Kevin O'Leary: Crypto As Software

Kevin O'Leary: "Crypto is Software"

I wanted to expand on his representation of crypto as software here. There seems to be some concern in the community around the idea of "who's going to be the top player in this space within the next 5-7-10 years?", you know? It's the mentality of who's going to be the top dog in the market and ... I just feel like this is somewhat of an anti-pattern.

One guiding principal of How to Be a Billionaire: Do business in a new way. Blockchain technology and cryptocurrencies certainly seem to be doing that.

With all this divergence of doing business from a centralized point of view wherein, "The Man" is leading the charge on the evolution of the company. We are starting to shift to something that's decentralized and supported by the community. We have seen a shift in the technology to decentralization and now we are seeing trends of this happening in business structures as well. How do you lead a company without being "The Man"???

My view on this is: It won't be one single crypto that Rules Them All™. This will continue to disburse across platforms as wealth is poured into new projects, tokens, experiments and much more!

As long as we, the users of cryptocurrency; the engineers, architects, investors, utility providers, etc; continue to diversify not just our investments, but also our use of these products, we can help fund the flourishing of many blockchains and introduce new ways to maintain wealth among all the blockchains!

I gather, there are two takes on this:

  • The side that wants to break things and run fast to develop something that'll 10x in the next year.
  • The side that sees the bigger picture and chooses projects that will likely be here to stay because their movement is much grander than what you can accomplish in a year.

I'm curious of who I'm attracting: What's your take on things? Are you looking for the next 10x in 2022? Are you beginning to see the grander picture and are looking at multi-year projects for investment over your next working years?

What are your thoughts? You can video reply below!


Kevin O'Leary speaks about his thesis on ##cryptocurrency . My reply to follow. ##Blockchain ##Crypto ##bitcoin ##ethereum

♬ original sound - Markizano Draconus


Reply to @markizano.draconus my take on ##CryptoAsSoftware what do you think? ##Crypto ##cryptocurrency ##CryptoTalk ##Blockchain ##bitcoin ##ethereum

♬ original sound - Markizano Draconus


Why Does BitCoin Have Value?

Let's talk about why Bitcoin has value at all. There are a few tennants that must be discussed in order for us to understand this. A lot of this is going to be conceptual descriptions derived from CEO of Micro Strategies, Michael Saylor and CEO of Parallax Digital, Robert Breedlove. So credits to them where I may repeat their words.

There was an interview with Tom Bilyeu and Breedlove that is about 2 hours, but totally worth the watch. I promise, it will Blow Your Mind!

In this post, we are going to review the following:

  • What is a Currency?
  • What is Fiat?
  • What is BitCoin (recap)?
    • Who is Backing BitCoin?
    • Why is the Price So Volatile?
  • Why does BitCoin Have Value?

With that, we'll get started!

What is Currency?

Let's talk about currency. What is it, how does it work, and how do we use it?

We'll have to travel through time to a point before we had cash: Our economy ran on the barter system. People would trade items that seemed to be of equivalent value. They might have used precious metals (like gold and silver), jewels (like saphire and rubys), luxuries (like salt and silk), and commodities to determine the value of something. Gold eventually became the standard since it was relatively evenly spread across the planet such that not a single person could hoard all the gold to himself. This worked for a long time because Gold played a role in being a currency.

A currency is a denomination of value among goods and services. It's difficult to say that your cow is worth three or four of my chickens without there being some common base factor that describes their value. So, if your steer is worth $300 and each of my chickens is worth $20, then it's easier to tell how much to exchange to perform such a trade.

Over time, though, it became more cumbersome to move Gold around since it was heavy, clunky and very suceptible to thieft if you didn't have the militia to protect your bounty. It was easy to counterfeit in that you had Fool's Gold based on pyrite or a less valuable metal like copper or nickel that was gold-plated or guilded.

So, what do you do? You took your Gold to a bank, where they had a vault to protect your assets. In exchange, they would give you a paper receipt of your deposit that kept a record of your wealth. These paper notes eventually made it easier to transfer wealth around since you could split the receipts into different denominations and thus the paper currency was born.

Governments would print authentic paper notes that represented a store of the value of the Gold with the banks via the Federal reserve.

Eventually, on August 15th, 1971, we moved away from the Gold standard. This is when the USD was no longer backed by Gold, but a promise from the Government.

What is Fiat?

Fiat means "by authorative decree" or "because I said so."

So, after that migration in the 1970's, we have since decoupled ourselves from the backing of the Gold Standard. People who wanted to be close to the source of this printing press would get jobs doing it, like being the CEO of a bank that receives money from the Government when you make poor investment decisions. In this way, as the Government prints more money and debases the currency, those close to the fountain of that money propsered whilst those farther away from it starved and experienced famine.

I like how Breedlove put this: Inflation by this means is theift of your assets. If I debase the value of your currency and take the money I just printed to pay my bills. Mechanically, that's stealing from you. The number of your $1000 won't change, but the buying power of that $1000 will go down to say $750. You will no longer have the buying power you once did because prices are inflating.

Here's a quote from Robert Breedlove. Credits to Impact Theory for that. I encourage you to watch the full video for context!

Up until now, the inflation rate has varied, but has averaged about 2% over the last several years. This gives us the illusion that we are making more money by making the numbers go up. Some think this is good because it creates this mentality of "oh, I have more money, I can go spend more!". Other people say this is good because it incentivizes people to either invest their money into assets or spend it if the value and buying power of the dollar goes down by the year.

However, personally, I see this as a detriment because the only kind of people it impacts is the small guy. If you have 100's of millions or even billions of dollars and your every need and whim is handled by your money, then you really don't care about inflation. Conversely, if you are living paycheque to paycheque, dealing with inflation means you must constantly hustle just to make ends meet.

I also need to highlight that "majikal" 2% number they talk about: That's 2% annual average. Inflation actually fluxuates month to month and can actually be higher or lower than this 2%. If you average the last 20 years of inflation, you get about 2.265% of inflation, but keep in mind, that is an average of the last 20 years.

Inflation was as high as 5.6% back in the 2008 real estate fiasco (not much higher than the 6.1% we're experiencing today). It has also been as low as -2.1% with an annual average inflation rate of -0.4% in 2009, shortly thereafter. The possiblity exists that this cycle will repeat itself after the supply chain issues are caught up in today's market.

Everyone is talking about how inflation is at all time highs and we are starting to experience some of that. Notice how prices on everything are skyrocketing when you visit the grocery store? Just like gas prices back in 2008. Someone is stealing value from you (not dollars: value) and its causing unrest in the local society.

Enter: Bitcoin

Enter, Bitcoin. A proposed solution to the problem via introducing the concept of scarcity. There will only ever be 21 Million BitCoin. Its emmissions rate is declining over time as it started with 50 BTC being introduced into the network every 10 minutes or so. Now that has declined to 6.25 and will cut to 3.125 in just a few months from when this video was recorded and this post written.

Shout out to the future: What's the price of BTC when the halvening happened? :D

Life, Liberty and Property

There's an old saying that the American dream is the freedom of Life, Liberty and the Pursuit of Happiness. That's actually not the three tennants of freedom, the third one is Property.

BitCoin solves this problem by building a protocol on the transfer of property. Bitcoin is used as a store of value because the application itself so strongly secures the concept of property. If ownership is transferred from one party to another, the result is immutable, public and 100% auditable.

Who's Backing BTC???

but ... but ... who's backing all of this??

How is Fiat Backed?

Let's first take a look at how Fiat currency is backed: At any given moment, the Government can simply take your money from you. Anyone ever lost money to child support or IRS taxes due? Fiat is "by decree", "because I said so." So, who's backing the USD? You can claim it's the Government, or the Military. The USD is a promise note from the Government. The Military backs the Government and enforces the will of the Government.

When you get paid and deposit that money into your account, technically, that's not your money. It's the Government's money and they can decree whatever value they want for that dollar.

So, this is the exact problem we are trying to solve. Governments have a habit of overspending the people's money, either by greed, or poorly described fiscal policy, or financial projects/experiments that just don't work out and the country has to write it off.

So who's backing the USD? Not one single person. It is a collective. Let's keep that in mind because it's not "The Man's" money. It's supposed to be "The People's" money. What is backing the USD is nothing more than an empty promise and they are proving to you that it's empty by debasing the value and buying power of your hard earned dollar.

What has happened with BitCoin, is we have basically automated the bank's function. We have developed a system where you get paid for doing the banks' job by just running a miner.

Let's put aside the media talking heads say in that it's "complex equations" and trying to talk over your head because they think you're stupid. Let's get one thing clear: You're not stupid. You can understand this. To put it in the most simplest terms: We've automated the bank into a computer program. This computer program cannot be tampered with by humans on a whim or a decision of a single man or entity. If changes are to be implemented on this network, it must be coordinated. The network must agree on it with a grander concensus than a single entity. It must be tested and published with agreement of the network.

This is why the big Banks are so nervous about BitCoin and spread so much FUD, (or Fear, Uncertainty and Doubt). They are starting to learn that if they don't get with the program (pun intended), they will find themselves to be the next Sears, Blockbuster, Radio Shack, or Circut City.

How is BitCoin Backed?

Those that are mining BitCoin are securing the network. They are running the programs that basically do what the Banks did in a way that cannot be reversed, edited, tampered, or spoofed. People will support what they help to create and Bitcoin is the embodiment of this.

The miners are the ones that are backing BitCoin. The electricity they are using are the pylons, support beams and foundations of what builds and secures its value. Math is what backs BitCoin. There's nothing political or disputable about math. 2+2=4. Math is finite.

This is what makes all of this so fascinating. Property value is transferred from one person to another (as Michael Saylor says) at the speed of light and it is done in a decentralized way. No one person or entity controls all of BitCoin, its a collection. Nobody actually owns the BitCoin network. Just like the Internet!

Why Is the Price So Volatile?

I'll give a conjecture here because I am not certain 100% myself, but what appears to me to be the case:

This is a brand new asset class to the broader market. Personally, I feel like I am late to the game and many are saying that we're just getting started. This is the mass adoption phase. The thought is if you jump in early like now, rather than after many places have adopted it and institutions have a ton of money invested in the blockchain technology, then you can prosper because the value of your investments will rise with them over time as mass adoption takes place.

I want to expand on this perspective of a new asset class as well. Newly released companies that come out with an IPO often experience extreme volatility until they get the backing of Billions of dollars. Same thing with Cryptocurrencies in general. There is so much money and wealth poured into these systems it's hard to pin the price to something that will stay consistent for more than a fraction of a second.

Compound this with the idea that you have the traditional banking system, where settlements are around 3 to 5 business days. The stock market (and banks) is only open during limited US business hours and even then take time to settle. Processing time of transactions on these networks
have a longer period to settlement than Cryptocurrencies do.

Since the Block time on many of these blockchains is around 10 minutes or less, in addition to the fact that these crypto markets are online and available for trading 24/7/365, that time is compacted from those 3-5 business days down to minutes, if not seconds!

Take the charts from the stock market, then, compress the time intervals. They may more closely represent the volatility we are seeing in Cryptocurrency today. Additionally, there used to be very tight knit control over access to the stock market until recent financial democratization tools like Robinhood, Public and Webull became available. By the way, you can get free stocks from all of these with the links in the description below.

So you had much fewer people in the market to shift the price of these assets. Now that these open markets allows average joe's like you and me to access them on such a grander scale in this massive digital era where we have access to so much of information at our fingertips: word of mouth gets around much quicker about things, the price swings are much more rapid and drastic based on the many conditions that are just constantly shifting.

So, my thoughts on this is it is still very new. As more money is poured into these protocols, networks, projects, tokens and more, we'll start to see some price consistency and stability start to form. Institutional investors are already in the space and charts are being draw up based on the traditional market technical analysis. These TA behaviours from the traditional market are starting to align with the price patterns we are starting to see in cryptocurrencies today.

Why Does BitCoin Have Value?

So why does BitCoin have value? It's a tested, tried and true protocol of the ownership of property and the transfer of that property. BitCoin has value because it doesn't water down that value. It cannot be diluted. It cannot be inflated past 21 Million Units. It cannot be hacked without a tremendous amount of consistent computing power.

If you own the keys to your BitCoin: you own that BitCoin. Nobody can take it from you. Sure, a Government can subpoena your coins. People can threaten you for your coins. If you don't hand them over, they will never actually get them.

A Government can go into your bank account and take your dollars from you. A Government can go into your exchange account and take your coins. Not your keys; not your coins.

Why is BitCoin So Expensive?

Many people have put their Fiat into BitCoin and the value has elevated to what we are seeing today. The value of USD is decreasing each passing day with more Government spending and rich-boi tax cuts. The electricity the miners are expensing into securing the transactions is also holding the value, however, I think it's also keeping the price in check, relatively. Somebody has to sell some BitCoin at some point to pay the bills due. I could also ask the same question of TSLA, AMZN, GOOG, & AAPL: Why are these stocks so expensive?

The value of BitCoin is clear. BitCoin has value /because/ it's not owned by any single entity. No Government can take your BitCoin away. No Government can print more BitCoin and steal from you via inflation.

In a future video, we're going to cover price charts and some basic concepts on how to read them. So, subscribe if you want to keep up to date with that as I release more Edutainment content.

The price is questionable, and I understand that. The price could be a little more consistent, but that's the price we pay for 24/7/365 access to this market. It changes and shifts so rapidly. I think this is still a new asset class that is still yet to be discovered. Just like a fresh hot company in the stock market with a low market cap. Pump and dumps are not unique to cryptocurrency. They happen in the stock market too. Also, wasn't the 2008 real estate bubble a pump and dump on real estate? Let me know in the comments below!

Gratitude and Promotions

If you made it this far, Thank you so much for watching! I put a ton of work into this video! I don't have a teleprompter, so all of this had to be memorized. It's just me and my camera. Help me get to 1000 subscribers by smashing the like button for the YouTube algorithm!

Get up to $100 when you deposit $100 into your Coinbase account with the link in the description. Get up to $150 when you fund your account with $100 with the BlockFi link in the description.

If you want to follow me on Twitter or TikTok, I also post content there and occassionally something unique to those platforms when I'm not posting here.

For the text version of my posts, you can find them at blog.markizano.net. I'll let you be the judge of how well I memorize my own writing ;) There I also have links that will help you get started and help support me if you want to help me produce higher quality, more professional content.

Enjoy the rest of your day and stay frosty. Cheers!

#RobertBreedlove: https://youtu.be/d_34YjXAU5Y
#MichaelSaylor: https://youtu.be/Vuz44fwkEz0

Get started with crypto:

Get started with investing:

Help me craft higher quality content!