Hi, my name is James Shepherd.
In yesterday's video, I talked to you about where did bitcoin come from.
We talked about the blockchain technology.
Today I want to talk to you about why is bitcoin such a mess.
Again, to go back historically a little bit, we literally in the last six months, the amount
of volatility in bitcoin has been insane.
You literally right now if you said, "James, I have a thousand dollars.
I'm thinking about investing it in bitcoin.
Is that a good idea?"
You literally would have better odds if you went to the casino and played blackjack with
your thousand dollars, than you would to invest in bitcoin right now.
Because when you have that much volatility, the more volatility you have, the less predictability
you have.
If a stock is going up and down, up and down, 50%, 50%, up and down, there is no way you
are going to be able to predict that.
Prediction is when you see something that kind of is doing this and you are like oh,
that's going up.
If something is slowly going up, it's going up.
If something is slowly going down, it's going down.
Even then predictability is tough because something could happen to throw off your assumptions,
but with bitcoin right now there is literally just no way to predict it.
Again, it is just hilarious to me all the LinkedIn messages and all the Facebook posts
and everything I got back in December of "Oh, you need to get involved with bitcoin.
I'm making thousands of dollars," and all that.
It's like.
Well, yea, I can flip a coin up in the air and I can get heads, but imagine if I told
you, "Hey, if you invest $1,000 with me, I'm going to flip a coin and if it is heads,
you are going get $2,000.
If it is tails, I'm going to take your $1,000."
Is that a good deal?
Well, over time you are just going to break even.
Who knows?
If you only have $1,000, that's a terrible deal because you've got a 50% chance of
losing all your money.
That's kind of where you are at right now with bitcoin, if you are trying to trade bitcoin.
All these people that are talking about, "Well, we found this mathematical whatever that predicts
the movement of bitcoin."
Oh, really?
Did it predict when the government came in and regulated bitcoin and it dropped?
Did it predict when the silk road was seized by the government and bitcoin dropped like
50% in like two hours?
Did your mathematical model predict that that was going to happen?
No, it is impossible.
You cannot predict massive unpredictable events.
They are unpredictable by definition.
Right now anybody that tells you, "Hey, bitcoin is an amazing investment.
All you have to do is you know put in your $10,000 and we will teach you how to trade
bitcoin."
I can tell you it is going to be very exciting if you are an adrenalin junky and you just
want to waste $10,000 on something and maybe end up with $2,000 or maybe end up with $50,000.
Go for it.
It could be a lot of fun, but you are probably going to lose all your money.
So just be prepared for that.
Because there is just no way to predict it.
It's like a crap shoot.
That's the sad truth about bitcoin.
Why is it such a mess?
What you have to understand about bitcoin is bitcoin has gone above and beyond to avoid
structure.
Structure is like the enemy of bitcoin.
They don't want any government control.
They don't want any involvement.
They don't want regulation.
They don't want laws regulating what they can and cannot do with the currency and things
like that.
Now again, when I say the word regulation, a lot of times that word has a negative connotation
as it should.
Many times the government swoops into an industry regulates it and it's a big mess.
I'll give you an example.
One of my huge peeves right now is self-driving cars.
The self-driving car technology is going to be like a huge industry over the next five
to 20 years.
What happens right now is every time some idiot takes their hand off the wheel in their
(tefla?) and they drive into a truck or something and that is very sad for them, but they are
not even operating it correctly and it is like one person out of a million dies, it's
this huge news story and all the Senators and Congressmen, "Oh, we've got to regulate
this industry.
It's just getting out of control."
Really?
Like 4,000 people died in their Ford car yesterday.
Are we regulating more there?
What in the world, it's like literally 50 times safer right now to have a car that's
got all these censors and auto driving, but every time somebody dies, we try to regulate
it.
That's an example of potentially very damaging bad regulation.
An example of good regulation is you are not allowed to go and make copies of U.S. currency.
Can we all agree that's a pretty good regulation?
That's a pretty good law, right?
I can't just go print currency.
That's actually a federal offense.
Do you know why?
Because if we allow people to do that, how would we know if our money was worth anything?
Because they might be fake.
It might not be.
Right?
These are the types of problems bitcoin is running into.
What is going on with bitcoin is there are a couple big things that are causing it to
be a little bit of a mess, actually a huge massive mess right now.
#1.
There is no structure.
So currency, the under-lying value of currency is all about trust and faith in that currency.
I'm going to Niagara Falls, Canada next week with a school group.
My wife and I are taking a school group there.
I'm bringing my U.S. currency to Canada.
Now when I go there, people are going to allow me to use my U.S. currency.
When I reserved the hotel rooms, we got one of these really cool hotels that overlooks
the falls and the Canadian side and everything.
When I booked those hotel rooms, they were expensive and I used my American currency
card and the Canadian hotel accepted it.
Do you know why?
Because the Canadian hotel has a very good faith and belief in the fact that that U.S.
currency is going to be worth something in a week, a month, a year.
Maybe it is going to drop 5% or go up 5%, but it is going to be stable.
It's going to be there.
That's because of all the structure there is regulating and making sure the U.S. currency
stays where it is.
Now with bitcoin, if you accept bitcoin, you don't have that faith.
A of people, what happens is as soon as one little negative thing happens related to bitcoin
or cryptocurrency which happens a lot, people are like scared to death.
"Oh, my, what's going to happen with bitcoin?
I'd better sell right now while it is still 17,000 because it may never get there again.
It may be the highest point it ever gets to, so sell, sell, sell."
When people sell, the price goes down.
When people buy, the price goes up.
When you have this craze of like, "Oh, a good thing happened with cryptocurrency.
Oh, I'd better buy it right now because it's at the lowest point it's ever going
to be at."
Buy, buy, buy.
"Oh, something terrible happened."
Sell, sell, sell.
That's where you are getting that volatility from.
The reason cryptocurrency is such a mess right now is because people just don't believe
in it.
What is the moral of all this?
The moral of all this is I'm not against cryptocurrency.
I'm really not at all.
In fact, I think that 15 years from now, I think it will pay a fairly major role in society.
I don't think it will play the role that people hope it will, but I think it will play
a very important role in society.
Where it will be over the next three to five years is kind of where it is at now.
It's going to be a mess.
Maybe less and less of a mess, but it's still going to be a mess.
The reason is because there are still fighting the structure.
They are fighting the laws and regulations.
They fail to understand this basic principle that you are operating in a country.
Bitcoin is accepted in the U.S.
It's accepted in Canada, the U.K. etc., and the problem they are failing to understand
is that bitcoin almost all of the exchanges are based on U.S. dollars, so the federal
government, the larger bitcoin gets, the more it is going to be regulated.
That is like saying, "2 + 2 = 4."
The larger a business gets, the larger an industry gets, the more it is going to be
regulated.
Right now it hasn't been regulated very much at all and when there was a little bit
of regulation, it was fought and fought and fought and agree that part of that regulation
was a little bit ridiculous and the guy who regulated it in New York.
I think it was the Attorney General there that was the main person.
He ended up starting a law practice to help people with the law he just passed, which
was ridiculous.
Definitely there was some bad stuff going on behind the scenes politically there, but
the idea is it needs to be regulated.
It needs a little bit of structure.
I think bitcoin would do really well to stop fighting the structure quite as much to make
it a little bit more of viable currency because right now it's just really not a viable
currency.
I have a bitcoin app on my phone.
I bought some bitcoin in the past.
I bought stuff with bitcoin.
Why?
Because I wanted to know how it works.
I didn't put $50,000 into it, but I've tried it out.
I want to see how it works, right?
So that's why it is such a mess right now, but in the next video, I'm going to you
about an important thing which is, "Should your merchant accept bitcoin?"
We are going to talk about that in the next video.
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