people go into coffee shops and grocery stores and buying eggs with Bitcoin, that's not something that's happening right now.

Kyle Fraser:                  And is that possible?

Konrad K:                     It would be possible. You would need to have the merchants being willing to accept it and there are a lot of barriers to entry for this. Because how our government's realizing this, it's really easy to buy something with dollars because dollars are issued by the central bank of a country and the government recognizes this currency as legal tender, everyone has to accept it. Taxes are written in this currency, wages are in this currency, everyone's incomes are in these currencies. So it's very easy for everyone to kind of know what they're talking about when I say I'm gonna buy this pop box of eggs with my ten dollars. I pay this much in taxes. The government takes that, they know how much they're getting and also the stability of this currency is relatively stable. We have some crazy situations like Venezuela as well as places in the past like Zimbabwe or Germany during their intense hyperinflation days, but for the most part central bank backed currencies are somewhat stable and this is a pretty good measurement for day-to-day type transactions.

Konrad K:                     So if I'm sending you Bitcoin - not to mention also how Bitcoins are recorded. Like, a hundred dollars in Bitcoin might be .002367 Bitcoins, which is kind of harder to conceptualize than a hundred dollars is just a hundred dollars, right? We're so used to these terms, so there's a learning curve in the terminology and just becoming second nature, as well as the systems in place that support it - taxes, everyone kind of accepting it, understanding it, and also the stability of the currency. Right now, Bitcoin entered the year coming down from its 20,000 highs maybe around 18K. I'm not exactly sure what the January 1st date was. January 1, 2017 it was about a thousand dollars. So we went from 1,000 to 18,000 if that's what it was on January 1st. It's June 4, 2018 right now and today it's about 7,500 US. So there's a ton of movement in Bitcoin and so this movement kind of threatens also businesses from accepting it because you might have high profits today, Bitcoin drops 30 percent in the next week, and now your profit's a lot lower. So the stability I think is also a pretty important reason for why it's not being so widely accepted as a main means of payment.

Kyle Fraser:                  Okay, interesting. You brought up taxes earlier and I'm wondering what are the current tax complications of Bitcoin, if there is any right now?

Konrad K:                     So, that's a good question. This is something that's kind of being still figured out. Different countries have kind of different answers to this response. I wouldn't characterize it as financial advise or super, super great. This is just to the best of my understanding. In the United States, you pay taxes kind of twice on Bitcoin I believe is how it works. From the buying and selling of the coin taxes are paid in a similar way of how property is taxed. So if anyone understands how property is taxed very well. Real estate is not my domain. Trading is my domain and that was my main role here, but in Canada it's a lot more just capital gains tax on [inaudible 00:08:09].

Konrad K:                     Pretty straight forward capital gains tax can work on almost any asset, if you buy and sell a limited edition comic book you buy it for five dollars way back when and sell if for 10,000 today, you'd be paying capital gains on the price you bought it at versus the price you sold it at. I believe that'd also be inflation if it's over such a long period of time. But capital gains taxes is mostly how it would be taxed as just an asset. If you do trading from leverage, just usually in fiat dollars or fiat dollar equivalents, like Tether, then you'd be paying income tax on that money and appreciation or capital gains tax on any of the assets that increased over time.

Konrad K:                     The reason this is kind of challenging, to better answer your question, is the example of eggs. If I buy ten dollars worth of eggs and pay thirteen percent in tax, I got 1.30 in tax, right? If Bitcoin declines by ten percent, it's no longer going to be 1.30 in taxes, it's going to be 1.17 in taxes. So now all of a sudden the government's tax revenue is different than what they're expecting and so they might overspend on the higher Bitcoin value and then Bitcoin's value dramatically decreases and all their tax [inaudible 00:09:14] increase, while it might have the same Bitcoin value, its dollar value will have depreciated. So this could cause some issues for how the government would raise money if they were solely taxing on cryptocurrencies, which I guess goes back to it's hard to really use it as a reserve currency the way fiat currency or US dollars are kind of like the reserve currency.

Konrad K:                     You want this kind of stability for long-term planning, which is something you definitely do do in government. So I guess that's some of the issues with how it's taxed, along with acceptance and having everyone use it there are some other additional barriers with having everyone use Bitcoin. We were talking like skill ability, how [inaudible 00:09:51] will work, how even people can access it because it's still not super, super easy to access Bitcoin the way it's super easy to access a bank, they're on every corner. Whereas Bitcoin, there's a technological barrier entry. Even with very explicit instructions and walkthroughs, it would be very challenging, for example, my dad to buy Bitcoin. So there is that kind of technical barrier. You gotta go on a computer, you gotta e-transfer your money, which is already quite challenging for a lot of people.

Konrad K:                     Before this job, earlier in my life, I was working at a bank as a teller. We were mostly working with older clientele and I was really able to see some of the resistance banking innovations have on some of the older populations. As a young person I embrace all these digital channels, it may have been a little bit frustrating for me to kind of see this inefficiency in banking that people refused to let go of, but then it's important to see that because this also some of the things that some of these really innovative think tank companies are up against. There are all these people that you can't ignore or leave them behind, so how do we create a new financial system that can use, benefit everybody. Can we do that or, if not, are we gonna try and create some sort of financial system that will abandon an older generation? Can we really do that? There's even some class and educational and generational differences that make it a little bit challenging to completely adopt this new system.

Kyle Fraser:                  So let's say that we bypass the technological barrier with Bitcoin. Would now still be a good time to invest into Bitcoin at its current price?

Konrad K:                     Well, I guess I'll just super quickly touch down on the assumption made where the barrier we'll get into it, being able to overcome that barrier and access it. I do believe it will become easier over time. For example, I would have assumed going on the internet in 1994 or something like that would be a lot more challenging than it was today.

Kyle Fraser:                  Sending an email back then -

Konrad K:                     Yeah. I imagine it must have been more challenging also the amount of resources available to you to guide you. Now you can Google how to buy a Bitcoin and they'll probably have a bunch of forms like click by click what to do. And even with Bitcoin this wasn't much the case several years ago. I heard some on the influencers discussing their difficulty in buying Bitcoin way back when, having to go through [inaudible 00:12:12] or something like that. Now there's exchanges popping up every week it seems. So it's a lot easier to get in, so I do believe just how internet was really hard, now internet's a lot easier. I think cryptocurrencies will become the same way.

Konrad K:                     Investing into Bitcoin as its own topic, once again this is definitely not financial advice, I would definitely regurgitate some of the other bits of advice I've heard regarding this area. Two good things is never invest more than you're willing to lose. You have to remember that Bitcoin is purely a speculative thing right now. Like regular money, not unlike regular money. Like regular money, Bitcoin has not inherent value. I can't point to a twenty dollar bill and this is worth this much. It's only worth twenty dollars because it says twenty on it and every other person looks at it and says this is twenty dollars and all the stores will say okay that number written on that sheet of paper will buy this much stuff at my store and everyone kind of agrees upon that. Twenty dollars would have bought a lot more a hundred years ago or fifty years ago, so it all has to do with how people view things, inflation, everyone starts gradually increasing their prices, and everyone stops believing that the currency has value then it dramatically decreases in value.

Konrad K:                     Venezuela has I think it was 34,000 percent annual inflation, so their prices are increasing. I think that was the number. I remember I calculated the number and their prices are increasing by an average of 80 percent a day. So you buy a coffee for a dollar in the morning and by the end of the day that coffee's worth 1.80. Your currency is literally almost halving in value everyday; it's absolutely insane. So, for someone in Venezuela, there will likely even be less than that used because so many have been lost in the early days or account holders that have passed away and had no passing down Bitcoin rights.

Konrad K:                     The amount of Bitcoins is capped. There can never be more. So similar in the way of gold. There's a limited amount of gold. Gold you can kind of find more as you get better at digging it and better at harnessing smaller amounts of gold that you'd traditionally throw away. With Bitcoin, there's straight up twenty-one million, there will never be more. With currencies as in Venezuela as we're seeing there's a seemingly limitless amount. The government is printing more money, it's severely affecting the wellbeing of every single Venezuelan and Bitcoin is kind of like a safe haven that's pretty accessible because you can access it through computers. Buying gold in Venezuela may be more challenging. I can't really speak to that. To them it may be a much greater investment, but I would say in general, we live in Canada here, a westerner, a member of a more developed country that isn't necessarily super [inaudible 00:14:36] or high-frequency trading, if you wanna just buy and hold it, a good rule of thumb is never more than you're willing to lose. Never more than you can afford to lose.

Konrad K:                     And if you do have a well-balanced portfolio and you have a pretty good nest and you wanna start throwing some money into this Bitcoin thing, I've heard something like five percent of a portfolio is a pretty modest amount for the average portfolio. The Bitcoin could satisfy your high-risk portion of your portfolio. You have your low-risk, medium-risk, high-risk. High-risk are like alternative investments. Some people invest in art or comic books, which I joked about but it's actually a pretty - especially with how comic books are kind of evolving as a movie franchise there's a lot more attention for it, alternative investments. So five percent, I would say. More than that I would say you have to start being really careful. Trading Bitcoin is my job. I do look at charts or at least be mindful of them pretty much 24/7 because this is for a first-time market and so that's kind of how I do it.

Kyle Fraser:                  Cool. So do you have any advice or a direction that you can point some of our beginners to who want to learn more about Bitcoin and cryptocurrencies in general?

Konrad K:                     I guess there are two things. DYOR - do your own research is probably the most valuable research I'll get. Anytime you have anybody telling you some other research you have to assume that there are some biases in that. Personal biases like, Hey, this coin is good. Oh, I happen to already be invested in it, so if you buy this coin it will financially benefit me. Those are biases you wanna be careful for. Going to events is very useful because people in this space, and I would even say the industry as a whole, I would argue is fairly altruistic compared to maybe other industries. The origins of the coin came at the end of the financial crisis when a bunch of people basically agreed that traditional financial systems, banks, and governments and central banks are not working. There's a massive conflict of interest. We saw what happened with the financial crisis. We're still not fully out if it. We're just pretty much propped up on monetary stimulus right now, so the effects of the financial crisis are going to echo through for a very long time and it's kind of etched into the history of time and finance. People said, hey this is really bad, let's create this other system that can't be controlled or manipulated by a governing body. Bitcoin and other products with similar ethos have evolved.

Konrad K:                     Because the whole idea behind the cryptocurrencies and the crypto industry, if you wanna call it, was about creating something that's one good, can't be controlled or manipulated by the one percent type ethos and, consequentially, it's very good for the little guy. Not just like the little guy, the small business man in flyover state in America or like a small country in Europe, but we're talking about the un-banked in Africa or in India. Someone who may truly wanna have business but they can't because banking is too expensive. A hundred dollar bank account balance for an account for someone who lives on two dollars a day is absolutely impossible. Then you have to factor in wire transfer fees. Micro transactions are very, very small transactions valued less than a dollar are absolutely unfeasible. And then exchange rate fees. So you see that the traditional banking system, while there is all this corruption and what not, cast all your opinions on corruption aside, it's unfeasible to include billions of people in the financial system.

Konrad K:                     And this does create a dead weight loss for the global economy because you can't have a better exchange of goods and a better offerings of goods and services so there is a loss to the entire global economy. So being able to integrate all these people through cryptocurrencies and decentralized, consequently low cost projects, you're able to incorporate more people into the financial system, uplift more people out of poverty, and potentially uplift everybody. It's like the rising tide lifts all boats. I do believe that ethos does exist within the cryptocurrency industry.

Konrad K:                     Going to events is a great place because all this positivity and thirst for change is really there at events. On social media, you will see a lot of it as well. You will see a lot of trolling and mean people and the classic YouTube comments from back in the day before YouTube really stepped up their game on filtering that garbage out. There's still a lot of negatively out there. And I think that's just the internet. That will be there. But you look past that and you will notice there's a lot of genuine good and appetite for positivity. So I'd say sift through that accordingly and go to events if you can. YouTube is a good place. Short videos explaining complex ideas. I would think it would be just as useful within the internet, like a quick book how does the internet work. That would be probably a similar gateway for the internet, but for cryptocurrencies. And DYOR, do your own research. Do as much of it as you can. Learn. It's really exciting. I encourage anyone who does start venturing into this area and learning about it, get excited about it. It is exciting. It's a really cool opportunity. It's a really exciting shift we're gonna start seeing in the next decade or two.

Kyle Fraser:                  Thank you very much for listening to episode one of Chelle Radio. And if you are interested in learning more about our own cryptocurrency, you can visit us at www.chellecoin.com. And if you're interested in learning more about the team, including myself and Konrad, you can visit us as www.chelleservicecapital.com. Stay tuned for our next episode.