Tom Talks Bitcoin and Cryptocurrency
Transcript:
Katie Nealis:
Tom, in your daily videos, you touched on the subject of cryptocurrencies. So Woody brought in a pretty great question saying that yesterday, you mentioned how the high paid athletes are being paid in Bitcoin. What happens if Bitcoin crashes? And what is Bitcoin mining?
Tom Vaughan:
Okay, that’s great. Yeah, it’s pretty fascinating. Last year, one of the Kansas City Chiefs players decided to get his pay in Bitcoin. And because it appreciated so much, he actually became one of the higher played players in the league. And then next was one of the other Kansas City players decided to get his pay for 2021. And then, of course, Trevor Lawrence, who was just drafted number one by Jacksonville, got a $24 million signing bonus and he decided to put that entire amount into cryptocurrencies, Bitcoin, Etherium and Solera. And so that, to answer your questions, you know, if those fall apart, I mean, theoretically, Trevor Lawrence stands to lose $24 million there, the whole thought process behind cryptocurrency is essentially, it is a digital currency, it might be something that could be used to buy things in the future, maybe convert to cash, it can be done, you know, those types of things, it might be a world currency at some point in the future, sort of like the dollar is.
So that’s the overall idea. But in the end, there’s nothing behind it, like the US government is behind the dollar. So there could be a collapse of the actual, you know, currency. cryptocurrency itself. Matter of fact, there has been several collapses so far. So you know, so that’s the, that’s the big risk. And actually, I’m gonna bring Easan in on the mining, he has some experience with this. And he can kind of describe, you know, in some simple terms, you know, what Bitcoin mining is.
Easan Aulanantham:
So Bitcoin mining, or just cryptocurrency mining is just a super high level is a complex mathematic equation that a computer runs there takes a lot of processing power. And once it gets the correct answer, you’re then given a coin, and that’s proof of work mining. And so, right now, there’s a lot of power that goes into mining Bitcoin in theory. And you could be an average Joe miner at home or you could be a big company that’s mining with these specialized miners.
Tom Vaughan:
So you can spend a lot for energy to mine these?
Easan Arulanantham:
Yeah, so all these mining centers are based where there’s low costs of usually your geothermal or some sort of hydro energy plants, so for cheap energy.
Tom Vaughan:
Now, how many how many different cryptocurrencies are there roughly?
Easan Arulanantham:
I think right now there’s at least over 5000 but most of the money’s in the big ones like Bitcoin Ethereum ripple Litecoin. So it sticks to a little bit a small group of them, I’d say that most of the money Alright, and they might all of them are just Bitcoin. So usually, I’m for Bitcoin, you can use a specialized miner to be competitive, otherwise, you’re just out of luck. But for like, so long, people mind the smaller currencies, the old coins, they’re called, and then they convert that into bitcoin or Etherium, whatever main currency they want to hold.
Tom Vaughan:
Okay, so what they do? Well, I want to expand a little bit and I’ll share my screen here, just kind of what I was talking about yesterday, too, I’ll show you a couple of different charts because this is where I see some of the risks to the, to the market, or at least some of the holdings that you know, we have or have had in the past. And so I’ll share my screen here.
You see here, here we go. And this particular chart is called Ark innovative technology. This is Cathy wood, she’s become quite famous, and she has you know, five main ETFs and this is the rkK we call it and so essentially you can see you know, great run up you know, huge run and then really struggled right coming down coming down and then in the last weeks here we can see it even fell below this 200 day moving average and and one of my my thoughts here is that as I’ve been watching this, as we’ve seen cryptocurrency really rise in terms of volume and for example on Monday, Robinhood’s you know, app crashed trying to do cryptocurrency trade. So that means that there’s obviously a lot going on, I actually think the same group that was buying this type of investment. Here’s another one here. So this is the same this is Cathy wood also, but this is the genomics right so this is I call this advanced healthcare same thing fell pretty good you know, acceleration here. I think this group that was buying this is now selling this and moving into you know, Bitcoin and here’s, you know, here’s clean energy . . .