Dentists Who Invest Podcast
Official Podcast of the Dentists Who Invest platform. Talking all things investing, money and finance with a dental spin. Have you ever wondered how you can grow your wealth and protect your hard earned money as a Dentist? We've got you covered. Featuring famous guests such as Andrew Craig, Edward Zuckerberg and Benyamin Ahmed we delve deep into EVERY aspect of finance to educate and empower ALL Dentists.
Dentists Who Invest Podcast
Bitcoin Predictable... Or Not So Much? with Paulina Karavella
You can download your FREE report on how you can avoid financial mistakes as a dentist using the link just here >>> dentistswhoinvest.com/podcastreport
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In this episode, Paulina Karavella from Glassnode gives us the lowdown on her journey into the world of Bitcoin and cryptocurrency. It all kicked off back in 2014 when she first got wind of Bitcoin during her master’s thesis. Fast forward and she’s now all over the data science behind crypto. With Bitcoin heading towards its all-time high, Paulina’s here to remind us that even with all the hype, we should still be taking a long-term, steady-as-she-goes approach when it comes to investing in this volatile market.
We also dive into on-chain data which is like having a live feed of every trade, transaction, and market movement. Basically a real-time look at what’s going on in the crypto world. Paulina breaks down key things to look out for, like the halving cycle, coin days destroyed, and how the big players (whales) can really shake things up. Plus, we chat about realised vs unrealised profits and what that means for the future of crypto.
We shift gears to talk about the challenges crypto exchanges face with transparency, especially when it comes to tracking wallet ownership. We also have a chinwag about Bitcoin’s growing role in real estate and its rise as legal tender in places like El Salvador. And don’t miss the story of Benjamin Ahmed, a young lad making waves in the NFT world—proof that there’s far more to cryptocurrency than just the coins. Stick with us for a fun, yet insightful chat about all things Bitcoin and crypto!
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Disclaimer: All content on this channel is for education purposes only and does not constitute an investment recommendation or individual financial advice. For that, you should speak to a regulated, independent professional. The value of investments and the income from them can go down as well as up, so you may get back less than you invest. The views expressed on this channel may no longer be current. The information provided is not a personal recommendation for any particular investment. Tax treatment depends on individual circumstances and all tax rules may change in the future. If you are unsure about the suitability of an investment, you should speak to a regulated, independent professional.
Crypto is something we haven't talked about in absolute ages in the Dentists who Invest podcast, and you know what it feels like a good time to begin talking about it now, because Bitcoin is close to its all-time high. Obviously, we just want to warn everybody listening to the podcast that it's probably not a good time to get into crypto or add to your crypto bags if you want to make more money in the short term, because this is precisely the point that people start to get hurt. But you know what I want to say hurt. What I mean is they can lose money very fast. If you have a long-term perspective, it's always a good time to buy crypto or at least that's what the data has told us but remember, don't put the family flipping house on it, and don't put the family farm on it either, because it's not that kind of asset. So whilst we're advocates crypto, we're also advocating a responsible message for crypto, and it's very important to reiterate that once more.
Dr James:On the Dentists Who Invest podcast, I've got a really cool guest with me today. Her name is Paulina and she works for Glassnode, which is a company that specializes in crypto metrics, and some crypto aficionados in the audience may or may not be familiar with Glassnode. I've actually heard of Glassnode before, way back in the day, so it's cool to have Paulina with us today, and one thing to remember is, whilst we are talking about crypto, we're going to be talking about the metrics. We're not going to get too technical, and whether you're a crypto fan or a crypto not-so-fan and you've yet to dabble in that world, this podcast will be engaging and informative for you. Paulina, how are you?
Dr James:Great thank you. Thank you for having me today. Hey, listen, it's my pleasure. I'm looking forward to learning, like I'm sure a lot of the guests are. Let's talk about okay, let's keep this super snappy. Why are you a believer, with a capital B for Bitcoin, in Bitcoin Polina? Or maybe you aren't Bitcoin.
Paulina:Polina, or maybe you aren't. Well, it all started back in 2014. I was actually writing my master thesis on the price of Bitcoin and I was trying to predict the price of Bitcoin on Chinese exchanges because back in the day, this is where most of the trade was going on. So I really got into it when the price of Bitcoin was sort of $400, $450. Oh man, those were the days, yeah yeah and guess what? I still haven't bought it.
Paulina:I didn't buy it at that point, um anyway, um, yeah, and I guess yeah, since then I I sort of because I'm a data scientist so I work for I used to work for big companies like the Big Four, consulting and so on, because back in 2014, 2015, bitcoin was not really or, in general, cryptocurrencies 10 month cryptocurrencies was not very well spread and not many jobs around it, basically. So I went into IBM first and actually they did some courses on crypto, which I, which I also attended, but I sort of forgotten about it for many years, until just recently or last year when I joined Glassnode and this is where my whole, you know, crypto story just began again. So it was like shocking for me how many things changed, what happened, how many other cryptocurrencies, altcoins, stablecoins so it was nice to see this change and nice to go back into where I really wanted to be originally.
Dr James:Yeah, because it moves fast, right crypto? So that period of time in terms of a hiatus, it's like flipping night and day. I mean, was there even altcoins back in 2013? 14, I think there were some right.
Paulina:I think 2011 was all points it wasn't really like known of, it wasn't really spread. So, yeah, I think I really focused on bitcoin at that point. Ethereum wasn't even a thing back then. So you told me something really interesting just before we hit recording this podcast, because think I really focused on Bitcoin at that point. Ethereum wasn't even a thing back then.
Dr James:So, yeah, you told me something really interesting just before we hit recording this podcast, because you and I were talking about the history of crypto and Bitcoin and everything along those lines, and I and I said, right, Paulina, we should really be hitting record right now, because you and I are just going to talk forever and then we'll have to go and do the podcast after that and that might be like an hour or two of us chatting before we actually do anything. So we drew a line under it. We said, right, let's hit record, let's continue this conversation on the recording. And you were talking about 2013, 2014. And you were saying that one of the big problems with the space back then was that people had their money on crypto exchanges, but they didn't actually have anywhere that they could take it off the crypto exchange, or at least it wasn't common knowledge how that was done, because now we have hot wallets and cold wallets and everything along those lines. Presumably they had hot wallets, but people just didn't know how to use them back then.
Paulina:Yes, exactly, and I remember having a lot of conversations with people who were willing to invest or were very interested in Bitcoin, but they actually didn't, or they just invested some. Actually they didn't, or they just invested some peanuts because they didn't know whether they will be able to withdraw. And, including myself, I was one of those people and for me, the investment of back then of, you know, 400, $500 were still quite a lot, given the student budget. So I think all of these things were given the student budget. So I think, um, all of these things were, um, unclear to everyone and even if people put the money into the exchange, they they haven't withdrawn. Like there wasn't many people who withdrew that point at that point, so it wasn't. Yeah, we didn't know what was going to happen back then well, you know what?
Dr James:it's interesting because that was where, when there were, that was the mount gox era, right when everybody had their crypto. Yeah, mount gox as a platform which was notorious for getting hacked continuously, which still how can I say this the the fact that that happened a lot in crypto still echoes to this day, insofar as its reputation for people pretty easily uh, they started repaying um just now, I think back in july, but they postponed it to next year.
Paulina:But it's taken 10 years.
Dr James:I'm surprised they're even repaying it. I mean, I'm surprised that's even happening, but yeah, it's taken 10 years. It's a good thing that it's happening, but wow, what a length of time to be waiting for your money. That's crazy.
Dr James:The other thing I was going to say was I remember in 2012, 2012, my friend he went to buy a bitcoin because he wanted.
Dr James:There was some website that he was using and he only accepted payments in bit time.
Dr James:God knows what he's buying, I don't even want to know, but anyway, he was using this website, the only accepted payments in bitcoin, and I remember he had to go to the train station in leeds and you had to physically meet with the person to get the bitcoin, which just doesn't happen nowadays. So, anyway, I'm quite interested to the dynamics of that, how that actually worked, but anyway, that's how things were done back then in the crypto space, which is fascinating. Anyway, we said we were going to talk about the metrics of crypto today, and when we say metrics, what we mean is the numbers that it's a good idea to keep an eye on, to analyze, because they do have some predictive merit in the market. But we just want to caveat everything that we're about to say, Paulina, with the fact that we want to make it clear to the audience that obviously nothing is 100% predictive in nature, especially whenever it comes to investing. If anybody tries to tell you they can predict the market short term, I would definitely.
Paulina:They're lying.
Dr James:That's a big red flag, in my opinion, whenever it comes to somebody's investing knowledge. Naturally there's correlations, but it's never going to be 100%, and when I say it's never going to be 100%, I mean it might even be like 20, 30, 40% correlation, something along those lines. So it's important to bear that all in mind. That's right, w all right, then. Should we jump in with the metrics? Paulina, what's your and I? I think? I think a good.
Dr James:I'll let you take the lead on this because I know a little bit about this world, but obviously this is something that you do day in, day out. So, let's say, we're talking about crypto investors, so not traders. We're going to park that conversation. Maybe we'll come back to that another day, another time. It's not really my style personally. We're more talking about crypto investors, so people who are buy and hold, and maybe they're just looking for a little bit of an opportune point to enter the market or get a little bit of an edge on everybody else yes, exactly, um, I think that's a good way of um of describing it.
Paulina:Basically, what we're trying to show here is some signals or some points to what we think might, you know, impact the price in some way, and where is the right time to, like, actually enter the market and when is not the right time to enter the market. So I guess, just to maybe underline how important this on-chain data is, that if you compare it literally to a survey, like when you, when you create a survey, like if it's, you know, scientific or non-scientific, you you want to show people's behavior, right, and you, literally you can't test the whole population. You just take a snapshot of the population big enough that will, you know, show you or illustrate how these people behave. But I guess with on-chain data you know that's not the case. We have the whole population, so we see, like literally, all the trades, we see the volumes, we see the number of addresses, active sending, receiving. So I think that's the actual beauty of this data that it shows you like literally everything. So I think this is just a good thing to underline at our beginning.
Dr James:Good stuff, okay, cool. Well, I imagine there's a little bit of a hierarchy in terms of what signals you would look at, and I get that it's never going to be as discreet as this is the most important number one, this is number two, this is number three, but there's got to be like that top, that sort of special category up here, like these are the big a macro level or the four-year cycle level, then a lot of people are saying that there is no chance for you to lose right within this four-year cycle between the housing.
Dr James:According to the data right yeah, yes.
Paulina:Historically, you know, historically, yes, that's right. But if you look closer to the epochs or the time in between the halving and see what is the return or what is the price or how the price behaves, it's not the same, right? The last two halvings, I think the last halving gave you a 600 percent increase in the price. The previous halving gave you two thousand percent, right. So you see, the the first halving I'm not even talking about because it's like it's monstruous, it's a big number, um. But basically this actually shows you that the increase in the price as the asset matures, the increase of the price is different or it's sort of lower. So I think that gives you also an idea that finding the right time to go there not just entering anywhere anytime and just waiting for that four-year cycle to pass, but entering at the right time is going to be more and more important. So, yeah, that's the four-year cycle as a macro sort of indicator.
Dr James:Absolutely so. The halvening is our first macro signal and what the halvening is. For people who are new to the crypto world, that's probably a 20, 30-minute explainer in and of itself, but suffice to say it's the stage at which the supply or creation of new crypto or bitcoin is halved. That's not quite what it is, but it's something along those lines. So, naturally, if you've got like a river and it's flowing and then you have to flow over the river, there's less water for everybody to go around, so it's more scarce, so the price goes up yeah exactly um actually another thing that you can look at, and I think this is quite relevant in the current market because we are um sort of around this range of 70k.
Paulina:We actually hit it yesterday and, um, you know it's it's close to the all-time high um again.
Paulina:So I think what you want to know, know as a signal not to buy actually is if a bunch of people from the previous bear markets take fat profits, because if that actually happens, then this is a signal not to buy. And the way to actually measure it is through point days destroyed and the Realized Profit. So actually, on the Realized Profit, you see how many people withdraw or how many people take the profits. And you also want to look at the cohort that has been keeping the coins for quite a long time. So there is some sort of indicator that is called Coinbase Destroyed, which is a number of coin and the number of days since they were last moved. So even that the number of days that they were last moved gets higher, um, and then you know that the coin days destroyed and also the the number of coins is high. Then it gives you a signal that you know this big, smart money is. You know taking the profit is probably not the right time, because there might be a change of the of the direction.
Dr James:So that's when I would not buy 100, and that completely makes sense to me. The day that the big guys and girls start selling well, that's probably a top signal. So the is, that's the whale, so to speak.
Paulina:Right yes, exactly so that. Yeah, that could refer to also whales and how the whales behave on the market oh, I see.
Dr James:So it's not necessarily related to the size of their wallets, it's just pure and simple realized profit on the platform, measured on a daily basis, or something along those lines.
Paulina:Yeah, exactly it's just not the size, is the like number of coins that were last moved um. But also, you know there is some caveats in here, because if you look, okay, the realized profit is already no profit that is taken. But there's also another sort of angle to it, like what you can look at is the unrealized profit. Um, so that's the profit that you know exists but it's not realized. So you know, if it's high, then that means. Or you know, if it's super high, that means that there is no, so there's only sellers, right. So that's when you don't want to buy um, because you know like people sooner or later are going to sell.
Dr James:And vice versa. I'm going to say that there's unrealized and realized losses which are probably more bottom signals.
Paulina:Yeah, yes, I think actually realized loss is one of my favorites because it's very brutal. It shows you the price and it shows you that if the realized loss is very high, then that correlates with when the price dips. Literally the guys who probably bought at the very top and then just start selling and panicking and selling, thinking that the price is going to go lower, even lower, so I'm going to just sell now, but it turns out that they are at the bottom. So, yeah, you can see those spikes and very clear signals there that if the realized loss is high then it correlates with this price drop and that's when you actually want to enter the market.
Dr James:Yes, or certainly. It's an indicator. One of many. It's a indicator, isn't it? What was I going to say? Did you say you use Coinbase?
Paulina:Myself. No, I don't use Coinbase, oh sorry, sorry, sorry.
Dr James:Just to clarify what I just said In terms of where you're getting this data from, this is from Coinbase, is that correct?
Paulina:Actually that's Glassnode data.
Dr James:Oh, I see. So it's not from any one exchange in particular, it's across multiple exchanges in particular, it's across multiple exchanges.
Paulina:Ah, yes, actually, if you talk about yes, if you talk about exchanges, then it's a macro signal. I'm not talking about the adjusted realized loss, I'm just talking about as a broad scope.
Dr James:Oh, I see.
Paulina:Including everything basically.
Dr James:Got you Because I thought maybe it was my ears. I thought I heard you say Coinbase earlier, so I assumed the data was from there, Because Coinbase is one of the biggest, you know, and it's one of the biggest platforms.
Paulina:That's right.
Dr James:But where I was going to go with that is it's also considered an entry-level platform for a lot of people, Whereas, yeah, something like Binance for the maybe slightly more experienced user. So where I was going with that was I was gonna say that these signals might be particularly pronounced on one particular platform over and above the other, because people who are newer to the space well, they've got shaky hands a lot more. What I mean is they're way more likely to sell, way more likely to take profit rather than to be in it for the long term.
Paulina:but anyway, I don't know if that's something that's relevant or not I guess, um, yes, it is relevant um, but I would be cautious about one thing. Actually, if you're saying about exchanges, um, there is a lot of, so if you do whale watching um, then that's probably not not the right thing to be doing, because, um, there is a lot of comments and usually it's the people who, who you know, have the the stranger's theories, and they are the most loud um that, okay, coinbase moved, like that, that much capital from the exchange and it happened to go into this specific address and and then you're thinking, oh my God, like there's something happening to Coinbase, that everyone is withdrawing what is happening? And shall I be withdrawing? And it starts this whole panic around it. But most of the time and I see it because I was actually dealing with a lot of this data is that it's an internal transfer.
Paulina:There is some specific patterns to that that, like, a lot of exchanges are using and turns out that, you know, they, they just um move in between wallets, and that happens a lot of with the cold storages or like vaults um that they have because they don't keep it in one specific wallet, but they usually, you know, ship the funds in between um, so if it was like one thing, um, to say not to do is probably like whale watching and listening to people on twitter just saying like strange theories, that things are like most of the time right, there are some situations where where there is some withdrawal, withdrawals, um, but most of the time it's actually internal.
Dr James:Interesting because I was the biggest inverted commas whale watcher of all time back in the day I because I was the biggest inverted commas wheel watcher of all time back in the day I was like if the wheels are doing it, there must be something to it. But you say not so much, don't pay attention to so much yeah, I guess.
Paulina:um, there's one thing is again, like no one holds the truth, like you don't know whether this account or this wallet is specifically Coinbase. It's a knowledge based on some sort of analysis, some factors that we take into account, but there is no, except for the proof of reserves, that the exchanges are published. Actually, coinbase is not one of them. They are not sharing it publicly, but most of the exchanges are actually sharing the proof of reserve. So this is exactly what you can trust of how much they store. But you know, if it's just a regular wallet, then yeah, I'll be careful.
Dr James:Interesting. So the metrics we covered so far, those are the biggies like the ones we most want to watch Any more in that category, the ones we most want to watch Any more in that category.
Paulina:Yeah, I guess one interesting index that I actually looked into just recently is called Chopinus Index, so it basically tells you if the market is on a trend or some sort of strong trend or if it's going sideways. Um, and there's like even a term called chop solitation, which is literally what is happening right now. Um, because if you're looking at the price in the last few months, it's like literally oscillating around some small range. Right, it's not going like literally um, anywhere. It might change after the elections but uh, so watch out.
Paulina:But, um, actually, choppiness index is um, it's nice because you can see when it recharges. So you see when you know, you see the price and, um, you know you have like a zero to 100 and if it's close to 100, then that makes makes the trading is going sideways and then once it reaches the high, then it goes back down again, so the value is closer to zero. Then it suggests that a market is in a strong trend. It wouldn't tell you what trend it is, it wouldn't tell you if it's going to go up or is it going to go down, but this is something to just tell you that watch out, there is something coming. I think right now this Japanese index, if you look at the moving average like monthly moving average, it's actually going down. So something might be coming, which everyone is expecting anyway.
Dr James:But I think it's just a nice way of just being prepared that something might be going if the index goes down. And is that calculated?
Paulina:from the price, a bit like a lagging indicator or some sort of on-chain data. No, it's a little bit more complicated. I'm not going to go into that, but it's a bit more complicated.
Dr James:There's a bit more to it, and it's literally called the choppiness index. Choppiness index Choppy like chop, chop, chop. Like that yes.
Paulina:Yes, Then I just chop it right. It's a chop-solidation.
Dr James:Okay, I like that little Putman tool word. You got there chop-solidation plus chop, married together. There we go Anyway. Okay, I like that Cool. So we got chop consolidation. That's going to be playing in my head all day now. Anyway, we got the choppiness index. We got unrealized prices and unrealized profits and unrealized losses. And then there was one before that as well. What was that?
Paulina:Also realized price Sorry, realized profit and coin days destroyed.
Dr James:Interesting and, outside of those, any more ones that you believe have a good bit of validity to them.
Paulina:Yes, Actually, there's one interesting one that I thought might matter in this case is the price drawdown from all-time high. So it's literally the percentagedown from all-time high, so it's literally the percentage difference from all-time high, and usually what we're seeing I think again, this is sort of a strong indicator whether it's a bullish or bearish market is that if we are below 50% from the all-time high, then I see, based on the data, that usually it's like a trend, so it happens for quite some period of time and it's more of a bearish market. It's actually interesting because you know again from the data, it takes around 700 days to recover from the bearish market. So I think it just gives you an idea that once you hit this 50% difference, then that's probably going to last for some time. Or if actually it lasts for some time, then it is a bearish market and you have an idea that it's going to last for some time.
Paulina:At the moment it's actually very close to all-time high, so it's literally a few percent different. And in general in the bullish market, on average we'll see 30% drawdown Right now. In these last days it was between 10 and 20, right. So it's actually a very, very bullish market right now, um, we don't know how long it's going to last, but again, it just gives you an idea of the cycles that it comes back and you know.
Dr James:On and on it's an interesting indicator, right, and yeah, we definitely don't want to do everybody to get the impression where they're going to listen to this podcast and buy their first crypto or jump straight in and go all in running along those lines, but it's, it's certainly, it's certainly food for thought and you know, another thing I would say is, historically, when it gets to this phase of the bull market, in a sort of chronological sense, it's usually about september, october, november, december, the latter end of the year that follows the halvening, which things go crazy, but then again, we don't have to look too far back to 2020. When this exact thing was happening, it hit a double top, basically, and I think it just broke through its price. No, it wasn't 2020.
Dr James:It was 2021, wasn't it? That was the last time.
Paulina:Yeah.
Dr James:Yeah, I remember that was the top and it had like a. It died in like july time the price. And then it came, it rallied straight back up, it took the it just. It made fresh highs just about and everyone was like, okay, it's gonna go crazy, like 2017, 2018, let's go. And it just never quite happened and a lot, of, a lot of people got stranded up there.
Dr James:And they're still stranded up there, man price wise, until like literally today, because it's only it's like if you would have bought at 69, I think that wasn't it 69 400 and something was the previous all-time high and obviously right now, as you speak, it's at like 70k uh, just over 70 000. So anybody who bought back then is literally just exiting now for a profit if that was their plan the whole time, and we're making this podcast on the 31st of October 2024. So it just shows you how volatile it should be, and we just need to remember that.
Paulina:But, yeah, you also need to remember that the market changes, right, we had this introduction of the ETFs. Literally since then, you know, the price drawdown was quite low. Right, we have a lot of trading going on, a lot of new capital, you know, especially BlackRock, in this recent few days. So this last six months were really, you know, quite even though the price is, you know, sort of stable. But there was a lot of relocation of capital, right, so we had Mt Gox saying I think they sold so far around 160,000 Bitcoins. We had German government selling around 40,000, but still the price has not gone down. Right, there is clearly a demand and there's clearly a lot of relocation of capital which keeps the price um high bullish, indeed, bullish, indeed.
Dr James:Paulina, you're a bitcoin, you're a hodler, are you? I'm all-time hodler, yes diamond hands I think they call it right where you can build on despite everything. When did you make your first entry into crypto? In terms of what year? Was it just out of curiosity, did you say?
Paulina:2014, actually 2018, oh, yeah, I bought ethereum, then, um, I bought also iota. Iota was like a very interesting project that literally spiked because microsoft bought it and then it like never recovered after then thanks, microsoft some failures as well, but uh yeah, since 2018 thanks microsoft.
Dr James:Uh, yeah, well, I mean it's. It's interesting, right? Because I mean, with a lot of the altcoins is in the smaller cryptos, and by altcoins we're defining that as everything outside of bitcoin. Some people consider eth Ethereum an altcoin as well. Sometimes people consider Bitcoin or Ethereum a category of their own. But whatever somebody believes, we're talking about the little, teeny, tiny ones. The philosophy is that people just game those most of the time to get more Bitcoin. But by the sounds of it, you're a long-term or at least you were a long-term believer in IOTA.
Paulina:Well, yes, yes.
Dr James:I was.
Paulina:But again I think, yeah, I would prefer still the assets that are more mature. So Bitcoin, for example, is sort of a new safe haven. They consider it as gold and it seems like it moves around with the stock market as well. So it seems like sort of, as I'm on the safer side, it's safer investment, um, at the same time, on this, on the on the other side, actually, there is a lot of. You know, the risk appetite for people as you make profits is growing and a lot of people are going to altcoins. You know, nowadays especially, just just yeah, just recently there was a lot more um risk acres, um in the space of outcomes. So maybe, maybe one day, maybe and nfts as well.
Paulina:Yes, that's another thing, yeah.
Dr James:Is that your forte? No, I don't have any NFTs no-transcript which I was rather proud of non-fungible teeth. I was pretty proud of that back in the day anyway, they might make a research, a resurgence, who knows? On the dentist universe community, sometimes it would be fun. What I always thought would be fun it's like with the nft nfts is to give them out to people and they can use them as tickets to events and cool things like that and sell them to each other and what have you?
Paulina:yeah, no, no it's. It seems like it's sort of a new asset space here. It's you know more for, like, arts and um. I'm not really on this part, but it seems like it's promising. Um, but I would like to watch it a little bit more because you know, in the end of the day, what's the value, that or what the price you would like to pay for. You know something, something that is on chain, which is like a picture or stuff like this. So you have to be careful, like what you really trust, um, and if you really trust in the project or stuff like this. So you have to be careful, like what you really trust, um, and if you really trust in the project, but also you know if you want to go into this sort of risky investment. That is, it's, yeah, probably good to diversify so you're not putting all the eggs into one basket, because you never know, like you knowing the project is probably like important and diversifying as well okay.
Dr James:I'm curious to know and obviously we just want to caveat this, with no financial advice, and this is always going to be a speculative prediction. Naturally, from what we've gathered and from talking to you today, you're a believer in the crypto space. What does the future for crypto look like for you, polina? Why do you believe in it so much?
Paulina:Yeah, actually that's a very good question. It's like a very, very broad topic. I believe it, and I think there is a lot of people ask me like is it even possible if crypto is going to replace the centralized money? And I think we're quite a long way from that. But a good thing is that you know there is some new developments in this space. For example, there is stable coins that are gaining a lot of attention and they are now actually backed up by, you know, us treasuries the short-term treasuries and they are actually being used by a lot of people in poor countries because they don't trust their own government or their own central banking. So it seems like there is a future and the space is moving super fast.
Paulina:You have to be careful, of course. I mean, do you want to use it for investment or do you actually want to use it to buy a house? Right, and I see there is some sort of adoption towards this. El Salvador actually is a good example in that, because they made a law that is now considering Bitcoin or cryptocurrencies as a legal tender. How they ended up with it, we don't know so far. I think the story is that they started buying a lot when the price was back in a bearish market and they were criticized a lot because they had to fund it somehow. They had to raise taxes, like people literally were affected after that, and you know they had this whole, I think, application that they developed, which was also hacked. So it wasn't really a good start, but I think you know, now that the price has gone, it seems like they are moving towards some direction like they are.
Paulina:They are moving towards some direction, um, but yeah, I guess I've been speaking just recently with some sort of agent, um and he, about properties and and whether you can buy properties, um, with crypto, and it seems like it's possible here inside bruce. It's, it's, it's possible, you can do it. You know, if it's a one-day transaction, then it's. You know, if you want to make a one-day transaction, then yeah, that's fine. If not, then it's a little bit more complicated, because you know what's the value of Bitcoin, right, like you have to peg it to something. So if you make this sort of contract, because it's a volatile asset still, not just Bitcoin, but in general you have to peg it back to dollar, for example, or to gold, and I think this is something that we're not going to get rid of very, very soon again because of the volatility of this asset class.
Paulina:But I think, yeah, 47% of traditional hedge funds hold some crypto already. Right, so that tells you something like you can legally invest in crypto through the ETFs now. So it seems like the market trusts at least I'm talking about Bitcoin, but in general, the cryptocurrencies, the technology, blockchain and so on. And blockchain in general is actually used not just for crypto, but you know, in other places, you know, as a technology that is being introduced. So I think there is slow adoption and I trust it will progress with time.
Dr James:If you like crypto, you might also like episode 221 of the Dentists Who Invest podcast, in which we interview Benyamin Ahmed, the 13 year old boy who made 300,000 pounds from creating his own NFT community.
