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I got the chance to sit down with a #bitcoin #investor that started in the asset classin 2015. It's safe to say that he has now entrenched himself in the industry and become somewhat of an expert. Unfortunately we don't have a video for this one, but run over to our podcast and have a listen if you're interested in #Cryptocurrency as an investment.
Stefan Angelini
Hi there. Thanks for joining us for another episode of the Investment Types podcast. We're talking about Bitcoin today with a very knowledgeable man who's been investing into bitcoins since 2014. We're going to talk about all things, going to learn about it, exactly what it is, why he loves it, why he invests into it, his journey, some of the horror stories he's come across, including exchanges shutting down and people just losing their money. But most importantly, we're going to talk about the type of investors that invest into Bitcoin people that need can take on volatility. People have a long term time horizon and people that have patience. So listen to the podcast. I really hope you enjoy it. Let's get into it. Hey, everyone, welcome to another episode of the Investment Types Podcast. What we're talking about today is Bitcoin and crypto currencies. So if you've been around for the last few years, this is something that's been hitting all the headlines in the papers and what I'm talking to today is an expert and someone who's done a lot in the field, who prefers to really remain a little bit anonymous. But nonetheless, we're gonna get really into some details so thanks a lot for joining me bud.
Anonymous
Thank you.
Stefan Angelini
I think it's gonna be a fantastic conversation. So you got first got into Bitcoin. Bitcoin investing back in 2014, 2015.
Anonymous
Yeah
Stefan Angelini
What made you get into it?
Anonymous
So boy. Pretty much. I had a developer friend and he he was always showing it to me. And I just thought I never really looked into it much. We were just at gym on time and he told me about how much Bitcoin had gone down. It was like at about 20 cents or something, went down eight cents. And then I just went home with the chart and then seen massive volatility not enough for you know, it's such a cheap price. It's probably a good investment.
Stefan Angelini
Yeah.
Anonymous
And you know, its kinda looked into the fundamentals from then, and that's when it's kind of kicked off for me.
Stefan Angelini
And then once you got into it, you saw the money got so much. So at the end of 2017, it got to 21,000.
Anonymous
Yes. That was
Stefan Angelini
US.
Anonymous
US
Stefan Angelini
Or Australian. So I wanna wanna up a lot.
Anonymous
Yes.
Stefan Angelini
Right. And I can imagine as your money starts to go up. You start to look into it a lot more.
Anonymous
Yes.
Stefan Angelini
Did you really start to really deep dive into an analysis of.
Anonymous
Yes.
Stefan Angelini
Is it still a good investment?
Anonymous
For sure. I went down the rabbit hole there and yeah. The the investment side of it was from then on was was clear that it was it was more a long term thing. It wasn't very short term for me. So
Stefan Angelini
Yeah.
Anonymous
I don't think I should have sold 20,000. I didn't. But it's you know, I know a lot of the big players did sell at that time, but this is something once looked into the fundamentals. It was too you know, it was too hard just to let go of. I think this is a very long term thing. And I'm into properties you know shares and gold. That's a long term thing for me. I don't think it should be any different.
Stefan Angelini
Yeap.
Anonymous
I think
Stefan Angelini
its still investment
Anonymous
Assuming it's an investment. Yeah, it's a long term investment. So and that's what I thought about it since the stocks when I bought it early days, I didn't think of it. You know, I didn't think anything from I just kind of left it there. I've always been like that
Stefan Angelini
Yeah.
Anonymous
When I was little. I just hold things
Stefan Angelini
Yeah.
Anonymous
And then I'd just, you know, put them away.
Stefan Angelini
Yeah.
Anonymous
I've always been a kind of hoarder. So in this case, yeah, I'll continue and I'll continue to invest in this pool of money where amount is, you know and
Stefan Angelini
Cause you believe in.
Anonymous
Yeah, I believe in. And it's not just more the belief, it's more about the fundamentals and how it works, how many how much the supplies know the decentralized nature.
Stefan Angelini
Well, let's bring it right back. Yes. Bring it right back to everyone that doesn't know who listen to this for the first time.
Anonymous
Yeah.
Stefan Angelini
What is Bitcoin?
Anonymous
Yeah. So Bitcoin is a proof of work payment system pretty much that it's so. Yeah. So it's just a proof of work pay payment system. So it's done all through crypto cryptography. So, yeah, the dissertation Nakamoto. He's a guy. He's anonymous.
Stefan Angelini
Yeah.
Anonymous
He was the one who created it. There's a few people before and that kind of cypherpunks bitcoin that time that we're trying to create something similar like bit gold. There's a guy called Nick Szabo. But the main thing that was that Bitcoin sold was the double spending issue, which block change been around for many years.
Stefan Angelini
Yeah. Yeah.
Anonymous
but the double spending thing was, was the one thing that Bitcoin solved, meaning that you couldn't pretty much double spend someone's coins. So every coin was pretty much the bit coin and it was signed to each seed.
Stefan Angelini
Yeap.
Anonymous
So, yeah, that's that's kind of the
Stefan Angelini
and then Bitcoin started getting talked about being exchanged or traded or people might be able to use it as a currency, not only to trade with each other or to to buy things, say online exchange goods for services.
Anonymous
Yeah.
Stefan Angelini
And that's that's where its value really I can imagine came from where people started accepting it as payments.
Anonymous
Yes, for sure. So that was that was the one thing I think the one of the biggest volume, you know, kind of areas for it was was in the drug trade, that kind of spice a lot spice it up a lot in the early days. But then I think it's kind of shifted away from there. And more now gone to goods and services is a lot of places like even in Australia, Australia's really taken around really well. You know, these places you can buy these exchanges now, you can pretty much buy troubled tickets through.
Stefan Angelini
Yeah.
Anonymous
Buy all kinds of goods and services, even the Litecoin Foundation have started, you know, pretty much making it really easy for everyone to just kind of buy certain things, goods and services.
Stefan Angelini
So a lot of people exchanging services for Bitcoin as payment as opposed to getting Australian dollars.
Anonymous
Yes, I think that's that's the future. So people always say, ah, you know, I to buy Bitcoin or they don't understand, you know, you don't have to buy one Bitcoin. You can buy a fraction of a Bitcoin
Stefan Angelini
Yeah because it's so expensive.
Anonymous
Yeah, because one is. Yeah. So we'll get to that part. But people buying a fraction of Bitcoin that's that's in in future generation, people will be earning and not buying it. So, you know, people don't understand that if someone has a goods or service, they can they can accept bitcoin. And and that's if for for a long term hold. That's that's great for a deflationary asset.
Stefan Angelini
Yeah.
Anonymous
That's you know, that it is deflationary compared to fiat currency. Currency is inflationary. So there's a massive difference in the fundamentals area. That's the one big thing that I'm I'm looking at and why I understand it keeps going up. It's not just the bubble. We will call it a bubble. Don't have enough understanding of the tech. And I haven't looked into a deep enough
Stefan Angelini
Yeah. But it's something you really got wanna to understand. I could imagine
Anonymous
it is sounds differently.
Stefan Angelini
A lot of the different markets where I can imagine there's a lot of information out there now. A lot of information that people might just I'm not sure how much it can be relied upon. Historical data is a big thing when it comes to investing. And that's why you invest in property. You invest and shares, you invest in gold. You invest in bitcoin.
Anonymous
Yes.
Stefan Angelini
So explain to us some of the fundamental characteristics of each of them.
Anonymous
Yes, sure. So the the one thing that Gold think bitcoin is is digital gold. It's very similar.
Stefan Angelini
Yeah, yeah. I can get that.
Anonymous
But the one thing is, you know, with gold, you can't just carry it out. It's kind of like a thing of the past to me anyway.
Stefan Angelini
Yeah. Yeah.
Anonymous
it's great. Gold's great, but it's not something you can just carry bars of through the country. Where's bitcoin you can't you know, it's
Stefan Angelini
you've always got it.
Anonymous
Totally lightweight.
Stefan Angelini
Got it. Yeah.
Anonymous
The it's very secure. Like being your own bank. You can even lend it out. You can you know, you can you can fund it. You, you can borrow against it in certain places. You can borrow against it now. With property, the one thing I find great about Bitcoin is liquidity. So liquidity to me is one of the biggest things. And that's why that's one of the reasons I don't like massive out coins is because liquidity, if you buy a big amount in exchange, you'll see a massive spike in the order book and it would just clean up a room, whereas bitcoin has massive liquidity. So even still right now, where it's it's going down the price, the liquidity is huge. So that's that's one thing. Liquidity means, you know, getting in and out of it, you know, property. The one thing I struggle with property, getting my head around and kind of lock in them quite patience with with investing is the time it takes. I'm sure you would have some cases.
Stefan Angelini
Yeah.
Anonymous
how long sometimes you want to sell, you kind of need it.
Stefan Angelini
So you have to get it ready. You have to advertise it. You have to go through the due diligence period and you got to get set them on period before you even get it out. Sometimes your tenant won't move out if you've got to put more cash into it.
Anonymous
Exactly.
Stefan Angelini
Share markets, though, are a lot more liquid.
Anonymous
Yeah,
Stefan Angelini
share market yeah.
Anonymous
Yeah, that's right. Yeah,
Stefan Angelini
it's okay. Gold market, not as liquid.
Anonymous
Would you
Stefan Angelini
but still a bit more than property.
Anonymous
Yeah, that's right.
Stefan Angelini
Yeah. But they also got that capital growth fundamental, which is what you really look for.
Anonymous
Definitely.
Stefan Angelini
And you probably love the bitcoin because of its finite amount.
Anonymous
Yeah.
Stefan Angelini
And the point there's going to be an end at some point.
Anonymous
Yes. That's right. And the one thing I've been into mining a little bit about a few S9 machines a few years ago, which weren't that wasn't the best investment. I think
Stefan Angelini
here's a horror story.
Anonymous
Yes
Stefan Angelini
some mining money for Bitcoin can be good. And basically money for Bitcoin is when you have a machine that goes,
Anonymous
yeah,
Stefan Angelini
hashes it or finds it for you and then pops into your bank account.
Anonymous
Yeah. Your your wallet.
Stefan Angelini
Yeap.
Anonymous
So, you know, your bitcoin wallet.
Stefan Angelini
Yeah.
Anonymous
So that's. Yeah. So right now you need to be you have really good electricity rates.
Stefan Angelini
So here's a horror story. Mining bitcoins where it can be good some mining bitcoins is basically we we hash or you have a program or a machine that finds a bitcoin for you, puts them in your wallet.
Anonymous
Yes. That right. Yes. Pretty much the bitcoin mining algorithm is one called SHA 256. It's pretty much the network, you know, fights to pretty much decode someone's transaction or block. They they just pretty much try to fill a block. And once it's filled, that's when the bitcoin is received. So that happens with transactions as well.
Stefan Angelini
Yeah. Okay.
Anonymous
So, yeah.
Stefan Angelini
So tell me tell me what's happened. So it sounds like it could be all rosy.
Anonymous
Yes.
Stefan Angelini
If you've got a machine there that's working for you to find these things, and give them to you. What are the downside?
Anonymous
The downside is electricity costs and the costs involved in and having it set up. So, you know, luckily for me, I had some friends overseas who who had set it all up and they knew what they were doing. The only thing that stopped us while it was going was the electricity costs. So when we first deployed the machines, they were working for a while, but then the electricity costs just didn't do. It was actually more beneficial just buying Bitcoin and then
Stefan Angelini
so no longer becomes just an investment by money. You're basically running a business.
Anonymous
Yeah. I'll take
Stefan Angelini
other factors into consideration. How goods your program?
Anonymous
Exactly.
Stefan Angelini
The internal costs of actually trying to get those trying to get those coins back things like a electricity electricity.
Anonymous
It's a huge thing. Yeah. So there are places in the world, I think Venezuela is one where there the electricity rates is really low, but the currency is also hyper inflated. So it might be a dangerous place to go into, but places like that would be very beneficial even today to to mine Bitcoin.
Stefan Angelini
Yeah. Okay
Anonymous
But it just depends.
Stefan Angelini
And so can work. But you've got to be willing to I could imagine, make make sure that those work
Anonymous
and the machines make a little noise. They they get really hot. So it might be great in a in a cold environment but in a hot environment. Going to make sure they keep cool.
Stefan Angelini
Yeap.
Anonymous
And so some places here in Australia just won't work unless you've got some great ventilation.You know.
Stefan Angelini
we've got some companies starting to put some of their server machines, the large companies like Google, they're trialling several machines underwater, but deep in the deep
Anonymous
Yeah right.
Stefan Angelini
in the depths of the water because it's a colder environment outside, which means machines get colder a lot quicker. But anyway, that's something else.
Anonymous
its amazing.
Stefan Angelini
And the other thing with bitcoins, I could imagine there, so there's a lot of volatility. But not only that, these coins have to be held some way and held in a wallet.
Anonymous
Yes.
Stefan Angelini
And you hear about how wallets get hacked, which is one of the one of the major horror stories.
Anonymous
It's more exchanges getting hacked, wallets getting hacked is very, very rare. I haven't heard many stories of a wallet getting hacked, per say.
Stefan Angelini
Yep.
Anonymous
The exchange getting hacked is what you know, that that's happened like exchanges just closed down.
Stefan Angelini
So could we see that as a bank getting robbed?
Anonymous
Exactly right.
Stefan Angelini
Okay
Anonymous
so if you hold your cash in a bank, there is a risk of that bank going on the and not letting you know some places it was Lebanon or
Stefan Angelini
taking your money
Anonymous
in Turkey
Stefan Angelini
Yeah.
Anonymous
or just wasn't. Yeah, they just weren't. People withdraw their money.
Stefan Angelini
Yeah. We said once there's a run on a bank in in a severe depression.
Anonymous
Yes.
Stefan Angelini
Basically there's been so many people taking their money out the bank who actually close its doors. Does it have to be people taking their money yet the bank and just decide to close its doors?
Anonymous
Exactly right.
Stefan Angelini
Okay.
Anonymous
So the beauty about Bitcoin is, is that you can be your own bank.
Stefan Angelini
Yeap.
Anonymous
And some people don't yet realize. So most people feel more comfortable leaving their funds in a bank or on an exchange.
Stefan Angelini
Yeah.
Anonymous
You know, whether they bitcoin gold or whatever.
Stefan Angelini
Yeah.
Anonymous
They're just not comfortable holding themselves until people are confident enough to hold their own keys. That cryptographic keys. And, you know, understand how powerful that is and how securities then it's going to open up a lot of doors for people, I think. The New Age people. You know, the next generation, I think, going to really have their heads around that we struggle to to get our heads around that have been compared to her.
Stefan Angelini
Yeah. And then you could be you could be one of the people who have just you hold your currencies there. And then something happens to the bank that holds the currency exchange. And then see you later. There goes your money.
Anonymous
Exactly.
Stefan Angelini
And you're gonna climb to it because I could imagine you don't have an insurance policy that might be able to fund it back.
Anonymous
Exactly. Right.
Stefan Angelini
Okay. Alright. Well, these are the things that you have to look out for sometimes until you get the confidence we can actually just hold everything yourself.
Anonymous
Yes. That's right.
Stefan Angelini
Yeah. So we've talked about some horror stories. Let's go into the characteristics of what a Bitcoin actually is and how it acts as an investment. So some key fundamentals as to help might compare against share markets, property investments and things like that. We start to talk about the volatility. It's finite nature. Bitcoin, you can imagine, has not much of an income you can own off it unless you start to trade it, lend it out.
Anonymous
Yeah.
Stefan Angelini
And then, yeah, that lending and trading aspect of it. Explain to me what you think the main characteristics of Bitcoin as an investment are,
Anonymous
I think. Well, yeah. Understanding the fundamentals and how powerful it is. You know, the, the P2P aspect of it, which people there's no middleman. That's that's one of the the most strongest characteristics that I believe maybe you ought to send to you with no middlemen. Yes. Incredible these days everything as a middleman these days well, there is PayPal, a bank website. So having it P2P is is quite incredible. And that's a difference between a property and you get through solicitors agents.
Stefan Angelini
Yeap.
Anonymous
Stuff like that, so it being P2P is one of the most amazing things out there. It's also one of the most, you know, I guess, drawbacks, because, you know, the financial system doesn't really like that at the moment or can't keep an eye on it as closely. But I think there will be, you know, certain regulations that will you know, Australia is really good like that. There are other countries that it just kind of putting a stamp, putting a stamp, trying to put a stamp on it.
Stefan Angelini
Yeah.
Anonymous
China.
Stefan Angelini
Okay. Yes.
Anonymous
Yes. And that's probably one of one of the flaws with it is it is just not understood enough. Not it's not regulated enough.
Stefan Angelini
Well, it can't be regulated.
Anonymous
Yeah
Stefan Angelini
Or becoming where it away that it can.
Anonymous
I guess it can't be regulated, but it can in the way of, you know, you know, authorities could say that you have to you know, they they can put systems in place. But it's just really hard because it's just so. Because it is that p to p. It just. Is that.
Stefan Angelini
Yeah.
Anonymous
And, you know, the only problem I see with with Bitcoin run as a fungibility of it, because even though that's you know, I'm not talking so much about, you know, governments controlling it, putting putting laws in place, stuff about it. But fungibility is not not proper, not for the privacy aspect, for the fungibility of it. So everything can be looked up on the block. Explorer. So right now, it's it's open source.
Stefan Angelini
Yeah.
Anonymous
So it's out there. So you can look at every single transaction where it's going. How much on the Bitcoin network. So it's quite
Stefan Angelini
So explain. So explain this. So let's say that eventually comes the point. We can go and buy a coffee with your bitcoin and you would spend three dollars fifty to go and buy a coffee. It's in Australian dollars and you use it point whatever of your bitcoin, you pay for that.
Anonymous
Yeah.
Stefan Angelini
That person can then
Anonymous
look up on the block explorer and find out how much it is in that certain wallet you sent from.
Stefan Angelini
Right
Anonymous
inputs and outputs were
Stefan Angelini
so what, your bank account balance is
Anonymous
pretty much.
Stefan Angelini
And how you been transacting on it.
Anonymous
Yeah. So that's the biggest problem. That's something that most people don't understand yet.
Stefan Angelini
Yeah,
Anonymous
it's one of the biggest problems I see is, you know, I've looked into a lot of it now and that's the one big problem I see. And there are certain things that there are certain coins that are getting this. Monero is the ecash you know privacy coins, but they don't scale enough.
Stefan Angelini
Yeah.
Anonymous
So once it gets to you know the twenty thousand mark again, it's gonna it's gonna take a long time.
Stefan Angelini
Yeah.
Anonymous
And we need a coffee quick. You know, we need that transaction to go through. It's going to be quite tough. So
Stefan Angelini
Yeah.
Anonymous
Fungibility and that's what I mean about fungibility. And the security side of that would be if I go to buy a coffee and someone can see the funds in my you know, and my wallet, then it could just lead to certain identity theft, could lead to, you know, it could lead to robbery. Could someone see how much is in your wallet? And, you know, you could be forced, you know, in certain ways. But that's the one thing. But there are certain you know, I think the lite coin found Charlie Lee. He's working on Mimblewimble implementation on lite coin, which would be quite amazing if it happened. So it'll be a side chain of lite coin. So you can pretty much, you know, send you litecoin to Mimblewimble lite coin and then, you know, and that'll be completely private transaction. And you can send it back to litecoins. So it'll be two separate chains running alongside each other. That'd be quite amazing to see. And it'll be scalable.
Stefan Angelini
Yeap.
Anonymous
What they're saying is,
Stefan Angelini
as well as with any company, something new and gets developed over time, something develops, someone develops, something newer, are better. You make it better. You forever to use.
Anonymous
Yes, that's right.
Stefan Angelini
So infantilism bitcoin we know we know from the past does that a lot of volatility. There are some things about transaction issues that come about. However, it still attracts a lot of attention and a lot of people want to invest into it. Remember, at the end of 2017, everyone saying what, they're piling into Bitcoin and bonds and I'm buying some. And after that, it got sold off a little bit. So if someone's to come to you and say, look, I'm looking to invest into Bitcoin, how should I do it? Or actually what I wanna know is what are the characteristics? Let's not talk about if they should do it or not. Let's look at the characteristics of a person that typically invest into Bitcoin. What characteristics did they have to have or what is their investor type?
Anonymous
Right. So I think they definitely need patience you said that needs understand risk.
Stefan Angelini
Yeah.
Anonymous
Also, I'd say to them, don't buy it, earn it. You know, earn bitcoin.
Stefan Angelini
Yeah.
Anonymous
There's a places now you can earn bitcoin is a place called Lolli. You can any online shopping now you receive cashback or bitcoin back. So every transaction you make with dollars you receive a certain portion back
Stefan Angelini
Yeap.
Anonymous
in Bitcoin. So that's what I would say to them. Just try to earn it. Don't.
Stefan Angelini
But let's say once they've got it yet, instead of transacting it into Australia or if they want to go earn it, as opposed to getting paid in Australian dollars. What's. So what's their character type? They gotta be patient.
Anonymous
Definitely.
Stefan Angelini
They have understand it.
Anonymous
Yeah.
Stefan Angelini
Do they have to be able to accept that there's going to be some risk.
Anonymous
Yes, for sure.
Stefan Angelini
Okay.
Anonymous
Volatility in it. But they're going to look at it on a logarithmic scale from the beginning to the end.
Stefan Angelini
Yeap.
Anonymous
And what I say is it's amazing. It's gone from a few cents to twenty thousand dollars. That is more incredible than it going right now. Seven thousand dollars to two million dollars.
Stefan Angelini
Yeah.
Anonymous
I don't think that's that unbelievable.
Stefan Angelini
Yeah, that's right.
Anonymous
So, you know, within within the next 10 years. I see it, you know, well past 10 million, especially if it takes some of the market cap of gold.
Stefan Angelini
Yeah. So long term approach have a long term approach in mind.
Anonymous
Yeah.
Stefan Angelini
I understand it's going to be some risk of volatility along the way.
Anonymous
Yes.
Stefan Angelini
But however, it's still another investment round where you've made some money off. You continue to invest into some. I've got to say thanks for coming on. It's been an amazing conversation with some tremendous insights. Thanks a lot for everyone out there listen. Thank you very much for joining us. I look forward to chatting again soon.
Anonymous
Thanks, man. Perfect.