YGA 4 | Physical Versus Digital Money

 

Money is changing and evolving. What we used to think of it is completely different than how it will be perceived in the years to come. Though coins and bills are still legal tenders, spendable, and savable, things are eventually shifting into the digital world, and our currencies will soon follow. Halle Eavelyn digests this inevitable reality and tackles how physical cash differs from digital currencies. Listen in as she helps us uncover the basics of bitcoin the value it represents in the modern world.

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The New Energy Of Wealth: Physical Vs. Digital Money

Bitcoin Basics

Full transcription of the show is below.

I am holding a physical Bitcoin. It looks like a real coin. It is gold, shiny, and it has a big B on it, but it is fake and it probably costs around $10. It was given to me as a gift.

This is part of the new energy of money. This is a coin, yet it is not an actual coin. It is a representation. It is more like an art representation of the money it represents. I know that’s a convoluted way of explaining it, but Bitcoin and all crypto do not actually exist in physical form. Money is changing and evolving. A physical Bitcoin is just a piece of art. It is almost like the artist, Andy Warhol drawing a picture of a dollar. At that point, it is not physical money. It is art.

When I refer to the new energy of money, I want to explain the distinction here between what we used to think of as money and what we are going to be thinking of as money because it is very different. Let’s look at US dollars. It used to be a penny, a nickel, a dime, a quarter, or paper denominations, usually from $1 to $100 in common circulation. That was before we had digital currency. Now that we have digital currency, our coins and our paper money are still legal tender, spendable, and savable yet most of our money is digital.

As cryptocurrency gets adopted, the coins are not going to be important anymore because everything has been turned into 1s and 0s, computer programming, all our money. You do not think about this very often, but that is the way currency exists because it is all digital already. People do not realize it. You can’t go down to the bank and get your $1 million out. You would have to make an appointment and they would have to arrange for the money to be sent physically $1 million in cash or $100,000 dollars in cash. My local bank said to me, if I wanted more than $3,000, I had to order it.

Think about how that has changed. Start thinking about your money in terms of being digital, even when you can physically hold it in your hand. Most of what you have in your bank account is digital. It exists only inside of a computer. Physical coins are eventually going to start going away. They are here now, but maybe in twenty years, they probably will not be.

As the industrial revolution is making new millionaires, some of the old millionaires are losing their way and some are losing all their money. Click To Tweet

When we have been saving our change for years at my house, we found out there was a change shortage. We brought it to the bank and we turned it in. It took us ages to roll it up and to count it. They had to bring out all these counter boxes and stick them in. They had little scooped sections, so they could lay the rolls of the quarters, the nickels, the dimes, and the pennies. Each one needed separate boxes.

The whole thing was extremely heavy. It took me two trips to bring it into the bank, even with another person helping. It was still two trips to get it in the bank, then it took about a half an hour to count it there. Ultimately, over eight years of diligently saving our change, we had under $1,500. Physically, it was extremely burdensome. When the Templars started their first banking system, they did it because gold was hard to carry, especially in a decent quantity from France to Jerusalem. You could be set upon on the way by bank robbers or pirates. Road pirates would steal all your money.

When you started being able to have an IOU at one end and turn that piece of paper in at the other, your money was in France, it was being held there. You would take that piece of paper to Jerusalem. You would hand it in and they would give you the equivalent of that in gold. That way, you were not in danger from carrying money. As we go forward, we are also evolving because this idea of cryptocurrency is enabling people who do not normally have access to bank accounts and physical ID like, “You need a driver’s license or a passport to do this.” You do not. All you need are two cell phones two crypto wallets.

Cryptocurrency is available to people who normally do not have access to create an ID or a bank account. Some people in Cuba, for example, or people in countries where their currency has collapsed, have been able to make a lot of money by using cryptocurrency for the very reason that it is digital. All you need is a phone. Almost everyone has one of those. Crypto is going to make things a whole lot easier. It is going to make banking a lot easier for the world, but it will not involve a physical representation of money except as art or as a cool picture of a Bitcoin that you can carry around, but you will not be able to spend, which is too bad.

YGA 4 | Physical Versus Digital Money

Physical Versus Digital Money: Bitcoin is being used as a hedge against inflation, against your money depreciating over time.

 

If I could go out and take this one Bitcoin and spend it on a $40,000 car, that would be pretty awesome. The money itself that each Bitcoin represents will be worth somewhere between $40,000 and $50,000 or more by the time you read this. Several big financial companies have said that they thought Bitcoin was going to be worth $150,000 a coin or more eventually. The people I know, Bitcoin say it is going to be worth $500,000 or $1 million a Bitcoin. That is an increase in value, current value versus future value that is causing people to be so excited about Bitcoin.

Many are so excited about other cryptocurrencies that are coming or already exist that they will also be worth more. That is what is making people so excited. It is making millionaires all the time. It is also causing people to lose fortunes depending on when you buy and sell. Many people are acting from fear because of the big cycle swings. They forget that this is not new. I am a big fan right now of The Gilded Age, which is the new series by Julian Fellowes, the guy that did Downton Abbey.

I watched an episode where somebody committed suicide because they lost their fortune overnight. Apparently, that episode of Gilded Age is based on a real life incident where somebody who had a fortune from creating railroads drove several old money millionaires out of business. Some of them committed suicide. We forget that as the industrial revolution was making new millionaires, some of the old millionaires were losing their way and some were losing all their money. We think this is the only time we have seen these hugely volatile numbers happen, but this is what Wall Street was like a century ago. Also, Wall Street then was fairly new. There was a lot of speculation and people lost fortunes very quickly.

When the railroads came into being, for example, there was a lot of speculation on a new form of transport. Fortunes were made and lost overnight. Now, we have the Wild West of crypto. It is also interesting to see that the basics of cryptocurrency are evolving. Bitcoin was created to spend originally, and yet it has become more of a store of value than a currency to spend and receive. The apocryphal story about Bitcoin is that in 2010, a guy named Laszlo Hanyecz spent 10,000 Bitcoins at Papa John’s to buy himself two pizzas.

Start thinking about your money in terms of being digital, even when you can physically hold it in your hand. Click To Tweet

Back then, his Bitcoins were only worth $40. The deeper details of the story are no one took Bitcoin at the time. Lazlo posted online and paid someone in Bitcoin who acted as an intermediary and bought him two pizzas on a credit card. Now, that Bitcoin would be worth over $400 million. We have already seen this huge evolution where Bitcoin has made not just millionaires but billionaires. It was the first wave. It will not be the last. That is why it is so important to get into cryptocurrency now, even on just a small basis, because during the Wild West is where so much of the money will be made.

Someone measures Bitcoin every October. Every October, October over October, Bitcoin has gone up from $0.09 in 2010 to over $40,000. Overtime, we are going to see a significant increase because it was designed to fix the problems with cash money, fiat currency. It also has a limited number of coins, 21 million max. Now they have mined or created 90% of those coins. They say it will take another 100 years to mine the other 10%. We are going to be looking at Bitcoin having a limited number of coins, divisible up to 1 million units, which are called satoshis after the pseudo-anonymous inventor of Bitcoin, Satoshi Nakamoto.

Satoshis are called SATS for short. You can divide each Bitcoin by 1 million SATS. Eventually, with a limited supply, you can’t just print more. They will be able to mine that extra 10% that is inside of the original 21 million. I know people whose Bitcoins have been burned and destroyed. I had Bitcoins that were stolen from me, and those were burned. I can’t get them back. There is a lot of that. I estimate you are probably looking at less than 20 million Bitcoin eventually total. You have a limited number divisible by 1 million units. That means those units will grow in value because there will never be any more of them. You can buy a 1/1,000,000 of a coin, so it has a very low barrier to entry.

YGA 4 | Physical Versus Digital Money

Physical Versus Digital Money: Its current value versus its future value is what’s causing people to be so excited about Bitcoin.

 

Since it will go up overtime, it is a good store of value. Another well-known store of value is gold. Like gold, Bitcoin is being used as a hedge against inflation, and your money is worth less overtime. You can do something called dollar cost averaging, where you are putting $50 a week or a month into Bitcoin or another cryptocurrency without regard for how much it is worth at that moment, knowing that overtime, it is going to go up a lot more. If you started with $50 a month between now and whenever you stopped that savings account, overtime, your small savings could be worth a lot. That means a lot of people don’t want to spend their Bitcoin because of that increase in value.

It is interesting to see that there are a lot of people that hold Bitcoin for a long time, years. In fact, right now, they say 60% of all Bitcoin has not moved in a very long time. We will see what happens over the next five years. There are other cryptocurrencies that are going to be used more as physical currencies to transact with because they will not be seen as a store of value. They will not be seen as going up over time. There are going to be cryptocurrencies that come and go because they do not hold any real value overtime.

As always, do your own research. Do not take my word for anything. You are not here to take anyone’s word for anything. Double check all the information on your own before you make any moves. If you liked this episode, I hope you will subscribe and you will share it with people, especially women. I feel the tsunami of the new energy of money coming. I want you to be involved as early on as possible. Learn to ride the wave you don’t get knocked over by the tsunami. Until next time, I will see you in another episode.

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