An Intro to Crypto with Jacob Frantz - 158

[00:00:01] Welcome to Money Talk with Skyler Fleming, guiding you through the maze of your money. Let's get talking.

[00:00:06] Welcome, Money Buddies, to this week's episode of Money Talk with Skyler Fleming.

[00:00:10] Today we're going to take a first ever dive into crypto on this show.

[00:00:13] I'm excited to learn more about crypto and I hope you are all as well.

[00:00:17] I brought Jacob Frantz on the show to help us learn more about crypto and talk about something that he's working on that intrigued me at FinCon where he and I met.

[00:00:24] Today's episode is going to cover some of the basics of crypto, investing in crypto, why crypto can seem so confusing because at least for me, I've always felt like you have to go get some sort of certification to truly understand crypto.

[00:00:36] So I'm intrigued to learn a little bit more about how it works and how we can save some money with it.

[00:00:40] But what do you think about crypto? Each of you listening have your own opinions on it and I'd be very interested to hear what you have to say about crypto.

[00:00:48] Feel free to send me an email or leave a comment on this episode on Spotify because I'd love to hear what you have to say.

[00:00:54] Is crypto something you prioritize in your portfolio? Do you generally avoid it like I do?

[00:00:58] Or do you keep a small part of your money in crypto? There's a lot of different ways to go about it.

[00:01:03] But let's keep this train moving along and get to meet today's money buddy.

[00:01:06] Today's money buddy is Jacob Frantz. He is the co-founder and CEO of Sensible, a high yield account for crypto.

[00:01:12] Jacob's been working in the blockchain space since 2020 and before that, Jacob worked on consumer technologies at Instagram and Facebook.

[00:01:19] The money talking points for this week's episode are

[00:01:21] How can you use cryptocurrency in your portfolio?

[00:01:24] Two, why would or wouldn't saving money through crypto in a savings account be a good idea?

[00:01:30] And third, how do you manage to keep tabs on crypto without feeling FOMO?

[00:01:34] With those money talking points in mind, let's get talking.

[00:01:46] Hello everybody and welcome to today's interview on Money Talk with Skylar Fleming.

[00:01:50] Joining me today, I have Jacob Frantz and we are here today talking about cryptocurrency.

[00:01:55] And I'm excited for this episode because I've never, I don't think ever talked about crypto on my podcast.

[00:02:00] So this is kind of a beginning introduction for me as well as all of you listening.

[00:02:04] But Jacob, could you introduce yourself for everyone?

[00:02:06] Sure. Thanks for having me on.

[00:02:08] I'm Jacob Frantz. I founded a company called Sensible.

[00:02:12] I am based here in New York and have known Skylar for a couple months now.

[00:02:16] Yeah.

[00:02:16] After we met FinCon.

[00:02:18] There's a thread going across the last couple interviews.

[00:02:20] If people listening closely have noticed they're all from FinCon.

[00:02:23] So great place to meet interviews.

[00:02:25] We met a couple weeks ago and I'm excited to talk about your product and use your knowledge about cryptocurrency to kind of lead us into a little bit of a better introduction on this podcast.

[00:02:34] But let's talk a little bit more about what it is with our first question.

[00:02:38] What is a cryptocurrency?

[00:02:39] A cryptocurrency is, I think probably the best definition for it is any currency that is primarily stored or lives in sort of source of truth on a blockchain.

[00:02:49] So I guess maybe defining a cryptocurrency requires defining a blockchain.

[00:02:54] A blockchain is sort of it, I think probably the easiest way to think about it is like a public single place for computation.

[00:03:03] So the way that I think about a blockchain is, you know, you're used to, we're all used to maybe going to some website or, you know, doing some type of computation or usage of one website.

[00:03:13] We have the understanding that they're all kind of separated from each other.

[00:03:16] And if I update my profile photo on Facebook, that that's not going to also change it on Twitter or Riverside.

[00:03:22] A blockchain is like a sort of single public space for shared computation.

[00:03:26] And a cryptocurrency is a currency that is primarily stored on a blockchain.

[00:03:31] Cryptocurrencies can be things that we've all heard of like Bitcoin or soul.

[00:03:36] But there are some cryptocurrencies that don't maybe necessarily feel so crypto-y in the same way.

[00:03:41] You know, people have stores of, you know, US dollars or stable coins on blockchains as well.

[00:03:46] Those are cryptocurrencies because they primarily reside on a blockchain.

[00:03:50] It's helping me in my mind clarify my next question of what's the difference between our digital bank accounts now and a cryptocurrency?

[00:03:57] Because I log into my Ally Bank this morning.

[00:04:00] It's all digital.

[00:04:00] Cryptocurrency is digital.

[00:04:02] How do we differ those and kind of separate those in our mind?

[00:04:05] It is the case that all of our bank accounts today and all of our balances are primarily digital.

[00:04:12] So it's not the case that what's unique about cryptocurrencies is that they are digital at all.

[00:04:17] I might say that maybe they're more digitally native than our digital bank accounts are.

[00:04:23] There's a number of key differences.

[00:04:25] I think the first thing is that a bank account is a very particular, you know, has a very particular meaning.

[00:04:30] A bank account is like what it is to be.

[00:04:33] Basically, it's an account at a bank and a bank is like a legally regulated term that has a specific meaning that cryptocurrencies don't have.

[00:04:40] You know, a bank account to people like you and me means a place where we can keep our money, where the government will ensure that the money is there.

[00:04:49] And the government has particular oversight over what the bank's allowed to do with our money while we have it left there.

[00:04:54] Yeah.

[00:04:55] So, you know, when you think about your digital bank account at, I think you said Ally Bank as an example.

[00:05:01] You know, Ally has its own sort of, has its own set of like digital infrastructure that's totally separate from maybe mine at Bank of America as an example, which might be totally separate than some of your listeners who might have, say, a Chase account or Chase JP Morgan or whatever bank account.

[00:05:17] And those are all different areas of private computation.

[00:05:20] You know, there's like Bank of America's storage of their accounts.

[00:05:23] There's Ally Bank storage of their accounts and JP Morgan storage of their accounts.

[00:05:28] And so one major difference just in terms of what's digital about them is the fact that they are each their own entity as opposed to things on blockchain where it's sort of one public.

[00:05:37] It's all kind of on the same computer, so to speak.

[00:05:40] And then in terms of just holding the assets themselves, there's a number of important differences as far as custody.

[00:05:45] So, you know, when you park your money at or when I park my money in a Bank of America account, you know, it's from that point onward, that's money that Bank of America has to do what they want to do with it subject to legal regulations.

[00:05:57] Blockchains blockchains enable a form of self custody that the banks don't really offer.

[00:06:03] How important that is to different people obviously varies based on what different people want to do.

[00:06:07] Yeah, so I guess a little bit in my mind is I'm hearing this idea that like one thing we talked about beforehand was banks obviously make money by lending it to people.

[00:06:16] And that's because they're allowed to do what they want to do with your money that you've stored with them.

[00:06:21] I guess the thought where I'm going is it kind of takes out that aspect of someone else being able to do something with your money.

[00:06:26] Is that kind of where crypto heads a little bit?

[00:06:30] That is a key difference between between bank accounts and self custody usage of crypto, you know, in a way, which is not to say that there aren't ways of achieving both with both.

[00:06:41] For example, instead of using a bank account to hold my money, I could keep a bunch of cash under my pillow.

[00:06:46] And if I were to do that, then I definitely am in control of what happens with my cash while I own it.

[00:06:51] And similarly with crypto, some people, you know, do self custody with their crypto where they just sort of own the equivalent of cash, you know, it's a bearer asset.

[00:07:01] And if you just are holding on to it in a self custody form, then it's, you know, no one can operate it on it.

[00:07:06] But for you or like many people, just like many people opt to use a bank instead of holding cash under their pillow, many people might opt to use a coin base or something like that instead of custodying it, custodying their funds themselves because of like, you know, technical boundaries and barriers.

[00:07:24] And I think maybe what we could layer on top of some, I guess, kind of thinking of this at the bottom layer, there's just like custody.

[00:07:30] Are you going to help custody yourself?

[00:07:31] Or are you going to entrust an institution to do it like a coin base or like a bank of America?

[00:07:36] And then there's this other element that you brought up, which is like, then what can what can or does the institution do while they're custodying your funds?

[00:07:43] And like you mentioned, banks in the US will generally lend out your money subject to regulations to other people, in some cases give you some interest for the time that you've let them do that.

[00:07:53] In crypto, Coinbase of the world did not do that right now.

[00:07:56] Coincidentally, we are working on something that would enable the analog to that.

[00:07:59] We're making great headway into explaining crypto.

[00:08:01] And I think the thing that everyone listening needs to take away is that there's many other conversations that come from this.

[00:08:08] It's a new field that I think can be tricky to understand.

[00:08:11] That's why I think I keep making these relations to the current banking method is because that kind of just helps me grasp onto it.

[00:08:18] As people are thinking about crypto, is it an investment or is it just speculation?

[00:08:23] So often you hear people saying, oh, I wish I would have invested in Bitcoin sooner.

[00:08:27] But you don't hear people saying, I wish I would have invested in the euro as much.

[00:08:31] Where does crypto lie on that investment and speculation game?

[00:08:34] I would start by saying it's like I'm obviously, of course, not here to give investment advice.

[00:08:38] And in my role, I've spoken with over the last several months, well over 100 crypto investors of various forms.

[00:08:48] And what I generally hear from them falls into one of a couple different buckets of behavior.

[00:08:54] So certainly, you know, I speak to some crypto investors who are speculating.

[00:09:00] And, you know, it might be that they heard about some new cryptocurrency from a friend of a friend online.

[00:09:06] And they wanted to, you know, buy it before something happens that they think is going to make it go up 10, 100, 1000 X over some time frame.

[00:09:14] You know, whatever it may be.

[00:09:16] And some of those people are, in some cases, very active traders.

[00:09:19] So there certainly are people who speculate on cryptocurrencies.

[00:09:22] Of course, there's also people who speculate in the traditional stock market.

[00:09:24] Yes, of course.

[00:09:25] We all understand that crypto tends to maybe have a much bigger proportion of speculators than.

[00:09:32] Yeah, it seems a little attractive to that crowd.

[00:09:35] No doubt.

[00:09:35] The way that it can fluctuate quickly.

[00:09:37] And you can trade 24-7.

[00:09:38] Like there's no hours that it closes or things like that.

[00:09:41] True.

[00:09:41] Like maybe a traditional market.

[00:09:43] But you said there was other buckets as well of behavior?

[00:09:45] That's right.

[00:09:46] So certainly, I've spoken with a number of speculators.

[00:09:48] And there's also people who tell me, and this is really the majority of people that I've spoken with,

[00:09:53] who say, you know, I don't keep like most of my money in crypto.

[00:09:58] Maybe it's like a small portion of what I have overall.

[00:10:01] But I see it more as an investment than a lottery ticket.

[00:10:05] You know, people would say, oh, back in 2021, I was hearing about crypto mostly as a lottery ticket.

[00:10:10] Now I mostly think about it as an investment.

[00:10:12] They'll tell me, oh, I have a small percentage of my overall assets in it as something that,

[00:10:16] you know, I kind of think about like I do my investments in other things.

[00:10:19] It's where I'm not necessarily looking to buy and sell on a very short timeframe,

[00:10:24] but maybe on the same timescale that I picture for, I don't know, most of my other investments,

[00:10:28] which might be if I need to make a huge purchase or retire or just generally save.

[00:10:34] That's really how what I hear from most people.

[00:10:37] So people who think of it as investment.

[00:10:39] And you brought up also like, oh, I don't think about buying, say, the euro or something like that as an investment.

[00:10:44] And I think you're bringing up maybe like to what degree these are sort of currencies like the euro or investment like stocks.

[00:10:50] And, you know, I think this is something that different people have differing attitudes towards.

[00:10:55] And I think part of it comes down to the fact that today most people don't buy stuff with crypto.

[00:11:02] And so I do think that maybe the word currency and cryptocurrency ends up potentially being a bit overloaded.

[00:11:08] There are places where people do, and I think this is why they why the term currency is used there.

[00:11:12] There are places where you actually do pay in cryptocurrencies, not places like coffee shops.

[00:11:17] But, you know, I mentioned that a lot of these are like acting, you know, acting as places for computation to happen,

[00:11:23] which could just be as simple as the computation needed to keep trapping everyone's balances.

[00:11:27] And on blockchains, usually you have to pay in a cryptocurrency in order to do that computation.

[00:11:33] And that's a major part of how it works.

[00:11:35] Yeah. So it's kind of a it's a form of currency that kind of builds around itself a little bit.

[00:11:41] I guess it's kind of what I'm understanding that as you're using that computation, that power, the blockchain, so to speak,

[00:11:47] that's where those currencies can come into play.

[00:11:48] Okay, because I think there's I always hear these random videos will come up about how the blockchain can be useful in other places.

[00:11:55] The thought coming to my mind is it's kind of like a public ledger that's available and verifiable.

[00:12:00] Is that kind of also maybe a proper understanding of a blockchain?

[00:12:03] I think that's a great way to put it.

[00:12:04] Yeah, absolutely.

[00:12:05] Awesome.

[00:12:06] Okay, I wanted to make sure I asked that because that was a thought that I had heard and it came back up into my mind as we're going here.

[00:12:11] But that's fantastic. I like hearing the different pools of behaviors you hear because just like you said, there's people that speculate on cryptos.

[00:12:19] There's people that speculate on Apple stock on options, calls, puts all those sort of different words that get fuzzy and blurry with investing all exist in a similar sense in the crypto world.

[00:12:30] They're just new terms.

[00:12:31] And so I think people need to make sure not to be scared by crypto because there's some unknown terms because so many people are scared by investing because of those unknown terms.

[00:12:38] But we have a little bit of an easier time taking a step into investing versus crypto.

[00:12:43] So I'm hoping our money talk today can maybe help break down some of those terms and say, hey, it's it's a public ledger.

[00:12:49] Let's call it that.

[00:12:50] And if the word Bitcoin scares you a little bit, you can start with that and work towards a better understanding.

[00:12:55] But often that speculator crowd, they're trying to find the one that's going to shoot up.

[00:12:59] Bitcoin can jump up large values.

[00:13:01] All these other ones feel like they can be volatile.

[00:13:03] What causes crypto to seem so volatile to just the outside investor?

[00:13:08] I would guess that what caused it to seem so volatile is that it really is compared to like most investments that I think most people are making.

[00:13:16] Crypto has been much more volatile, you know, swings that that would day over day or week over week swings that in the stock market would be more unprecedented or might just be more like a monthly weekly occurrence in crypto.

[00:13:30] And I think that plays a role in people's perception.

[00:13:33] And I also think it's part of what plays a role in the speculation behavior, because when something can go up by 30%, you know, or when you've seen something, you want it to 30% in a day or a week, it makes I think a lot of people think, oh, maybe maybe I could have maybe I can get it.

[00:13:51] Yeah.

[00:13:52] So that yeah, what I'm hearing is like an acceptance that it can be a bit of a bigger standard deviation.

[00:13:58] Like there's a bigger gap between the highest high and the lowest low, and it can jump between those quicker.

[00:14:03] Whereas like your S&P 500 index fund hopefully isn't going to do that.

[00:14:06] If it starts doing that there, then crypto is in for a real roller coaster.

[00:14:10] But I like the I like the acceptance that it can be volatile, because if you're looking to invest in it, understand that that maybe one day you're going to check it, it's going to be way down.

[00:14:20] And then four to six months later, it's going to be way up.

[00:14:23] And make sure you take that to heart with the emotion that's going to come from it.

[00:14:26] But because let's say, let's say you did have one Bitcoin, like you had one exact Bitcoin, and you've seen the skyrocket lately.

[00:14:33] I can't imagine like the emotions at jump would have, and the kind of role that that could play in your life if you weren't ready for it and accepting that it can be volatile in that way.

[00:14:43] But I heard you mentioned people are considering it as part of maybe an asset class in their investment portfolio.

[00:14:49] Is there is there value in even having cryptocurrency as part of your net worth?

[00:14:53] Is there even a place for it?

[00:14:54] For many people that I've spoken to, their answer would be a pretty resounding yes.

[00:14:59] I think at this point, if you look at a number of the studies that say Coinbase has published or other sort of surveys that have been published, something like double digit percentages of Americans or American households have crypto, own crypto as a part of their overall portfolio.

[00:15:14] And so I think what you're finding is that for a lot of people, it already has or is.

[00:15:20] I think if you look at sort of the institutional side, I think you start to see some of the same there where, you know, this year, some of the first crypto ETFs were approved.

[00:15:31] And part of the reason why those have been as popular as they have is because the ETF format is something that is a lot operationally easier for people to have as part of a portfolio of assets.

[00:15:43] For example, someone's money manager, it can be easier to pop in another ETF alongside several other ETFs than it is to go open a Coinbase account on your clients to have or whatever it might be.

[00:15:55] Yeah, you're definitely you're speaking to a potential simplicity piece that people have, because I think that's one thing that stress people out is, oh, I got to go open another account that I don't understand that there's big charts flying around and numbers all over the screen on some of these.

[00:16:07] Some of these places really hype up the marketing of it all.

[00:16:10] And that can also be overwhelming.

[00:16:11] So I like what you're saying there about there may be options that could be simpler.

[00:16:15] Is there I guess what is the value in keeping your crypto life simple?

[00:16:20] Um, I am a big fan of simplicity.

[00:16:23] And, you know, I think different people have different appetites for hopping around, checking the latest being like really plugged in and wanting to kind of get the drip.

[00:16:33] Other people want to spend their time, you know, we all only have so much time and energy and different people want to spend most of their time thinking about things other than how their finances or their crypto or spending time, you know, even looking into other elements of that.

[00:16:48] And so, you know, again, everyone's going to feel differently about it.

[00:16:52] I can just as easily imagine some of the people that I've spoken to over the last while instead preaching the excitement and entertainment of being plugged in and watching every, you know, every tick.

[00:17:02] But I tend to see a little bit more towards like, I want to remove certain forms of stress from my life, not at them.

[00:17:12] Yeah, yeah, I like that.

[00:17:13] And there's avenues now to do that.

[00:17:14] And that's, I think, what's awesome about crypto as it evolves is that there's different avenues coming about.

[00:17:20] And let's lead this into talking about Sensible a little bit and maybe some more of the back end of crypto mining and things like that that I've heard these terms thrown around.

[00:17:29] I don't know a whole lot about them.

[00:17:30] So let's start with what is mining?

[00:17:33] What is crypto mining?

[00:17:34] Is it people going into caves or how does that work?

[00:17:38] Um, that would be cool.

[00:17:42] Crypto mining is one of the ways that different blockchains sort of operate.

[00:17:47] Like, in other words, it's maybe the way that they're held secure or made to be self-sustaining to the degree that they are.

[00:17:54] And the reason why there's a need for these things, which, you know, we don't really think about or we wouldn't ask, oh, what is the way in which Bank of America's back end operates?

[00:18:04] Comes back to the fact that these blockchains are public rather than private.

[00:18:08] So there is no Bank of America that can just pay the cost of operating a blockchain network.

[00:18:13] So the role that mining as well as other analogs like staking, which we can talk about later, but the role that mining plays is it's the way that these networks are made secure while letting anybody participate.

[00:18:27] So for Bitcoin, which is really the main blockchain that still uses mining at this point, the way that it works is like eventually everyone's got to agree that like Jacob sent one Bitcoin to Skyler or Skyler sent half a Bitcoin to this person.

[00:18:42] Everyone's got to like agree in order for it to be public in the way that it is.

[00:18:46] And mining is basically one way to do that, where computers will basically look for a needle in the haystack, so to speak, by running a lot of computation until somebody finds the sort of needle in that haystack and then can go publish that out and say, hey, you know, Skyler sent this to Jacob and I found this needle in the haystack, which is what allows me to advance the blockchain by one transaction.

[00:19:08] And so and that's sort of how that moves forward.

[00:19:11] What you might hear about as well with mining is like people mining Bitcoin to get Bitcoin.

[00:19:16] And the relationship with that is that, you know, the work that these computers are doing or that the people operating these computers are doing to find that needle in the haystack that is a cryptographic process is an exchange for doing that.

[00:19:29] They get compensated in Bitcoin.

[00:19:31] And this is sort of that that kind of circular or, you know, currency element that we spoke about before is they're getting paid for work in a cryptocurrency.

[00:19:40] And when somebody wants to send, if you wanted to send me some Bitcoin, then you would pay the Bitcoin network a little bit of Bitcoin to execute that.

[00:19:49] And that would be received by the miner.

[00:19:52] Well, that made sense.

[00:19:53] We started off and I was thinking, wow, this is very complicated.

[00:19:55] But then I think the way you wrapped it up there was it was a great way to put that, that the fees maybe that are being paid in a cryptocurrency or what those people that are running that computation system are able to get.

[00:20:06] I think that might be just a simple way to put it.

[00:20:08] But thank you for that explanation, because I honestly didn't know I couldn't have got on here and explained it.

[00:20:13] So thank you for that.

[00:20:14] And you mentioned staking is another method.

[00:20:17] Let's kind of move into that.

[00:20:18] And then we can talk about sensible a little bit as well.

[00:20:20] What is staking is as an option?

[00:20:23] So staking is just a different way that different blockchains that aren't Bitcoin secure their networks.

[00:20:29] So, you know, I think I would guess that to many listeners like they're like feels I imagine somebody might say feels kind of hand wavy.

[00:20:36] Why is that related to just securing a network?

[00:20:40] And the reality is I was kind of the first one that somebody thought of.

[00:20:43] Since then, people have come up with other ways, protocols for doing it, technologies for doing it.

[00:20:48] Staking is an alternative to mining where to secure the network instead of instead of running that like needle in the haystack process.

[00:20:57] Computers will or operators or people who have cryptocurrency will kind of put up their funds and secure their network.

[00:21:05] And by basically like putting up or staking their funds while they, you know, go validate the same transactions that this that the miner might have been doing in Bitcoin.

[00:21:15] So I think like probably the simplest way that I would put it for most people is that staking is an energy efficient alternative to mining that that most blockchains really other than Bitcoin do at this point.

[00:21:27] So for most but not all other cryptocurrencies that most of your listeners, I would guess, have heard of, they most likely use staking rather than mining.

[00:21:35] So you mentioned mining was going out, finding that needle in the haystack, verifying it, and then you get paid in that in that Bitcoin for doing that work.

[00:21:44] Where I guess where does staking deviate from that process?

[00:21:48] Like a transactions made in one of these cryptocurrencies that uses staking.

[00:21:52] What happens to the stake once that transaction is made?

[00:21:54] Sure. So, you know, using the same kind of example, if you were trying to send me some, I'll use ETH as an example, someone, same deal.

[00:22:02] Everyone's got to agree that Skylar sent Jacob one ETH.

[00:22:06] And then instead of a bunch of miners operating computers, there'd be a bunch of stakers operating computers.

[00:22:11] And they would basically, instead of coming with the proof that like, oh, I found the needle in the haystack, they would come with the proof of like, well, I'm staking my money.

[00:22:22] I put my money at stake.

[00:22:23] And I'm saying that this transaction really happened that I actually did, that Skylar did actually tell me that he wanted to pay Jacob.

[00:22:28] And instead of being assured of that because he found the needle in the haystack, you can be assured of that because I put my money at stake here.

[00:22:36] And if I lied, then you would, you know, then other people.

[00:22:39] The system breaks down.

[00:22:40] Exactly. Yeah, that's right.

[00:22:42] Okay, that makes sense.

[00:22:43] Okay, thank you for connecting that one as well and helping see how those can differentiate a little bit.

[00:22:48] Let's talk about Sensible here a little bit.

[00:22:50] It's your company.

[00:22:51] You founded it, correct?

[00:22:53] And then what does it do?

[00:22:54] That's right.

[00:22:55] So Sensible is a high yield account for crypto.

[00:22:59] So, you know, some of your listeners may or may not have crypto sitting on, let's say, like a Coinbase or a Robinhood, Kraken or, you know, whatever, crypto.com, whatever crypto exchange it might be.

[00:23:11] And generally speaking, that crypto is sort of sitting there.

[00:23:15] And many people would buy it hoping or thinking that the price may go up over time as a broader investment portfolio.

[00:24:17] So, you know, I mean, I don't know if you're going to do more for what you wanted in the end.

[00:24:29] So, you know, if you're going to do more for a little bit of money, you're going to do more than a crypto exchange.

[00:24:52] So this is like if you have, you know, one ETH and 0.1 Bitcoin, let's say, on Coinbase or three Solana on Coinbase.

[00:25:01] You know, when you hold those assets on Sensible, it's your Solana or your Ether that's gaining that compound interest rather than a cash deposit.

[00:25:10] Is it paid back in that cryptocurrency?

[00:25:13] Is that part of that similar to mining?

[00:25:18] That's right.

[00:25:19] That's right.

[00:25:19] We're a place to get compound interest on your crypto, not on your cash.

[00:25:23] And so, like, the way to think about it is, you know, if you deposit one ETH and were to get a 4% interest rate over the course of a year, then in a year you'd have 1.04 ETH.

[00:25:35] Do people bring their cryptocurrencies to Sensible or can you purchase them there?

[00:25:39] How does that, how do they enter into the account?

[00:25:41] Most people will be coming from crypto that they already own elsewhere and they will tell us that they're interested in moving it from there to Sensible so that they can, like, put their crypto to work.

[00:25:52] And say, well, geez, if I was already planning to own this, I might as well get some interest out of it.

[00:25:58] And we do offer the ability for people to, you know, go from cash to crypto.

[00:26:04] But really the primary use case that we've heard from most people is like, you know, I already own, you know, 1, 2, 3 ETH.

[00:26:13] It's on Coinbase.

[00:26:14] It's kind of just sitting there.

[00:26:16] I might as, you know, I don't have like short-term plans to be trading it.

[00:26:19] I just have it there as part of my investment portfolio.

[00:26:21] And so I'd rather, you know, move it somewhere where I can get that, you know, variable compounding interest on it.

[00:26:28] Yeah.

[00:26:28] Okay.

[00:26:29] Awesome.

[00:26:29] That makes sense.

[00:26:30] That paints that picture clearly for me.

[00:26:31] Thank you.

[00:26:32] As we come to the end here, a couple of questions.

[00:26:35] One, just make sure everyone knows where they can find you or find Sensible online.

[00:26:39] How can they maybe get in touch with further questions?

[00:26:42] So right now we're at holdsensible.com.

[00:26:46] We're invite only.

[00:26:48] And if you, but if you use the code money talks, you can get in off the wait list now and start using it.

[00:26:53] And you can definitely ask us any questions through the sort of chat widget on our website, or you can email me at Jacob at holdsensible.com.

[00:27:01] If you have any questions, thoughts, or feedback.

[00:27:04] Fantastic.

[00:27:05] There you go.

[00:27:05] And you heard that promo code.

[00:27:06] I'll make sure it's in the show notes, of course, with links and the like, of course.

[00:27:10] But as we wrap up here, the final question I like to ask everyone is maybe to kind of reflect as if you're talking to people that are younger than you, or maybe at the beginning of their journey.

[00:27:20] Whereas you're maybe more along the path and can help the money buddies, as I like to call everyone in this community.

[00:27:26] But the final question here is what's one thing about crypto that you wish you could go back and tell yourself maybe five to 10 years ago?

[00:27:31] You know, I would say maybe as a like, as a general, as a more general piece of advice to not let the perfect be the enemy of the good or the better.

[00:27:41] I think a lot of times, you know, like you mentioned, it's very easy to find yourself dealing with confusing terminology and sort of feeling like you're just staring at a long list of things you don't understand.

[00:27:55] And that if you were to go all the way to the maximum depth about it, you know, you might have to spend a really long time.

[00:28:01] And sometimes there are things that you don't care about until you have kind of started looking at them.

[00:28:07] This is how I felt about my business, about things that I've done outside of crypto even, you know, setting up my own finances when I was first entered the workforce and all that.

[00:28:17] Sometimes you kind of have to learn progressively and iteratively and you'll never get to sort of step three if you don't start with step one.

[00:28:27] Yeah. And so many people look at that. Oh, I want to be the person that has one Bitcoin and you're getting rich by the day because it's going up or something like that.

[00:28:35] But so often then we get confused about what is what is a digital wallet or things like that, which we didn't really get to touch on a whole lot today.

[00:28:42] But there are maybe a whole bunch of other areas that crypto can confuse people.

[00:28:45] And like you said, that even extends to, I guess, just basic old school personal finances of starting your Roth IRA or getting your 401k up.

[00:28:53] So that question is both applicable to crypto as well as just generally across the board of dip your toes in the water and just go ahead and get started because you can learn as you go.

[00:29:03] Don't throw all your money in something you don't understand. Just get started and learn as you go.

[00:29:07] But that's a fantastic place to leave it, Jacob. Thank you so much for coming on.

[00:29:10] Thank you so much. This has been great.

[00:29:21] Thank you so much to Jacob for coming on today's episode.

[00:29:24] That was a fantastic conversation and really helped me understand another side of crypto.

[00:29:28] And I think it was a really helpful conversation. Hopefully it was for you as well.

[00:29:32] But let's talk about the first money talking point.

[00:29:34] How can you use cryptocurrency in your portfolio?

[00:29:37] Well, it can help you achieve your goals just like any other investment would.

[00:29:41] That's one way to look at it.

[00:29:42] You will hear most people say that you should only have a small percentage of your portfolio in crypto.

[00:29:47] Why might that be?

[00:29:48] Well, because of high volatility or high standard deviation.

[00:29:52] Think about how you're going to handle those big changes emotionally.

[00:29:54] Are you going to be able to stay the course when Bitcoin skyrockets and then plummets the next day?

[00:29:59] Of course, anytime someone speaks of an example of this where they're talking about as a roller coaster,

[00:30:04] they're using those worst case scenarios.

[00:30:06] And it may not be that bad.

[00:30:08] It might be easier to stomach than the highest highs or the lowest lows.

[00:30:12] And of course, it's easier to say that you can stomach that roller coaster when you're standing off to the side and not currently riding it.

[00:30:18] But even though it might not be as bad as it can be, you still need to think of that whole range of ups and downs that Bitcoin or other crypto can go on.

[00:30:26] And are you going to stay on for the ride?

[00:30:29] Which means are you going to stay on for it going up?

[00:30:31] And are you going to stay on for it going down?

[00:30:33] Because there's both parts of a roller coaster.

[00:30:35] So you got to be prepared for both.

[00:30:36] I also agree that a small part of our portfolio should be in crypto.

[00:30:40] I don't know if it feels like as much as it used to be where people say only invest what you're willing to lose.

[00:30:45] But I personally have a hard time seeing it go to zero.

[00:30:48] There are some garbage coins out there that are just a scam.

[00:30:52] But if you're a general everyday investor or just looking to get started,

[00:30:56] you won't likely hear about those unless they're being pushed by a person who stands to make money off of them.

[00:31:00] So be aware of that.

[00:31:02] Be aware of who is pushing the coin.

[00:31:04] So where do you start if you're listening to this podcast as a crypto beginner?

[00:31:08] Well, if someone you know online is pushing a coin that you've never heard of,

[00:31:11] and you didn't even realize that person was into crypto or that they were some sort of a money coach,

[00:31:15] stay far, far, far, far away from those coins.

[00:31:18] Keep it simple with this advice.

[00:31:21] Just stick to the big coins you hear about.

[00:31:22] The bitcoins, ethereums, the ones we mentioned in today's episode.

[00:31:25] Also, I think institutions like Coinbase or Sensible,

[00:31:28] or these companies that have a larger motive or audience, can be useful.

[00:31:32] They know what they're doing and they're going to help you learn about crypto.

[00:31:35] So another thing to do if you're just getting started and want to get going with crypto

[00:31:38] is don't stop with my podcast.

[00:31:41] Keep going.

[00:31:41] Keep listening to other shows and watching other YouTube channels.

[00:31:44] There are a lot more people out there that know a whole lot more than I do about crypto.

[00:31:47] The point of this podcast is to help you get the conversations started.

[00:31:51] There's going to be some great people out there that can take you to the 201 or 301 deep dive on this

[00:31:55] and go find those people and listen to those episodes about crypto and learn more.

[00:32:00] So what should you do if you're stuck with crypto?

[00:32:02] Well, one easy method is to take a step back.

[00:32:05] Review your basic personal finances first and make sure those are in order

[00:32:08] before you start pushing your limits on what you know

[00:32:10] and trying to learn everything there is to know out there about a new asset class.

[00:32:14] Let's talk about REITs for a second.

[00:32:16] Real estate investment trusts.

[00:32:17] Just like crypto, something I've never covered on this show,

[00:32:21] but that's because it can tend to be something that once you get into,

[00:32:24] it's a bit beyond that normal investing and normal personal finance.

[00:32:27] So let's turn this episode around a little bit and reflect on the basics.

[00:32:31] Let's talk for a second about the seven money talking points.

[00:32:34] You can find them online at moneytalkwithskylerfleming.com slash resources,

[00:32:37] and then click on the money talking points guide.

[00:32:40] Let's reflect on this for a second to make sure you've covered the basics.

[00:32:43] So when we're reflecting on this, I want to start by going over each of the seven money talking points.

[00:32:47] The first one is what will I do in an emergency?

[00:32:50] The second money talking point is how am I making money?

[00:32:53] The third one is how am I spending money?

[00:32:55] The fourth one is how am I saving money?

[00:32:57] The fifth one is do I want to pay off all of my debt?

[00:33:00] The sixth one is what do I want my retirement to look like?

[00:33:04] And the seventh money talking point is what are my big money goals?

[00:33:07] These are going to be a great guide to get a money talk started.

[00:33:10] They're simple steps to have clear, healthy, and better money conversations.

[00:33:13] Also, talking about money is essential.

[00:33:15] If you've been listening to this podcast for a while,

[00:33:17] you know that talking about it helps us all do better together.

[00:33:20] That's the whole point of this podcast is to help us all do better with money together.

[00:33:24] So I'm going to choose one of these and let's dive into it a little bit deeper.

[00:33:27] And then you can go check out the guide if you'd like to.

[00:33:29] How am I spending money?

[00:33:30] Tracking, tracking, tracking, tracking.

[00:33:32] I'd said it on a couple episodes ago about one of the first small steps to financial independence is tracking.

[00:33:38] How are you spending money?

[00:33:40] Are you spending money all in one place?

[00:33:42] Do you spend more than you make?

[00:33:43] What categories do you spend the most in?

[00:33:45] It's very likely I'm going to give you a free tip right here.

[00:33:48] It's very likely that your credit union or bank in their app will categorize your transactions for you.

[00:33:53] And then you can see it all just easy, free.

[00:33:55] You don't have to pay for an app.

[00:33:56] You don't have to connect it to anything.

[00:33:58] Though paying for an app can be super useful.

[00:34:00] So keep that in mind.

[00:34:02] But how are you spending money?

[00:34:03] If once you start diving into how you're spending money,

[00:34:06] you want to talk about it a little bit more,

[00:34:07] head over to money talk with skylarfleming.com slash chat.

[00:34:10] And let's have a conversation.

[00:34:12] The link is also in my show notes.

[00:34:13] So head over there and go ahead and click on it.

[00:34:16] And let's have a conversation and start talking about your money and how you can do better with money.

[00:34:20] But let's move on to the second money talking point here.

[00:34:23] The second money talking point is why would or wouldn't saving money through crypto in a savings account be a good idea?

[00:34:29] Well, compound interest, of course.

[00:34:31] Saving money through any app is going to be a great idea because of compound interest.

[00:34:34] I know Jacob said that you don't get paid in cash, which makes sense.

[00:34:37] Your compound interest should be in whatever currency you're holding in that account.

[00:34:41] But in terms of saving through a crypto savings account,

[00:34:44] I still struggle to wrap my mind fully around what staking is.

[00:34:47] The principle is there that it's a way to put up your crypto in a place to help verify and back the system that's ran on it.

[00:34:53] And that's how you make crypto on the side.

[00:34:54] I honestly think it's a great way to go because you're then earning a little bit of interest while the value of your coin could still be going up.

[00:35:00] So I don't fully understand staking, but I love compound interest.

[00:35:04] And compound interest is a great thing to get.

[00:35:06] So if you have crypto that you're trying to save and use for long term goals, consider these staking options.

[00:35:10] I think they could be worth your while.

[00:35:12] But this is another moment to plug going beyond the 101 and look into it further with other content creators and crypto guides out there because I'm sure they exist for staking.

[00:35:21] The third and final money talking point here is how do you manage to keep tabs on crypto without feeling FOMO?

[00:35:27] Well, one way that I recently experienced is just buy it and forget about it.

[00:35:31] Maybe not, but I wanted to share what I did.

[00:35:33] I realized while working on this episode that I had some really old crypto that I had completely forgotten about.

[00:35:38] One way to avoid FOMO is to just abstain from crypto news altogether.

[00:35:41] Put jokes aside.

[00:35:43] One way to avoid FOMO is to put a little bit in it and just let it be.

[00:35:47] Or put a little attention into that asset class that you're failing FOMO for.

[00:35:51] And realize that once that FOMO hits, it's likely too late to fully jump in.

[00:35:56] FOMO happens in every asset class.

[00:35:58] Think about real estate in 2020 or 2021.

[00:36:01] Tech stocks in the 2000s or late 90s.

[00:36:04] Tech stocks in the 2010s and crypto now.

[00:36:07] Just know that if you're experiencing FOMO, you've likely missed the ship and you're just paying for the gains that those who are aware of the asset class are now cashing in on as the tide rises.

[00:36:15] So be cautious and remember that next time you feel like you want to jump in, that it may be too late.

[00:36:20] But make sure you remember the basics and make sure that those are in order before getting into investing in any asset class really.

[00:36:26] Especially if you don't fully understand it yet and you're looking to invest because of FOMO.

[00:36:30] But don't let that keep you out of investing altogether.

[00:36:33] Start simple with an S&P 500 index fund and get your toes in the water.

[00:36:37] I wish there was more FOMO around being the market and not trying to beat the market and be fancy with your investing and see big gains.

[00:36:44] Keep it simple with the S&P 500 and keep it simple with just some basic index fund investing.

[00:36:50] Well, let's wrap this episode up.

[00:36:52] What did you learn from today's episode?

[00:36:53] If you're on Spotify, leave a comment for this week's episode.

[00:36:56] I would love to see some more engagement from each and every one of you listening.

[00:36:59] I do appreciate you all for listening, especially those of you who are here at the very end.

[00:37:03] If you have a topic idea or something you'd like me to cover, shoot me an email and let me know what you'd like me to talk about.

[00:37:09] Odds are also likely that if you want to talk about it, someone else wants to hear about it.

[00:37:13] And if you want to chat about it, come on as a guest.

[00:37:15] I'd love to have you.

[00:37:16] But today's episode was a first for me, a first in crypto.

[00:37:19] Thanks again to Jacob from Hold Sensible for coming on today's episode and for parting his knowledge about crypto with all of us.

[00:37:24] Be sure to check out his information in the show notes.

[00:37:26] For many of us, crypto might seem like a complicated, volatile or speculative space.

[00:37:31] But through today's discussion, Jacob and I unpacked a foundational element of what makes it so unique.

[00:37:35] We started by defining cryptocurrency, how it differs from traditional digital money, exploring the role of blockchain as a decentralized public ledger.

[00:37:42] We touched on crypto's volatility, how it captures attention and how it becomes an asset class where more and more people want to engage in.

[00:37:49] We're also talking about mining and staking, two processes that help the blockchain remain secure and efficient.

[00:37:54] Though they can seem a little confusing, you can begin to think about them and have conversations about them and they become a little less daunting.

[00:38:00] If you've been hesitant to explore crypto or unsure where to begin, I hope this episode helps give you some clarity and let you dip your toes in the water.

[00:38:08] Whether you're looking to dive in or just looking for some insight to help learn about a new asset class.

[00:38:12] If you want a fellow money buddy to talk about anything you learned in today's episode or ask any personal finance questions to, head over to moneytalkwithskylarfleming.com slash chat and sign up for a free money talk.

[00:38:23] Also, don't forget to subscribe, share this episode and stay tuned for more insightful conversations in the future.

[00:38:28] Thank you for listening to this week's episode of Money Talk with Skylar Fleming.

[00:38:31] I'm your host, Skylar Fleming.

[00:38:33] Have a great week.

[00:38:34] Thank you for listening to Money Talk with Skylar Fleming.

[00:38:36] This show is provided for informational and entertainment purposes and may not be specific to your unique situation.

[00:38:43] Please be sure to do additional research before making any financial decisions.