What You Need to Know About Cryptocurrency

What You Need to Know

About Cryptocurrency
Featuring Robert Kiyosaki and Special Guest Expert, Jeff Wang

Introduction

People either love or hate Bitcoin. Or, they want to know more about crypto and
whether it is time to get in. But like any investment, knowledge is what helps manage
risk. People evaluating cryptocurrency need to know, what’s happening with crypto?
What’s really going on?

In this Rich Dad Special Report, Robert Kiyosaki sits down with his Rich Dad Crypto
Expert and content creator for the Rich Dad Cryptocurrency newsletter, Jeff Wang, to
talk about the current state of cryptocurrency and discuss what the future may hold.

What You Need to Know About Cryptocurrency

ROBERT KIYOSAKI: Welcome, Jeff. Let’s jump right into it.

Where do you put your money? I started off years ago saying cash is trash. And it
is happening more and more. With technology making things more efficient, prices
should be coming down, but the Fed keeps pumping it up. So, we have people in the
middle, the people that are stuck having to work for money. They’re screwed. So that’s
why people have got to understand the future of money lies in crypto or Bitcoin and
blockchain. What do you have to say about that?

JEFF WANG: Yeah, so we can talk for hours on this. So, I’ll try to summarize as much
as I can.

Let’s start with Bitcoin. Bitcoin is a decentralized ledger. Think of an Excel sheet that
nobody owns. But everybody that has a cell in the Excel sheet, they can only control
the money coming out and they can receive money.

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Another interesting thing about Bitcoin is that it isn’t a fixed supply. As more Bitcoins
are minted, it gets less and less inflation. I think it stops around 21 million Bitcoin.

And it’s not pegged against anything. You can say Bitcoin today is $51,000. But it
doesn’t matter, Bitcoin is by itself, it’s not pegged to any world currency. As a result, if
you have the US dollar getting printed like crazy, Bitcoin actually is inversely correlated.
So basically, as the dollar value goes down, Bitcoin actually goes up. And what we’re
seeing right now is hundreds of billions of dollars of Bitcoin being acquired by financial
institutions. A lot of funds are buying in $100 million increments. But what’s happening
is there’s not much Bitcoin supply left. So, it’s causing an overcorrection of the hedge
against the dollar thesis. Everyone agrees that it is a hedge against the dollar, but at
some point, it might be over correcting it. And then if the dollar gets stronger, that
thesis is going to get turned around.

KIYOSAKI: Being a real estate investor, when I see how much debt is going to default
and when all those office buildings can’t pay their rent, I think to myself, “who’s going
to bail them out?” That’s why I put my $50,000 bet on Bitcoin. It was a bet against
the economy more than a bet on Bitcoin though. I’m betting the government will keep
printing more money. That’s my philosophy. It’s not a very sophisticated philosophy, but
I’d rather have Bitcoin than dollars right now.

WANG: So, I want to talk about what’s going on with Ethereum. Because I think
this is pretty crazy. Ethereum took Bitcoin’s decentralized ledger idea and added a
programmable logic on top of it, so people can develop code on blockchain. So,
what you have is decentralized code, as well as a currency. You can take financial
applications and put value on it and then transfer it over the chain. But in 2018,
Ethereum came up with the initial coin offering (ICO) concept. You can mint new tokens
on top of Ethereum. And that became a huge fundraising vehicle in 2018, which
ultimately resulted in a big bubble pop, because there was not much utility, there was
actually not much adoption coming from that. 2020 though changed everything. By the
way, just for reference, Ethereum is up 700% since last year, and Bitcoin is up 300%
since last year. So that is just an idea of what’s going on with the divergence of Bitcoin
and Ethereum. However, Bitcoin and Ethereum, are very tightly coupled.

So, if you want to bet against the government, it’s Bitcoin. If you want to invest in the
technology, it is Ethereum. There are a lot of projects within Ethereum that I think are
very promising as well.

KIYOSAKI: So Ethereum has some use to it, that’s what you’re saying?

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WANG: Yes. There were a lot of ideas, a lot of technology, scaling, all those ideas
came out in 2018 and 2019. The first thing that really got adopted was in 2020. And
that was called the decentralized exchange, but someone or a couple of projects
made use of a concept called Automated Market Making. Basically, what that means
is you can deposit money in pools, and then people can trade out of those pools. So,
at any moment in time, I can just go on, use my wallets that has any number of tokens
and swap it with other tokens. So, there’s always liquidity. And in 2020, that concept,
exploded. It got to the point where there is more volume on decentralized exchanges
than centralized exchanges. So, 2020 was the year of DeFi—decentralized exchanges.
2021 is going to have a whole new set of services that we can talk about as well.

Today, you have to login to a broker like E*TRADE or Ameritrade to trade a stock, right?
That whole concept is going away now. With blockchain, you can represent stocks on
blockchain and trade it and you’ll always have liquidity.

KIYOSAKI: So, are you saying, E*TRADE is toast?

WANG: It’s trending that way. Centralized exchange volume is starting to rival the
decentralized exchange volume in the crypto space for now.

KIYOSAKI: Wow. So, what happens to stocks then?

WANG: I think stocks will always exist because they have fundamentals behind it. They
have actually equity and ownership behind it. What is happening now, is a concept
called synthetics. So real-life assets are being represented on tokens, whether that’s
gold, whether that’s the US dollar, or whether it’s even Apple or Tesla stock, that’s all
being represented on blockchain through different means of price feeds and staking
and collateralization. So basically, you take all these assets, you make them secure,
and then you make them tradable on decentralized exchanges. That means anybody
with a wallet can trade these assets and they do it at any time. They don’t have to login
to anything. If they have the wallet, they can trade.

KIYOSAKI: Yeah, that sounds like to derivatives to me. That’s what brought down the
real estate market. They would take a mortgage and then they would chop it up and
sell it to other people.

WANG: Yes.

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KIYOSAKI: So, they’re now taking crypto and making derivatives out of it, or they
could do it with anything. You could put real gold in it.

WANG: Again, so crazy in 2021, because there is a derivatives market forming as

well. You can do options trading, Forex exchanges are getting launched soon, with
IMJ. There’s a lot of different projects that are popping up and these projects, are
where all the yield is. So, a lot of the synthetic projects are up about 500% in the last
three months alone, because people are already investing in Bitcoin and Ethereum,
they need other places now to put that money. And then one of those areas is the
synthetics that we’re talking about right now.

KIYOSAKI: So, what holds it all together then is blockchain?

WANG: Yeah.

KIYOSAKI: Because blockchain is the contract?

WANG: Yes, blockchain makes it, not just secure, but transparent. And then you can
audit the code. You can see everything is reasonable and not suspicious, because it’s
on blockchain.

KIYOSAKI: Blockchain is a decentralized system, right? Everybody is a part of it. It’s

not like the Fed is in charge of it.

WANG: Exactly. And before people just weren’t using it, right? You could say it’s
decentralized, but it’s slower. And it’s hard to put up some new infrastructure to get it
working. That was a problem in 2017 to 2019.

KIYOSAKI: Yeah. But that will be solved because you guys will speed it up fast
as you can.

WANG: Yeah. So, the speeding issue is being solved right now. And I think the barriers
of entry are being eliminated as well, too.

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KIYOSAKI: Yeah, because you guys don’t have government regulation.

WANG: Well, I would say it’s more like the software has made it much more
intuitive to use.

KIYOSAKI: If I were to go and try change Wall Street’s system, let’s say, there’d be a
lot of people who would be upset.

Because they’re making too much money the way it is. You would have to go to
Congress and the Senate and make all these changes. You guys are making these
changes on the fly just because I think you guys trust blockchain. You don’t trust
human beings.

WANG: Actually, I never thought of that. It’s almost impossible to pick winners that will
be the same winners in three years from now. Because blockchain moves so fast.

If someone deploys a contract that looks great, everybody jumps over and uses that
instead. No one is really safe in blockchain. You might have a project that looks great
today, and then another one comes out that’s better, then everybody starts using that
one instead. It’s kind of like the App Store, right? Like the Apple App Store or Android
App Store. Everybody can just deploy their apps whenever they want. Except right
now there is extra financial value tied to these apps and it’s crazy because they’re
all representative of real-life financial services, and they’re all being represented on
blockchain.

KIYOSAKI: I have a lot of gold, silver, Bitcoin, and Ethereum. I try to get as much
as I can right now, because the government is screwed. We’re screwed. Our whole
economy is screwed. We’re so deeply in debt, we’re sinking into quicksand right now.
And people are arguing about whether one should have gold and silver or Bitcoin. Just
buy something! So, Jeff, what do you have to say about that? Give a message to all the
old guys like me out there.

WANG: It’s good to be diversified. I think Bitcoin and Ethereum, if you hold those two,
you’re holding the index of crypto, the health of crypto. Because if Ethereum goes
down, I would expect all the other crypto assets go down. And vice versa, if Ethereum
goes up, I’d expect these other crypto assets that we talk about to shoot up even
more. It’s kind of like a derivative of Ethereum, it swings wider.

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KIYOSAKI: A derivative is an interesting, interesting phenomenon because you’ve

gone into the mind now. You have a piece of real estate, the market is just the
derivative. And when you have mortgage-backed securities, that was a derivative on a
derivative. And that’s why when it collapsed in 2008, real estate collapsed. I think right
now, I’ll stay with Bitcoin, Ethereum, gold, silver, and hang tight in there. But for the
young people who grew up with technology, your minds are different. You can see the
invisible, where I’m still in the brain phase where I can only see what I can see, touch
and feel. So anyway, what is this thing called DeFi?

WANG: So DeFi is short for decentralized finance. Basically, it mimics real-life financial
services on blockchain. With Bitcoin, the main mimic of a financial service is just
currency, right? It’s a currency and it could be traded. In 2020, decentralized finance
focused on borrowing and lending. So, people could deposit money for interest rates
and borrow with paying an interest rate on top. And, we talked about the automated
market makers, which was the liquidity so people can trade stuff as well. Now, what
we’re seeing in 2021, are these new developments of other financial services. So,
you’re starting to see options trading, you’re seeing insurance, you’re seeing hedging.
You even see hedge funds, you’re in finance. That ecosystem is really covering a lot
of the different ideas in finance. And basically, all these things are being developed and
represented on chain. So, these are all financial services, decentralized on blockchain
that you can use if you have a wallet.

Remember with blockchain, nobody owns the infrastructure. There’s no central bank,
there’s no country. A bunch of different servers are out there running at the same
time and they all own the same code, the same chain, the same history. So, it’s
almost impossible to come in and then break the system or develop a new code that
catastrophically ruins the whole ecosystem. So, what that means is, you can build new
apps on it, you can build new services and there are malicious services out there for
sure. But overall, things that work, the things that are verified become adopted. And
you have this world computer where everybody can go in and create their own app
that everyone could use. And again, it moves fast, because when something works or
something works better. Everyone migrates to that. Everyone uses that service instead.

KIYOSAKI: Let me explain my thinking. I don’t trust Wall Street. I took three
companies public and every time I did that, I got nauseous. I just got sick at how they
manipulate, lie, cheat, and steal. That’s why I stayed out of the stock market. I know
it cost me a lot. But I refuse to jump into the den of thieves. I stayed in real estate
and remained an entrepreneur. These are things that I can control and manage. But it
sounds to me, what blockchain does is establish a broad trust and transparency.

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WANG: Yeah. And I think the key takeaway is the transparency. Everyone can read
each other’s code. Everyone can help develop and vote on different governance
decisions. And things that other people build can work with other people’s ecosystems.
Then you start forming these ecosystems around blockchain that have billions of dollars
getting poured into and out of it. So, again, the keywords are transparency and trust.

There is another project called Polkadot, which is very similar to where Ethereum was
in 2017-2018. Polkadot has that ecosystem now. Understand anybody can launch
a coin. Anybody can launch a blockchain project. But what really matters is the
ecosystem. Do you have a service that can fulfill on chain transactions? That can bring
wallets? That can read what’s on the chain? But do you have other services for testing
and for bringing apps online and all that stuff? What I’m seeing is Polkadot is actually
starting to show that ecosystem exists and it’s really catching steam right now.

KIYOSAKI: When you say ecosystem, what does that mean to you?

WANG: I would say it’s a set of services and developers that all support each other.
But if there is a barrier to entry, that barrier of entry is solved somehow. So, somebody
has come up with a way to make it easy to do something that is necessary for that
platform to run. That’s a very generic answer but basically, it’s a set of services that
work together that make all the barriers of entry go away.

KIYOSAKI: Okay. A couple of more questions. Way back when, in the 2000s. The
.com area blew up. The only ones that survived are I guess Facebook and Amazon.
And everybody was starting a .com company back in 1999 and 2000, and all these
.coms collapsed. The only one that really survived was Amazon and a few others. Is the
same thing going to happen with crypto money?

WANG: Absolutely. I think things are overheated right now. And I think this is all a
result of lots of stimulus being pumped in, lots of the stock market being up. Right
now, there’s no signal that it’s going down anytime soon. There’s no reason for it to go
down unless the dollar gets stronger. Where I see the red flags is when the dollar gets
stronger. Or if the government steps in. And they say like, “Hey, you’re not allowed to
use this wallet unless you identify who owns it.”

KIYOSAKI: Okay. Not too long ago, I think when Bitcoin was getting up to my $50 line
and it dropped I think $15,000 or something, what caused that?

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WANG: By the way, 30% swings in crypto are entirely normal. Just want to make sure
that everybody is aware that. Crypto is volatile.

There are strategies to counteract the volatility, whether it’s stop losses or taking profits
at opportune times. But the main takeaway is that crypto is a very, very volatile asset.
We have had days where in DeFi, in the fall of last year, it dropped 70% in two days
because inflation was getting out of hand. And people learn from that mistake as well.
So just make sure that that precaution is out there. If you get into crypto, you do have
to understand it is a wild ride and there’s huge swings in both directions. So Polkadot,
we talked about it earlier, but it is a new standalone blockchain. So, like Ethereum has
its own network, has its own DeFi services and all that, Polkadot is another standalone
chain, its intent is to connect different chains together. So instead of a single ledger, a
single history, a single block of code that everybody can write to, it’s actually more like
a hub of different chains that connect to each other.

KIYOSAKI: So, when people say Bitcoin is going to go $100,000, $300,000, what
goes through your brain?

WANG: I think it’s such a complicated question to say, is it going to go $100,000 or

$300,000 It’s simplifying the reality. You have to think, if the dollar keeps devaluing, then
it has potential to go that way. If there’s policies that come out that support blockchain
and blockchain adoption, then that could push those currencies up to $300,000, that’s
how I think about it.

Again, all those things I just mentioned have to happen. You need a lot of things to
happen for those things to go that high. But at the current state, I don’t think it’s very
likely for it to go to $100,000.

KIYOSAKI: Can somebody knock Bitcoin out of us out of the top position?

WANG: I think Bitcoin will always be near the top position. Ethereum will probably
outpace it. We already saw that this year. 700% gains in Ethereum versus 300% in
Bitcoin. But I do think Bitcoin will always have a place because it was the first mover.
And because right now, financial institutions hold so much, they want to make sure that
it remains the gold standard of crypto and I think Ethereum will be the gold standard
of the technology. So, the applications utility, that’s where Ethereum will have to prove
itself, if it’s going to beat Bitcoin.

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KIYOSAKI: Would you say that Bitcoin is like gold and Ethereum like silver?

WANG: I would not. I would actually say, Bitcoin is like gold and Ethereum is like
the S&P 500.

KIYOSAKI: Why not silver?

WANG: I think if you were to pick one asset in the crypto space to be “silver,” that
would be Litecoin, which is a fork of Bitcoin and that acts more like silver to Bitcoin.

KIYOSAKI: So there’s a thing called Litecoin, Ethereum, Bitcoin?

WANG: There’s so many. There’s thousands and I’d want to get into all of them.
Litecoin is just a fork of Bitcoin, it has like some better transaction speeds. It’s actually
like more of a sandbox for Bitcoin. I wanted to say Ethereum represents many, many
services that are being developed, which I think represents the S&P 500, which is like a
lot of companies represent the economy, right? So that’s why I say Ethereum is like the
S&P 500.

KIYOSAKI: Jeff, thank you always for doing your best to simplify it for everybody like
me. It’s changing so, so fast right now. And when I look at what’s coming up from
the real estate side and how many of these projects are going to collapse and then
we have our pensions which are going to collapse, that’s why I’m into Bitcoin and
Ethereum. And I’m into gold and silver. I just don’t trust the dollar, it comes down to
that. So anyway, thank you. Thank you very much, Jeff. I appreciate it.

WANG: Thank you.

Parts of this interview were edited for content and clarity.

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DISCLAIMER: This document is designed to provide accurate and authoritative

information regarding the subject matter covered in it. It is provided with the
understanding it is not providing you with investment advice and that the publisher
is not engaged in rendering legal, accounting, investment, or other professional
opinions. If legal, investment advice or other expert assistance is required, the
service of a competent professional should be sought.

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