Financial Freedom Junkie

Cryptocurrency: The Future of Money Or Full of Dangers? with WallStreetPapi

• Adam Fernandez • Episode 6

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#6 Let’s demystify the world of cryptocurrency with expert WallStreetPapi. We talk about fiat currencies and their limitations, particularly in the context of inflation and devaluation over time. Then we dive into the nuances of cryptocurrency, its benefits like inflation resistance, border-free transactions, and the trust and verification aspects of blockchain technology. But we can’t discount potential downsides such as market volatility and scams. Gabriel emphasizes the importance of financial education and research before investing and offers practical steps for getting started. Tune in to learn about how to manage personal finances and build wealth in an ever-changing economy, and why understanding money is crucial for leading a fulfilling life.

Connect with Gabriel:
Instagram - https://instagram.com/wallstreetpapii
Website - https://wallstreetpapi.com/

FTC article about cryptocurrency investment scam losses: https://www.ftc.gov/news-events/data-visualizations/data-spotlight/2021/05/cryptocurrency-buzz-drives-record-investment-scam-losses

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Gabriel:

If you derive your wealth in dollars, how well do these dollars perform in the long-term? People think leaving their money in their checking and savings account is relatively safe over the long run. They look at if they have 1,000 dollars in their savings account and they don't touch it for five years, it still says the number 1,000. You're seeing the cost of living rising and you are required to give up more of your dollars for those same amount of goods. If they're okay with their wealth devaluing in their bank account then ultimately that's the decision they have to make and understand that as time progresses, the prices are going to keep on going up. And your dollars are going to buy you less. Why is crypto even something worth looking into? You have to do the research understand like what is the reason to even look at it.

Adam:

I'm a pretty like super chill person, but like my blood is boiling and I'm like mad pumped Born and raised in Miami, Florida to Cuban and Puerto Rican parents, Gabriel Garcia Arce came from humble beginnings. He graduated high school with a below-average GPA and was rejected from every university he applied to. So he worked like a beast to be better every single day, dual majored in accounting and finance for his bachelor's degree, and graduated cum laude with a master's in finance from Florida International University. But his achievements didn't stop there. While working full time, he launched a successful e-commerce store that sold bucket hats across the world. He's become an expert in the stock and crypto market. And today he works at a prime brokerage on Wall Street, which is why he's better known as wallstreetpapi. When he's not training in Brazilian jiu-jitsu, he's studying personal finance and breaking down money without the B.S. I'm so excited for you to listen in on this conversation about cryptocurrency. Or should I say cryptic currency? Sorry, I thought, I thought that would be punny. All right, let's dive into episode 6. Welcome to the Financial Freedom Junkie Podcast, where we help everyday people master their money and fulfill their financial purpose. You should never lose sleep over money, but together we can change that. I'm Adam Fernandez. Join me and let's get addicted to the pursuit of financial freedom together. It's time to become a financial freedom junkie. Mr. WallStreetPapi, what's going on, Gabe ? Thanks so much for joining the Financial Freedom Junkie Podcast . So glad to have you on here, man.

Gabriel:

Of course, Adam, I really appreciate your time. I also want to do a little selfish plug and I have a quick story about you. The first memory I have about you. Uh,

Adam:

Okay, let's do it.

Gabriel:

Long story short in middle school, I remember knowing Adam, we had several classes together and there was this one time where I left my lunch. And this guy right here, Adam hooked it up with half of his sandwich from Publix. And for some reason that, uh, that story always stayed, stayed with me. Like every time I remember you, I'm like, I still remember this guy gave me half his lunch in sixth grade. So, uh, it's a pleasure to be here, man.

Adam:

That's awesome, dude. Thanks so much. I don't have a lot of positive middle school, high school memories, so it's good that other people have good ones of me.

Gabriel:

Of course.

Adam:

Appreciate it, bro.

Gabriel:

course, Adam.

Adam:

We're talking about I want to talk about crypto. Okay. Cause I know very little, and I think a lot of people out there know very little, but there's a reason that should be changing, I think

Gabriel:

Right.

Adam:

for a lot of people. And so I kind of want to start off with a baseline, uh, because before we talk about cryptocurrency, because cryptocurrency is currency, why don't we go into, maybe you tell us a little bit about what fiat currencies are, uh, fiat money.

Gabriel:

Got you. So even before that, Adam, something that I like to explain to people is kind of just understanding what money is at its core. we look at money, it's really just value exchange. So if let's say in way back when, in the early adoption of human civilization, where we're just first starting off, if you were a farmer and I was a baker, we would effectively have to figure out a means of exchange to exchange goods and services. So if I needed a dozen of eggs and you needed to have a cake for a birthday party, we could actually make that exchange happen. That transaction is effectively money. It's just trying to find a solution to how we could transact. As we moved along down that curve in the timeline, we started using precious metals. This could be something like gold for some reason, Egyptians, Roman empires, all of us had some sort of kind of allure to gold and several components behind gold tied to money today, which we could leave that for sometime later in the stream. Uh, but effectively once we kind of moved down the timeline, we eventually went to something called government backed money. So the way it could work for individuals to understand Effectively, I could have this piece of paper and I can exchange this piece of paper at a bank for a brick of gold. And what's the reason behind this? Well, now I don't have to walk around with bricks of gold to effectively make day to day transactions. And I could trust that this piece of paper has value. Now, when we kind of move along the timeline, we talk about Fiat money. Fiat money is government money that is not backed by anything. So in 1971, president of the U S Richard Nixon removed the currency off the gold standard. And I think earlier I messed up in saying it was government backed money. So it was gold backed money. And then it eventually turned into government backed money, which is now called Fiat. Um,

Adam:

Yeah, so so fiat fiat currency is money backed by the government, and that could be the United States. That could be, you know, British pounds in, you know, the U. K.

Gabriel:

Exactly. Exactly. So

Adam:

Okay.

Gabriel:

kind of like the logic that I like to break down as always rule of first principles, thinking for people, like, why does this thing have value? Well, for one logically, it makes sense, right? It's legal tender here. You cannot pay your bills with bags of Skittles, right? You need U.S. Dollars to pay for your rent, for your mortgage for, uh, utilities, everything requires this piece of paper. Thus it holds value. when you look from a global standpoint, it also holds value because a lot of trade is done in the dollar. 80 percent of oil trade is done in us dollars. Thus people need this piece of paper to make transactions happen. So kind of like understanding the concept of fiat money. Once again, when you hear the concept in any country, like you said, in the UK. In anywhere else that they use this kind of currency. It's not backed by a physical thing. You can't exchange it for anything, but you need it to survive on a day to day.

Adam:

This fiat money is. In some ways, just arbitrarily assigned value because governments have said this, and I say arbitrarily, I don't mean that in any sort of negative connotation, but because the government has said, Hey, this is legal tender. You can use this to do business and it has value because we will protect it. But that has issues, right? What are some issues or limitations that we, some of the major limitations, limitations we have with, with fiat money?

Gabriel:

So with fiat money, and once again, I don't want to be known as the, uh, the guy promoting just like full on crypto telling everyone to buy Bitcoin, et cetera. No, like I just like to about the logic behind all these different parts and let people make the decision for themselves. Uh, but in terms of

Adam:

of course.

Gabriel:

Some of the downfalls of fiat, it's very evident based on data. And that data shows that there is. It's not a control of the amount of dollars in circulation. if you look at the total number of us dollars in circulation right now, it's give or take 2. 4 trillion. you look 10 years ago, it was 1. 2 trillion us dollars. If you look back to the year 2000, it was 500 billion dollars. So one of the things that you have to understand, and by you, I mean, the audience, people that are watching and listening to this Scarcity is very important in anything that has value, right? Anything that you can look at and pinpoint if there's scarcity in it, it automatically has more value. A one of one LeBron James rookie card versus a one of 1 million LeBron card. The 1 of 1 Has significant more value. what happens is Okay. there are more dollars chasing the same amount of goods, is why prices keep going up in society. And once again, people say things are getting expensive. say things aren't getting expensive is just what your dollars can buy becomes less over time. The very simple example is this. If let's say. We were the last civilization on planet earth, call it 10 people in this small town. There was one grocery store and each person had a thousand dollars in cash on hand. there was, let's say a gallon of milk in that store, people would reasonably price that last gallon of milk based upon all the money they have. In the same simulation, now same town with 10 people, each of these individuals now have 10 million on hand. There's still only one gallon of milk left in that town. The price will go up drastically. And this is just very simple supply and demand and I think that's probably the main issue is that people think leaving their money in their checking and savings account is relatively safe over the long run because it's, more so, they look at the nominal, they look at what's on paper. They look at if they have 1,000 dollars in their savings account and they don't touch it for five years it still says the number 1,000, but when you just look at it logically you could see if you're someone, let's say, call it from Miami, you're paying almost 60 70 percent more in rent in a couple years. You're seeing the cost of living rising and you are required to give up more of your dollars for those same amount of goods. And I think, honestly that's my one issue. I would say my one concern. Granted like here in the U S. We don't, we haven't experienced like something like Venezuela or Cuba, uh, like Venezuela had hyperinflation, but it's still steady enough that people should actually do research to figure out where they could allocate their, their capital.

Adam:

and I think that's really relevant because one of the things I think about constantly is that everything in life is relative. The group of people that you are, they could be like the most amazing athletes in the world. And then suddenly you're kind of like, that's normal to you because you're always surrounded by these people or, but similarly, right. I like the idea you talked about having one supermarket in this town, whatever. And everyone has all this amount of money. The, the value of that money is now significantly impacted by just the environment that you've put yourself into. And so what happens with, I guess, with this fiat money is, and like you mentioned, the amount of money that's in circulation, the amount of supply that we have just continuously increases. So that's, like you said, that thousand dollars in your checking account, people are like, Oh, I still got a thousand dollars in my checking account. And, you know, two years go by and it's like, well, the thousand dollars is really worth like 900. When there is more and more of what we have, every unit of what we have is just not as valuable.

Gabriel:

100%. And to be honest, Adam, like, this is one thing that I'm not sure majority of people understand because I feel like sometimes they just don't know exactly. The full extent to it. Like they just kind of go with the flow and just kind of say, well, I just need to make more money, I guess, but this understanding of inflation. Of actually understanding its direct correlation with your currency, the, where you hold your wealth, it's that one thing right there. Before wanting to learn about crypto, before learning about investing, people first need to understand that piece right there that we just talked about. So it's, it's so important, man. It's so important.

Adam:

So, so we've, so we've got a huge issue like I'm not trying to like hype this thing up or anything. Right.

Gabriel:

Right.

Adam:

But we, we've got an issue. We get so used to the life that we live and the situations that we're in. And then sometimes something comes along that completely changes the perspective and you realize, Yeah, this, what I had, there's something way better than that. There's something much more valuable, there's something much more impactful So, so we talked about this main issue that you see with fiat currencies, fiat money. Now, what is cryptocurrency? How is this different?

Gabriel:

So with cryptocurrency and one last thing I want to mention about Fiat before I forget that, just to add it in there. to your point, like the last thing that you were saying about like, people kind of just go with the existence of their day-to-day life. I think more so people feel it. Like you could fundamentally tell someone and they understand that prices have gone up in the past couple years, it's almost like a slow and painful death with fiat money because the price increase are somewhat incremental and it's like little by little, year by year, year by year. And then, uh, 10 years pass, you're like, dang, I used to pay $5 for a freaking sandwich at Subway. And now I spent fricking 28 from me and my wife. It's what the hell's going on. And that's, that's the issue. People just go with it.

Adam:

The power of compounding.

Gabriel:

The power of compounding people just go with it. And they just think the solution is making more, in reality, it's like, if you get a 20 percent raise in the past five years, but the cost of living has gone up 60%, What is the actual outcome? Like if you're talking nominal, you're thinking, Oh man, like I make 20 percent more, but if you look at the reality, you're worse off. So then that's when you have to tap in and figure out what the hell can I do? So in terms of cryptocurrency, the explanation that I could say is as the internet evolve, there was the ability to create something that was different than what we've seen as of recent history. Cryptocurrency is built upon a technology that's called blockchain technology. So what the blockchain technology created was pretty much like a permissionless way for a group of computers, what they call nodes to come together and build a currency based upon the rules that are set in stone on the code that cannot be altered, manipulated, or changed in any way, shape, or form. So kind of some of the use cases is you look at hyperinflation, which is what happened in Venezuela. It's one of the issues that's resolved here with Bitcoin. And once again, I'm not telling people to buy Bitcoin or anything. That's what I'm just saying with that use case. It has a set number of supply, meaning that is inflation proof effectively. Like they can know they can't print more money. They cannot say we're going to increase the supply by 10 X and

Adam:

Right.

Gabriel:

Demand economics one on one this controls inflation and you don't see that kind of. Increase of having to use, let's say more, 10 times more Bitcoin to buy XYZ. Right. Um, so just from like a scarcity component, I feel like there's some value there, in terms of public auditing, people can identify and view transactions as a whole, a lot of times with traditional banking, there's a lot of smoky mirrors. There's also times where

Adam:

Yeah.

Gabriel:

banks want to hold your money for X, Y, Z reason, like in Canada, when there was, I think these truck drivers were, I think they were on strike or something the government there decided to like hold all their funds within the bank. So there's a lot of different times and you could go back to the great depression where banks do not want to give people their money because they simply just didn't have it. And that's kind of like a red flag because a lot of the banking industry is kind of, it's very much smokey mirrors. They have a minimum that they have to keep in the bank right. And the rest, they pretty much invest it based upon the rules that are there based upon regulation that is set. But, once again,, I'm not saying crypto is the alternative, the number one thing. I'm just more kind of trying to help people understand it because all people know about it is like, Oh man, what price bit is Bitcoin at today? it up? Is it down? Oh no, it's down 70%. Oh no, it's at a hundred thousand. And it's almost like before people start

Adam:

looking at the price Yeah.

Gabriel:

it's rule of first principles thinking always. You have to understand the things we just mentioned in the beginning of the podcast of. why should you even learn about investing your money, If you look at the wealthiest individuals in the world, like Jeff Bezos, if Bezos has a net worth of 250 billion in us, in us dollars, you have to question why does he invest his money? Like why does he only have 10% of his wealth in cash?Well, it's because he understands inflation.. He understands his dollars devalue. So even yes, he has 250 billion and I'm sure if he just left it in cash, he'd be perfectly fine. the idea is there has to be some sort of logic as to why these individuals invest their money. And sometimes like a catch 22, people say, Oh, well they invest because they have excess capital. And I, and I get that that's valid, but there's a lot of individuals out there that invest 0 a month, not even 5, 10, 0. I know there's definitely a good percentage of people that have a little bit of excess per month that they could start investing, but they don't, I think the, I think the lack of information on. Fiat money like what it is and inflation is really the big driver.

Adam:

One of the issues that I understand cryptocurrency and really the blockchain is solving the blockchain is what all cryptocurrency is tied into.

Gabriel:

Correct

Adam:

Right. This chain of events, let's say this chain of computers, the blockchain,

Gabriel:

hmm

Adam:

one thing that the blockchain really does better than the smoke and mirrors banking is this sort of what I like to think of as like trust and verify.

Gabriel:

Mm

Adam:

Maybe you can speak to this if you'd like, but you know, you and I, we're accountants, we've got accounting degrees. And so there's a level of comprehension there with like, in the banking system, you've got. Let's say a simple transaction of like the bank, the bank is going to lend you money. So some individual is going to take out a loan they're going to have their own record of that transaction.

Gabriel:

hmm

Adam:

And then the bank is going to have their own record of that transaction. And every time that money is trend, money is transferred. There's a separate entry that's being made in this relationship. Sometimes you have a third party that's able to verify this kind of thing. Right.

Gabriel:

Yep,

Adam:

But that's kind of it.

Gabriel:

mm

Adam:

And data can be manipulated

Gabriel:

hmm

Adam:

in our system.

Gabriel:

Right

Adam:

And this is not to freak people out, but the idea, but the point that I'm trying to make is like, that changes a lot with this blockchain where the manipulation of data is kind of. Almost like impossible, right? You can't just make something appear different than what it really is.

Gabriel:

Right and I think that's one of the things that kind of red pilled me into learning about crypto the technology is created like the blockchain technology is created in a way that is The rules are pretty much set in stone from the jump. So when let's say Bitcoin was created in 2009, all the rules were pretty much set in stone and it's effectively like this code is thrown into frigging Narnia and they get the master key, lock it in there and no one can alter that data. No one can change the rules and say, Hey, let's add in X number more supply, the rules are set in stone. And we trust the code and the code, like you said, is audited by thousands of different independent individuals within that network. So it's almost like you have a lot of different individuals validating that this code is legitimate and you have a lot of individuals validating that every transaction is effectively correct and accurate. just from like using my accounting hat, that was something that. interests me because I felt like technology was not able to do that before the blockchain was created.

Adam:

We're talking about, we've got some huge changes that are benefits to what cryptocurrency is, how cryptocurrency has come to be. Bitcoin, like you said, there's a, there's a finite supply. It's not the only one, but it's just the most well known the most exchanged, uh, currency, cryptocurrency, this finite supply really changes the game in terms of supply and demand it's. It's a hedge against inflation in a way, just from a pure, like keeping your money standpoint, not keeping any of the banking cash that's backed by the government that they'll just keep printing and your money can devalue month over month, year over year. Um, like crazy decade over decade. So it's inflation resistant. We've also got this whole, like I mentioned, this trust and verify thing where it should be more secure.

Gabriel:

Um,

Adam:

I think there's one more thing and you talked about this on your newsletter. I was reading about this a couple of weeks, a few weeks ago. You mentioned that it was free of borders. I think this is huge. Can we, can we, can we just touch on this?

Gabriel:

Of course. Of course, Adam. So like free of borders is effectively saying if I want to send money and when we talked about money in the beginning of the podcast, we were saying money is just value exchange. If you're giving me a cake and I'm giving you a dozen of eggs, that is money. That is value exchange. Now, when I talk about value exchange from someone from here in the States to someone in all the way in South Africa, what is the most efficient and quickest way to do this? And it seems like the answer is crypto. And once again, I don't want to be a spokesperson for it. But if you look at it, logically, any way, other way to send money, right. It requires some sort of third party example, right? Like, let's say if I sent money to you, it probably maybe Zelle, right? Like that'd be probably the most, um, practical one right now, but I still have to go through a third party. And that third party is the bank versus with, let's say, Bitcoin. You are your own bank. You have self sovereignty and there's no middleman. It's more so saying, what is your crypto address? Adam in South Africa. Okay, perfect. the amount of Bitcoin sent it out and it's fast. It's easy. another thing as well, right? Let's say, and I always like to throw these worst case scenarios, Let's say someone wanted to leave their country, and I think about this example'cause my grandfather, when he lived in Cuba, he eventually had to leave Cuba 'cause of what happened with communism and things of that sort. And he was telling me the story that he effectively had to kind of like rip all his money, like his. His all the money he had worked for was effectively worthless at that point. But what if there was something like crypto at that time. Maybe something like Bitcoin. He could have just taken his little ledger nano with his Bitcoin, put it in his pocket, put it in his shoe, went to another country and had some means of exchange, some sort of value that didn't require him to start completely from scratch. So rather than being someone that had a PhD in pharmacy, He had to move and start cutting deli meat because he literally had to start from zero. So kind of that nuance of having something that's universally recognized as value. and that's reflected on the price. It's a reflected on the market cup at the market cap. Um, I think it's like at a 1. 8 trillion market cap. So that means there's a lot of individuals that deem this has value. And I could use this in kind of like that worst case scenario, but I could also use it in a very practical way. Just, it makes sense. It makes sense to me at least.

Adam:

Okay, so I, I want to hear more about this whole, you know, if your grandfather had put a wallet in his shoe, well, we want to go to that later.

Gabriel:

all right.

Adam:

I know it's, I know it's, it's not physical, but this idea, I like this idea of being able to put your wallet in your shoe with theoretically unlimited amounts of money. Okay. So that's, I know that's what we have with credit cards and stuff, but, but the free of borders things, it could become the currency. That's that's pretty huge, but there's not. I'm going to shift gears a little bit because I, it's not all rainbows and butterflies, right?

Gabriel:

100%

Adam:

don't we have potential for market manipulation? If it's not evenly spread out, if it's held by sort of an elite few. we could also see where we're seeing it right now, right? Massive price swings, maybe because of the unknown, but also because of it's less, um, the value is less predictable just because it's, it's kept

Gabriel:

right.

Adam:

and we don't necessarily know what to expect of the value in the near future.

Gabriel:

Yeah, no. So that's a, that's a very valid question. Right. makes sense, right. The, the supply is limited and that's also a big concern. Like what if someone held 60 percent of Bitcoin, but also that question also applies to many different types of investments. like the Walmart family owns over 50 percent of Walmart stock. um, the CEO of Oracle owns 40 percent of Oracle stock. From what I understand. Jeff Bezos owns like 13 percent of Amazon stock. So there's, and even in real estate too, there's freaking real estate billionaires that probably, what if they just buy up all the properties in this one town? And now these individuals are basically stuck on having to pay the rent. I mean, I'm sure there's some regulation behind that, but just trying to show that at least this is how I see it. I feel like in every single different type of investment class, there's always things subject to a lot of, um, big flares, taking up a huge piece of the pot. And this results in big swings whenever they kind of make a move, I would say in the context of Bitcoin, there are big players, but anyone can play. If you have 10, you could effectively own Bitcoin, right? You could exchange those 10 for ownership in this thing. And that's how, that's how I view it. Like I know there's big swings and, and I get that aspect. I feel as if the adoption increases, meaning more individuals, I guess, buy into, and then for all intents and purposes of video, we'll just use the example of Bitcoin. This increases the market cap of the, of that coin or Bitcoin, and the volatility should slowly decrease over time. So shouldn't be as volatile as it is. but more so that's not my concern as someone does hold it. the way I see it is like, if there are big whales buying in and Wall Street starts to get into it, there's large institutional investors from other countries getting into it. That fundamentally benefits me because my store of value, whatever I put into it is positively affected by that.

Adam:

Yeah. And, and, and you're, and you're not trying to make a quick buck. Um, there's, there's all sorts of speculation in any type of investment that's out there. Uh, that's not your intention.

Gabriel:

Right.

Adam:

And I did my, I, I want to say my a fair share of trading. I wouldn't say I traded for very long, but you and I, we were part of a group where we learned about trading and stuff like that. And I only had to trade for such a short amount of time where I was like, yeah, this is. This has got to be a full time job. And even then I may not do, I may not be successful whatsoever.

Gabriel:

Yeah. And Adam,

Adam:

And we see that, right? We see a lot of people, sorry.

Gabriel:

no, no. That I want to add one thing too, because there are a ton of different things out there that are very, what they call pump and dump, where these creators of these projects are promoting this thing. they intentionally want people to buy in the price to go up. And then these creators just sell off. I always want to like show both sides, the good and the bad, for people to have perspective, because there's more, more times than that. There's a bunch of these crypto currencies that are very volatile. People are trying to get rich quick. That is the 99. 9 percent of people that I've met in my life. Most of them have that kind of. Thought process of this is the thing that will get me rich versus I think the people that stay in it long-term, right? Like the people that stay in it for multiple cycles and don't sell, they're just looking at it as somewhat of a bet for the long-term of somewhere where they could hold their wealth that outperforms whatever they're kind of their money is in. Right? So, you know, If I look at it very holistically, all of us here, we determine our net worth by dollars those dollars are based upon how much we have after we liquidate all our assets. And then at the end of the day, we go into our Excel spreadsheet and then we say, this is how much our net worth is in dollars. So the idea is, if you derive your wealth in dollars, how well do these dollars perform in the long-term? then is there a way to kind of maybe diversify yourself to have positive expected return and have a better outlook, a better financial, I guess, lifestyle in a couple of years. Like we're just trying to improve our lifestyle. And I think two types of people, there's people that go into crypto thinking they're going to get rich quick. Usually it doesn't turn out well cause might for several reasons, which we get into, but the latter I think is the most important educate yourself first and foremost. Why is crypto even something worth looking into? Cause once again, I could be completely wrong and you have to make a decision yourself. You have to do the research and understand the why's, understand like what is the reason to even look at it. That's, that's what I would say.

Adam:

Yeah, I think you got me like, I may not look like it because I'm a pretty like super chill person, but like my blood is boiling and I'm like mad pumped because like thinking about all these possibilities in my head and again, it's not about getting rich quick, but again, it's a, it's this idea of like, long-term view of value creation, value multiplication. as an accountant, as, as a real estate investor, like these are things that I'm constantly thinking about, um, to, to better my life and to better the life of my family.

Gabriel:

For sure.

Adam:

So, yeah, I mean, I also want to, I also want to talk about, cause we've talked about Bitcoin and. All of this has been finite supply stuff. Um, we may not go too much into it, but like, I mean, what's your take on those that we, that don't have a finite supply, things that have an infinite supply? Like we've got, you've got like the, like the biggest one, right? This is the second most, my understanding is this is the second most transacted coin, Ethereum.

Gabriel:

Right. So one, my, oh, my interest first thing is always kind of like, what is the value ad and why is it different than anything that's already out there? a lot of times for myself, once again, I'm not like super in the weeds of, of like doing the research on every single like top cryptocurrency. That's not me. I've usually probably stuck to the top five at most. but with Ethereum, from my understanding, that one's. Even more so better than Bitcoin from a, just a supply standpoint, cause it's deflationary, meaning that every time a theorem is used, there is Ethereum that's burned. So the supply is actually going down versus Bitcoin is sort of flat at 21 million. The Ethereum supply is actually deflationary where the supply goes down and down as time progresses. So from that context, I mean, I like that even more if it's deflationary. Uh, but once again,

Adam:

Interesting.

Gabriel:

what is the perceived value? What is the one that people use as a means of exchange, which is the one that people will take, uh, for payment. Right. Um, in terms of like the doge coins of the world with infinite supply, I mean, I guess from just from that context of scarcity, it's, um, blank checkbox for me in that department, and then it's more so figuring out like, what does it do differently than other crypto currencies? I also have to acknowledge the reality of where we live at in 2025, where it is filled with Reddit forums. And it's filled with memes it's just filled with the most unknown things that actually can prop up value. it's more so the way I perceive it. And once again, don't listen to this and take it as, Oh my goodness, I need to start investing in meme coins. No, please, meme coins is so fricking risky. It's

Adam:

This is not a financial consultation, people. This is not a financial consultation, to be clear.

Gabriel:

Yeah. It's so risky. But what I would say is feel like almost asymmetric bets because. I look at a lotto ticket, a lotto ticket is very much like based off the probabilities and it's just the numbers. But when I look at a doge coin, it's backed by communities. It's backed by people hoarding and going all in together and uniformly prompting up the value of this thing. the meme culture is something that legitimately has to be looked at more because 20 years ago, we were in a completely different environment when it came to investing, right? In term. And I, Anthony Pompliano was telling me about this. He was basically saying that the speed of information nowadays. Has created a completely different environment in investing. So like that speed has resulted in faster markets and that communication has resulted in these kind of like cult like behaviors where people invest in more so memes or more so like people, right? Like Elon, people freaking love Elon Musk, and thus, yes they may invest in Tesla'cause they think it's a great company but they more so just invest because. It's Elon Musk. Why? Because it's Elon Musk, right? Like that's their logic. But something that you can't really overlook anymore. Cause it's like, dude, these companies, these meme coins are in the billions of dollars of valuation. we're just stuck sitting in the sideline with our accounting degrees thinking, oh man, that that's, that's all gambling and things of that sort. But it's like, seems to be some, and once again, very small, um, not logic, but more so substance, right, behind the meme. substance behind people gathering together and rallying together, right?

Adam:

No, I think, I think that's really important because I talked to a lot of family members all the time about things that we see on the news or whatever. And when we talk about how just people are just crazy irrational, but in finance, and, we, we've, we learned about this, right? Like there's this thing called the efficient market hypothesis, which is that the, like, as an example, the value of any particular stock in the market. are valued at what they are supposed to be at any given point in time.

Gabriel:

Right.

Adam:

Right. I mean, is that like the right way to put it? I think like, it's not like people are like, Oh, things are, things are, it's overvalued and it's undervalued. There's this idea and a lot of people back this. I'm not saying that I'm a proponent for or against, but this idea of the efficient market hypothesis that things are. valued what they're supposed to be right now. And they are always valued what they're supposed to be until something changes. Until some new information comes out that tells us things should be different.

Gabriel:

Right.

Adam:

So the reason I bring that up is because you talk about the meme coins and things that are valued in the billions. Is it ridiculous or is there something else there? And it's not about, this whole idea about me and make you me bringing this up, it's not about to have people just try to go crazy and spin their wheels, thinking about, dude, what the hell are you telling me? Are you telling me to do something? Are you telling me to not do something? Should I look into it? Should I not look into it? What am I doing?

Gabriel:

Right.

Adam:

It's, it's just that everything needs to be taken with a grain of salt.

Gabriel:

Mhm.

Adam:

uh, for better or for worse.

Gabriel:

Yeah. but to your point, right, just to get like down to it, there seems to be something in the culture that we can't overlook of the internet, the evolution of the internet, the communication, the meme, social media, Instagram. We can't deny the fact that this Prompts up value in some way, shape, or form. it's fundamentally changed how a lot of hedge funds on Wall Street trade stocks, Based off what happened with GameStop, they had to change their whole strategy. Like a lot of these hedge funds were shorting GameStop stock. And then this Reddit forum on Wall Street Bets figured out that there was more stock shorted than actual stocks. In circulation. Thus, if they were to buy a GameStop stock, the hedge funds would have to close their positions before taking a huge, huge loss. That was completely orchestrated by a forum. Although, like, if you tell me, was it, was it right? Uh, I mean, the numbers are the numbers. It was publicly available and they just capitalized on a move. So we can't sit here and think that meme culture is completely BS because for one, very risky and I feel like majority 99 percent of them will probably go to zero. But there are going to be some that probably go on to do something ridiculous and then people are going to be sitting, but why though?

Adam:

On that same note of being careful, about what you're doing with your money, where you're putting your money. Here, I've got an article from the federal trade commission, the FTC, this is actually written in May of 2021.

Gabriel:

Mhm.

Adam:

And I just want to talk about, naturally as someone that does anti fraud work, I feel like it would, uh, be not true to who I am and the work that I do in the, in the, in the real world to talk about protecting yourself. cryptocurrency scams are real thing. Just like all sorts of other scams, but cryptocurrency scams, because there's all this buzz, it can be pretty detrimental to people, who are, who are able to be attacked by this and, and buy into these scams, obviously not intending to do so. So I'm just going to highlight a few things that I thought were interesting that I, that I kind of jotted down. So you've got nearly 7, 000 people reported losses. This was just since October, 2020. So this, like I said, this was written in May of 2021. So in a matter of like seven months, nearly 7, 000 people reported losses. That doesn't mean that many people were actually the people that got scammed. This is only the amount of people that reported it to the federal trade commission,

Gabriel:

only been one Right.

Adam:

um, That median loss was 1, 900 per person. I mean, most people don't even have 1, 900, that's crazy. Um, you know, people being lured to, to websites, it looks like they're investing. They're going to be investing or mining cryptocurrencies, but they're not, they're not real things. They're, they're fake testimonials. guarantee, they say they're like guaranteed returns. Um, and red flag, if people say they're guaranteed return, that's, that's not something you ever invest in.

Gabriel:

sure.

Adam:

there's no guarantee investment of any kind. Uh, so you're not going to get anything back from that. Don't do that. Um, you've got imposter scams. So people pretending, and we see this all the time, people pretending to be someone that they're not usually like a government agency.

Gabriel:

100%

Adam:

Um, And what was really interesting to me, especially cause like, we're, you know, we're millennials, we're in that. This 20 to 49 group.

Gabriel:

Mm

Adam:

Uh, actually there was 20, there was, there was a group in their twenties and thirties,

Gabriel:

Mm hmm.

Adam:

the numbers are that's people in twenties and thirties reported losing far more on investment scams than any other type of fraud. And if we look down here, this is like. They reported 114 million in total losses. Um, this was the largest of any scam reported, if I'm not mistaken, in that time period and you think like, Oh, that could have been me or that could have been my friend. And so, I mean, like I mentioned before, you've got, you've got cryptocurrency. It's pretty much unregulated. Like I said, it might change in the, in the coming months and years, whatever, but thinking about security, thinking about if we are going to, going to be investing in these kinds of things, like what are the best steps that someone can take to make sure that we don't get to scammed or defrauded if we want to invest?

Gabriel:

I think the basics of utilizing internet safety, right. When it comes to passwords, um, verify, like it's coming from the right source. And if you're not too certain, then do your due diligence. There's just, I more so believe it's, it's that alone. Like if you just stick to using coinbase. com to buy your stuff and you are very diligent and just not entering your password on a random email, you got that says coinbase with two E's dot com, right? Like, It's just, I think fact checking everything DMs from people don't, don't answer any DMs from people on social media about crypto. Like if they're asking you for this or telling you to invest in their coin, like stay away from that. Understanding it and also understand the negative aspects of it as well. Once again, it's not all sunshine and rainbows, right? It's very volatile. but I know one thing for sure. If I left my money in fiat, year after year, it's going to decrease due to inflation, printing of money. And that's something I know for certain. So knowing that, I unpack it, and figure out how can I best allocate my chess pieces. If you look at your money as little chess pieces on the board, how do you make your chess moves? Some people freakin play aggressive chess board and put all their money in Bitcoin, which that seems to be like risky business, but once again, to each your own, um, there's some people that diversify their money in stocks. Maybe some diversify their money in real estate. Or maybe some just don't diversify their money at all and just focus on maximizing their income.

Adam:

You know, the main reason I invest in real estate is for cashflow purposes. You get like a rental property. You can even do this online. You go to a place like Fundrise or whatever, and you can get a chunk of, you buy a chunk, a bunch of other people buy a chunk of this property, this apartment complex or whatever, and you get certain dividends every month or every quarter or whatever, um, that's cashflow. Okay. You've got like interest that you earn in your bank account. You've got those dividends on stocks that are actually dividend paying stocks. I mean, do we have that in the crypto realm? Okay. Like, or is it just, you know, I'm going to, I'm going to invest with the idea, the hopes of price appreciation and hopefully I'll sell it later and make more money or are there things out there? Similar to like you were talking about, you know, people buy ETFs and mutual funds where they don't have to pick a specific thing. are there options other than I just want to buy a particular coin?

Gabriel:

So in terms of the, the first question about cashflow for the general sense, right? Like you could just think about it as more so like a store value for the most part,

Adam:

Yeah.

Gabriel:

do not provide cashflow, So it's kind of like a give or take some people like to have that consistent cashflow, which I understand. Cause it kind of alleviates the decision making of like selling, right? Cause you could just hold on to that thing and it just generates X amount of cash. But in the concept of Bitcoin, it doesn't provide cashflow. It just provides absolute insane returns on statistical. if you look at the statistics historically for the past like 10 years, uh, but once again, historicals do not forecast future results. one of the things I heard, uh, Anthony Pompliano say is like, Bitcoin is kind of like the S and P 500 of crypto. So it's more so like, and it's true, like everything moves in correlation with Bitcoin. it's more so like when I look at the crypto market, it's a $3.4 trillion market cap, I believe. And Bitcoin is $1.8 trillion. So it's more than, I don't know, 50 percent of it. And

Adam:

Wow, it's more than half.

Gabriel:

Yeah, more than half. And when you look and like the ETF that you're referring to, in a sense, I get where you're saying like a basket of different cryptos within one, I would say on Wall Street though, they have created ETF specifically for coins, right? Like the Bitcoin ETF. this has allowed for individuals to buy Bitcoin directly through, let's say like a fidelity or Vanguard, things of that sort. seems to me for people that don't want to, um, have the probability of getting scammed or something along those lines, maybe that's something that they want to look into

Adam:

Yeah.

Gabriel:

because they could get exposure to it. I, for one, I want to hold the actual thing. I want to hold it. Um, but once again, to each their own. It could be a viable way for them to get exposure without having to feel the stress of it because I, I totally get it. But once again, it is very volatile when it comes to crypto and like more so for the people that watch this, they're not, if they have 0 dollars and 0 cents invested, know if the best thing for them is just to start on crypto. So it's more so before you look at prices of where Bitcoin is at, before you look at what to buy, you have to really break down the things that we discussed on the podcast. So it's talking about what is fiat currency? Why are things getting expensive? So understanding inflation a little bit better. And why should you go down the rabbit hole of putting your hard earned money at risk? Like why should you risk your money? And that's how people look at it. People are risking their hard earned dollars, which they are. They're putting on the line to have a future expectation of a better outcome in their life financially. Uh, so, you know, I think most people, they have to make the decision for themselves. So if they're okay with their wealth devaluing in their bank account and their dollars, then ultimately that's the decision they have to make and understand that as time progresses, the prices are going to keep on going up. And your dollars are going to buy you less. And I don't want to sound like the person that's, I'm not against fiat currency. I think dollars are extremely important to have in your bank account for emergencies. Once again, how I said, you can't pay your rent with skittles. You can't go to the emergency room and I don't know.

Adam:

You could try.

Gabriel:

you could try it, right? You could try, you could try to pay, uh, with V bucks from fortnight on your medical bills, right? No, but you need us dollars to pay for all your things. So does have value. 100 percent does have value.

Adam:

Yeah. And I think you brought up a good point and I'm, I'm, I mean, I'm glad you mentioned is something that I would have wanted to talk about. Someone's just getting started off investing. This is probably like if you have nothing anywhere else, it's probably not the best. Like this is the first thing that I will do. Like, okay, I'm going to jump into the water investing. Let me go buy Ethereum. um, And, and, and with any, I think with lots of investments, I think with lots of investments, especially the cryptocurrency, like you should, at least when you're buying like individual companies, individual coins, not like a basket of things, a specific thing, you should be willing to lose all of it. Um, you should be willing to live without it. And so those kinds of people that are thinking, they're thinking, Oh, you know, I'm interested in investing in, in cryptocurrency, maybe it's not for you. If you haven't gone and you don't have like a high yield savings account this is not going to be, this is not universal advice, because there are exceptions and everyone has their own preferences. Like you said, to each their own. Um, but there's, like you said, baby steps, there are sort of fundamental steps people probably should be taking before going in and saying, okay, I'm going to put some money in this. Um, but, what would you say to people that are for people that are actually willing and able to invest? And like, you already talked about Coinbase, which is great. I think my thought is like, okay, so how do I start? I create an account for Coinbase and I will have a digital wallet. Is that, is it that simple?

Gabriel:

uh, yeah, it's pretty, it's pretty simple. Like with Coinbase, you're effectively having them hold your crypto for you. So you don't have to have like a, a wallet. You don't have to have a wallet. If you use Coinbase, you pretty much have your crypto stored there. Uh, if you want to hold your crypto independently, typically there's two ways you could have a digital wallet, uh, what's called a hot wallet, or you could have a physical wallet, which is called a cold wallet, uh, like a ledger.

Adam:

Okay.

Gabriel:

And it kind of looks like a USB. So basically when you create, and once again, for someone first starting off. I don't think they should create their own wallet because you're so much more likely to get scammed, especially if you're first starting off. So I would say for the average person, I can't, I will, I will explain a little bit of the nuance to it just in case someone's interested. But once again, I would recommend maybe stick to Coinbase, maybe stick to Coinbase because with you having self custody have to create a password. You have to write down your seed phrase. The C phrase is a series of 16 words. So let's say you forget your password. You need your seed phrase to reactivate. Once again, this is where most people get scammed. They get fake emails of like, Hey, you got logged out. Please enter your 16 word seed phrase. if you enter that, that's it. You're doomed. Like that's it. Someone has your things. It's already, it's set in stone. There's nothing you can do. Um, also with the seed phrase. They recommend a store it on a piece of paper, like they on paper, not on a computer, not anywhere digitally to avoid someone hacking in. Uh, so typically you have your seed phrase written down somewhere And, um, with the ledger nano, from what I understand, no one can hack into it unless they're physically connected to it. Like you would have to authorize a transaction on the physical nano to actually move money around. Uh, the million dollar question is what if I flush my nano down the toilet? Like my. um,

Adam:

Mm hmm.

Gabriel:

wallet. And the answer is if you have the seed phrase on a piece of paper, you can buy another, one of those physical nanos, those USBs, and just reactivate it with your seed phrase.

Adam:

so there's, there's lots of ways that they've lowered the barriers to entry. You've got, like you said, if you're going to invest, you can do something easily, go into Coinbase, create an account. We've covered how You know, not that you're a huge, a huge, uh, anti Fiat, but we have some issues with that and that's what, there are lots of things that crypto and the blockchain have, have improved on or have kind of solved the, you know, supply demand issue, at least with the finite, the finite coin ones or the finite supply ones, and it being free of borders. there's more than just a store of value. Even some of these other ones, like there's technology behind it and this technology is being used to honestly improve, improve lives, make lives easier, um, make transactions kind of like bulletproof. Like, I want to know, do you have, do you have any, any final thoughts or takeaways that you want to share about crypto, why someone might want to invest it or

Gabriel:

Dude. I mean, honestly, Adam, I would just say for people before anything, before you put a single dollar into it, I'm going to sound like a broken record, but do your own research, understand the technology before anything else. Forget the price, forget where it's trading at, forget this and that, because that's probably going to lead people to FOMO in. They're going to do the inverse of what Warren Buffett says. Warren Buffett has a quote that he says, be fearful when people are greedy and be fear and be greedy when people are fearful. Meaning that, When Bitcoin was trading at 30,000 or 19,000, I got zero questions on Bitcoin, like zero, no one would ask me about it. No one will talk about, Hey, is this a good time to buy? Not one person. But now everyone is now asking about it. Like, Oh man, it's freaking at 94,000. That's crazy. Like, should I buy? And I've seen this, I've seen this movie. I've seen it in real life happened last cycle. When Bitcoin was at 60,000, everyone was like, Oh, should I buy? And then it went down. No one was talking about it. And it's the same thing over and over. And why does that happen for most. And once again, this isn't just a Bitcoin thing. This is in the stock market too. People have this sense of, I need to sell when things are bad and when things are great, when we're rallying, this is the best time to buy, which mathematically speaking, that's the reverse. It's not true. So I think my one piece of advice is in the age of technology and with artificial intelligence, making this whole thing grow faster and faster and faster, I think the main thing is to always question everything. Have that mentality of being like an auditor play devil's advocate in every type of investment. Don't listen to what I said on this stream and take it at face value. Do your own research and educate yourself because then through that education, you can figure out what's best for you. Maybe that's in real estate.

Adam:

Yeah, and I think,

Gabriel:

No, go ahead.

Adam:

yeah, and I think you're bringing, you, you're constantly bringing a lot of, um, really intriguing perspective we've had all sorts of different conversations, uh, the past couple of years, and there's so much that I have appreciated with your perspective, your knowledge. And so, I mean, just this topic of crypto is something you dive deeper with, you dive deeper into with people right and there's lots of other things that you talk to people. You've got your your financial literacy boot camp, right? Um, this is something you help people with one on one

Gabriel:

Yeah, man. Yeah. I, I help people on a one to one basis, but once again, just follow my boy Adam here. He knows this stuff. He's very knowledgeable in it. You could go ahead and feel free to follow me as well on my content. And I think my perspective on everything, man, is I want to just educate people. And that's it. I don't want to make content that is fake in any way, shape or form from the context of selling people on the idea of the getting rich quick, because in my own personal life. And I feel like this fundamentally true generating wealth is boring. Getting wealthy, I believe is boring. And a lot of people don't want to hear that. They want something quick. And if you try to get it quick, you want to get it quick, you're going to put yourself in, in less optimal position. that's why on my platform, everything is very much teaching people the fundamentals, so they can take that and make the decision for themselves. And I know you're on the same mission of educating people too, man. So I really respect everything you're doing, man.

Adam:

yeah, but but we need we need to have the I don't want you to downplay also your you say it so like humbly and I appreciate that but um, thank you for the kind words, but people need to be reaching out to you as they have There's a lot more that you haven't covered. Um, I'm going to, I'm gonna include the links to you, people, being able to follow you on IG, um, other links that you want to link them to, but I just got one more thing. Okay. So this is the financial freedom junkie podcast, right? And so part of why we're here is to give people coincidentally, uh, perspective into how different people view. Or how different people define financial freedom. So what does financial freedom mean to you?

Gabriel:

I feel like financial freedom means having the ability to spend without having to stress so much the kind of thought process of putting that money into that expense if that makes sense. So just having that lifestyle that you want, I think that's really kind of like taking a page out of Tim Ferriss book, the four hour work week, more so the lifestyle over anything else. It's not the dollar amount in your, your spreadsheet of how much money you have, it's more so, you living the lifestyle that you want? Do you have a roof over your head? Do you have food on your table? Do you have a hot shower? I think those are the things that people need to strive for, more so all the kind of like superficial things about money on social media. Like when you go on the internet, you see a bunch of 19 year olds driving Lamborghinis in Brickell in Miami. And it's just like, is that reality? Maybe there are and to each right? Like maybe there are 19 year olds making a lot of money and driving Lamborghinis. And, but everything on social media about finances and money has become this thing of like, here's how to make 50, 000 in a month. And it's almost like it's out of touch. So it's not a number to me. It's more so a feeling. I think it's a feeling and having that flexibility in your own life.

Adam:

And I really appreciate that because so many different celebrities and echoed this idea of like, you'll get there and then you'll realize that's not it. Being rich is not it and having the money is not it like there's way more to it I think the idea like you, you, you said having sort of like an attitude of gratitude is huge. I think that's what you were talking. I think that's one of the things you were talking about, this attitude of gratitude and, and trying to use that. And also. In a way that is going to just enhance your life and the lives of the people you want to be around. The lifestyle.

Gabriel:

Yeah, for sure, man, like, I think there's too many people out there promoting money as this thing. Like, if you don't drive a Lamborghini, it's like, oh, man, like, you're not doing it right. Most people just want enough to live the life that they, they want to live, whether it's, you know what I could go out to eat a couple of times, I could spend money on myself to maybe buy myself a couple nice shirts, um, things like that, support your family. That's that's where my goal is. I just want to help people understand money better to do that aspect of life, to actually have a better, a better, optimal life, man, a better life with the knowledge that they could acquire, um, with personal finances. Yeah.

Adam:

appreciate you for being here, um, providing this remarkable. Insight perspective and knowledge. And hopefully people can, people are going to reach out to you, um, because there's a lot more where that came from.

Gabriel:

Hmm.

Adam:

and, you know, just, thanks so much for being here, man.

Gabriel:

Of course, man. Thank you, man. This is one of many, man. We'll, we'll do this again. We'll do this again, man. This is a, this is a very, um, awesome conversation, man. I, I genuinely enjoyed this one.

Adam:

All right, bro. Take it easy. Thanks so much for sticking around and I hope you enjoyed that conversation with Gabe. Be sure to follow him on Instagram at wallstreetpapii. Papii is P A P I I, wall street P A P I I, and of course be sure to follow our podcast if you haven't already. Until next time. Oh, and one more thing, quick disclaimer. This content is for general informational, educational, and entertainment purposes only, and it is not financial, tax, investment, or legal advice. See full disclaimer at financialfreedomjunkie.com/disclaimer.

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