Beyond the Chain

Scott Melker on trading, investing and decentralized finance

October 14, 2020 Scott Melker Season 1 Episode 6
Beyond the Chain
Scott Melker on trading, investing and decentralized finance
Chapters
Beyond the Chain
Scott Melker on trading, investing and decentralized finance
Oct 14, 2020 Season 1 Episode 6
Scott Melker

In episode six of Beyond the Chain co-founder Fabio Canesin talks with Scott Melker aka The Wolf of All Streets. We chat about how he went from professional DJ to professional trader, his philosophy on investing and his view on the role altcoins play in his portfolio. 

Show Notes Transcript

In episode six of Beyond the Chain co-founder Fabio Canesin talks with Scott Melker aka The Wolf of All Streets. We chat about how he went from professional DJ to professional trader, his philosophy on investing and his view on the role altcoins play in his portfolio. 

Chris: [00:00:00] Welcome to Beyond the Chain, the podcast from Nash that takes a deep look into blockchain technology and connects the dots of decentralized finance. I'm your host, Chris Fenwick. And each episode I'm joined by one of the Nash founders and a special guest.

This week here with me is Nash co-founder Fabio Canesin

Fabio: [00:00:17] Hey, good to see you guys again.

Chris: [00:00:19] and joining us also is Scott Milker. 

Scott: [00:00:21] Hey guys thank you for having me.

Chris: [00:00:23] Scott is a professional trader and DJ who releases the Wolf Den newsletter at least twice a week. He has a biweekly podcast called The Wolf of all Streets, where he interviews anyone in the world of finance, technology, sports, art, music, trading politics, and more, so genuinely, a lot of streets there. His trading strategy and unique Twitter personality have a master following of over 120,000 people. And he just launched his own site called thewolfofallstreets.io Scott. So that's a very interesting resume you've got there. Would you care to let us know a bit about your background, maybe also, how you made this transition from deejaying and found yourself in the world of cryptocurrency.

Scott: [00:01:01] Sure. Um, again, thank you so much for having me and for that great intro, very flattering. Um, you know, I have a, uh, Very scattered background. It's funny. I was a kid who had a pretty bad ADHD, so I was always all over the place and interested in a million things. So kind of a Jack of all trades and a master of none, I would say.

But luckily, you know my parents cared deeply about financial literacy. So I learned a lot of important lessons when I was younger. I was already buying stocks when I was a young teenager you know, when it was literally a physical piece of paper that was sent to your house when you bought a stock since I'm 43, that was in the 1980s, believe it or not. And, uh, you know, I attended the University of Pennsylvania, which in the late nineties was sort of the hub for all things finance. They were giving away wall street jobs, like. Halloween candy and I chose at that point to surpass an opportunity on wall street to effectively become a DJ.

There's a lot more twists and turns in the way I was actually the owner at that time, uh, with three partners from college of a website called phillytonight.com, which was an early nightlife website in Philadelphia, where I lived. And I leveraged that into running a magazine that I started. I sold that magazine to a company in New York. I went to work there as the editor in chief of that publication, which was national but then at the end of the day I quit all that because music was my passion and it's what I wanted to do. That was a tough path. it took me a very long time to sort of catch my quote unquote lucky break, I guess.

And then I had a, a very what I would call a very happy and wonderful life as a result of my DJ career. It was really living the dream, but, as with all things, eventually, you know, you burn out and, and good things come to an end. had my daughter, I was already steadily approaching the ripe young DJ age of 40. And decided to pack it in and focus more on trading, which, you know, as I touched on earlier was sort of something, it was always a part of my life was, was in the background.  So, soon after I found crypto, I came like everyone else for the massive pumps that were so fabled around the trading world. It had nothing to do with what I was trading. I just wanted to make money. And then. like most people, I slowly started to realize that what I was trading was actually really important and became much more of an investor and a believer in the space. And that's sort of what led me to where I am now.

Fabio: [00:03:17] That's a very interesting history. I think many of current trading funds and tra ders uh, did the exact same path. So they, they were trading just because a really good opportunity for market efficiency and then they start, uh, becoming believers of what they are actually trading.

Scott: [00:03:34] Yeah, I agree with that. I think that that's, you know, as I touched on, it's a very, very common path.  I'd heard of Bitcoin and whatever, but, uh, it didn't really take notice until we saw the crazy sort of bull runs. It was late 2016, early 2017, for me, when it really grabbed my attention.

But you know, you should understand what you're trading even if it's not something you're passionate about, you should always understand any asset that you're buying and selling at least at a basic level. And you know, when you go down that rabbit hole with, with Bitcoin and cryptocurrency, it inevitably leads you down the rabbit hole of what monetary policy is and what money is and how it's used to oppress people, around the world and has been in history. And then you start to realize that there are very few. Idiosyncratic, uncorrelated assets in the world that are truly, you know, deflationary and hard money. And that Bitcoin is probably the most promising of all of them. And once you sort of accept that and, and, you know, you take the pill and enter, you know, exit the matrix. I think a it's really hard to go back.

Fabio: [00:04:31] I actually am interested since you joined in 2016, 2017, how was your trading strategy there? Uh, let's say you were not still, taking the pill, as you said. Uh, how would you trade the assets? if you can tell a little bit of, of your logic behind that. 

Scott: [00:04:49] At that time my trading strategy was probably jackass YOLO, blindly put money into something out of it, an unstable exchange. Yeah. And hope that it goes up really high and doesn't go to zero. I can't pretend that I was trading particularly responsibly when I, when I started, because I wasn't, I was gambling.

I think like, Like everyone else. Um, but you know, the core to that strategy, always for me, any investing strategy, it has always been sort of dollar cost averaging. So I was always constantly buying Bitcoin and Ethereum from sort of from the beginning. Um, You know, and I needed Bitcoin to trade all coins.

So that was, you know, somewhat of forced behavior for a lot of us. So, you know, I got, I was more lucky than good, I would say because, you know, I just kind of kept buying Bitcoin. It was under a, you know, it was around thousand dollars, 1800 bucks, $3,000. By the dip at 1800 again, and all of a sudden it's the $19,000 assets.

So, um, I wish I could say that I was coming in and as you know, genius wall street prodigy, but the reality was like those exchanges that existed at the time, did it really have the kind of orders that you were familiar with on legacy exchanges? You know, like OCO orders trailing stops. Some of them didn't even have stop-losses.

Right. So, I mean, it was a complete, I might as well have been on an online casino to be, to be quite honest.

Chris: [00:06:14] I guess you've touched on an interesting point. That, which is that there's a lot of quite amateur traders involved in cryptocurrency who were attracted to it because they saw the potential gains, but certainly weren't people were like buying stocks when they were teenagers. So there's probably quite a lot of misconceptions about trading and trading basics in the crypto space.

Is that something you've had observed?

Scott: [00:06:36] Yeah. I mean, you could do a 10 hour podcast just on that.  there are countless misconceptions and I think that technical analysis is a huge thing in, in cryptocurrency, obviously. I mean, I learned technical analysis long ago. It was something I sort of laughed at for a long time and then became very useful when I moved to crypto from other markets. that's largely because there's no fundamentals to trade on in the altcoin market. Bitcoin moves  all out points, basically become the same, right? It's complete systematic risk. They dump and pump completely based on the movement of Bitcoin and Bitcoin itself is not a corporation with quarterly earnings and profit and loss statements. it's a speculative asset. That's price is moving primarily based on what people are willing to buy and sell it for. So technical analysis works exceptionally well in a market like that, but I think that a lot of people come into the market new and they see technical analysis and they learn charts and they think they're going to be these genius, you know, God tier traders. And the reality is the only thing that matters in trading is risk management, right? I don't care what system you use, what indicator, what strategy is looking at a chart. It doesn't matter if you use astrology or if you, throw a basketball in the air and close your eyes and if it hits you in the face, you decide it's time to buy and if it hits you in the foot, it's time to sell. It doesn't matter. I can throw darts and be profitable if my position size and stop loss are  correctly. And that's really all that should matter to almost any trader, you know, it's sort of an interesting take when you think about the only thing that you can as a trader is how much you're going to lose.

You can't plan how much you're going to win because a trade can go down you immediately. So knowing that the only information you have, right, there's a calculation of how much of your portfolio you're willing to lose on any trade. You have to approach every single trade and every single decision based on that.

Fabio: [00:08:26] Very interesting take, I think, especially because of the whole psychology behind losing money, a lot of people has the tendency of doubling down, right? So they, they believe something will go up again instead of cutting their losses and actually following a plan that they have set before. And that's where people actually start losing money on crypto.

Scott: [00:08:49] Yeah, I think that there's an important differentiation between the strategy of a trader and an investor. If you're taking a trade, that trade has to have a firm place where you view it as invalidated. Right. And that's where your stop loss is. So you do you accept that you're wrong. You move on, doubling down is not a trading strategy. It's an investing strategy. Investors will do things like I mentioned before, like dollar cost, average or value average by a fixed amount at a certain time, or buy a dip on something that they believe Dave is going to rise because markets tend to rise over time, but that's a sure way to lose a whole lot of money. If you're a trader. Because as a trader, your stop loss should have been placed at the level at which you take an acceptable loss relative to your portfolio and doubling down is increasing that risk. you really have to trade with a plan and have your risk properly managed.  if you're going to be trading.

Fabio: [00:09:45] Scott. What are you trading now?

Scott: [00:09:48] First of all, I should state that it's very important differentiation cause people ask me that. I'm an investor first. I only trade with a small portion of my capital, even though I'm a quote unquote professional trader. I believe that investing is a smarter strategy. So even if I say I'm long or short something, if I ever short Bitcoin, it's a very tiny position that is a hedge against my long investment, that never changes. So I'm always long Bitcoin and I'm always buying. I should, I should make that very, very clear. I was recently just long Bitcoin for quite a bit of a, the most recent move, which was great.

I dip my toes into the DeFi nonsense and  all the uniswap, hype and excitement, but I treat all of those as lighting money on fire and a garbage can. so any position that I take on uniswap or in any coin on a place that has no stop loss at all, I calculate the position to be small enough that if I lose the entire thing, it literally goes to zero that I will only lose 1 to 2% of my portfolio. You remember, in 2017, the mentality was like, I'm going to buy 10 things. Nine of them will go to zero, but one of them will do a hundred x and I'll be rich. That's kind of the approach you have to take with a uniswap in DeFi. I think the problem is that all tend to go to zero

Fabio: [00:10:56] Yeah. Yeah. You'll sometimes have ten of ten go to zero, right.

Scott: [00:11:00] Yeah, for sure.

Chris: [00:11:02] I mean, I guess one issue with these investments is the  transparency around the teams. In a lot of cases, there are projects where there's actually very little information available about the people behind this. No, no sense of transparency and security. And I guess this is another risk in the cryptocurrency space that is.

Less prevalent in traditional stocks and investing. So what are your thoughts on the idea of sort of security and transparency in terms of the assets themselves, the infrastructure of the exchanges

Scott: [00:11:31] For the assets yourself, you're a hundred percent right. I mean, you're taking a lot of responsibility in your own hands that is covered by, the CFTC and SEC, and government agencies, when you buy an equity or, or an asset, but let's not pretend that there aren't scammers outside of cryptocurrency and at the end, and Enron's of the world and the Bernie Madoff's don't exist in a legacy market.

So I sort of hate the stigma that Bitcoin and cryptocurrency are criminal enterprises and scams because has been used for criminal enterprise more than the good old US dollar. Right. In fact, Bitcoin's far easier to trace then than dollars, but that's a completely different conversation and direction, but, um,  for a while you had the credibility of an exchange that you trusted choosing to list something which effectively meant like they've done the due diligence. So maybe you don't have to, you know, someone's smarter than you has said, Hey, this has assets, not an exit scam. It's not going to zero.

That obviously does not exist in with a lot of the defy stuff, but now different than 2017 and something that does concern me is that you're seeing projects that were not even an idea in someone's head a month ago. Like coming to fruition in two weeks being listed on unit swap, then hitting a major exchange within like a week or two.

Right. So that, that sort of is out the window for me, obviously, sushi is a great example. Um, so, you know, I always somewhat trusted exchanges to choose the assets that were safe to, to trade to some degree. There's only so much a due diligence that you can do as an individual. And I don't think you'll ever really get the whole story.

So. I guess that's one side of it. Is that just understand that there's always risk trading any of these assets. That's the bottom line. As far as the exchanges, I think they've come a long way. Um, and you know, it's hard to generalize because some exchanges do a better job than others so you have your two factor authorization set on a separate device. That's offline and doesn't have your phone number attached. You have to enter that code. Then you have to enter an email code. You know, if you want to send crypto out, I should say, then you'd have to enter an email code and you can use an encrypted email, like proton mail, which also has two factor authorization.

And you can add like a hardware like a Yubi key or something, which then you have to have in your presence and press to send funds. So in a situation like that, you can feel pretty damn secure that nobody's going to be able to send your crypto off exchange. and that just wasn't the fact in 2017, right?

I mean, people would, could literally just get your email and your password and bye bye. I think that certain exchanges are doing, doing a lot to, uh, make. Make life more comfortable for traders as far as security that said it's still, you know, not your keys, not your Bitcoin. Um, I think that security in general is another sort of like infinite pathway.

Once you get it and get into it and you start like everyone else, you're like, I'm putting my money on an exchange. It's fine. Right? I mean, I use E-Trade. I use Charles Schwab. I'm not worried about losing my money. So you're natural, you know, I think you just sort of default to, this is fine. Then you go, you know, you start studying it and realizing, Oh, maybe this isn't mine.

Maybe I should get a wallet and you use some sort of a meta mask or something like that. And then you, the next step is, Oh, no, I need to self custody. You get your. Ledger or your Trezor, and then you start moving things there and you start putting things in the safe and putting your private keys in a safety deposit box and all this other stuff.

And then you're like, well what if I die? Like what happens to me then? Like, where's my Bitcoin go? Or what if someone comes into my house with guns at gunpoint and just makes me send it, and then you learn about multisig and you set that up and then it's just sort of this like endless thing. then from there making sure that there's a few key people in my life who understand that. And if I die, what happens, my wife, she knows what to do. If we both die in a car wreck, what happened? Someone else knows what to do. Right. Um, So security is sort of an endless thing being in this market.

And you get to a point where if you've been hacked, you take that even out of your own hands, you know, where like you even would have to do things that nobody robbing you would ever go through to, to, to send any. A significant amount of money beyond like your pocket change in a wallet that you transact with.

So I think that that's a long answer sort of to your, to your question. I will say though, that now we're at a time where it's really, really interesting and just today cracking became a official bank in the United Mmm. In Wyoming, they're a state chartered bank. They'll be able to, you know, have insurance on the funds. They'll be able to custody your Bitcoin. You'll get a debit card and a savings account. Like any other account, things like that are just massive for mainstream adoption, because if you're in this community, you might accept that, you know, being your own bank is amazing. In fact, you know, we all are short, the bankers long Bitcoin, screw the banks, all that, but your average person who we need to love Bitcoin and to love crypto, they don't want to do any of that they just want to put their money, be in a bank and see it go up and they'll be able to do that, you know, moving forward as we see things like this. So I think it's massively bullish for the space to see the federal government saying, Hey, you can custody crypto in a bank.

Fabio: [00:16:42] Yeah, I think that's a general direction is it's not only personal security, but also institutional is security, right? Because Kraken today, or other centralized exchanges are not as far from being a bank already, but when you have a formal setup where they can actually be called that, I think it, it changes the responsibility and it changes the guarantees as a client adds.

Right.

Scott: [00:17:07] Right. I mean, as you just said,  they're banks, but without any of the benefits and title, right. They're banks with all the downside risk and none of the upside. So seeing them get those protections, listen, that's not for me. Like, I'm probably not putting my Bitcoin in a bank. That's the point I want Bitcoin because I don't trust the bank, but that's not the case for most people. And like you said  if you're a corporation, a pension fund or something like that, and you want to be exposed to Bitcoin, you've had very few ways to do that securley. Like you're not going to just buy a bunch of Bitcoin and put it on your ledger. I mean, and put it in a safe in your office and hope that you're company's funds are secure. But that's not what we want, you know, as a crypto community. So if they can actually buy it and put it in a bank and to know that it's insured and secure, it's absolutely huge for institutional money.

Fabio: [00:17:54] Right. I think this is one of the things that we have been focusing a lot on Nash from the perspective of technology is how can we the same kind of experience that is natural for a modern bank, right? Because we are also not talking here at brick and mortar bank. Right. We are talking about a nice mobile app.

We're talking about a good online service. I do not expect people to go to Wyoming to use Kraken. Uh, I think that it would be unfeasible. But how can we provide that same digital banking experience for the crypto native assets? That's at the core of a value that to try to build at Nash. Scott I just want to go back a little bit from what you were saying. You talked about Defi a little bit and the bad side of Defi casino projects that we all know, we try to farm and who can flip first. But how do you see DeFi as a movement in general? Or we're just talking about a move that CeFi is doing right now which is becoming even more like a bank. And how about the other side of the coin the DeFi. How can the DeFi space evolve and this conflict between becoming more like traditional services for the  Ce Fi world and, going in the opposite spectrum for the Defi world 

Scott: [00:19:13] It's an interesting question. And I think it's actually unfortunate that Defi has become this sort of all encompassing umbrella for all of these projects, because it's really not right. I mean, as you said, if you want to take DeFi at what it should be, you're talking about a competitive advantage over centralized finance. A crypto bank that eliminates a centralized entity allows for higher interest rates to be earned, you know, better yield more efficient loaning, all the things that centralized banks do, but to basically poorly or do at the expense of the customers. Right? I've, I've said this recently, I think in a tweet, but if there's one thing I've learned from companies like Voyager and Block Phi and Celsius who are offering up to 9%, is that banks are inefficient or they're just absolute crooks, Because these guys can offer me 9%, 6% of my Bitcoin and 9% of my USDC but a savings account can't get me any yield at all anymore. That's highway robbery. There's a way for this to be done. It's just, they're a huge bureaucracy and the nature of what they do that they don't want to pass on the money that they're making to you.

So I think that Defi is the wave of the future for finance. That doesn't include yield farming and sushis and yams and hotdogs, and, you know, um, steaks and boiled peanuts. those are, offshoots of this where a very small percentage of the trading population understands what they're doing and can leverage, an inefficient market to make a whole lot of money.

But you have to be early and you have to understand what you're doing or else you're just going to be the sucker who gets dumped on and that's going to be 99% of the people. So I would say that there's an unfortunate stigma now around DeFi because conceptually it's a brilliant thing that I think could change, finance forever.

Chris: [00:21:01] Yeah. I mean, I remember when Nash started, we started talking about term decentralized finance before this whole Ethereum ecosystem had grown up and now the term has become somewhat synonymous with just sort of yield farming projects and Eunice swap. 

Scott: [00:21:16] I mean, to me, I've been using  these platforms for ages. I mean, they're like the happiest day of every month for me is the first, when I see my interest statements from all the places that I'm just sitting in stable coins and earning yield, it's incredible. It's like the same interest rates we were getting in the 1980s on our accounts when I was a kid. It's amazing.

Fabio: [00:21:34] Yeah, i to ask you because a lot of our users, they are more holders than traders. So they are interested a lot in this, profile of investor that, like you said, you have a look at the yield, but  you also do some trading. Right. So could you tell a little bit, like, how is your trading?

They have, how do you. Hmm, become a tray there, uh, in that sense, um, uh, do, do you look for create a market metrics around Bitcoin and then you say, Oh, I can think I can increase my stack. Uh, if I exited the position now, how it's your logic around, uh, doing a trade when you are primarily an investor?

Scott: [00:22:18] So first, primarily as an investor means that I don't overthink anything. And I don't think that I'm smarter than the market. And I just buy something and assume that if I hold it long enough, it will rise. Right. And I think that that's what most people will do because it's been proven 95% of people who attempt to trade, fail, and even the ones who succeed. Barely beat investors. If they do, you know, they would have been better off spending all those hours, learning to paint and, uh, spinning their wheels and barely beating an index fund by like 1%. So, you know, the stats on trading are embarrassing. It's not for everyone. And that's why I'll only trade with, you know, generally it, depending on the market, but generally it's about 15 to 20% of, uh, My portfolio in any given market while I, I trade with as far as looking for edge or strategy, I it's funny. You ask how you learn. Well, you learn by losing all your money over and over again, and then getting absolutely so sick of losing your money, that you become determined not to suck. and, uh, you know, I've lost. I mean, I finally made it back, but I was probably even when I was a quote unquote, good trader after decades of trying, I was still down, you know, especially if you have to account for interest.

So I think that, um, You know that the edge really comes with the managing risk, maybe hating the feeling of losing money and knowing that you could have done nothing and probably acquired, acquired wealth. But now in this market, I mean, My goal trading alts is to get more Bitcoin. It's not really to invest in alt.

So I just look, no, maybe watch Bitcoin dominance or other signals for when coins are tradable. And then I plow into them heavily, you know, make my gains and get back into Bitcoin quickly before it ruins the party. Um, you know, and I think that's sort of been my strategy for quite a while. A long time. I'm interested in compounding the amount of Bitcoin that I have through trading.

Um, As far as I don't do very much leverage trading. I do some when I think that the market is right. And again, that's sort of just a strategy to make a little more money on small Bitcoin Bitcoin moves, but almost every trader goes through this sort of like. Evolution of trying every single indicator.

That's it like not FOMO going into the top of a move because you see everybody talking about it, not moving your stop. Stop-loss down like a jackass, because you're afraid that it's going to reverse on you, controlling your emotions and eliminating that from your trading gives you more edge than any other strategy.

And that's how, as a trader, you will make money.

Chris: [00:24:50] So how do you feel about bots and algorithmic trading then?

Scott: [00:24:55] I will, they eliminate all the emotion. Right. But the problem is there's you, there's usually a person who makes, who turns their bot on or off. Um, I know a lot of people who've had successful bots, but still override their bots based on their emotion or their own feelings on the market. I mean, algorithmic trading quant is the future high frequency. Quant in legacy markets. I mean, you know, people spend millions and millions of dollars just to have a, you know, a connection that's a second faster than someone else. But I mean, it's compelling and there's people who definitely make money doing it, but like, I don't see any like, Billionaires running around, talking about how amazing their pot is.

So

Fabio: [00:25:34] I don't think they will ever tell you. If they have even running bots, right. Scott, do you denominate your portfolio in BTC.

Scott: [00:25:46] I did nominated in both. Um, and anyone who tells you, they don't is probably lying. Um, you know, if, uh, like my, my concern is to compound Bitcoin, as I told you. So I think that that's sort of the default, but I'm not paying my kids' private school tuition or my house mortgage and Bitcoin. So I need money, Yeah. So like, I, I quite frequently, regardless of my portfolio, just like dialed dollar average into things, I also sell quite frequently and take profit. I've I believe as a trader that you need to have a salary. If you're not taking money out of the market, then you're not making money. And unfortunately that means largely dollars.

So, you know, I've said this a lot of times. I mean, I kind of, at this point, view Bitcoin as your savings account and dollars as your spending account. Um, but you know, you need to have that money to spend, which means if you're trading professionally, you need to take it out. Um, but I am more, I think emotionally, if that's a word for me, which it probably isn't, but you know, I want to have more Bitcoin at the end of the day.

Chris: [00:26:43] You did mention the you trade altcoins. Um, so are there any in particular that you've traded in the past or trading now, and are there any in particular that you maybe have you been burned by.

Scott: [00:26:55] I've been, I I've praised or been burned by most of them at some point, depending on the week or a month that we're talking about. I mean, I've always been very bullish on the theory even before defy. So I, I view Ethereum as an investment like Bitcoin, and that's really the only coin that I. View as such also like there's times when I switched dollar cost averaging from Bitcoin to Ethereum or switch it just because if I believe the market is turning, you know, Ethereum sort of gets like disproportionate downside or upside depending.

Right. So if you think you're going to trend up, you'll probably do better in Ethereum and Bitcoin. So that's something that I happily invest in. my biggest gains, you know, 2017, I have no emotional attachment to them. In fact, they're the most laughable coins probably at this point. I mean, I was an XRP when it was, you know, under 50 stats or something.

Yeah, like fractions of a penny and TRX as well. I mean, TRX, you know, I was in the 20 stats and was exiting the end of my position at 2000. I don't care about TRX. I don't use it, you know? Um, but, uh, I would say that those were, you know, life changing type gains when they, when they happened. I this year, I was preaching junior heavily. Elrond at 15 to 20 sets and you know, it did. Over a 10 X from there, way over a 10 X from there. and that was this year. So I have love for those coins. And when I do exceptionally well on a coin, I always believe in keeping like a small percentage of that trade. It's the casino's money, the house is money, so to speak and kind of moving it to the longer term portfolio.

So I have sort of dust accounts of a lot of, altcoins sitting there, either up, down or otherwise that are, have become part of the longterm hold. But I only do that because. If you do a 10 X might as well, take 10% of the profit and put it away in case it does a hundred. Right?

Fabio: [00:28:36] Hey Scott from an investment perspective? What's your main teases for Bitcoin? Is it a store of value? Is it a payment system? Is it, reserves for federal banks in the future? What's your main teases behind Bitcoin?

Scott: [00:28:50] like 'em all, man. My favorite has to obviously I think be store of value. As I mentioned, I, I view it as a savings account at a very basic level. We're inflating away our future by endlessly printing money in quantitative easing and buying corporate bonds and all of these insane practices that have gone exponential, you know, kind of slowly happened for 20, 30 years.

And now you just see the curve going straight to the moon that, that can't end well. So. The ability to own a hard asset. That's deflationary is a store of value and it can be a store of value regardless of what the price does, in my opinion. Right. So like, just because it went through 3000 for five minutes in March, did not destroy that narrative for me because it was briefly correlated to other markets and crashed in a global, you know, economic crisis.

So store value, which I mean is effectively digital gold. It's better than gold in every single way. I tweeted literally yesterday to the effect of, you know, good luck crossing a border as a refugee with your block, bricks of gold. Boomer, um, you know, because, uh, you've met memorize your private keys and you can move your Bitcoin a hell of a lot easier than you'll ever move gold around.

You can transact in it easier. Um, so yes, I believe it's digital gold and it's superior to gold as far as transacting, you know, like there, there are faster ways to transact. Not in legacy systems really, but, you know, Bitcoin is not the best cryptocurrency for quickly sending money, but it does the job and it does it well.

Um, you know, I had Ray Yusuf from full on my podcast, not so long ago. And he really sold me that it wasn't the store of value that mattered, but that it was this global transacting, medium, that was really what it was superior for because you know, he's on the, on the ground in Africa and.

Banks are effectively useless in Africa, especially if you're trying to get money from a bank Cindy to another or one country, even more to another. So, you know, Bitcoin works exceptionally well as a medium of exchange across borders, and it's a very compelling case, you know? so I think that it's all of those things.

It doesn't mean it's the fastest. It doesn't mean it's the newest, but, I think that it serves all those purposes and that, that will continue to be the case moving forward.

Fabio: [00:30:59] Right. If you look at the past one year of Bitcoin pricing, it has been a lot more stable than it has been for its whole history. Right? Let's say so volatilities is a lot lower.  How do you see that? Do you think it's just the calm before the storm, do you feel this is the paintings for Bitcoin?

Scott: [00:31:18] I mean, I think that that's a good thing, you know? I think it just signal of a more mature market. Um, it's a signal that more mature, money is in the market. You know, I believe that, uh, 2017 we saw that insane volatility because it was purely. All the signs of a bubble. You know, when, uh, the lady cutting your hair starts telling you about ripple, you know, that it's probably time for you to sell and that's not happening now.

You know, we, we see real institutional, um, adoption here. We see. You know, companies that are putting, they're putting their cash into Bitcoin. We know. Yeah. I mean that a lot of companies are exposed one way or another to the space. So I think it's, it's very, it's very, very different. Um, and so I think that that obviously, uh, controls the price a bit and the truth is as much because it's fun to see the crazy volatility and to see it swing and go up.

We want it slow, sustained rise. To all time highs and beyond, because that's the way that we'll get people on board and that will keep people also, you don't want to live in a world where Bitcoin goes to a hundred thousand or a million in the next six months or a year, because that means the world is ended. Right. If that happens, then if that happens, then it's like, you know, you're, you're in Waterworld and on your raft or in Madmax, you know? And, uh, it's like fully dystopian future a Hollywood movie, and yeah, you'll have your Bitcoin and you'll be the rich guy who still doesn't have electricity. So I don't think that that's a path that I want.

So I think the goal would be less volatility and a steady rise.

Chris: [00:33:00] So in general, how do you use st general? How do you, how do you think the market will trend in the next next few months?

Scott: [00:33:08] um, you know, I don't make wild price predictions for the future and, you know, the path to up includes a lot of down, always, you know, I mean, you take the Dow Jones chart from the inception of the stock market, um, and you zoom out long enough, large enough, and it's never gone down. The great depression was a good buying opportunity.

Good buying opportunity, right? It's a blip on the chart. It's just, it's a line that just continues up X, Y access, both trending up, and that's what you want to see with any mature market and asset. So I think that that will happen with time. So I can't tell you if that's the next few months or if that's the next few years, but I think if you zoom out, we will only see continued price appreciation.

We just need to smash. We need to beat inflation doing it. That's the trick.

Fabio: [00:33:51] Hey Scott. If, if it does become Waterworld, then we go to a billion dollars, a Bitcoin, uh, maybe you're already at the crypto mutants, right. That will be adapted to it. So

Scott: [00:34:05] I hope so.

Fabio: [00:34:06] if that's fast, I wonder what's your view of the day? Following them? The digital national currencies, like digital, a young digital, remember the store irreducible dollar.

Scott: [00:34:18] Well, I mean, I think we all know that digital is the future one way or another, I mean, money is not gonna, is not going to be left behind it's going digital. The problem is that central bank, digital currencies. We'll have all of the downside of the central banks and none of the upside of cryptocurrencies besides maybe the speed of transacting.

The reason that people like cash is because it's private. I can, you know, you and I can exchange cash and the government doesn't know about it yet. I'll be dead with digital, with central bank, digital currencies, they will know exactly who you sent money to, how much you sent and when, and your privacy and transaction will be gone.

They'll be able to. Just take money right out of your wallet or your account. If they think you owe taxes or you think they owe you money, you'll have zero control of your money. so I think, I think it's very bearish for society, unfortunately, but I think it's very bullish for Bitcoin and cryptocurrency because.

A, if central bank digital currencies become the new warm, every person on the planet will be forced to transact digitally, which means that they'll understand how to open a wallet. They'll understand how to type in an address. They'll understand how to send and receive money, currency. And that's not the case right now.

Right? In fact, those are major barriers to mainstream adoption, I would say is that people don't understand and don't want to do the hard work to understand how to actually use it. So they'll know how to use it. And then at some point they'll go. Wow like this privacy thing. I don't want my money sitting on this wallet that my government controls. So I think it's very bullish for cryptocurrency and probably a net loss for, for privacy and in society.

Fabio: [00:35:43] So you don't believe there will be a national inquiries, which does preserve privacy.

Scott: [00:35:47] that would be the antithesis of what a government would want when creating a national currency.

Fabio: [00:35:52] Well, I think there will be a tremendous competition around who is the least problematic of for having your data then. 

Scott: [00:35:59] Yeah. And I'm, I'm a hell of a lot less worried about the government having my data than I am about the people that I give my data to every day, being Apple, Google, Facebook, and friends. So, our data is not going to be private, but at least maybe our transactions can be.

Fabio: [00:36:14] Personal questions, call it. Do you to music where, where you are looking at a graphs for training.

Scott: [00:36:21] Yeah, generally. Um, I almost always have music on in my life. I always have sort of, as a kid, it sorta keeps me somewhat focused. Um, so yeah, I listen to music.

Fabio: [00:36:32] Did they have any burrum song?

Scott: [00:36:35] I love, I was just joking about it today. I was so excited when, uh, I read about cracking, getting their banking license that I like put on rage against the machine. And it started jumping around the room. I felt like I was gonna run through a wall. I was so excited. So it depends on my mood, but yeah, I mean, I love that kind of stuff, but generally when I'm trading, I'm either listening to like, depending on my mood, jazz or something that.

It doesn't have words, so I'm not distracted. Um, but, uh, when I don't mind that it's almost always like nineties old school rap

Fabio: [00:37:05] so, so w what are your feeling about them? Uh, putting on rage against the machine, like, uh, bulls on parade, something like that.

Scott: [00:37:13] well, you got to put on bulls on parade. Of course. I mean, it's, it should be the it'd would be the theme song of crypto, but yeah, usually I go to killing in the name of first and then I expand my horizons from a. From there, but yeah, I mean, bulls on parade, greatest tradings on in the world, unless price is going down, I guess.

And it's just ironic. So,

Fabio: [00:37:36] There is no.

Scott: [00:37:38] no, not that I'm aware of. There's a lot of nursery rhymes and involving bears, 

Chris: [00:37:43] you mentioned that you had a lot of success with like, uh, drawn and L Ron's. but you also said that you think cryptocurrency is a domain where you can't really do proper fundamental analysis. so what was it that led you to invest in those projects? Was it looking at technical indicators?

Scott: [00:38:00] Yeah. I mean, primarily, almost any trade I take is based on technicals in this market. now I can be interested in the projects and I can think that some of them will change the world and will be brilliant, but that doesn't necessarily affect price. In my opinion, you know, and as I touched on earlier, if Bitcoin moves, it's not gonna matter.

If one of these coins is literally cure in cancer, it's going to dump. So, you know, until the time that there's sort of an untethering where the actual value of the fundamentals of these projects, uh, comes into play. I think as a trader, you need to primarily focus on technicals, not fundamentals that said, if you want to invest in one of these projects and you really believe in it, then.

Invest just dollar cost, average, like anything else and, you know, hopefully, uh, it rises with time. No, I will say in the case of Elrond specifically, I had Benjamin Minshew, the CEO on my podcast. Who got me really, really interested in it. That's what caught me sort of looking at the chart in general and thinking that I wanted to trade it and be interested.

Chris: [00:39:20] Yeah, we, we actually, um, we have, uh, we've had Benyamin on a podcast and

Scott: [00:39:25] Oh, wow. Wow. Yeah, I'm actually going to have him on again because I enjoyed it so much.

Chris: [00:39:30] Well, I think that marks a good point to end it. We're running out of time here. So thanks to you, Fabio for joining us today.

Fabio: [00:39:37] thank you for having me.

Chris: [00:39:39] And special, thanks to Scott for such a lively conversation.

Scott: [00:39:43] thank you guys. I really do appreciate it.

Chris: [00:39:45] Okay. And thanks also to everyone who listened, you can subscribe to our podcast with your favorite listening.