The Basics of Bitcoin with Matt Kasper and Will Doty

December 6, 2021

The Basics of Bitcoin with Matt Kasper and Will Doty

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The Basics of Bitcoin Show Notes

Bitcoin has become incredibly mainstream. It’s been a hot topic for a while now and it’s mentioned frequently in many investment discussions in the financial planning world.

Everyone sees ads for Bitcoin in their social media feeds with the cute little graphics of coins with Bs on them. There are probably some people out there who also think that there are real, physical Bitcoins they can get, too! So, with that in mind, today’s episode is all about Bitcoin: how it originated, what it really is, and how you can invest in it.

Joining me today to discuss the basics of Bitcoin are two of our CERTIFIED FINANCIAL PLANNERS™ Professionals at Modern Wealth Management, Will Doty and Matt Kasper. Without going down too many rabbit holes, this conversation is a top-level introduction to the Bitcoin and cryptocurrency basics – and one you can use to make it a part of your portfolio in a meaningful way.

In this podcast interview, you’ll learn:

  • How Bitcoin was inspired by the financial crash of 2008.
  • What Blockchain technology is and how it can be used to ensure transparency in supply chains and many other use cases.
  • Why the price of Bitcoin is so incredibly volatile.
  • How to minimize your risk of fraud and secure your cryptocurrency investments.

Inspiring Quotes

  • “You’ve got to be aware that what goes up can quickly come down.” Matt Kasper
  • “Don’t go in thinking that you’re just going to have this incredible growth that we’ve experienced historically. You never have control over what sequence of time you’re going to experience inside of these types of investments.” – Matt Kasper

Interview Resources

Interview Transcript


[00:00:08] Dean Barber: Hello, everybody. I’m Dean Barber, Managing Director at Modern Wealth Management. Welcome to The Guided Retirement Show. This is the season finale for Season 5. I want to thank all of you who have taken the time to listen and subscribe to The Guided Retirement Show and share it with your friends. Our next episode, Season 6, will be coming out in January of 2022.

As a quick reminder, this podcast was actually released early as part of the Modern Wealth Management Educational Series. If you want to get enrolled in the Modern Wealth Management Educational Series, every other Wednesday, we have an educational video designed to help you become more intelligent and informed investors. I want you to get enrolled in the Modern Wealth Management Educational Series, and you can find that link in the show notes.

Today, we’re going to be talking about Bitcoin. I have Matt Kasper and Will Doty, both CERTIFIED FINANCIAL PLANNER® professionals here at Modern Wealth Management. And we’re going to cover the basics of Bitcoin today. We’re not going to dive really deep into the weeds, but we’re going to cover some interesting facts about the origin of Bitcoin, about what Bitcoin really is, and about how you can actually participate in the investment of Bitcoin. Please enjoy my conversation with Will Doty and Matt Kasper, both CERTIFIED FINANCIAL PLANNER® professionals at Modern Wealth Management.


[00:01:26] Dean Barber: Matt Kasper, CERTIFIED FINANCIAL PLANNER® professional, Will Doty, CERTIFIED FINANCIAL PLANNER® professional, gentlemen, welcome to The Guided Retirement Show.

[00:01:32] Will Doty: Thank you.

[00:01:32] Matt Kasper: Thanks.

[00:01:33] Dean Barber: Alright. So, we can take a deep dive later, but today, what we want to do is an introduction to Bitcoin. And to set the stage for you guys, Bitcoin has become very mainstream. And there’s almost not a day that goes by that you don’t hear Bitcoin multiple times. You see the ads for Bitcoin and you got this cute little coin with a B on it. And I think there are people out there that think that there are actually coins that they can get and those are bitcoins, but that’s not really what it is. So, I want to back up and Will, I’ll start with you.

[00:02:08] Will Doty: Sure.

[00:02:09] Dean Barber: And again, this is an introduction to Bitcoin, so we could take this down many, many rabbit holes and get people really, really confused, but let’s try to keep this pretty high level.

[00:02:18] Will Doty: Yeah.

[00:02:19] Dean Barber: So, first of all, what is Bitcoin?

[00:02:23] Will Doty: So, Bitcoin essentially, it’s just a ledger, but it’s done digitally, and talks around this subject, Matt and I were talking earlier, and he put in a perfect phrase that it’s a ledger, just like you’re doing your checkbook, right? So, it’s just a list of transactions that center around, for Bitcoin, it’s transferring money from one place to another.

[00:02:47] Dean Barber: From individual to individual, individual to business, business to business, government to government. How is this done, Matt?

[00:02:54] Matt Kasper: Yeah. So, ultimately there’s some key language to understand. This is what we would define as peer to peer. And what that means is it’s potentially me transacting a pass through a bunny over to you, Dean, for example. That is ultimately what’s being accomplished with these digital assets. So, it’s no longer utilizing an institution to be able to accomplish something to that degree. So, you have to go back and think, why did this all start in the first place?

[00:03:27] Dean Barber: Good question.

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[00:03:28] Matt Kasper: And it really all started because the frustration and the craziness that happened with 2008, as we all remember, as we were being financial advisors back in those days, watching how wild and crazy these markets were, but we saw some of these incredible institutions just fail. Dean, I’m sure you have multiple stories about whether it’s Bear Stearns are going in and seen, even things, Goldman Sachs being bailed out. There were a lot of these examples back in ‘08.

One of the most concerning ones was when the dollar, we broke the buck. And ultimately, what happened? Well, people lost faith. They lost trust in what was going on. And what happened was out of that, Satoshi Nakamoto, who is the developer of Bitcoin, ultimately wrote a paper. And this paper came out in 2008. You can actually go look it up and read through this long document that he created, but what came out of that was ultimately, a system utilizing technology where we no longer needed to incorporate the institution. It was what we would define as being decentralized.

So, ultimately, you think about a Bank of America, you think about a UMB. Ultimately, they’re all connected to a centralized banking system. That’s what we call the Fed. And here, for the first time, we developed a system, where Satoshi Nakamoto developed a system that was truly peer to peer, removing the concern that was coming from these institutions. And ultimately, Bitcoin launched out of what was developed in that white paper in 2009.

[00:05:17] Dean Barber: Okay. So, a great explanation was that the birth then of the Blockchain technology of which Bitcoin is built on.

[00:05:27] Will Doty: Right.

[00:05:28] Dean Barber: Okay. So, it was Blockchain that was introduced first, then Bitcoin?

[00:05:32] Matt Kasper: Absolutely.

[00:05:33] Will Doty: Yes.

[00:05:33] Matt Kasper: Yeah.

[00:05:34] Will Doty: Blockchain is the digital ledger.

[00:05:36] Matt Kasper: You got it. So, you think about Bitcoin. Bitcoin is the product that ultimately relies on a technology like Blockchain to even exist.

[00:05:46] Dean Barber: So, let’s take this away from currency for just a minute. And I can tell you, the way that one person explained it to me, and I’m going to verify, you guys said, “Dean, yes, that’s exactly what Blockchain is.” So, they used an example of, if you go to your local market and you go buy a fish, and that fish is laying in the freezer there or in the fresh meat section. And they say, “This is a fresh Atlantic salmon.”

So, the Blockchain technology, if it were used to track that salmon, you would be able to tell the day and the time that that salmon was caught. You would be able to tell the water temperature. You would be able to tell what time that fish was cleaned when it was shipped, whether it was frozen when it was shipped or whether it was refreshed, and how long has it actually been out of the water, and what was the price that it cost to catch the fish, what was the price that it cost to clean the fish, what’s the total cost of the fish, and what’s the market charging for that fish. Is that the kind of transparency that you’re talking about with Blockchain?

[00:06:50] Will Doty: That’s a great example.

[00:06:51] Matt Kasper: Absolutely. So, when you think about Blockchain, there are going to be so many use cases out there. Cryptocurrency is just one example. We actually have completed it already. We’ve had voting systems to do the next election has been completed through a Blockchain type of format. So, what we’re trying to accomplish is as what Will was already identifying, this truly is a digital ledger. It’s a digital ledger that utilizes cryptography to validate and confirm the transaction.

So, you wonder where the term cryptocurrency comes from. It’s because of the process of actually validating the transactions. And in the case of the election, validating the vote is ultimately being correct and implemented with complete accuracy. And this gets back to why is this so significant? Why is this technology so revolutionary? Well, ultimately, it’s an open platform to where everybody can go and see these different transactions taking place. So, it’s no longer shut off to say, this is my ledger, this is my book of business. This is ultimately open to the globe.

[00:08:07] Dean Barber: So, one of the things I think that people have probably either heard the podcast or watched the documentary on Silk Road, where a college kid out in San Francisco decides that he wants to go kind of against the grain and he wants to fight the establishment. And so, he begins using cryptocurrency as a means for him to sell drugs on the dark web. And he actually winds up having the drugs shipped through the United States Postal Service.

I know that hasn’t anything to do with cryptocurrency, but he used cryptocurrency because the owner of the cryptocurrency remains anonymous. So, the transaction remains anonymous so that it cannot be tracked by any government. And that was the reason why he used it. And that, I think, scares a lot of people that they may think that this whole cryptocurrency world today is fraught with the possibility for fraud.

[00:09:13] Will Doty: It’s a great, great question, Dean. I mean, you also have to think just our normal currency and the amount of fraud that goes on around it. No matter what you do, there’s always going to be a certain level of fraud, but with how Blockchain is created, how it’s built, how the transactions flow and are verified by independent people, it actually probably lowers your chance of actual fraud itself.

[00:09:36] Dean Barber: Okay. We’re doing Bitcoin basics here, right? So, we understand Blockchain now. We understand that it’s the tracking of a system, it’s a ledger. So, how does one acquire a bitcoin? And is there a finite number of bitcoins that are out there? And why in the world is the price so volatile? So, one at a time.

[00:10:02] Matt Kasper: Okay, yeah, I think the first place to start is that ultimately, there is capacity. So, what I mean by that, is there will eventually be 21 million bitcoins available. Right now, we’re only at, what, 18.6, is that right?

[00:10:18] Will Doty: Correct.

[00:10:19] Matt Kasper: So, we’re at 18.6 million, which is ultimately out in circulation where people can actually participate in that currency now.

[00:10:28] Dean Barber: Circulation in the digital world.

[00:10:30] Matt Kasper: Digital world.

[00:10:31] Dean Barber: Not the real world, right? It’s in the digital world.

[00:10:32] Matt Kasper: Exactly. And ultimately, when you think about how does a bitcoin even exist? Well, once you have a number of these bitcoins that become available, well, you have to think, if you are there to have transactions confirmed, there’s got to be some incentive for you to be going on to the Blockchain and ultimately, confirming and validating these different transactions. And that’s where you hear this word called mining.

[00:11:04] Dean Barber: I picture mining with the old guy with a beard with holes in his jeans. And he’s got the gold pan down there, shaking it in the water, trying to find the little bit. That’s what I think of mining, either that or it’s the guys drilling into mountains and finding the giant veins, but this is different.

[00:11:23] Matt Kasper: It’s different in one regard, but essentially, it’s not all that unique from the standpoint of the miners that are successful or the ones that get to the actual gold. So, you could have one team of miners that are out searching for that gold and come up short. Meaning what? They had no reward that came from that mining capability versus another mining team that came up and had the success.

When you think about Bitcoin and you’re thinking about what Blockchain is and making sure that these transactions take place, it’s all about what team is first. And that’s where you hear about these huge mining companies and all these different servers being utilized to be the fastest, to be the first, to be able to capture the incentive. And well, what was that? So, the incentive is what they define as a block reward. And I forget what’s the incentive at this stage.

[00:12:14] Will Doty: So, current stage right now, if you are the miner to win, you’re going to receive 6.25 bitcoins.

[00:12:21] Matt Kasper: And you can see at this stage with the valuation of where Bitcoin is, it’s a very competitive market.

[00:12:30] Dean Barber: Okay, so as we’re recording this, bitcoin is $48,000. So, I’m going to get 6.25. So, I’m going to get $3,000 for mining that coin. Is that what I’m getting?

[00:12:44] Will Doty: No, it’d be closer to $28,000.

[00:12:47] Dean Barber: One bitcoin is $48,000, if I get 6.25– am I getting 6.25 coins?

[00:12:53] Will Doty: 6.25 coins, yeah.

[00:12:55] Dean Barber: To mine one? That’s crazy.

[00:12:57] Will Doty: Yeah.

[00:12:58] Matt Kasper: And you wonder why there are so many different mining companies out there.

[00:13:02] Dean Barber: And so, when you talk about being first, how do one of these miners be better than others? Is it all about the speed and the power of their computing system?

[00:13:14] Matt Kasper: Exactly.

[00:13:15] Will Doty: It’s all about the computer.

[00:13:16] Dean Barber: And why is it so difficult to mine a bitcoin?

[00:13:21] Matt Kasper: That is above my pay grade, Dean. I don’t know the ins and outs of actually cracking the code.

[00:13:30] Dean Barber: Have you seen pictures of these miners?

[00:13:32] Will Doty: Yes.

[00:13:32] Dean Barber: Have you?

[00:13:33] Will Doty: Yeah, they have some pretty impressive rigs, so to speak.

[00:13:37] Dean Barber: Really?

[00:13:37] Will Doty: Yes.

[00:13:37] Dean Barber: Interesting. Okay, so because there are only 21 million of the bitcoins that can ever be mined, and can you explain why is that? Why is there only 21? Why is it not an infinite number?

[00:13:51] Matt Kasper: So, for one, that’s how Satoshi wrote it, as this is what he wanted for Bitcoin. Now, Bitcoin is just one of many different cryptocurrency’s digital assets, however you want to look at it. And some of them do have the– what is the word I’m looking for?

[00:14:11] Will Doty: Unlimited.

[00:14:12] Matt Kasper: Unlimited amount of availability. So, essentially, Bitcoin is just one structure that is again popularized because it was the first, it was kind of revolutionary at the time, but there have become many, many other coins out there that are following different sets of rules, different protocols. And, of course, you’re just trying to locate from the standpoint, what’s going to be the best fit for whatever you’re trying to complete?

[00:14:39] Dean Barber: So, Will, this is the part that I am confused about, and I’m sure that anybody who’s watching us on YouTube or listening to the podcast is probably as confused about as well because I doubt there are very many people who are actually using Bitcoins to go to the grocery store, to get a haircut, to buy a vehicle. The price of bitcoins seems to be a speculative investment where people somehow think that at some point in the future, there’s going to be some real value to this.

Is this going to be much like what we saw, the dotcom bubble, where we had all these Internet players at the very beginning that were saying, this one’s going to be the one, this one’s going to be the one, and the stock prices were all going through the roof, and then ultimately, there was a handful and the rest kind of just go off into the sunset and never to be heard from again?

[00:15:31] Will Doty: I think that’s a good possibility. I mean, there are hundreds of coins out there now, and everybody’s trying to figure out, which one do I own? Do I just own Bitcoin? Do I own ether and all the others that are out there? And that’s where we get a lot of this price fluctuation and speculation.

[00:15:46] Dean Barber: Because it sounds to me like this technology is really designed to transfer bunny, okay, something of value from one person to the next without the intermediaries. And so, who’s going to have the most effective technology to do that is who’s going to wind up being the ultimate winner.

[00:16:07] Matt Kasper: Well, one thing, I was going to step back for a second because you were talking about transactions, and there is a date that’s kind of celebrated in the Bitcoin universe as being a holiday, and it’s called Pizza Day. And Will, why don’t you go through what Pizza Day is because I think that will help people understand, what was the first transaction?

[00:16:30] Will Doty: Yes.

[00:16:31] Dean Barber: So, Tuesday nights at my house.

[00:16:34] Will Doty: So, the first-ever transaction where somebody was purchasing a good or service with Bitcoin happened on May 22nd of 2010. And what’s pretty funny about it is they use 10,000 bitcoins at the time to buy two pizzas from Papa John’s and pay, somebody delivered it. So, that person received 10,000 bitcoins. Now, take this, Dean, so if we had those 10,000 bitcoins in 2015, so if that transaction, same transaction, same amount of bitcoins were given for those two pizzas in 2015, that would have been a value of $2.4 million.

[00:17:16] Dean Barber: How many pizzas can I buy with $2.4 million? I thought that’s where we’re going here.

[00:17:19] Will Doty: No, no, no, not at all.

[00:17:20] Dean Barber: I’m going to feed the world with my bitcoin.

[00:17:22] Will Doty: Not at all. And on the last anniversary or the 11th anniversary, that same transaction would have been at a value of $630 million.

[00:17:32] Dean Barber: So, if I would invest it in two pizzas back in 2010, I could have $630 million.

[00:17:39] Matt Kasper: That’s right.

[00:17:39] Will Doty: Yeah. It’s crazy.

[00:17:42] Matt Kasper: And that seems crazy, but the first bitcoins were a fraction of a penny. So, 10,000 bitcoins back then really had no value. I mean it really was the value of…

[00:17:53] Dean Barber: Yeah, $35, $40, it was a Little Caesars’ $7.99 pizzas or was it…

[00:17:59] Will Doty: All we know is Papa John’s, don’t know about the toppings.

[00:18:04] Dean Barber: That is unbelievable. I didn’t know that.

[00:18:06] Will Doty: Yeah.

[00:18:07] Dean Barber: Ten thousand bitcoins for two pizzas. So, that day is what, again?

[00:18:11] Will Doty: Pizza Day.

[00:18:12] Dean Barber: But what is the actual day?

[00:18:13] Will Doty: Oh, May 22nd.

[00:18:15] Dean Barber: So, May 22nd of every year is Pizza Day.

[00:18:17] Matt Kasper: May 22nd. And so, we just went through the 11th anniversary of that. And that’s where they hit those unbelievable levels. Now, of course, Bitcoin has fallen this year as well. So, that’s one thing you’ve got to be aware of is what goes up can quickly come down.

[00:18:35] Dean Barber: Will, you and I, just a couple of weeks ago, we were looking at the volatility of Bitcoin. And there have been many cases where you’ve seen Bitcoin fall by as much as 98%.

[00:18:45] Will Doty: Oh, yeah. Extremely volatile.

[00:18:48] Matt Kasper: Yeah. And that’s one of the things where you definitely want to throw out the flag, you want to use caution if you’re trying to gain exposure because while we’ve seen a lot of success come into this Bitcoin, I mean exponential growth, it also comes with the fear of how quickly it can retract.

[00:19:07] Dean Barber: Okay. So, now that we understand that Blockchain technology is behind the Bitcoin craze and that there are now over 300 different coins out there that are trying to be mined by miners with sophisticated rigs, as we’ll call them, now that we know that, now let’s talk about the next competitor in the space, and that is federal governments, not just the United States, but other federal government, other governments from around the globe that are trying to come up with their own form of digital currency that can be that next way of exchanging dollars or funds.

[00:19:48] Will Doty: Yep. So, a lot of people don’t know this. We’ve got Russia, China, Japan, and even us in the U.S., we are working on digital currency. Now, this isn’t meant to be a digital currency to compete with price fluctuations of Bitcoin. It is meant to really actually replace our currency in the way we think of currency so that we’re actually, you’re going to be using your digital dollar to go buy your pizza, just as you would the paper dollar.

[00:20:15] Dean Barber: But it almost feels like we do that today. I’ve got Apple Pay on my phone, and the amount of cash that I carry today is nothing compared to what it was 15 years ago. I walk in, and whatever I’m out, I scan my phone, and it debits my account. And so, is this speeding the transaction? Who’s going to profit from it? Why is all this happening?

[00:20:36] Will Doty: That’s a tough question.

[00:20:37] Dean Barber: Again, is this a new evolution?

[00:20:43] Matt Kasper: Yeah, it’s a really good question from the standpoint of, it goes against the grain of the original design of Bitcoin because you’re trying to remove the institution. Now, you have the Fed, you have the U.S. coming in, working with MIT to ultimately come up with their own stable coin, essentially is what it would be classified as, meaning a dollar is going to be valued at a dollar. It’s not going to have the craziness of the volatility of what goes on with your typical Bitcoin cryptocurrencies and so forth. So, like, you were just sharing, what makes it unique relative to what we’re already experiencing is, quite frankly, just the question, and I don’t have a solid answer for you.

[00:21:23] Dean Barber: Alright. So, now you buy Bitcoin, and it’s placed inside of a digital wallet. Okay, so something that’s invisible to you and I and to everybody else, but you can pull that digital wallet up on your computer, you can pull out digital wallet up on your smartphone, your iPad, or whatever tablet you’re trying to use. And it tells you how many bitcoins are in that digital wallet, right?

[00:21:49] Will Doty: That’s correct. There’s also something else you want to understand about the wallet. There are two different ways you can go, and this comes down to personal thoughts as far as security on the Web. There’s a cold wallet and a warm wallet. So, a warm wallet is a wallet that is live on somebody else’s server that you then access through your phone, you’re accessing it through the web, where a cold wallet is actually one that gets downloaded and encrypted to a specific device.

So, back in the early heydays of Bitcoin, there were a lot of people that were using this so-called cold storage, the cold wallet. And what is being theorized right now is they think out of the 18-plus million that are in circulation, there’s four million that is actually lost because people can’t remember their passwords to get back into these devices, but it’s a way that you can take your wallet off the web because …

[00:22:49] Dean Barber: I’ve heard of somebody searching through old servers, trying to figure out her old, what do you call it, the memory cards or things in your computer saying, I know that I had Bitcoin on one of these, but how do I get back into it? How do I find it? And once a bitcoin is mined, that’s it? I mean, you can’t go back and redo that one because it got lost. You can’t reprint a new one?

[00:23:14] Matt Kasper: Right. Yep. Yeah, you have to wait for the next release of the eventual 21 million bitcoins that will become into circulation, but again, that one wasn’t coming at. What was the deadline for the full 21 million to come?

[00:23:27] Will Doty: I believe it was 2041.

[00:23:29] Matt Kasper: 2041, so.

[00:23:31] Dean Barber: Well, at the pace they’re going, it’s going to happen a lot faster than that obviously, right? Or is it becoming more and more difficult to mine the coin because of the way the technology is?

[00:23:40] Matt Kasper: Well, actually, it’s part of Bitcoin policy. So, it’s already determined when they’re going to have the release dates and how many are going to be released. So, it’s not going to be up to the popularity of it. It’s going to be simply what did Satoshi define inside of his process?

[00:24:01] Dean Barber: Okay, alright.

[00:24:02] Matt Kasper: And one fun question also asked is, who is Satoshi? And that’s kind of wild as well because nobody knows who Satoshi Nakamoto is.

[00:24:11] Dean Barber: Really?

[00:24:11] Will Doty: Whether it’s a group of people or one guy, nobody is coming forward and laying claim to being Satoshi.

[00:24:17] Dean Barber: Interesting. It’s fascinating. Well, I did not know that either. I just thought he was from Japan.

[00:24:24] Will Doty: They’re pretty sure the group or person is from Japan, but they do not know if there is an actual Satoshi then.

[00:24:31] Dean Barber: Interesting. Well, okay, so let’s go back to what I think a lot of people want to know is, should I invest in Bitcoin? And if I invest in Bitcoin, what’s the smartest way to do it? So, first off, Matt, should people be buying Bitcoin as a long-term investment? Or should they be using it as short-term speculation?

[00:24:59] Matt Kasper: Well, when you think about participating in something like a digital asset, one, go into it being fully aware of how much volatility is really incorporated inside of this new asset class because essentially, don’t go in thinking that you’re just going to have this incredible growth that we’ve experienced historically because you never have control over what sequence of time you’re going to experience inside of these type of investments. So, I think, yes, you need to have your eyes open.

You need to be aware of what some of these opportunities look like, but how you participate, meaning how do you invest in it specifically is, one, you need to spend some serious time to determine what are the risk factor, what are the tradeoffs, whether I’m owning the currency outright or I’m owning an investment that is seeking the return of what these different currencies are entailing. And of course, there are security questions. There are so many questions that go into how should I invest in this? And then once you determine how you want to invest, the next question is how much?

[00:26:03] Dean Barber: Right. So, do you own Bitcoin, Matt?

[00:26:05] Matt Kasper: I do.

[00:26:06] Dean Barber: And Will, do you own Bitcoin?

[00:26:07] Will Doty: I do.

[00:26:07] Dean Barber: Okay. And do you own the Bitcoin direct? Or are you participating in investments like ETFs or mutual funds that are trying to mirror a group of the coins, and they’re more diversified?

[00:26:21] Will Doty: Right now, I’m currently in funds.

[00:26:22] Dean Barber: Okay.

[00:26:23] Will Doty: I do have a wallet. I have not invested in the wallet yet because again, even though I’m young, I’m still getting used to the whole idea.

[00:26:30] Matt Kasper: Yeah, I did it both ways just to gain experience, but of course, the question is it almost feels like play money to me. You have your YOLO account, You Only Live Once. And essentially, that’s where you have some of the speculation structured inside of this. And I wanted to have an experience on both sides. So, that’s why I went in that direction.

[00:26:50] Dean Barber: I thought you were going to tell me that you’d put in your child’s college fund in there.

[00:26:55] Matt Kasper: Well, there’s one way to get there faster. That’s right if you start too late.

[00:27:02] Dean Barber: Facetious, of course, correct?

[00:27:04] Matt Kasper: That’s correct.

[00:27:06] Dean Barber: So, I, too, own some bitcoins. I’ve done both. I’ve bought in the wallet and I currently own in an ETF. And Will, one of the things that you and I were looking at here, which I think is something that we’re exploring and doing more due diligence on and really trying to gain some better understanding is there is a company out there today, they’re creating a Bitcoin mutual fund that’s designed to capture roughly 60% to 70% of the upward trend of Bitcoin, yet only capture 40% to 50% of the downward trend of Bitcoin.

So, if you can do that and you’re capturing more of the up than you are of the down, then ultimately you wind up with a winning investment over time. So, to me, that’s a concept that’s interesting because I don’t know of any other way to hedge an investment in Bitcoin.

[00:28:04] Will Doty: Yeah, that’s exactly right. And it’s really fascinating. They’re doing this all through futures as opposed to actually owning the asset. So, it’s a whole different way of thinking and investing and being able to get into that space, get some exposure, but again, hopefully, you’re not taking the worst downtimes, which I mean, we’ve seen it sell off over 90%. So, I mean, you just have to look again, like what Matt said, you got to be okay and comfortable and understand these dynamics if you’re wanting to get into this place.

[00:28:35] Matt Kasper: Hey, and also, taking it in a different direction from an investment perspective, this might sound crazy, but there are scenarios where owning a digital asset can lower your portfolio risks. And the reason why that could be true is because when you look at something like Bitcoin, Bitcoin is not highly correlated to the stock market or the bond market. So, you get a unique return pattern that comes from a Bitcoin type of investment. And if you look at, oh, how do I structure this inside of a portfolio? Well, let’s not get crazy with an investment like this. This is where you own potentially 1% to 2%.

And if you look at 1% to 2% inside of a Bitcoin and you build it with the other stocks and bonds and real estate that you’re structuring inside of your diversified portfolio, it may surprise you that ultimately, it’s not adding or contributing to additional risks, respectfully. Not to say if you own it outright individually, yes, that volatility is incredible, but if you have it in a well-diversified portfolio, you can position it to actually reduce risk in certain cases.

[00:29:41] Dean Barber: Interesting, interesting. Guys, we’ve got 27 minutes of Bitcoin basics here for our listeners, and I’m not sure if people are smarter after listening to this or if they’re more confused. The whole concept of mining the bitcoin is still something that I need to understand better of how it works, the whole concept of Blockchain technology. And we live in this world, and I think we all grew up in a visual world where we can see it, we can touch it, we can feel it. This is something that’s real.

And this bitcoin may be as foreign to people like us as the day that our grandparents or great grandparents didn’t have to hold the physical stock certificate to say, I’ve got this money. And the day that it was held inside this brokerage account somewhere, they’re like, oh, my gosh, where’s my money, right? We used to own the stock. It’s just all held at a brokerage company. Well, who is this brokerage company? They’re going to steal my stock. And I think it’s going to require a little bit of a change in how we think about things much in the same way that our parents or grandparents that used to hold the physical stocks or they used to have the bond where they literally clipped the coupons, send it in, and they’d get a check, right?

[00:31:05] Will Doty: Yep.

[00:31:06] Matt Kasper: Right.

[00:31:07] Dean Barber: So, it’s a different world. It’s a digital world. We’re moving more and more towards that. So, we’re going to come together. We’re going to provide additional information in the next season of The Guided Retirement Show, a more in-depth dive of Bitcoin. And of course, as always, if anybody listening to this or watching this on YouTube wants to have a conversation with either one of you, too, or any of our other CERTIFIED FINANCIAL PLANNER® professionals, more than happy to talk to you about how Bitcoin might play a part in the overall financial plan.

[00:31:38] Will Doty: Definitely.

[00:31:39] Matt Kasper: Correct. Absolutely. And I don’t think you want to overwhelm yourself with the complexity of this. This is a technology that is ultimately highly innovative, and you’re just trying to see, does it fit in my overall story as far as either an investment or trying to, quite frankly, just figure out how it fits into our life, in our role?

[00:32:00] Dean Barber: I just want to know if those two guys who bought the pizzas, what was that, 11 years ago, are kicking themselves for spending 10,000 bitcoins on two pizzas that would now be, what did you say, Will, $630 million?

[00:32:15] Will Doty: Yeah, roughly

[00:32:16] Matt Kasper: Or the four million that’s been lost.

[00:32:19] Dean Barber: Yeah. I’ve heard of losing your wallet before, but that’s crazy.

[00:32:23] Will Doty: It’s an expensive wallet.

[00:32:24] Dean Barber: Yeah. Well, guys, thanks for taking the time to give us a brief education on Bitcoin, what it is, how it works, and we’ll dive deeper in the next season.

[00:32:34] Will Doty: Sounds good.

[00:32:34] Matt Kasper: It sounds perfect.

[00:32:35] Dean Barber: Thanks.

[00:32:35] Will Doty: Thank you.


[00:32:36] Dean Barber: Alright, everybody, that’s a wrap for Season 5 of The Guided Retirement Show. Once again, a big thanks to all of our listeners out there. Those of you that have already subscribed, those of you that have been sharing this with your friends and relatives, please continue to do so. We gain more and more listeners every single day. And I know we’re making an impact from the feedback that we get from you.

As a quick reminder, get to a link in the show notes where you can subscribe to the Modern Wealth Management Educational Series, where every other Wednesday, we come out with a video of things that you need to know to become more intelligent and informed investors. And through that link as well, you’ll be able to request a complimentary consultation with one of our CERTIFIED FINANCIAL PLANNER® professionals. Thanks for listening.


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The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.