Is Cryptocurrency All It\’s Cracked Up to Be?

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The following is a transcript of Episode #54 of the Retire Happy podcast with Roger Gainer.

All episodes of the podcast can be found at Apple PodcastsGoogle Podcast, and Spotify.

Roger: I\’ve been an evangelist, if you will, for people investing in things that they\’re comfortable with instead of something that somebody says you should. You know, like the guy that called in and said, you know, \”Everybody that\’s not in Bitcoin is a fool.\”

You know, when things are really going crazy, you gotta ask yourself, why? Why do you want to participate and for how long? Because it\’s easy to buy, it\’s hard to sell. And unfortunately, I think a lot of people are gonna lose a lot of money, if they haven\’t already, just like they did in tech stocks back in the early 2000s. They\’re losing it in cryptocurrencies right now.

Clark: You are listening to Retire Happy with Roger Gainer, president of Gainer Financial and Insurance Services Inc. Thanks for joining us. I\’m your host, Clark Buckner.

With so much uncertainty in the world today, it\’s more difficult than ever to make decisions that can help you progress toward your financial goals. In this episode, Roger talks about cryptocurrency. He shares his point of view on something that has stirred up quite the chaos and confusion. Is it the next greatest thing? What can we learn from past events in history?

Roger explains crypto risks and provides a level-headed approach on the topic. There\’s a lot to cover, so let\’s dive in. And don\’t forget to head on over to for more content like this. Enjoy the show. Roger, how are you doing, my friend?

Roger: Doing well. Doing well. Summertime has arrived, and as they say, the living is easy.

Clark: Living is easy. Good deal. Well, the topic today, I know we always try to have conversations around things that have a long shelf life. And, you know, something that is as turbulent as we\’ve been seeing these last several years and beyond around crypto, it\’s got a lot of people talking. And you got a lot of buzz, you got a lot of mania around cryptocurrencies, you\’ve got a lot of question marks about, what is this? You got a lot of people potentially getting taken advantage of. It\’s just a wild, wild west, and it\’s something I know you\’ve been keeping an eye on for a variety of reasons. And you\’ve had, I\’m sure your clients, ask you about crypto. Is this something I should be looking at? What is this? What are your thoughts on it?

So, I know this is also gonna be quite the rabbit hole to go down. We\’re gonna try not to go down the rabbit hole, but from a high-up view though, I think this is certainly an important conversation for today.

Roger: Well, thanks for that introduction, Clark. Our next blog post that\’s coming out, we talk about what are cryptocurrencies and how do you get cryptocurrencies? I don\’t want to go into too much of that today other than, you know, if you wanna own cryptos, you can either go to an exchange and buy them.

Those are coins that have already been minted. Coins are tokens, is the other thing that they\’re called. And the two big ones, Bitcoin, you know, the granddaddy, and Ethereum, which a lot of these other currencies are based on, in that respect, they both, you know, require somebody \”mining\” to create more tokens because it\’ll take more tokens to handle more transactions. And that\’s what the blockchain is all about. The technology that this is based on.

Clark: Decentralized is the word I hear often.

Roger: Decentralized. Yes, exactly. You know, we have a federal reserve and a treasury department, and they print the money, and they regulate the banking system, and it\’s sort of a command and control top-down sort of system. And the idea is the blockchain is it decentralizes. It democratizes currencies and the evangelists will all, you know, bang on that drum pretty heavily actually to get people to participate.

But when you get right down to it at its core, there are…and, again, we\’re not gonna get too deep down the rabbit hole on this one. We\’ll develop this maybe over future podcasts some of the details and how cryptocurrencies work and some of the differences between them, but when you understand the mining system, you understand that every so often, they change the reward for mining new tokens. You get paid less is basically what it boils down to because they\’re theoretically more valuable.

So, who does that benefit? It benefits the people that were the early miners, the people who, you know, years ago created the programs and didn\’t have to compete like the competition is today. Arguably, the value of Bitcoin is how much electricity it consumes, and those that consume more electricity end up with more Bitcoin.

Clark: Yeah. I mean, that\’s a big criticism to all of this. And, again, I don\’t wanna get too in the weeds, but you have…

Roger: There is an environmental impact to…

Clark: Environmental impact. Yeah.

Roger: Right. And if you talk to somebody who lives in the vicinity of a so-called crypto mine, you find out what some of that environmental impact, because they stick, you know, large numbers of computers in a facility and they discharge a bunch of heat. And so, there has to be big, big air conditioners which consume more electricity to keep the equipment from overloading, and that equipment runs 24/7.

And so there\’s a hum, and even in some areas in Montana and South Dakota, I\’ve read that, you know, people, because power\’s cheaper in some of these areas, you set up one of these mines near a hydroelectric dam or something like that. And so, they go into these little towns and the outskirts and they build these things and people think, \”Oh, this is gonna be cool because somebody\’s gotta pay taxes here.\” And a couple of months later after these things come online, they find all the wildlife has gone away because that hum drives them crazy.

Clark: That\’s terrible.

Roger: And people want them to shut this stuff down or do something about the sound, but they can\’t. You know, the rabbit\’s out of the hat at that point and you can\’t stuff it back in, but again, it\’s so easy to get off on tangents. The most important thing is either you gotta buy them and pay somebody who already mined the coins or bought them somewhere else and you gotta buy them from them, or you\’ve got to mine them. That\’s how you get Bitcoin or Ethereum or anyone.

Believe it or not, early this year, there were over about a…well, not over, about 1,000 new cryptocurrencies coming out every month. Every month. It\’s hard to keep track of that thing. That\’s sort of like 1,000 new companies going public on the stock exchange every month. You couldn\’t possibly keep track of that.

Clark: Yeah. No. There\’s maybe 20 that actually matter, I\’ve heard some people say, but anyone can make a cryptocurrency. What is interesting, though, the number one cryptocurrency that people will talk about is Bitcoin. That was kind of the big first splash. And for someone just trying to wrap their minds around this, what\’s interesting about something like Bitcoin is, you know, there can only be 21 million total for this particular…

Roger: That\’s what\’s supposed to make it valuable.

Clark: Right. Still have value.

Roger: Is we can only have 21 million tokens, right? And so, unlike our treasury department that can print money, there\’s something real here. And the only thing real is it\’s a limited supply, right?

Clark: Right. And you can\’t game it. You can\’t fake it because you do have the decentralization of all these computers synced up.

Roger: Well, in theory, you can\’t fake it.

Clark: But did you hear some terrible stories? I mean, I\’m sure you\’ve heard of these stories. Someone has…you know, they mined a couple Bitcoins a long time ago, they had a couple Bitcoins on a thumb drive, they lost it. That money is gone. It\’s gone forever.

Roger: These exchanges where people deposit their Bitcoins, many of them have been hacked.

Clark: They\’ve been hacked. That\’s true too.

Roger: And the Bitcoins are gone and there\’s no FDIC insurance. There\’s really no regulation whatsoever. It has a lot of the trappings of legitimacy, which are usually wrapped in complexity.

Let\’s think back to the early 2000s when credit default swaps and certain derivatives were being touted as being without risk and certain so-called synthetic assets were…the engineers were telling us we figured out how to do this and make money and not have any risk. And when you drill down on all of these, you know, for Bitcoin to go up in value, you need more participants in Bitcoin.

Clark: That\’s true.

Roger: Okay. That limited number, you know, doesn\’t create value. What creates the value, the appreciating element, is more participants. And it\’s always been that way.

You know, we hear on a stock market report. I think we\’ve mentioned this before. And the stock report, you know, they say, \”Oh, the stocks went up today because interest rates dipped.\” And then some other times you\’ll hear, \”Oh, stocks went down today because interest rates dipped.\” And really, the only reason stocks went up is because more people bought than sold. And the only reason they go down is more people are selling than buying.

It\’s no different whether it\’s cryptocurrencies or real estate. You know, we\’re seeing a lot of areas now where real estate is cooling off, but usually comes after cooling off is we see prices correcting to more normal valuations.

And what is that a result of? And people are gonna blame it on high-interest rates, uncertainty, you know, cost of building materials. Well, the cost of building materials is coming down dramatically. The number has dropped in half in the last few months. So, you know, why aren\’t we building more houses? Well, there\’s a variety of reasons, but usually, it\’s because the developers don\’t think that they can sell at a big enough profit and twas ever thus, right?

Cryptos, same thing. Artwork become a very hip, fun, profitable asset class for a lot of very wealthy people buying and selling pieces of art for ridiculous amounts of prices. And it makes the auction houses very happy, but it takes more people believing that we\’re smarter than the next guy and we\’re moving to what\’s next.

Clark: So fascinating.

Roger: And, you know, it really is fascinating and, you know, we see it everywhere. And cryptocurrencies, you know, have been beat up pretty bad from the beginning of the year, lost a lot of value. And so, a question a lot of folks are asking, is this a buying opportunity?

Clark: I love hearing you say that, buying opportunity. We talked about that in the podcast before. Tell me about what that phrase means to you.

Roger: Well, buying opportunity, you know, I had a boss once when I was a broker back in the \’80s who told me, you know, as long as the market\’s open, it\’s a buying opportunity. And I think a lot of folks in the crypto world right now kind of feel that way, especially with prices being down as much as 80 plus percent on some of these coins. You know, it\’s a great time to buy.

There\’s an extension of the crypto market, which we won\’t talk about today, but maybe in a future podcast called NFTs. Have you heard of NFTs, non-fungible tokens?

Clark: Right. It\’s almost like a piece of digital art.

Roger: Well, that\’s what the claim is, but most of the digital art in these NFTs is pretty poor art. You know, it\’s just crude and somebody\’s hoping that, you know, an NFT will go viral because if it goes viral, then the price goes way up. But most people upon further research are losing money. Not surprisingly.

You know, oh God, I can buy, you know, this NFT for five bucks. Well, they\’re selling 100,000 of them. That\’s not exactly scarcity. It\’s good for the person, the creator, right, but, you know, your 5 bucks could turn into zero as likely as it could turn into 10 bucks. So, you know, again, it\’s just a different vehicle but it\’s the same thing.

Clark: You know what\’s interesting, Roger? You know, I\’ve been in the podcast space now for a little while. I interviewed a guy named…he goes by Beeple. This is several years ago.

Roger: Oh, you interviewed Beeple.

Clark: Right. Yeah. Beeple. Mike Winkelmann.

Roger: His NFTs are very valuable.

Clark: So, yeah. I mean, he broke the record. He sold an NFT, this was…

Roger: Sixty-one million dollars, wasn\’t it?

Clark: Yeah. I mean, over $60 million and that is out of… I mean, what is life? Are we living in a simulation here? What? It\’s pretty wild. I mean, it is a wild time. So, how about this? I think you\’ve done a great job giving a little bit of a taste of just crypto thinking about, you know, there\’s supply, there\’s demand. People have to choose collectively there is value in this.

And sure there might be some pros to some of this, but there\’s still a lot of concern. And if you\’re at the retirement stage, you know, like this is who this show is for, is helping people think through retirement, helping them think through their assets. Let\’s get to that next part of the conversation about your motivation and your point of view as you\’re working with folks thinking about these things.

Roger: You know, when it comes time to retire or getting close to retirement, a lot of people, they worry, \”Oh gosh, the dollar is going down in value.\” Or they\’ve just created a couple of trillion dollars worth of money during the pandemic. Expanded the money supply. And so, we have fiat currency. You\’ve heard some of these terms.

Clark: Right. Fiat, basically government-backed. This is your traditional money, right? Governments are managing it.

Roger: And I\’m not here to argue the relative merits of the dollar, I am here to point out to people that are thinking about retirement that things aren\’t priced in Bitcoin or Ethereum. They\’re priced in dollars. They\’re not priced in gold, right? Shares of stock aren\’t priced in ounces of gold. In fact, ounces of gold are priced in dollars. So, I think of all of these different assets, whether it\’s Bitcoin or barrels of oil or bars of gold, these are currencies, right? They\’re just currencies. They\’re things that get traded. But when it\’s time to come spend them, you have to trade them back or convert them back to dollars.

So, you have a currency exchange risk. And if that currency exchange isn\’t gonna happen for decades into the future, the risk is much more minimal than if it\’s gonna happen in the next two, three, five years. As we\’ve talked before, you know, in 2007, we had to wait till 2013 for the market to get back to where it was in 2007 before the crash.

And if you really want to go back to get to where the market was in 2000 before the bubble burst in the fall, you had to go to 2013. We came back close to that level in 2007, but we never got above it. So, then we went back down. So, you could argue that somebody that invested in 2000, in the spring of 2000, had to wait till 2013 if they were in an index fund to see their balance come back. Many people on Wall Street refer to that period of time as the lost decade. And if you\’re gonna retire, you don\’t have time for a lost decade. You just don\’t.

You know, we\’ve done this and gone through it in previous podcasts. And if somebody would like to listen or read, go to our website at, or just reach out to me and I\’ll send you links to where we\’ve actually talked about that topic. But cryptos are, you know, the new hot thing and because of this fiat currency, they\’re being looked at as perhaps an alternative.

Well, they\’ve become very widely adopted amongst criminals. Unfortunately, they thought everything was anonymous, but when you think about the blockchain, it means that every transaction is listed on something called a distributed ledger where a bunch of different people who own Bitcoin, who\’ve mined coins, validate your transaction and record it on their computer.

So, I can look at what I recorded because I get paid for that, by the way. I bid to validate the transaction and the transaction validators that the system chooses, I can look at that transaction and see your name. I can see exactly who you traded that with. So, it\’s not exactly a secret, but what I just said about validating, the prices of validation go up and down. So, it can cost a lot more than a couple of bucks that you pay to your bank for using an ATM at another bank, maybe you pay five bucks and that drives you crazy.

Validators can get paid in percentages that can be pretty high when there\’s a lot of transactions waiting and not a lot of people available to validate or willing to validate a transaction. The other thing that it does because it has to wait for those validators to complete, a transaction can take minutes, hours, and in rare cases, even days to complete using these currencies because they have to be validated.

I read an article not that long ago, you know, people talking about gee, look, El Salvador adopted Bitcoin. And I saw a reporter talking about, okay, I\’m going down to El Salvador and I wanna just use Bitcoin on my vacation. And he traded some at an ATM at the airport and it took five hours for the Bitcoin that he took dollars to exchange into showed up in his wallet. That\’s the kind of transaction type.

Next day he went to buy something, a cup of coffee, and he finally had to just take money out of his pocket because after 45 minutes, the money hadn\’t transferred out of his wallet to the vendor\’s wallet, you know? That\’s really not acceptable time lag for commerce.

I mean, think about it. You get to go in, you wanna buy a cup of coffee at McDonald\’s, it costs a buck. You pull a buck outta your pocket, you hand it to him and you\’re done. You don\’t have to sit around and wait for a bunch of validators to say, \”Oh yeah, that\’s a dollar, right? And I\’m witnessing that you gave that dollar to McDonald\’s, and now I have to validate that McDonald\’s actually received it, and now you can have your cup of coffee.\” Okay. That\’s kind of unwieldy.

So, there\’s some practical issues here and that\’s why Bitcoin has primarily become a speculator\’s heaven. You know, and so because its practical side is incredibly limited by those two elements, the speed of the blockchain and the limited number of tokens that it was designed for.

So, people come back and say, \”Well, you know, you can use Ethereum because it can handle so many more transactions and da, da, da, da, and it\’s much-improved technology and you don\’t have to buy the same number of expensive computers. Now, you have to buy expensive video cards.\”

So, there are people that are driving giant piles of video cards and Ethereum has announced that later this year, those video cards are gonna become, frankly, worthless for mining because they\’re changing the protocol. Oops, right? And oh, yeah, the price of those video cards that are designed for this went way, way up because everybody wanted to buy them. They became very scarce.

See, this can happen with anything. And so, what are those cards gonna be worth? So, you pay more for card, you pay more for electricity, and the stuff you\’re mining is worth less every time you mine. You know, there\’s a convergence where it just becomes not worth it anymore unless you bring a bunch more people in to bid that stuff up.

Clark: So, all this is so helpful and interesting. As you start to think about what someone should consider, where are you at? And I know none of this is financial advice for… I mean, there\’s already… I mean, you know, crypto is just such a mind warp. How do you even start to think about what someone should maybe or maybe not do as, or thinking about what\’s right for them because that\’s what we\’ve also talked about? This podcast, you know, your downloadable guide on your website, the thought organizer, it\’s helping someone think about their individual gross tolerance and what their goals are, all of that. So, where does this fit or where does this not fit based on what you know so far?

Roger: Well, where it fits, I\’ve been an evangelist, if you will, for people investing in things that they\’re comfortable with instead of something that somebody says you should. You know, like the guy that called in and said, you know, \”Everybody that\’s not in Bitcoin is a fool.\”

Okay. Well, I\’m not sure he fully understood the risks of his Bitcoin investments, okay, because, you know, even let\’s take real estate. Let\’s talk about something that people think of as really solid. Some parts of the real estate market are dramatically overvalued. There are parts of the country where we\’ve forgotten that back in 2009 and 2008, housing prices cut in half and more for a whole variety of reasons. But everybody thought, \”Wow, that can\’t happen. It\’s residential real estate.\”

And now we\’re hearing the same things and many of those same markets. A lot of them are in, you know, the Southwest. Arizona comes to mind, parts of Florida come to mind where there\’re just a lot of places that you can build stuff and then those values go up. There will always be manias.

Let me tell you a little story as we wrap it up here. When I was in the brokerage business, I worked for a little tiny brokerage firm that was owned by an individual. We only had four offices and he up to that point was the richest self-made person I ever knew personally.

And one night, I was working late. Me and another guy were in the office. It was about 7:00 at night, and I was just taking care of some stuff and doing my charting and those kinds of things. And he walked out of his office and very few people ever got to go in his office and he came out and he saw the two of us, you know, at our desks.

And he said, why don\’t you guys come on back here and, you know, gee, you\’re working hard, and let me offer you a cocktail? And then we just started talking about, you know, how did you get here? He asked us, we asked him, and he pulled a book out and he said, \”This book, I wanna recommend to you, because this is the book that made me a multimillionaire. This is the book that made me wealthy, and everything I\’ve been successful in has come from my reading of this book.\” And the book is called \”Extraordinary Popular Delusions and the Madness of Crowds.\” I love that name, and it\’s written by a guy named Charles Mackay LL.D.

Now, if you look at the topics in here, it\’s all about different things where values…people jumped on an idea, and values jumped dramatically. Some of our listeners may have heard of something called tulipmania, which was actually the first commodity markets where tulip bulbs hundreds of years ago became so valuable.

Clark: Just a flower. Just a little flower.

Roger: Just the bulb itself, not the flower.

Clark: Just the bulb.

Roger: The bulb that the flower comes from. The bulbs were traded and became so valuable that wealthy people, you know, owned a couple of these rare ones that were…and the book tells a really interesting story about a guy who didn\’t know this was going on and ate half of a very wealthy man\’s net worth by taking a bite out of a rare tulip bulb. The guy had a heart attack and died.

There\’s something called the south sea bubble, which was some of the first corporate debt. The witch hunts, the crusades. These are all things where they started with an idea, it went broader and broader and became more and more of a \”mania.\” The alchemists, the people who claim to be able to turn lead into gold, and all the money that was invested in those schemes.

The cool thing about this book is you read through it and you can see the stuff that\’s happening today in certain kinds of stocks, social media companies, cryptocurrencies, some types of speculative real estate, and we see these patterns repeating themselves of this madness of crowds and how people talk themselves into, \”This time, it\’s different.\”

This book was written in 1865, so the language that it\’s written in is a little flowery, so shall we say. It\’s not modern English, but you read these stories and you think, \”Wow, that\’s like today. This is going on.\”

So, you know, while past performance is no predictor of future results, history does have a tendency to repeat itself. And that\’s what I\’m hoping our listeners, you know, get from today\’s podcast, is that, you know, when things are really going crazy, you gotta ask yourself, why? Why do you wanna participate and for how long? Because it\’s easy to buy, it\’s hard to sell.

And unfortunately, I think a lot of people are gonna lose a lot of money if they haven\’t already, and a lot of people have lost significant portions of their wealth just like they did in tech stocks back in the early 2000s. They\’re losing it in cryptocurrencies right now.

So, take that moment, understand what we\’ve talked about, why do I wanna make this investment, And, you know, hey, if you\’re worth $5 million and you wanna take 20 grand and stick it in cryptos as a flyer, you know, think of it as I\’m going to Las Vegas, and I\’m gonna go to the high rollers room.

As long as you keep it in perspective and you only speculate with what you can afford to lose and you have a plan for taking your chips off the table because remember in Las Vegas, they count on you staying there until you lose, and then some. You gotta have that exit strategy, that timing.

And as long as you do that, you know, go ahead and have some fun but keep it in perspective. And if it\’s just the money you\’re gonna retire on, please don\’t do it. If somebody tells you, \”Wow, this is the next can\’t-miss thing,\” you better take a few extra minutes and see why, and validate whether what they\’re saying makes sense to you. That is my advice.

Clark: Whew, good stuff. Roger, thank you as always for sharing your insights and perspective. I\’ve really enjoyed hearing your point of view on this. And it\’s very level-headed in the midst of such chaos for some time, we\’re hearing, and especially with crypto. Wow. Thank you, and I\’m looking forward to our next chat.

Roger: All right. Me too. Take care.

Clark: Roger L. Gainer, RICP, ChFC, California insurance license number 0754849 is licensed to sell insurance and annuity products in California, Illinois, Arizona, Oregon, Washington State, and Georgia. Roger L. Gainer is an investment advisor representative providing advisory services through HFIS Inc., a registered investment advisor. Gainer Financial and Insurance Services Inc. is not owned or affiliated with HFIS Inc. and operates independently.

The contents herein are the opinion of the speaker, and it should not be considered as tax or legal advice. This podcast should not be considered a solicitation for investing or advisory services. Strategies mentioned here are not a recommendation to implement or purchase those products or strategies. You should contact your own advisors as to the appropriateness for your specific situation.


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