Tom Discusses Cryptocurrency and It’s Volatility
Transcript:
Katie Nealis: So we have another question in from Chris saying cryptocurrency has been in the news a lot this year, would you say this is a good investment? And how volatile is it?
Tom Vaughan: Well, there’s a whole bunch of versions of cryptocurrency, you know. And so they’re all different in terms of their volatility. I’ve had several meetings, actually, with some fairly high level people general talking about cryptocurrency. And it’s, it’s really, really fascinating. crypto currency is a digital currency. And the piece behind it is blockchain.
So blockchain allows, you know, that line of code, that’s basically your currency to be secured. And so that somebody else you can’t replicate it. And that’s what keeps the you know, the Bitcoin, going as far as that goes. And blockchain is a phenomenal investment arena, because it can be used all over the place, it’s just a new technology, fairly new technology, but they’re gonna use it in financial services, they’re going to use it in medical science. So that aspect, I think, is a really interesting investment arena. Bitcoin itself is really kind of fascinating, the thing that really catches my attention on this is that almost everything that you buy is an investment has something behind it, buying with the hope that you find somebody in the future to buy it at a higher price.
So if I buy Apple apples behind it, they got a certain earnings and growth number employees, whatever it is, and you know, I hope if I buy it $100 that I can sell it for 110 or, you know, whatever somebody else, at some point time will buy that. And I buy in the US dollar? Well, the US government’s behind that, right? Because they’ve talked about Bitcoin, kind of replacing the dollar, or maybe some points in the future. So I think that’s really fascinating. If you think about Bitcoin, you’re buying it, there’s nothing behind it, there’s no US government, there’s just the hope of selling it to somebody else at a higher price. So that has caused a tremendous amount of volatility. And they’ve it’s been really, really volatile. That’s why I don’t use it personally in the portfolios, just because the volatility is just too high.
There is another vulnerability with Bitcoin that I think’s kind of interesting, that came out of a meeting I had. So Bitcoin can only do one transaction every seven seconds. *NOTE: Bitcoin can actually do 7 transactions per second.
And if you look at like VISA, they do 65,000 transactions every second, right? And so really, when you look at that, one of the things that people are talking about is Bitcoin, like Yahoo. So in other words, we all used to use Yahoo search engine, you know, before Google, and then Google came out with a better search engine and our using Google, I think, is probably the biggest search engine. So is there another, you know, digital currency that comes along that has maybe faster processing rate or what have you, or whatever the issue is, that might replace that. So I think it’s very fascinating. It’s fun to watch. I worry that it is one of those things that could bubble and affect other things like the things we’re invested in. So that’s just a piece of what I watch for as far as that goes.