The Rookie’s Guide to Crypto: Why Blockchain Matters with Kyle Reidhead

23:35And I wanted to stop guessing at things like that and actually look at the data behind my body. I've mentioned it before, but lately I've been taking time in the gym much more seriously, not just to build a bunch of, you know, aesthetic muscles, but to build a good, sustainable, long-term health plan for my future. Your daily resilience leaves a clear data trail in your body and function tracks the exact markers behind your energy and immunity. Not a generic overview. They look at core biomarkers like white blood cell count, which maps your frontline defense against invaders, HSCRP, which catches hidden energy-draining inflammation, vitamin D and zinc, which are essential immune anchors, and commonly low in a lot of people.

24:12Plus, there are secondary metrics that they cross-reference, things like ferritin, which is iron levels behind your energy, MMA, which is your active B12 for energy and nerves, and cortisol, which is how stress is actually impacting your body. I use Function and you should too. Check your health the way I do. Function provides 160 plus lab tests for$1 a day and member pricing on advanced imaging. Join at functionhealth.com slash beginners and use gift code beginners25. What's the best way to get started in the market? Download my ebook for free at stockmarketpdf.com. Yeah, that's fascinating. So I'm curious, you've kind of touched on some of the fraud and stuff.

24:51How can a normie like me who's not really in the space, how can I identify what's legit and what isn't? That is a very good question. So the thing to understand about crypto is these are just a bunch of private companies that are all startups, right? So it's hard to invest in a startup unless you're a credit investor, you're a VC, etc. And in crypto, because you can tokenize things, and as I said, it's permissionless. So it's this global database that anyone can interact with. Anyone can launch a token on there. What that means is anyone can launch equity, essentially. In the traditional world, I can only launch equity to the public if I go public, which means I have to file all this paperwork.

25:36I have to get approved through the SEC. It takes years and it costs millions of dollars to do. I can literally launch token right now on this call in five seconds right now won't have any value right it's like me saying hey i'm launching this company does anyone want to buy it no right so it is a bit different and so there's a lot more um let's call it crap companies companies that aren't as good um but that's true in the startup space too if i was to go and be able to invest in the tech world there's a lot of really bad tech companies out there it's just i'm not actually able to buy them which is probably be a good thing, right?

26:09For a lot of investors out there. Crypto is different. As I said, you can go and you can create a wallet today and you can buy any token that exists. And so it is a space where there is a lot of value that's going to be created there because it literally is a new financial system, a new global financial system, kind of like a new internet for the finance world. So it is an exciting space and a good place to invest in. But you have to remember that there isn't these loopholes you have to go through to launch that equity. And so 99 % of tokens that exist have actually no value. There is nothing going on there.

26:43And so it is an education that you have to get. And that's really like study the space, listen to podcasts, read newsletters, look at the data. The interesting thing about blockchain is again, because it's an open ledger, this open database, I can go and look and see the revenues of any company. I can see how many users every company has. I can see how much volume they're going through. I can't see that for Robinhood or for the banks that they have to wait for their earnings reports every quarter in crypto and in blockchain. You can see that live anytime you want. So it is actually a better opportunity for investors who understand what's going on.

27:17But of course, it's very, very complicated. Just like if you were trying to invest in internet companies in the 90s, it's like, who should I invest in? You're like, I have no idea. You know, there's so many of them. They're all launching equities, you know, in 1999, et cetera. It was very difficult, but a few of them made it out. It's kind of the same situation scenario here with crypto and with blockchain. So you just have to really be educated and you really understand what you're doing. But my advice though, just to answer, my advice would be to use it, right? I think the best thing you can do is actually just to use this stuff because one, I'm explaining what all this stuff is and you kind of get it.

27:52But until you use it, until you've sent a transaction or, you know, to someone, you know, in India and they receive it a second later, it's so hard to even understand what that is like sending an email, right? Like imagine in the 90s, you're like, yeah, we're gonna have these things where you can send emails and you can chat. And you're like, what are you talking about? No way. And it's like, once you do it, you use it, or you take a loan out with your Bitcoin on a protocol, like a DeFi protocol. It's like, whoa, this just happened automatically. I didn't have to go into a bank and sign all these forms.

28:18And it took a week to set up my account. It's a whole new experience. And so I would recommend people just go and try it, play around with it. And if you're in the US, I'd start with Coinbase. It is sort of the leader. It's also another public company, so you can trust them. They push you to use a lot of these things and kind of teach you along there. But I would start by using it for sure. Just obviously with a small amount of money. Yeah, kind of dip your toes under bucks here kind of thing. Exactly. Yeah, exactly. Exactly. That's fascinating. How does Ethereum and Bitcoin play in all of this?

28:50Because those seem to be the two that you always see on CNBC whenever they talk crypto. Yeah, absolutely. So Bitcoin has really kind of crossed the chasm, I would say. Every big time investor, sovereign wealth funds, even the US, they are buying or holding Bitcoin at this point, right? You have a lot of companies that are putting Bitcoin on their balance sheet. And the question is why? The main answer is it's basically gold, but it's digitized, right? So gold has obviously been a store of value for hundreds and hundreds of years. Why is it a store of value? it's hard to mine new ones. And so there's only a, there's a finite scarce amount of it.

29:31Right. And so that is obviously very valuable in a world where currencies, you know, the governments can print them or central banks can print them and create more of it. You can't create more gold. Well, at least it's very hard to. So Bitcoin is basically that except for the fact that if you think of what are the problems of gold, well, it's heavy, right? It's very, very heavy. And so if I want to own, I don't know, a million dollars of gold, I either have to, you know, get someone else to custody that for me. So I'm back in the same issue. I'm now back in the banking system or the financial system.

30:00I have to trust someone with my gold, which like, again, in the US, probably not a problem, but there have been many places around the world where that has been an issue. But the other issue is like, let's say I want to move to another country. Well, how do I bring my gold with me? Right? I got to like, it's very costly to move that gold to another place around the world. Right? Whereas Bitcoin is, think of it as the same properties. It's scarce. There's only 21 million. There'll never be more. Except for the fact that I can hold it on my phone, right? So it's right here. It's on my device right here, and I can take it with me anytime I want, right?

30:31So you could see a world where that makes sense for a lot of people. Now, people that are older might not get that, might not want that. They're not really as tech forward, right? Or internet native is what I would like to call. But if you talk to the younger population, them thinking about buying gold, they're like, that makes no sense to me. Why do I want to buy a rock? Right? They just can't really wrap their head around. But something about like Bitcoin that's digital makes more sense because they're kind of like digital first. So Bitcoin has been around for about since 2009. And I think it's a close to a$3 trillion market cap sits at about$110 ,000 today US.

31:07So it's sort of made it is one of the biggest assets in the world. Okay. But all Bitcoin is, is you can think of it as a currency or as a store of value. That's it. I would say one thing that gets confused a lot, it's not going to be used as payments. It's not replacing the dollar by any means. Just like we don't pay for things in gold. It just doesn't make sense. Bitcoin is the same thing. We're not going to use it to buy things. It's a store of value. It's a place to put some wealth just like gold is. So that's Bitcoin. Ethereum is a little bit different. It is similar in the fact that it is also becoming a store of value, but it is also being used a little bit more as like a currency.

31:43But the thing to understand about Ethereum is that it is a platform. And you could think of it very much similar to Apple, right? Apple has the app store where you create apps, you put it on top of Apple, and then Apple sort of powers it in its devices. Ethereum is the same thing. It is a blockchain. So it's those databases that live all around the world. But what people do is they put apps on top of it. Okay. And the reason they put apps on top of it is because they want to tap into that shared database that is all around the world. They want to tap into that capital that exists on there. So there's hundreds of billions of dollars already on Ethereum.

32:17ETH itself, so the asset is worth, I think about 500 billion right now. But there is about$300 billion of assets that exist on top of Ethereum. Some of those are stable coins, which we already talked about. Some of that is other crypto assets. Think of them like stocks or equities. And then some of it is stocks are actually coming on chain now. So like Robinhood recently launched tokenized stocks. This is actually bringing stocks onto a blockchain. And so it basically secures all of those assets and all of those apps that exist on there. And so Ethereum is more of a tech play that also has an equity.

32:54So ETH is the token for it. So that's the equity. But it's also sort of a store of value as well because there's a certain amount of it. So you can't print more of it just like you could a currency, right? So Bitcoin is a store of value. Ethereum you can think of as like a store of value, but more of like a tech platform. And the token for it would be like equity is a good way to think about it. It is a bit different. It's not actually equity because to make a transaction on Ethereum, you have to spend a bit of ETH. So that's that fee, that transaction fee that I talked about. And so it's more thought of, it's called like oil, right?

33:30If you think of like the way the economy works globally, everything that you build, everything you do, you need oil to manufacture, to transport. and so that's kind of what ETH is thought of. It's obviously not oil. It's not a physical thing, but it's a nice sort of like representation or a way to try to understand it because everything you want to do, you want to launch a company on Ethereum, launch a protocol, launch an asset, trade an asset. You have to spend a little bit of that ETH. So it's kind of, you could think of it sort of like oil, but yeah, that can get confusing, but that's generally a way that people think about it.

34:05Yeah, that's super interesting. So, okay, being the payments geek, I'm curious, how does a stablecoin sit on a blockchain? And then how are companies like a Visa, MasterCard, American Express, Stripe, or Walmart or Amazon, how are they going to, how could they, how will they, how are they, using those to make their business better and the customer's lives better? Does that make sense? Yeah, it does. It's a great question. And this is probably one of the biggest unlocks that I think is happening right now in sort of the tech world. You've seen Stripe is one of the biggest payment companies in the world.

34:46They just bought a stablecoin company called Bridge, and they are already integrating. So you can actually pay using stablecoins now when you use Stripe. But if we think about the payments world, it is dominated by the companies just said Visa, MasterCard, Stripe, and a few others, right? Especially when you get outside of the US. And this is basically the ability to move traditional money. So currencies, dollars, euros, whatever, move it from one person to another person and Stripe, Visa, MasterCard, they basically just do it all in the background for you, right? All you do is tap a card. What's actually happening is money is moving from one jurisdiction to another jurisdiction.

35:25There's a bunch of fees associated with it. It feels instant to us. when I tap my Visa card, I can take my coffee and I can go away. But that actually takes about three or so days to settle. So the company, the merchant that sold you that, Starbucks, whatever, they actually don't get that money for a few days later. It takes a little while. And the credit card companies and Stripe, they take about 3%. So it depends, but they take, I think it's 2.7 % or whatever, plus 30 cents per transaction. And so there's a lot of places you go in the world where you actually can't buy something with a credit card that's like$1, right?

36:00Because the credit card companies are taking a big portion of that, right? They're taking 3%, so okay, that's 3 cents, but they're also taking 30 cents per transaction. So they're taking 33 cents out of a dollar. So a lot of like convenience stores, even in the US this happens, they're like, yeah, we're not gonna accept, you gotta pay at least like$5 or$10, right? So that's a bit weird because we wanna live in a world where if my money's all in my bank and it's all in a credit card, I don't really want to use cash anymore. Not a lot of people use that anymore. Why can't I buy something that's a dollar if I want to, right?

36:31And the real reason is because the financial system and payment system is just old and it's slow and it's inefficient. And so what did the internet do for information? It made it very efficient. It made it fast and it made it cheap. That's what's happening here with payments. And so Stripe has recognized that. So is Visa. They're actually really big in the crypto space as well and building on blockchain. So what they want to start doing is for the average consumer, the user, we won't know. We won't even notice the difference. We're still just going to tap a card. But instead of using these old traditional finance rails, where what Visa has to do is take that dollar you just spent, and then they have to send it through one company to the next to get it to the merchant or one jurisdiction to the next.

37:09So Visa ends up paying a lot of fees for that. What they're doing is the moment that payment happens, it's swapped into a stable coin. Now that stable coin, because it's on a blockchain, can go anywhere in the world, right? So let's say, I don't know, I'm buying something on Amazon that's actually from Italy, right? It'll send that stable coin over to Italy for free. And then it'll, you know, convert it back into the Italian currency, right to euro. And now Visa has saved a ton of money on that transaction. And it happened instantly, right? Whereas otherwise, if they did the old way, it's going to take three days, and it's going to be very costly.

37:42And in some jurisdictions, it's not even possible. What these companies recognize is that this is a way more efficient and more profitable product for them in the background. Now, our hope, and we are already seeing this with Stripe, is that means cheaper fees for merchants. So right now, if you use stable coins on Stripe, the merchants pay, I think, just a 1 % fee instead of a 2.7 % fee. Now, they couldn't do that on the old traditional finance rails because it's actually just so expensive for Visa, so they couldn't go cheaper. Of course, they have good margins, but what stable coins allow them to do is really make their margins way better.

38:18And then hopefully give some of that back to the merchants, which will allow us to have what's called like micro payments or much smaller payments where we can still do it online. We can do it with credit cards. And so I think it's going to really change the way that we think about payments, especially smaller ones. So one of the things that comes when you use stable coins and you don't have all this, these fees that a lot of people haven't thought of is why are we paid every two weeks or every one month? It's because, you know, from companies, it's because it's actually quite costly to manage payroll and to make these payments, especially again in other jurisdictions.

38:51So what companies want is, well, instead of paying you every day or every week, let's make it one time a month. And then I can save on the fees to send that money over. Things that are happening in the crypto space right now is actually streaming payments. So because there's none of these inefficiencies, you can pay someone every second. and it's just like, as long as I'm working, you're getting paid every second and there's no fee to do it, right? So you think about, which is like, again, what did the internet do for information? We're recording a podcast. We could stream this live on Twitter.

39:20That wasn't possible in the 90s or in the early 2000s. It is today because of technology. That's what's happening in the financial system. Now, I'm not saying we're gonna go to a world of streaming payments, but you start to think of like what things could happen in that instance, right? You could start streaming payments for other things. If I'm, I don't know, live streaming some sort of session where I'm teaching about whatever, I could make sure that if you want to watch it, instead of making you pay 20 bucks to watch my entire webinar, you just stream payments in. And if you want to leave at any point, you didn't have to pay me the full 20 bucks because you left halfway through.

39:51So you only paid me 10. So there's a lot of like cool things, net new things that can come from this innovation. And I think that's what really excites me. And I think that's what excites the payments companies, Visa, MasterCard, Stripe. That's what they're already starting to work on? I'm not going to lie. Running a small business has been stressful lately. Swamped in paperwork, different state agencies, and got all these expenses to track and everything. And it's hard to have visibility on these things. But I've stumbled on a better solution, kind of like a one-stop shop for my bookkeeping, my expenses, my P &L, my banking, my contractor payments, all of the messy pieces.

40:30It's called Found. It's for business owners like you and I. There's over 750 ,000 business owners who've chosen Found. I've chosen Found. It's cool because the interface is clean and all of my transactions are auto-categorized. I can pay all my contractors keeping all the 1099s organized on the app. So less headaches and more time to do the things I love. Take back, control your business today. Don't wait. Open a found account at found.com. That's F-O-U-N-D.com. Found is a financial technology company, not a bank. Banking services are provided by Lead Bank, member FDIC. Found does not provide tax, legal, or accounting advice.

41:13Optional subscriptions to Found Plus for$35 a month or$315 per year or FoundPro for$80 a month or$720 a year. There are no monthly account maintenance fees, but other fees such as transactional fees for wires, instant transfers, and ATM apply. Read FoundFeeSchedule. This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales. Using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result?

41:53Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify. That's super fascinating. Okay, so another thing I'm curious about is, and I'll get off the payments thing after this, I promise. How does the on-ramp, off-ramp work? Like one of my concerns as a uneducated, admittedly person in the crypto space is the onboarding, offboarding of going to 7-Eleven, buying a Coke Zero and having that money end up, you know, taken from my account and end up in 7-Elevens. Like how, how does that part of it work? Is it easy?

42:41Is there still, is there still some hurdles that need to be crossed in that regard? There's definitely a lot of hurdles. And again, this is part of the regulation that we just had. That stablecoin bill is helping to figure this out. How can banks do this? Who's costing this stuff? How's this all going to work? We've gotten a lot better than we were, let's say, five years ago when stablecoins first came out. I guess it was more six, seven years ago now. But there's still a lot of work to do. And again, this is what the stripes of the world are doing. They acquired Bridge for, I think it was a billion dollars or$1.2 billion.

43:12Bridge is basically that. They are an on and off ramp for stablecoins. so that is a problem that they've realized and they're like okay let's let's buy a company that's already working in this space for consumers it won't really matter because i'm still just going to pay with the dollars that are on my visa card right i'm going to be lent out money from visa in the back end they're going to use stable coins so it won't matter to the consumer and the merchant they won't get stable coins they'll also get a dollar in their bank account so for the the people that it matters for they won't even know though there will be options i think what stripe has been building is an option to either, like for me, I hold a lot of my wealth in stable coins because I can get yield on it, right?

43:49I don't have the benefit being in the US where I can put it in treasuries in my Schwab account or whatever. I'm Canadian. And so I can only get 2 % on the Canadian dollar, right? And I don't want that. I want to hold the US dollar and I want to get yield on that. So I hold a lot of it in stable coins. And so for me, I actually don't even want to use my money in my bank account. Sometimes I'd actually just like to use stable coins. And so that is a a part that is being built in. It's still a bit clunky. We're not fully there yet, but that is coming. Merchants are starting to want to accept in stable coins as well, because again, it can be cheaper.

44:20There can be less fees. They can get it faster. So some places around the world, they want that. Also, if you think outside of the US, if I'm a company, I'm a convenience store and someone's coming to buy a coffee, do I want that payment to be in a euro or in a rupee or in a peso? Or would I like that to be in a US dollar, right? If I'm in Mexico, I want there to be a US dollar. And so that's something that's coming. Now, how do they then get that into their own currency so they can go and buy groceries, etc? There's a lot of exchanges. Banks are beginning to launch and become exchanges as well.

44:54So there are crypto exchanges like Coinbase and Kraken in the US. We're starting to see JP Morgan become a crypto exchange. So you can actually move your crypto, your stable coins in there and then get real dollars from that. So I think that's the big trend moving forward. They needed regulation, which came this year. So we're going to see all the banks start tapping into this and many of them already are beginning to. So it's still going to be a few years probably until this really gets seamless for everyone. But it's coming and I think it's coming pretty quick. There's a lot of capital being put behind building this infrastructure.

45:25Wow. Hard not to get excited about it. What for people who are curious about like adopting this stuff, checking it out, kind of dipping their toes. What type of person do you think it's good for to do this? And what type of person do you think it's not good for? Great question. I would say it's good for everyone. I really think everyone should be learning this. It's kind of like in the early 2000s, if you're like, okay, who should try out the internet? Of course, not everyone was going to try it out. But eventually, it was like, okay, you all needed to understand this. And so I really think everyone should.

45:59If you're an entrepreneur and you have a company, you absolutely should try to understand stablecoins because it's going to be something integral to your company. And it's a way that you can save a lot of fees. Just an example here is we pay about 35 to 40 % of our employees in stablecoins and we save a heck of a lot of fees as a result of that. And our employees end up saving a lot of money as well. So they absolutely love it. So it's a great benefit to our employees to do that. So I think entrepreneurs absolutely should be all over this as you should any new technology, because it's kind of the way that the world is going.

46:28But I think in our community, so Milk Road is a media company where we basically educate about crypto and we have a community where people can share ideas, whether it's investing or using this stuff. We've got people that are in their 60s and their 70s that are playing around with this stuff and they don't have to, right? Like probably, I don't know if they'll ever need to use it, but they like it and it's cool to understand. And so I think if you're young, you absolutely have to be doing this because this is again, the way the world's going. So you want to get ahead of it. It's like if you were early to use the internet and create content on social media, you probably did pretty well in life.

47:01If you're early today using AI, you know, you're becoming a superhuman and you can do so much more. And so I think the same thing is true with crypto, especially if you want to really own and manage your own finances. A lot of people kind of just give it to a financial advisor, which is fine. I'm not advising you not to do that. But when you really think about it, there's a lot of fees that are associated with that and probably a lot of gains that are left on the table. Whereas if you manage your own finances, then you can try to find and kind of be on the edge here and you can find ways to save a lot of money, right?

47:32And so I think, again, I'm not saying put all of your money in there by any means, but start small, play around with it and start to learn what matters for you, right? Again, there's so many different use cases within crypto now that there's different pieces for different people. And so, you know, you can go in and kind of explore and see what makes sense for you in your life, right? Do you need a loan? If you do, and you can't get one at a bank, you can go get one on chain, right? Do you need access to dollars or euros? Because there's also stable coins for euros. It's not just dollars. Do you have family that lives abroad that you send money to?

48:06Well, check out the fees. And maybe there's a better solution here in the crypto space. Do you store value somewhere? Are you looking for somewhere to invest money? Maybe you should look into Bitcoin. That's been a very good play for a lot of people, right? Maybe you can diversify outside of gold or stocks into that. So there's a lot of different things that you can do. And that might make sense depending on what you do in your life. Yeah, totally makes sense. So where can people check out Milk Road? And please tell us like what you got going on there. Yeah, sure. So you go to milkroad.com. That's the best way to find us.

48:39And we've got newsletters in the crypto space. We've got newsletters in the macro world. We're launching one soon in the AI world. And really the goal of this all is to help you understand where the space is going, both of these spaces, but also understand how to capitalize, how to invest in it, how to basically have financial, what is the word I want to use here, but like security and take responsibility for your own finances is what we like to teach there. So we have newsletters and podcasts. So milkrow.com is the best spot where we're most active would be Twitter. So milkrow daily is a, is the Twitter account there.

49:10And you can also follow me on Twitter. I'm pretty active there. And it's just Kyle Reedhead. So my name. Awesome. Awesome. We will make sure to put all that stuff in the show notes so people can easily find all that. Kyle, this has been an education. I have learned a lot and it's been incredibly fascinating. I am going to start reading more about this stuff. So I appreciate you sharing your knowledge with us and with our listeners today. I know everybody got a little smarter. So thanks for having me on. I'm glad to hear that maybe I'm converting you a little bit over to the dark side, as some people call it.

49:45But I think it used to be, we had a bad few years, which always happens with new technologies. And I think we're coming out on the other side much better. And so I don't think we call it the dark side so much anymore. Yeah, well, stable coins will probably be the gateway drug for me to get into this stuff, so to speak. So with the whole payments keep thing, I promised I wouldn't talk about it anymore. Sorry, I slipped. All right. Well, with that, we will go ahead and sign us off. You guys go out there and invest with a margin of safety. And if it's on the safety, have a great week and we'll talk to you all next week.

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