Curious about cryptocurrencies? Is it investing or is it gambling? It’s a topic the community has a lot of questions on, so in this episode we create. framework for the conversation and explore the nuances. In the US, we generally want for nothing and true scarcity is something we haven’t recently experienced until this year and suddenly being presented with it creates some interesting psychological reactions. It’s good to position yourself to be ahead of the game and be prepared when you hear reports of activities that might affect the supply chain. You don’t want to be doing something at the exact same time as everybody else. See trends, think outside the box, and make your moves ahead of time. Colonial Pipeline paid to resolve their ransomware attack with a cryptocurrency, specifically, Bitcoin. Gas pumps on the east coast may be getting back to normal soon, but there’s an ongoing pump and dump issue with crypto. The stories of insanely high levels of return from crypto are all over the news and social media, creating a sense of missing out for those who aren’t in the game. So should crypto have a role in your plan for financial independence? For Brad, cryptocurrencies have always felt like pure speculation, which is the hope that you can buy it and then sell it later to someone else for more money. Although he is leery of all cryptocurrencies in general, he is interested in learning about the entire sphere of crypto because of all the innovation with decentralized finance and potential for smart contracts and NFTs. Although Brad believes there could be work-changing potential, he knows he’s not knowledgeable enough to know what it will look like or pick a particular company or cryptocurrency. Bitcoin was the first cryptocurrency to experience mass adoption and the most valuable on a per coin basis. Its value has increased ten times in the last year alone and yet it isn’t the crypto with the highest rate of return. At its core, Bitcoin is code. While only 21 million of the coins will ever exist, because it is code, it can be cloned or forked to add new features. There’s nothing magical about it that makes it worth $40,000 or $60,000 per coin. There are close to 10,000 different cryptocurrencies all with unique features and various values. Some have done well and some have done insane, but without the benefit of hindsight, you don’t know which are yours. It’s important to understand the different parameters that drive the value of a coin, what a pump is, and how they can run in parallel to affect the price. In contrast, investing is when you buy an asset of known value and it produces a return of some regular amount over a period of time. There are some who state Bitcoin is digital gold. When asked his thoughts on gold, Warren Buffet said that he had no idea where it would be in five years but he knows it won’t do anything between now and then except look at you while Coca-Cola and Wells Fargo will be making money. He would rather invest in something that can produce. Jonathan notes that while we are all on the same path directionally, we aren’t always going to agree. Though it’s true gold doesn’t produce anything, he sees it as an excellent store of value and has been more open to gambling on the Doge cryptocurrency. Gold has increased in value over the years, not because it produced anything but because the dollar has lost value to inflation while gold has held its value. The same argument could be made for crypto due to the limits on the number of coins. Unlike physical gold, crypto is a lot easier to store, liquidate, transfer, and transport. Cryptocurrencies have value because we say it has value. Although Brad believes the use cases are still small, he’s open to learning new information. In Episode 099 of the podcast, Michael Peterson discussed his non-profit in El Salvador. The use of Bitcoin there has cut down on friction and the fees for sending money from the US to El Salvador. Crypto is different from gold though