#70 Goal “Reach $1M In Crypto By 2030” w/ Cash Flow Investors Coran & Leanne Woodmass

Today Gerbz chats with entrepreneurial power couple and cash flow investors Coran and Leanne Woodmass about their recent decision to dive into crypto investing.

Episode Links

Show Notes

Gerbz: All right, cool. I've been excited and looking forward to this. We've been hanging out for a year, pretty regularly. And crypto, I never bring crypto up. I mean, I've learned to not bring crypto up just in general in life, unless, because I've been through years where I did that pretty regularly.

But also, I know you guys had a little crypto history of some kind, maybe we'll get into that. But beforehand just tell me, I know your names, but tell the world your names what your background is in, maybe in investing or business, and what brings you towards maybe reconsidering crypto?

Coran: So Corinne and Leanne Woodmass, both Australian entrepreneurs. We've traveled the world as you have as well, building businesses and all that sort of stuff. Probably the last four years we've been focused on cashflow investing. So this is where, you and I first met in Bangkok a few years ago.

And I was talking about cashflow investing. I don't think you had a crypto thing at that time. But by then we were kind of like, we just, we're focused on cashflow only, and that's it. So yeah, that's the background.

Gerbz: Cashflow investing, full time?

Coran: Yes. Yeah, so, background is M&A advisory business brokerage. So we help people buy and sell businesses, and then we've bought a business ourselves, and been, that was a year ago, a year and a half now.

And yeah, about four years cashflow investing. So most of our questions, we will be comparing this to cashflow investing, which I know this isn't.

Gerbz: Yeah.

Leanne: Or is it?. It might be. We don't know, we got questions. Lots of questions to ask.

Gerbz: Sure. And I know you guys, oh, you work together. She's your chairman of the board and your VP of marketing. Is that...?

Coran: Something like that. I sell, she delivers. That's, the easiest way to...

Gerbz: Breakdown. So tell me then what is it about life or the internet or something that's bringing you back to reconsider crypto?

Coran: It's kind of a funny story. We were Googling house prices or real estate pricing in Prague two weeks ago, three weeks ago, almost. And because we're looking at investing in real estate in Europe, we do a bit in the United States here. And on YouTube, just searching around, came across Leon Wankum's talk at BTC Prague.

We used to live in Prague as well, so that was the extra, oh, this is interesting. He's a property developer that builds real buildings and also has a crypto or Bitcoin strategy that really made us stop and think. Like, wait a minute. Because we're about to move some assets, some cash flowing deals that are like, the capital's coming back basically.

And a few other things. It's like, where else do we go next? So a few weeks ago, perfect timing, the market took a dip and we started buying Bitcoin.

Gerbz: Hey!

Coran: There you go. Do you have anything to add?

Leanne: So Gerbz always talks to us, funnily, about crypto, when he does talk to us. And we're like, this guy can't be crazy. He's pretty smart. He's a pretty sharp guy. He definitely doesn't seem foolish with his money or his investments.

So maybe we should start listening. We've definitely, not all of our investments have won. We've definitely had some losses. Crypto has been a loss for us in the past just because we had a cash requirement at a time. And so we were forced to sell. I don't, I think we were always planning to hold forever, but it didn't work out that way.

And then when we lost, it was like this bitter pill that you had to swallow and it was harsh. But then, okay, crypto starts becoming more interesting, it's fluctuating in a way that makes you see opportunity, maybe. Friends are doing interesting things in this space and talking about it in ways we'd maybe never considered before.

So it's like why not try and see what's behind that? What don't we understand? And as investors, we want to understand what we're investing in as best we can so that we can mitigate risk. Because we're not, it's not a risk play. We're actually quite risk adverse But I think now that there's a lot more adoption with crypto it's probably less risky than a lot of people think. Because I think there probably is a base there now, so interested to hear more from you on the positives and/or maybe negatives of the day in the life of being a crypto asset holder.

Gerbz: A crypto bro.

Leanne: Crypto bro.

Gerbz: I know you wanted to say it. I love that you're rocking the Bitcoin orange glasses now too. Like, you're all in.

So, I was biting my tongue and you guys were like, alright Gerbz, we're ready to talk crypto. And I got so excited. I said put together a list, and you did, of questions. And I checked them out today. They're awesome. I wanna go through all of them. To have noobish questions at this stage is, like, so to be expected.

And I think I'm so disconnected these days from people who are like, seeing it with a fresh set of eyes, that I've lost track of what questions people have at the very beginning of their journey. You even mentioned to me, you're like, your website has so much stuff, but like, where the hell do I start?

And, I know, that's a problem. Like, even I have a problem organizing it that way. So I was very excited to kind of take a step back and go through this with you guys. So, let's just bang through questions and see where we end up.

[00:06:19] Timeframes: Getting to $1M

Leanne: So this is my question. How do I get to a million dollars of crypto assets today without it being 50 years time? Like, you know, I want it now. So, say my goal was like 2030, what would I have to invest today to be able to get to a million bucks of crypto? Like what is realistic and what isn't?

Cause if I'm, you know, back in the day you could put $5,000 or $10,000 in maybe and you get these 400x returns or bigger. Is that still possible? Is that not possible? Obviously the volatility isn't as, like it was. So volatility equals opportunity. So what do you think?

Gerbz: That's a super loaded question. Like how do I go from a hundred dollars to a million dollars? Let's go. I think about it a few ways. First of all, you said 2030. I don't think the way I'd set like timeframes, is I just think like cycle to cycle. When I say the cycle, I'm talking about the halving event. Have you guys, are you familiar with the halving? Bitcoin's halving. A little bit? Heard of it, yeah.

Day one, when Bitcoin first started, there was zero bitcoin. And the way it's designed is to issue fifty bitcoin in each block to whoever mines the block. And a block takes ten minutes.

If it takes twelve minutes, it readjusts back to ten minutes. If it takes eight minutes, it readjusts up to 10 minutes. So its block time is always roughly 10 minutes and it adjusts, we call it block time. And so every 10 minutes, 50 more bitcoin were issued to the miner who helped process all the transactions in the, that happened in the last 10 minutes.

And those are new, those 50 bitcoin are new bitcoin that didn't exist before. It's an entry in the ledger that says we got 50 more and they went to the whoever processed those transactions for everybody. And every four years the amount of Bitcoin that gets issued gets cut in half and that's the halving.

2009 I think, the first Bitcoin block happened. It was 50 bitcoin for four years. Every 10 minutes, 50 Bitcoin were issued and then in 2013 that got cut in half to 25 every 10 minutes. Now we're at I think three and an eighth bitcoin. And when this happens, it creates a little bit of a supply shock in the market because, where all these miners were making 25 bitcoin yesterday, now they're making 12 and a half bitcoin the next day.

And they're, the miners, they usually have to sell a lot of bitcoin in order to pay for their infrastructure and their electricity. So they're big sellers of bitcoin. They're the ones who provide a lot of liquidity in the market. And so this halving event, it's programmed into Bitcoin, it's going to happen.

We're at three and an eighth. It's going to be, that's a hard number, one and a half and a sixteenth or whatever in four years from now. It's going to keep happening until almost zero bitcoin are issued every block and that's in like the year 2140. And this is the way Satoshi came up with like, how do you create a new money?

Who do you give it to, and How do you issue it from the beginning? And that's the system. And so it creates this four year cycle. And I can actually pull it up here and I'll, show you guys.

This is the chart of Bitcoin where the blue turns to red is the halving event. And so you can see every time the blue turns into red, we go into a bull market right after. That colorful line is the price. And so every time, here it is within six months, bull market. Within six months, bull market. We just turned red again, we just had the halving again in April.

And everyone knows this now. This is not like insider information at this point, but for some reason the market still questions it. Now past events don't necessarily dictate the future price, but the supply shock, it's going to happen again.

So, long way to say, I think of all of my goals in crypto. And I think part of your question comes into goals and whatnot, is I think in four year cycles. And where am I in the cycle? And what is my goal for this cycle right now? 2030, let's save that for the next cycle, what your goal is for that cycle. What's your goal for this cycle, maybe.

Maybe your goal is to just accumulate more Bitcoin and learn about it. And not sell the cycle. And I think given what we've seen here, we should kind of break out of the previous all time high within, by the end of this year. That's what's happened every single time. And based on this, we should have the top somewhere around the end of next year. And so if you have a goal within about a year timeframe right now, that's kind of how I'd be thinking because of where we are in the cycle.

Are we going to still see these like 100x returns? All over crypto? Yes. Is Bitcoin going to 100x this cycle? Probably not. Is it going to 100x over the next five cycles? Probably yes. How to construct your portfolio maybe if you're looking for a certain return, what, $100k into a million or something maybe as an estimate? That's a 10x. And historically, even Bitcoin has 10x every cycle. That's a realistic thing.

We can look maybe from bottom to top, maybe not from like where we are right now to the top. I don't necessarily see a 10x right now. It's doable. That would be $500k or 600k. It's doable, it's less likely. And each cycle, I think it's less and less likely to have a 10x amount. But, leading up until this cycle, I've thought about each cycle as a 10x opportunity.

How do you do it? You just buy the dips. And you average in slowly over time. And when you have the cash to buy more, you buy more. When you don't, you hold on tight. Because it's gonna be hard, it's hard to hold.

Did I answer your first question? I went into a little tangent on the halving though, but it's so fundamental to the cycle and the cycle is fundamental to investing in crypto.

Leanne: So is there a way, is there like a crypto calculator that you can put in, I think crypto's gonna do this, I'm gonna buy $100,000 of Bitcoin, I'm expecting this multiple? Or is it just as simple as that, do that sum in your head? Okay, if we're gonna get a 100x or a 200x, it's like, just do that math and that's what you can expect?

Gerbz: Yeah. I mean, there's no calculator. It's like, if I buy Nvidia stock, is it going to go up? It's the same thought process. If I, instead if I buy an index fund, will the market go up? Yes, but it'll be like the smallest amount compared to the largest. It's a risk reward question. Buying an index fund, which you could spray and pray across crypto, and have a ton of random tokens that you've never heard of, like little slivers of them, and you'll probably, it'll go up through a cycle.

When it comes time to sell them all, it's gonna be a shit show. There are some indexes that you could buy too, I wouldn't probably recommend. You could, just buying Bitcoin and ETH, it's like a good index I think for the crypto market. If you wanted to dive into a particular sector, you'd do that a little differently. But yeah, the math is just, what I like to do in each cycle is have a concrete goal. Not a monetary goal, but like a thing I'm trying to accomplish in my life. So maybe it's, I'm trying to buy a house, a million dollar house. Well, I need $1,200,000 because I'm gonna have to pay tax when I sell that million dollars of crypto.

And then that's kind of, I'd work backwards from that. And then when the cycle happens and the chaos comes and everyone's rolling in the dough, you sell when you accomplish your concrete goal. Not when you think you're gonna magically time the top of the market, because that's where everyone fails and then rides it all the way down. Lock in your goal and then who cares what happens after that. That's how I think about it.

[00:14:01] Trading: When and How Often?

Coran: You've talked a few times about just making a few trades. You don't call yourself a trader, but you do like three, four trades in a cycle. Or a year, depending on the year. What is it that makes you trade?

Gerbz: Okay, there's probably three or four types of trades maybe. The first is, sometimes I need cash. You gotta sell, that's the reality of the world. And, do I try to sell at the best price? Yes. The way I would typically do that too is I'd just set a limit order, a sell price at a price that I think based on the chart where I think we could go.

And it'll probably do that while I'm sleeping so I set a limit order to sell at that price, and I hope that I wake up over the next week and it's happened. Sometimes I just need cash and I'll set a limit order for that. I also, I do, I trade the cycle, is the way I describe it. Which is, I have one big trade every cycle.

I have some concrete goal that if I need a lot of money, like to accomplish some big goal, I'm going to average out of crypto at some typically Bitcoin cause that's what I hold the most of, but I'm going to average out meaning sell in a few chunks to hopefully lock in that goal that I've set. And I'll do a big trade every cycle to hopefully accomplish that goal.

One of the trades could even be try to sell a bunch of Bitcoin at the top of the cycle so that I could buy two years from now at the bottom. That could be a goal. So that would be like a trade that I might do.

There's also just dollar cost averaging in, like I use Bitcoin as a savings account. If I have cash, I just buy Bitcoin with it. And I'd rather hold Bitcoin in my wallet than then inflating money in the bank's wallet.

Coran: Do you hold the cash, the spare cash, in like a Coinbase account or something so it's ready to deploy? Or do you just buy? I guess it depends how much you have, but are you constantly buying regardless of the price? Or do you always try and, like, catch the bottom?

Gerbz: Ideally, I try to catch the bottom. If I have cash in my, let's say I've got money in my Coinbase account, it's never sitting as a balance. It's sitting as a limit order. I'll put in a limit order right now at like, $40k. Because, hey, if I wake up one morning and Bitcoin is 40k, and I magically bought it at $40k, I'm gonna be stoked about that.

So I never just have it sitting there. Typically I'll have it like, where are we, like about $60k right now? If I see the chart says like, oh, we could go as low as $50k and I'm trying to buy more right now, I'll just have limit orders at $50, 51, 52, 53, 54. And I'll just spread them out and hope that they trigger while I'm sleeping.

I never buy while I'm looking at the computer, it's just like a rule. Because the best time will never be in that moment. Like, it's a proven fact. So it's always limit orders.

And I guess the last sort of trade I do is I do some DeFi stuff, which is the next level. We'll get you guys into DeFi at some point here. But a lot of times I'm earning interest in random ass tokens and rewards and these crypto-ey things that I'll usually sell them for more Bitcoin or more Ethereum. So, every month I have like a calendar event where I go and I farm all of my rewards and I trade them for tokens that I want to have.

Oh, there's one more. There's a portion of my portfolio that's like trading, I'll call it trading narratives. I mean, even Bitcoin and Ethereum are a narrative. There's the sound money narrative and there's the digital gold narrative, that would be Bitcoin. Ethereum is like, the global decentralized supercomputing platform narrative.

But there's thousands of narratives in crypto. Everyone has some juicy idea about what they think the future might look like and they're trying to build it. And I have like 10 percent of my portfolio is just investing in narratives. An example might be, like DeFi, is just a great narrative. Do we think borrowing, lending, trading, all the things that banks do now are going to happen on blockchains instead in the future? Hell yeah.

Coran: Well, compared to you, we talked about this a few weeks or months ago now, we were trying to get a cash out refi on our properties. We hadn't owned them long enough. We bought them with cash and then the interest rates bumped, spiked six weeks. We were late basically.

Which you can't control, but you're like, oh, I just got a loan the other day. Super easy. Like, no questions, bam, done.

Gerbz: Yeah, it's like four clicks. And that's the future of this. And especially once your home is tokenized, you can borrow against that. Like right now you can only borrow against Ethereum and some other assets and we can talk, we'll talk borrowing at some point, but borrowing against physical real world assets is coming and it's going to be a major unlock.

So that's a perfect narrative. So that would be as part of this kind of, for me it's a 10 percent bucket, depending on what your risk profile is. It might be higher or lower. That's a great narrative. And what you would do is go chase down every fricking rando in their basement building borrowing against real world asset tokenized tools and see how to invest in it.

Maybe they have a token. Maybe it's an opportunity that you can invest in and then spray across them.

Coran: Well, that, that kind of speeds up the token question because, we're primarily credit investors, which means we lend as a pool of investors, we lend capital to companies, projects, et cetera. That's where most of our cashflow investing comes from. So once that's unlocked, that's going to be ridiculous.

Gerbz: It's a big deal.

Coran: Yeah. When you can link real world with this, versus cutting out banks and the rest, that's very interesting.

Gerbz: It's already doing it. I'll show you I actually pulled that up because I knew this would be like An example that you guys would be into. This is called the Real Chain. I just heard, I heard about it recently. I haven't done a lot of due diligence on it, but it's a real world asset chain.

This is something that they're doing, they've tokenized gold bars. Just as an example, right? Where these are custodied, I don't even know. They've fractionalized and tokenized gold bars as an example. They've also done it with all sorts of real estate properties. And this is like a platform for tokenizing real world assets.

I think at the moment they're still early. Like it's not very, let's call it, it's not very permissionless. So you've got to talk to them, set up an account. But then you can like invest in tokenized real estate and you can hold those tokens.

Coran: But you'd kind of want that, because it's the internet.

Gerbz: Maybe at first.

Coran: I own this building over here. Yeah, sure you do. Yeah, right.

Gerbz: So this is the hardest part about when real world meets blockchain. Digital assets, if you say you own it, we can prove it with cryptography. Physical assets, I need to see your deed. There's no way around that. However, did you guys hear that California, they minted NFTs of every vehicle in California, like license and registration, is on chain now. I could see like a municipality or like a city putting all of the deeds on chain and making that like, verifiable.

[00:21:05] Real World Assets on Blockchains

Coran: That's a side question. I actually think that's more interesting than, this is what's kind of held me back from crypto, as I think that's more interesting utility. But why does that mean this thing is worth more?

It's kind of like, if you're a public company, then there's a value to your company by minute when the exchange is open. But why does that instantly mean this has value? I don't think it does instantly mean this should be more valuable than something else.

Gerbz: Sure. It maybe doesn't mean it's more valuable.

Coran: It's just interesting.

Gerbz: And it's not just interesting either, it unlocks potential that didn't exist. Like, you guys have dealt with like international banking troubles, I'm sure, in your life. You guys are from Australia. All of this kind of can go away. Like, if it's permissionless, anyone in the world can invest in real estate.

So they have this UK real estate fund. So this is like, the next example. This is eight properties with a projected 12.8 percent interest and somewhere it even broke down. I think it included 5 percent of asset appreciation and 7.8 percent of rent earnings.

They also are issuing 42 percent in RWA tokens. This is a very common theme in crypto where they've got a token, they're, to early users of their platform, they're slowly issuing it out. As the value of their token increases, the percentage goes nuts.

Coran: So why haven't you done this? Because it seems to me from the outside, this is where the money is.

Gerbz: This is

so new.

, so new.

Coran: No, but add a coin. Your own coin on something. So why doesn't BitLift have its own coin?

Gerbz: I don't know. I haven't gone down that rabbit hole. I haven't built a business out of BitLift. I haven't built a business in crypto, actually, all.

Coran: Why not? Let's do it.

Gerbz: Yeah.

Coran: He doesn't want to do it.

Gerbz: I'm less hungry to build any business these days. That's why.

Coran: That's fair.

Gerbz: Businesses are hard, man. Investing in crypto, it seems easy to me, maybe because I've been doing it for a while, but yeah, I don't want a business. I don't want a token. I don't want investors breathing down my neck. The guys that are running this, they're working their ass off, and they should. This is a big deal, as you've identified. Like, this is really fucking cool. It's very early too. Like, we've seen a lot of blow ups in crypto. So like, how early to get into things and how to do proper due diligence on these types of things.

I'm sure you guys have done deals where doing due diligence is really hard in the real world. There's no crypto component at all. And doing due diligence is a nightmare. Well, now you add this on top of it. It can be scary. But this return, it might, maybe it's worth it. Up to you.

But anyway, I just wanted to show you like some of the things that are going on in the real world asset realm. I know that's like something you guys are gonna be interested in. Rabbit holes you're gonna go down for sure.

[00:24:02] Crypto and Lending

Leanne: So on this theme of crypto and lending, how does that work for you personally.

Gerbz: Yeah.

Leanne: So I know that you've done it recently.

Gerbz: Sure.

Leanne: We've been talking about, okay, so maybe when you first thought about taking your loan, the price was this much and then like, this happened. Are there like stop loss calls that have happened to you or limits that got triggered or anything?

Like how does the whole lending thing work? I'm like, you have to pay the bag with cash or are you waiting for your Bitcoin to increase in value? And then you just pay this guy back in Bitcoin. Like how does that work?

Gerbz: All of those things are true. So this is Compound Finance. This is one of the biggest kind of decentralized platforms in crypto lending. And they have these different markets. So you can borrow, this is on the Ethereum blockchain, you can borrow USDC, which is Coinbase's stablecoin.

You can borrow it against Ethereum at 4.77%. You can also lend your ETH to this protocol and earn 4%. And this actually breaks down, too. It says net interest rate because, as with most crypto-ey things, there's a token involved. The interest is actually, it's 5.14 percent to borrow, but they give you 0.36 percent of Compound, of their token, as a reward for using the platform.

A lot of these platforms they're going to, they reward their users. That's always a theme you're going to stumble across a lot.

Coran: Who calculates this?

Gerbz: This is an algorithmic calculation.

Coran: The bonus piece?

Gerbz: Yeah, actually it is. It's based on how much of the token they have decided to issue over a given time, and then what's the utilization rate of the protocol. Utilization, 72 percent of the available USDC is currently loaned out.

And see how it's super flat here, this is the rate. As it starts to reach, what is this, 90 percent utilization, it just goes parabolic to avoid that from happening. Because they never want to loan out 100 percent of the money, maybe it's like for safety or, whatnot. But yeah, it's an algorithmic, constantly adjusting thing.

And maybe the amount of tokens that are allocated to this borrowing pool, that might be voted on by the DAO. And the DAO is just it's the shareholders. Everyone who holds Compound, the more Compound you hold, the more votes you can have. And maybe who owns Compound is even like a protocol themselves.

Like, this was borrowing on Ethereum, but this is borrowing on Optimism, which is a different chain. I noticed here, to borrow on Optimism is negative. They're currently paying you to borrow Ethereum on Optimism. So, for whatever reason that's happening, and that's an opportunity and it's a quarter of a percent.

So, based on your risk and what you want to do with that. Is it worth it? Maybe. But it's interesting, right? When it comes time to actually borrow, I'm not connected to my wallet or whatnot, but in this dashboard, so you deposit collateral. You can deposit wrapped Bitcoin or Ethereum. You can even deposit staked Ethereum, so you can be earning interest on your Ethereum while you're borrowing against it.

If you ever borrow against Ethereum, always borrow against staked Ethereum.

Coran: And then they'd take the lot if it drops below a certain threshold?

Gerbz: And then it's up to you to determine your threshold. It'll tell you, actually, it'll tell you what the threshold is. Let's go back to Ethereum USDC. Here it is. So if you're borrowing against Ethereum, you can borrow up to 83 percent loan to value ratio. You would never want to borrow 83 percent because you'll get liquidated really quick. And it'll get liquidated at 90 percent loan to value ratio.

Coran: So can you top up or does that automatically just, cuts you off? So if you're on vacation for example, and LTV gets whacked, so you're probably like down at 50 percent or something to be super safe.

Gerbz: Yeah, I'm like 30%.

Coran: Okay then, yeah. Because you don't want to lose your collateral.

Gerbz: Never.

Coran: Yeah. But if that triggers while you're on vacation, say. What's the time limit between you topping up with more ETH, cash, whatever, so you don't lose your collateral? Or are you screwed? Is it just gone once it hits that?

Gerbz: Just no more vacations. That's really the, only way.

Coran: This this is really a lifestyle business.

Gerbz: No. I mean, so flash crashes can happen. Like I said, I'm so, I do this at such a low loan to value ratio that I'm not concerned about this. I also, I look on the chart and I see like, at what price, what price is not even possible, and that's where I borrow.

So I think with Ethereum I determined that like $800, like, we're not going to $800. So I only borrow enough to the point where ETH would have to be $800 for me to get liquidated. And then I think what happens, every protocol is different, this is Compound, there's also Aave, there's also MakerDAO, there's a bunch of them, they're all coming at this borrowing process differently. I'm pretty sure they liquidate half of the position, might have to double check that.

And it's when it reaches the liquidation factor, which is 90%, right? And with MakerDAO, I'm almost sure there's a 24 hour period with Maker where it's been flagged for liquidation, but you have 24 hours to top up if you want to, or repay if you want to.

And those are your options, right? You could just repay the loan or you can just top up more collateral.

Coran: And then how does the actual payment work? Do you just break off a bit of ETH to pay the equivalent and that's part of the transaction?

Leanne: So you hope it goes up in that time, so that you don't lose any ETH. You can just pay them what you've made, maybe, while you were...

Gerbz: Doing something with it.

Leanne: Yeah.

Gerbz: Yes. So I definitely, I want my collateral to go up in value because then my loan to value just gets safer and safer and safer as I wait. I could also just as it goes up, pay down the loan if I wanted to along the way.

Leanne: But you're paying down the loan with ETH. So, even though you're lending against ETH, you're paying with ETH too at some point?

Gerbz: No, whatever I'm borrowing, that's what I'm going to pay it back

Leanne: So if you're borrowing cash, you're paying it back cash.

Gerbz: Yeah, so I just, I could sell some of the ETH or whatever I'm doing with it to earn interest. I could, and you can swap between these things very easily. But you just have to pay back in the same token that you borrow in. I'm trying to think of an example.

Coran: Well, you mentioned you're buying a house for a million dollars before and we talked about this a few weeks back, but let's say you want to buy a house for a million dollars. When are you liquidating, crypto to get enough fiat to go buy a house versus lending? So in that million dollar example you'd need what? Basically 10 million to buy it.

Gerbz: That would be a 10 percent LTV, right? Yeah, you need seven, you need six a half million, yeah. Like that, yeah, to keep that very safe loan to value ratio. And I mean, to be honest, I'm not buying real estate with my borrowed money. I'm just not, and I actually, I'm not doing very longterm either.

I'm usually bridging. I'm just like, I have no cash and I need to paint my house. Like, that's why I'm using it. The other reason that most people are using it is to lever, to do leverage. So one of these markets on here wasn't to borrow a stablecoin, it was to borrow more ETH.

We talked about how Optimism is paying 0.27 percent to borrow Ethereum. So something you can do here and something people are doing with billions of dollars in crypto is borrowing ETH, staking it, taking that staked ETH, making it collateral, borrowing more ETH, staking it, and looping that. Right now it's literally paying you to do it.

So it's like, if crypto was like just a very safe place to hang out. Everyone would be doing this. Train beers are coming.

Leanne: Train beers.

Gerbz: I feel, I feel the energy.

Leanne: Oh no.

[00:32:15] Train Beers

Gerbz: It's good. All right. But we'll, we'll pivot the conversation while the train comes by.

You want to get a train beer?

[00:32:23] Final Thoughts on Lending

Gerbz: I think something important with this though is that these are DeFi protocols. I think Coinbase had to legally turn off their lending program. So like right now you guys are using an exchange, your money's there, that's a safe place to until you figure out this stuff. But at some point we'll get it onto your own wallet so you can access these protocols.

They're like two totally different worlds. Coinbase is a bank. Any exchange you use like that is like you're holding your money with someone else. And you can't access any of this while your money is tied up in that thing.

[00:32:57] Wallets and Storage

Coran: Well that's a really good segue. So we do have a Ledger wallet, but I read on one of your blog posts about securing your crypto that, you said, and I don't understand this...

Gerbz: Okay.

Coran: Bear with me. I'm pretty sure it said cold storage only works if it's ideally never been connected to the internet.

Gerbz: Yes.

Coran: How does that work? And how do I get my crypto onto something that's never been on the internet?

Gerbz: Have you written your words down on your, from your Ledger? Have you set up your Ledger yet?

Leanne: Yes.

Gerbz: Yeah, and you've got your 24 words written?

Leanne: Yes, they're locked away.

Gerbz: Locked away. Okay, good. Your Ledger has never connected to the internet. It's the purpose of that device. It doesn't have an internet chip.

Leanne: So there's like an app or an interface?

Gerbz: Your computer has the interface. You plug your Ledger into your computer and they communicate over that cable. what's on your Ledger, the private key that was generated, it was generated on the Ledger. It's never left a Ledger. It's not capable of transferring over that cable.

That's what you want, and that's good. So you have cold storage, you've got it set up. And that's a great thing.

Leanne: So even though the cable is connected from the Ledger to the computer, and the computer is connected to the internet, it is not connected to the internet.

Gerbz: Correct, not connected to the internet.

Leanne: See, that just sounded confusing. I'm like, just...

Gerbz: I agree.

Leanne: Normally when you plug something in, it feels like it's connected.

Gerbz: Yeah, and then they came out with a new ledger that has Bluetooth. And you're like, wait, what the fuck? The whole point of this thing is I'm trying not to do that stuff. As says Ledger the private key is in a very safe part of that device, and it will never leave that device. It can communicate over the cable and via Bluetooth some information, but not the private key, which is those words that you wrote down, and it's very safe.

The next step is to lock down your words even better someday, we can go into that at some point. But then also we'll connect your Ledger to an interface so that you can then interact with some of these protocols, like Compound.

Coran: I heard you talk about, or I read rather the stamping thing, the metal phrase. So you just told me before we hit record or maybe we were recording, I don't...

Gerbz: I don't know.

Coran: With the letters. So it comes with letters. You can build your own. And you mentioned sending that to someone else in a different state that you trust

Gerbz: I did?

Coran: Part of the phrase or something. And like, I'll never. I'll never ask for this over the phone, only in person. So if we're traveling a lot, how many of these should we have? Should we just have them in safety deposit boxes around the world? Or, I'm guessing...

Gerbz: Here's the fun part. No one will ever tell you how to do this. Because it would be them disclosing the way that they do it. However, there's a few like, primitives, that you can like use to come up with a strategy that makes sense to you guys. The first is you gotta stamp your 24 words in metal.

That's just like fire, flood, there's this guy, Jameson Lopp, who like takes a blowtorch to all, he buys them all, and he like does a review of them, he like takes a blowtorch to them, he like tries to smash them with a hammer, to test their durability. Most of them are pretty good.

The thing that you want to do is, there's one extra layer that you can add, which is called a passphrase, which I think is important to use. It adds, think of it like a 25th word. And that you can just remember, or you guys can both know it. And you could even tell someone in another place maybe what the passphrase is.

And then, if someone ever was to stumble on your metal 24 word thing and they punch it in, they wouldn't know the passphrase. So, I think together you can come up with a good scheme of how to do that. And I can help you with it.

Coran: When we're not recording. Sorry for bringing it up.

Gerbz: No, don't be. It's really important and people have a lot of questions about it. It's a weird, this is the part that Derek's app sets to fix. Do I trust his solution to making that, to fixing that? I don't know. But is that, can that be problematic? Yeah, that can be problematic too. Yeah, protecting your words and your passphrase and your geographic distribution. That can be tricky too, so...

Leanne: It's 2016, your husband gives you this piece of paper with a bunch of words scribbled on it and says, don't lose it, lose this. And I'm like, I don't even know what crypto is at this point. Apparently we got given some ETH. Lost. Gone.

Coran: I earned that. There was a consulting fee.

Gerbz: Damn it.

Coran: ETH was at 200.

Leanne: Gone.

Gerbz: And I know with how much these guys pay you per hour, must have been a lot of ETH.

Coran: Back then it was less, but still, it would have been, I'd prefer to have it than not have it. It would have been nice.

Gerbz: Of course, yeah.

Leanne: One of many, right? Everybody's lost something,

Gerbz: Yeah, and that's the thing too is that all these stories you hear about like the landfill that like has some computer in it Where the guys Bitcoin are in there, like this is because these assets they weren't valuable yet. No one knew what they were yet, or how to use them yet. Once you know like the value of this you're not gonna screw it up. People just, they read these headlines in the news about how hard it is to protect your crypto and everyone's losing or getting robbed and that's just not the reality of it, especially today.

Coran: Can I tell you a real story about a bank?

Gerbz: Please.

Coran: So we've talked about this, but I feel like this gives context for what you just said. And this is probably why one of the reasons we didn't go heavy into Bitcoin at $3000, which is what Leanne was just talking about.

So we were living in Prague. We're Australian citizens, as you mentioned, we're living in Prague. I was getting paid in USD. We had a Czech bank account with USD and crowns, which is the Czech currency. Not to hedge or anything. We just kept most of our money in USD in the USD account.

I got an email one day and it says, due to factor rules changing that we will not comply with, we're just refunding all your USD. So we're, we don't, we're not holding USD anymore.

Gerbz: Gotta transfer it out.

Coran: And it said you have to come into the branch and we'll give you cash.

Gerbz: Cash. That's the only option?

Coran: We'll give you cash. That was it. So I'm like, shit, this is...

Gerbz: They have USD?

Coran: All our money.

Gerbz: Cash? Huh.

Coran: Well, you're jumping ahead here. Alright, so. Wait, that's not possible. So Prague back then was a pretty cheap place to live comparatively to what we were earning. So we had probably a couple days in crowns, in our crowns account. Most of it in USD. So I get this email and I'm like, huh, okay. So I call up, hey I'm coming down at 2pm.

Yeah, no worries. I get to the bank. And they say, oh, we're out of, we're out of US dollars. I say, I don't care. Give me my United States dollars.

Gerbz: You're the reason I'm here in the first place.

Coran: Where do I need to go to get my United States dollars? They said, because of what just happened, there are no more United States dollars.

Gerbz: Run on the bank. They caused it.

Coran: There's literally no more United States dollars in the city, which is bonkers. I go home. I don't remember this exactly. Maybe you could give some perspective. But I remember coming back and just being like, to your point about the phrases and holding custody of your own cash versus this, we were in a well trusted national bank, not a multinational bank, and I couldn't access my cash.

And when I got home, I was then thinking, hey, do I need to ask a friend for some cash?

Leanne: Rent due in a week or something. And we just didn't have the rent money on us because we only bring it down when we need to pay. And then I was like, we're going to default on our rent. Like, that's kind of crazy.

Coran: Yeah, and our rent back then was like six or eight hundred bucks a month or something. So it wasn't huge Yeah, but like when all your money is frozen...

Gerbz: It's scary.

Coran: And in one place

Gerbz: Why do we give it to them? That's the question. So that they can protect it for us? Like, we live in the future now. There's so many better ways to do this. Anyway, that's interesting. That's crazy. And maybe it started to get you thinking about Bitcoin at that point? Is that what you're...?

Coran: Well, not yet it was still, like you're always looking at the risk factors. So then it was like oh, let's go for a bigger bank. And when we came to the US, like let's we started with Wells Fargo. Right before they had their holding cartel money issue.

I don't know if you remember that and then we went to Chase. I mean, of course, they did at some level whether they know it or not. They're holding cash.

Gerbz: They sure are.

Coran: For a lot of people.

[00:41:31] Use Cases for Crypto

Leanne: So let's talk about what are the best use cases for this, right? So sometimes you've got to pay for stuff in cash. You need cash. But like, what are the handful of awesome ways that you can actually use crypto today?

Gerbz: Great question. Crypto, Bitcoin, all of them, just in general?

Leanne: I mean, like you mentioned, the blockchain doing the like, VIN numbers or license plates and stuff. You know, that's an interesting way, but like, I've got a wallet full of crypto. How can I use it to fund my life?

Gerbz: Uh huh. To fund your life.

Leanne: Or to pay for things or to, yeah. Like not have to exchange it to fiat.

Gerbz: So this is when I've got into crypto, this is, I thought crypto was for payments. That's, I come from an e-commerce background. I wanted to use Bitcoin for payments. That was the unlock. And I think even Satoshi, like the word payments shows up many times in the initial white paper.

This was the original vision for it. And over time, especially since the invent of stablecoins, a lot of crypto payments stuff has fallen to the wayside. All of the Bitcoin I've ever spent, I don't regret spending my Bitcoin. However, if I hadn't spent any of my Bitcoin, I'd be a lot better off. And that's what everyone has seen across the board.

So it would be like spending the best investment you've ever made. Why would you do that? You spend like, the cash when you have that laying around. And you keep every, as much as you can, in the investment. So we've sort of like, crypto as a whole, has shifted to more of that kind of way of thinking.

Doesn't mean there's not use cases for crypto anymore, just like the payments one isn't there. Even like remittances. So like sending money internationally. I still do it in Bitcoin all the time and then I replace that Bitcoin. It's called spend and replace because I never want to get caught spending on my Bitcoin and then it freaking goes nuts. So I will like, let's say I have to pay someone $500. I will buy $500 of Bitcoin and send it to them. That's using Bitcoin. I don't, I wasn't holding $500 in Bitcoin before that moment. I just used Bitcoin as a tool for transferring it from this country to another.

So it's super, it's amazing for that. Especially the larger the quantity, the larger the amount you're trying to remit, the better of a tool it is. It just costs like pennies to send any amount. Billions, if you've got it, to the other side of the planet. Within 10 minutes, there's nothing else like that. So that's like a killer use case.

The next ultimate killer use case, and there's, we always talk about use killer use cases in crypto. When's the next killer use case going to come and like, what's it going to be? I still think self sovereign money that you hold the keys to, I don't know if they'll ever be a better use case than that. This idea of that bank issue you went into or, imagine as you just accumulate more and more over your lifetime, it becomes scarier and scarier to let anyone else hold on to it. And if you've got a good like system that you've designed for stamping your seed in metal and like protecting it that you know you know everything about that, man. Screw the banks, man. We don't need them anymore.

So that'd be the second. The third would be. DeFi. Or actually maybe stablecoins have become like a major use case. This was my biggest, the unfortunate reason why I ended up getting in Luna last cycle, was because I knew and still agree that stablecoins is one of the biggest opportunities in crypto. And there was a big stablecoin angle to that platform, which is why I was invested in it.

Coran: I think lending too man, like if you can hold the collateral. So we're investors in a couple of deals where there was supposedly collateral when everything went to shit. I hope we can swear here, when everything went down, there was no collateral. But if you're holding the collateral, and someone's at a 30 percent LTV, I'd do that deal all day.

Gerbz: Yeah, yeah. So I mean, I said I was like trying to swap stablecoins and DeFi and DeFi is borrowing and lending and swaps. That's like, 90 percent of decentralized finance. It's basically DeFi is just defined as like reinventing the banking system.

Coran: But then how do you work on the trust issue? Because there's been a lot of theft in anything crypto, because it is so decentralized, no names, etc.

Gerbz: Yeah you've, I'm sure heard of the term smart contracts. They're programs that live on the Ethereum blockchain or on any EVM based chain, which is a chain that can handle smart contracts. The longer these contracts exist on these chains and are used, the more hardened they become over time.

It's like the Lindy effect. It's like the longer something exists and hasn't been hacked, the less likely it becomes to get hacked in the future. And at this point, the honeypots are big, right? They've got billions of dollars. I think we saw on here somewhere that there was a billion dollars in Compound protocols as collateral.

Total supply, 1.88 billion. Earning 790 million, borrowing 560 million. So like, if you're a hacker, this is a good place to hang out. And it hasn't happened. We are, now, 4 years ago, 8 years ago, it was a mess. All these things were getting hacked. But, they've really gotten a lot better over the years.

And, do I use, like, the hot new kid on the block to borrow large amounts of money now? Hell no. Will that new kid like, do they have some new innovation that could like, completely change the game forever? Yeah, maybe. But also, these guys could, Compound could adopt that new thing. Or they could just stay the way they are and people like that too. Being conservative, right?

I agree. Borrowing and lending is massive. Once, once we get different collateral, so right now it only happens against crypto collateral, right?

Coran: Once there's buildings, oh man, my brain's going nuts. I'm gonna have to stop talking soon.

Gerbz: Yeah, I agree. It's a killer, killer use case. And let's talk like tokenizing equity. Killer use case. Like the fact that we exchange stock certificates between like, only institutions that are like vetted to do so, like. It's weird. Like when you buy Apple stock, like, where is it? Where is it? No one can even answer that. You could call your broker and they can't even tell you where it is. So having tokens under your control, it's a big, big deal. You can do streaming payments with crypto, which is another cool like innovation that's happening.

People haven't, I remember when I first got into Bitcoin, there was talk of like someday autonomous vehicles are going to be transacting with each other to determine whether they want to pass each other on the road. It's gonna be like a micro penny to this car, to allow this car to pull in front of it.

And it just unlocked so many, like, It made me realize how little I could, how uncreative I am about what we could do with this stuff. NFTs, they get shit on a lot because they're silly monkeys, JPEGs. But. when you think about, like, concert tickets, for example which is owned by a mega monopoly, I could buy a ticket directly from you. You could hold the ticket in your wallet. This is, like, game changing stuff that didn't, couldn't exist before.

So those are some killer use cases.

[00:48:57] Crypto Credit Cards

Leanne: I know there's a crypto credit card. Are people using their crypto to pay that off, or is that just like a regular credit card and they pay it with cash?

Gerbz: There's a lot of innovation happening there because the Visas and Mastercards of the world are finally getting more comfortable with this stuff. Metamask, which is one of the biggest wallets companies, they just announced last week that they've partnered with a bank to issue the Metamask debit card.

And you hold Ethereum and Stablecoins in your wallet. And when you swipe your card, it converts it on the fly. No more like having a checking account. Over here in a savings account over there or only having enough money to pay your bills and then pulling from your investments for liquidity It can just pull from your investments, like every time you swipe And that could change things.

Leanne: But it sounds like it's better to have your buy and sell limits to actually maybe make your fiat, to pay those bills. Rather than just do it on a one to one transaction. Because you're paying the market rate at the time, and it could be like, the high to be buying a Coke.

Gerbz: Yeah, it could be shit timing.

Coran: Or the low, and then you're overpaying.

Gerbz: Yeah, I mean if I could just have all my money in bitcoin and then swipe my debit card I would probably do it. What is it, like It's something like some Warren Buffett thing, where like you just never disrupt compounding, like even for a millisecond. It's like the secret to it, right?

And I feel like we'd be better off if we didn't have to disrupt our compounding. Now, is it compounding down sometimes, right?

Coran: Have you delved into whole life insurance much? So it's a tax protected vehicle, you basically can put money in there.

It's protected from tax, it's allegedly a guaranteed rate of return, and you can lend against it usually less, ideally less than your interest rate. So if you go get a deal over here that's doing higher, you can like, kind of like what you're talking about with Compound here, like tripling up your investing,

Gerbz: I've been pitched on it before. What you said allegedly, that's where I stood too.

Coran: I think everything's allegedly, man. Come on.

Gerbz: Not in crypto! It's truth. If it's on chain, it's, it can't be any other way. It's just code. It doesn't make decisions or file for bankruptcy.

Coran: Even T bills, like Warren Buffett.

Gerbz: Has more of it than anyone.

Coran: The last time, I think it jumped like a hundred billion. In the last couple months, maybe.

Gerbz: Because he just sold half his Apple position,

Coran: Apple position, yeah, and put it into T bills. But I'm like, who says that's risk free? Everyone says...

Gerbz: Hold on.

Coran: Well, they print money. But if the money supply is going down, so your mate Brian was talking about this. What was his peg was 13 percent per annum or something to keep up with inflation? That's like keeping it zero.

Gerbz: Yeah, so T Bills are paying five, and it's like, that's not making money, that's losing eight percent. According to Brian, yeah. And according to the numbers.

[00:51:59] Bitcoin as Cash Flow Without Losing Your Ass

Leanne: Bitcoin itself doesn't cash flow.

Gerbz: It doesn't.

Leanne: But that doesn't mean that crypto doesn't cashflow. There are ways to make it cashflow. Obviously staking and this kind of thing, but what are the best ways to actually make some cashflow off your assets without losing your ass?

Gerbz: Yeah, without losing your ass, that's the hack of the trick. I think just like in traditional finance, lending money is the primary way of generating cashflow on financial assets. Not physical assets, like renting out your real estate would be a physical asset, renting that out.

It's sort of like lending. You're lending your apartment to someone for six months or a year. I don't know. Just had that thought. But yeah, lending in some way, sometimes you're lending to people. Sometimes you're lending to protocols that pool capital and then lend to individuals and have safety parameters in place.

Like, like that's how Compound works. You're not lending. It's not like P2P. I'm not lending my money to a person. I'm putting it in the protocol. Anyone can come along and borrow from that protocol.

Staking is you are lending your money to the network to help secure it. So that's Ethereum security comes from its stake Bitcoin has proof of work, which is like burning electricity in order to protect it and Ethereum was that until two years ago. Ethereum worked the same way, it was electricity and they, change it to proof of stake because it's better for the environment. And whether it's better for security or not, that's a huge topic of debate in crypto, but you lend it to the protocol to help secure the protocol.

The more money that is locked up in the protocol, the harder, the more you'd have to have to hack it is the way that, a simple way of, maybe an oversimplified way of thinking of proof of stake. So right now you can earn like three and a half percent staking your ETH. You can also like, stake your ETH and then do what's called liquid staking. It's staked but they give you a token that's worth the same amount as ETH and it's pegged to the price of ETH. So if i've got 10 ETH I can stake them and then it's earning three and a half percent. And then, but I'm holding that token, and then I can re-stake it maybe with a safe collateral, safe loan to value ratio. And I can loop that up to about 10%. That would probably be like a degen, degen is for degenerate investment opportunity in crypto.

The next is like, you can loan. So, all of these exchanges, we call them DEXs or decentralized exchanges. Coinbase is a centralized exchange. But just like Compound, Compound is to borrowing what like Uniswap is to trading.

And it's a decentralized Coinbase is maybe a way of thinking about it. It works a little differently. It doesn't have an order book, which is like people placing orders and then matching people together. It uses a different system where anyone who wants to provide liquidity To the decentralized exchange can provide it and then people can trade that liquidity back and forth. And if you provide liquidity you can earn interest for being a an LP or a liquidity provider to a decentralized exchange.

Leanne: So that's when, I remember you telling me one time, that if you have a certain amount of ETH, you can do these special things. Yeah, right?

Gerbz: Like, borrow against it, or contribute it to...

Leanne: Be a protocol, something or...?

Gerbz: You could borrow against it, you could stake it, or you could LP it. Those would be three different ways to earn interest on ETH.

Leanne: Is that worth it, to be, like, an LP?

Gerbz: Is three and a half percent worth it to you?

Leanne: What are the other ones paying?

Gerbz: Exactly. And this is what's interesting is as the cycle progresses, so do those APYs. And new protocols will launch that'll be like, well, if you stake with us, we pay you that flat three and a half percent. But we also, we're like a startup, and we're going to issue you our token on top of it. And our token is set to be to the moon.

And we're going to issue a million tokens a day to, and we're going to spread it across all the people who use our protocol, and so now you'll see the base rate is three and a half percent, but the total rate is 85 percent AVY. And that extra ridiculous number comes from their token.

And what you can do though is you can do what's called farming and dumping. Which is every day, every week, or every month, whatever . timeframe you want to do it, go withdraw that interest in their token and sell it. Sell it for more ETH, sell it for Bitcoin, sell it for whatever you want, and farm and dump it.

Now, that protocol will incentivize you to lock up their token. They'll say, oh, that 85 percent that you're earning on top of your 3%, if you lock it, you can earn 185 percent and you'll be like, yeah, I'm going to lock it. And this is where things get, go sideways in crypto. If you can stick to your guns in terms of like, when you see these numbers get stupid, you can avoid it. You can just farm and dump that. That 85 percent was fine. You didn't need 185, and you're still making 85. That's pretty freaking epic.

[00:57:22] Fear and Greed

Coran: How do you switch your brain to be like, oh yeah, I understand fear and greed is real. I understand everyone's going to go this way and I want to go that way, but how do you actually do that in reality?

Gerbz: Yeah. The hardest thing, I mean, the lesson I've had to learn the hard way too, is that when all of these income generating opportunities, when the percent APYs start to go vertical, this is like a chapter of the cycle. It'll be about six to eight months, and you can earn good interest on it.

But you're also timing it because you've got to get out before everyone else gets out. It becomes a ponzi. It's like a small window of opportunity. And so you have to really think about, are you here playing the long game? Do you recognize, hey, we're at this moment in the cycle that things are going to get wild, I'm going to try to get as much out of it as I can during that time.

But I'm also not going to risk like, my core assets. Like for me personally, a rule, I don't put my bitcoin at risk. There's ways I could do it. I don't do it. Hard stop.

With my ETH, half of my ETH is I solo stake it. Which is the safe, that's the it's the risk free rate in Ethereum, half of it.

The other half of it I get a little crazy with, and that all represents 90 percent of my portfolio. So all this crazy stuff we talk about, like a lot of it is very, I think, very, in a very safe place. Do I like to go have fun, trying to earn all that APY when shit gets crazy and test all these new things? Yeah, the reality is there's some opportunities in there too.

Coran: That's kind of like gambling. You have to have like, this is what I'm going to put towards this. I'm going to walk away if it doesn't...

Gerbz: Yeah.

Coran: Do what it does, but you also want to take some profit along the way.

Gerbz: I'd definitely take profit. Huge yes to that. But also, I'd correlate it more to trading. Trading might be like gambling.

Coran: I should define. So, for me, gambling is playing poker, which I have an edge.

Gerbz: Okay.

Coran: And I don't actually, as you know, I don't gamble that much. Like, I won't put a lot into an unknown. You've got a slight edge in blackjack, sure, sometimes.

Gerbz: So gambling has, okay, so gambling can have some edge, you're saying. I see, yeah. Okay, so, by your definition, it's gambling. But also like, you could, the more time you spend, the more due diligence you do, the more systems and rules you have in place. I don't know if you've met many traders, like, the best traders have very strict rules about how they enter positions, what percentage they're willing to allocate, how they get in and out of positions.

And they invented these rules themselves and they follow them very strictly. You can do that in crypto and be very successful, especially during that manic chapter that I think is coming again.

Coran: How much time do you think you'd need to, put into finding these opportunities? Or is that literally tagged to APY? Once it goes crazy, then you're getting in.

Gerbz: The way I do it is every morning I hop on crypto Twitter and I just scroll through and see what people are chatting about, see what protocols are talking about. I have a list I can share with you of like, it's 800 people I follow in crypto that are just talking about cool new stuff.

And that's where I find, that's like the beginning of my rabbit hole of the day, in some ways. If someone's talking about 800 percent APY, I'm going to click and just see what's up. It doesn't mean I'm going to invest. I mean, I'm definitely not going to invest right away. But yeah, that's kind of how it starts for me.

Lately, the higher the percent, the more unlikely I am. I also like to stick to, I put on blinders to a lot of things in crypto. Even to this day, like Solana is a big chain. Lots of people have Sol, have invested in Sol, even for multiple cycles now. I don't have any. I've never even used it. And that's not because I don't think maybe there's something interesting happening there.

I just, I don't, it's too much of a rabbit hole that I don't have time for. Like I have a lot of, a lot of other shit to look at, I guess.

[01:01:32] The Rabbit Hole

Leanne: So, the rabbit hole. The rabbit hole is deep. It's long and winding. You're deep into crypto. You love it. We're investors. We want assets. How much down the rabbit hole do we need to go to be comfortable with this asset and to make good decisions with it?

First, I don't want to sit there every morning and read 800 threads. Like, that doesn't sound fun to me. That sounds fun to you, but like, I don't want to be a dummy and do nothing. So, like, what do you do? Do you think the recommendation for someone like us is to say, hey, I think you should learn these basics or maybe once a month. Or like what, how, do we keep in touch with crypto without being

Gerbz: Okay, let me build an analogy then because I would wager that at some point the two of you have had a conversation about deal flow. How do we get more deal flow? What's our system going to be for getting more deal flow? That's that's my list. My Twitter list is like my deal flow, my crypto deal flow.

I'm not a, I'm not an angel investor or a VC. I'm like investing in public crypto assets. So that's like my deal flow system. I don't think it's that different than investing in any other category, how deep you want to go, how much deal flow you want, how much time you want to spend on due diligence in each one.

Maybe it just depends on how much you're enjoying it, how much you're making on it. I would say though, you should really, I would spend my time on the core protocols. Understand Ethereum, understand Bitcoin, because it's going to be the majority of your portfolio, and everything that's been built since has been built on that.

So like, building that strong foundation, I think is vital. Then everything else will make sense. You'll see what these guys are doing with their weird lockup thing or their reward token, and you'll be like, yeah, yeah, yeah. I get that because I've seen this before.

Coran: And most of them are built on ETH, so you can't just say, oh, if it's on ETH, then it's more interesting. You still need to dig way deeper, right?

Gerbz: You'll start to understand how the layers work. So crypto is being built out in layers. Ethereum, when it comes to chains that can handle general purpose, I'm trying not to use slang or jargon, but it's hard. I mean, general purpose chains, like Bitcoin is only trying to be money.

Ethereum is trying to be a platform for building financial tools on top of. And with all of these chains, they all have scaling problems. Even in 1999, we thought web, the internet, was going to be this incredible investment opportunity, and none of it could scale. That's probably why, I mean, there was a bubble, but also none of it would have been able to scale to where we're at today anyway.

Coran: Nothing good came out of it, so that's fine.

Gerbz: Yeah, I mean, we got the fang, we got the fang companies, right? And they've all figured out how to scale. That's basically what they've done since that time and now is they figured out how to handle scale. Bitcoin and Ethereum and everything else is going through that same trajectory right now, and it's being built out in layers.

So there's all these layer twos. I mentioned Optimism a little bit ago. It's probably just like a jargon word right now, but it's a layer two on top of Ethereum. It uses Ethereum only for security. And, but everything else happens on Optimism. Really fast and really cheap but it uses Ethereum only for its security system.

And there's a lot of layer twos being built as even layer threes and layer fours probably to help make everything fast and cheap. But if you understood Ethereum and why it doesn't scale, then all that other stuff would make a lot of sense to you, too. So that going back to that understanding, the foundation, that's where I would put my time.

Leanne: So I feel like I'm going to try to start layering, right? Like, so I know how to get a wallet. I know how to buy, I'm sure there's something about gas fees I probably should know about, whatever. I can, we can work around that. Then I start to think about, okay, what's my portfolio split? I understand a bit about which platform and what protocols each one's doing.

And then you can like double into the staking. And then it's probably the opportunity of the assets. That sounds like it might be the progression.

Gerbz: Yeah, so maybe think about there's going to be these there's going to be the base chains the Bitcoins, the Ethereums. Then there's going to be dApps, or decentralized applications, are built on top of Ethereum. And these are like, we looked at Compound, Compound is a dApp. It's a decentralized application.

And then Compound issues a token. And then the token is like the voting, it's the way you invest in Compound itself. If you think compound has a future and that it's making, you can even look at the revenue Compound is earning and what they're spending and their P and L. Like it's all public information.

You could decide to invest in Compound. That would be like, I'd say investing in Compound would be like you're a venture capitalist investor. Investing in like, Ethereum would be like, you're invested like, I don't want to call it index fund, maybe like a NASDAQ investor. And then Bitcoin is like digital gold in its early days.

And some of those, there are those layer twos like Optimism, you could buy the OP token. It's, if you just think man, Ethereum is slow and the future of using this, we need it to be fast. Optimism is building something called, they call the super chain, so that anyone can build layer twos on top of Ethereum that integrate together and use Ethereum as security.

If you think that's the narrative that you want to chase, you could invest in Optimism itself. all of those kind of opportunities, that would be another like, a VC investment. Maybe Compound would be like an angel investment if you wanted to like layer and think about it in those ways.

And all of these things, I put them personally in a 10 percent of my portfolio bucket.

Coran: I know I've seen you put this out that you have a checklist of new projects. And, have you thought about going and interviewing these people and talking to them about what they're doing?

Gerbz: Not interviewing them myself, but I do that in two ways. The first is, one of the very first things I do no matter in any opportunity or new rabbit hole I want to go down is I find interviews with the founder. It's literally one of my first steps, and it's the most fun step, I think. And I share lots of those clips on the BitLift socials, because I listen to it and I snip them out.

But also, the second thing is, while I'm doing my due diligence almost all of them have a community Discord, or a community Telegram. Which is where they like, everyone who's using this protocol and/or working on it, even the like funds and whatnot that are involved with them, they're all hanging out in there.

So as I'm learning about it, I'll fling questions into that community, And the people who are working on it will answer you. So I don't do the traditional like, angel investment style, like, oh, go have coffee with the founder. I think that's like an antiquated, like good old boys network thing anyway.

Coran: I disagree. So one of the investor groups we used to be a part of, one of the value ads was they would get the people coming in and pitch us. And we got pitched by billionaires and all sorts of people and it was amazing to me, just as a human. I've, my background's in sales, so I study people, that's what I do. And I'm just like, this is a hard pass.

And the amount of smart people with way more money than me, that were like, all in on X, Y, and Z, after hearing and getting to ask their own questions. It was, quite cool. So I wonder how many people in your community, I'd be one of them, that would say hey, we're getting the Compound guys on, let's talk to them.

Gerbz: Sure. Hey, if we can move some weight. You, what are you, how much weight are you pushing around? And then maybe they'll hop on our call.

Coran: Yeah. One of the groups I was in there was 12 billion in liquidity.

So that one was pretty good. This one was smaller and newer. I think the largest at the time we were in, it's probably bigger now. I think the largest check they wrote combined was 30 million. So that was like pretty sizable when you're raising, most of these guys were raising, I don't know what, some of them were raising like a hundred million. But sometimes...

Gerbz: Real estate stuff?

Coran: Mostly Well, real estate. The VC stuff we weren't really interested in. It was more cash flowing. So yeah, that was actually a crypto mining project that we were, we'd committed to, but they never called our capital, which was kind of weird. That would have been nice instead of the hundred we put elsewhere that failed.

Gerbz: Heh heh.

Coran: That probably would have turned out okay.

Gerbz: I'm not opposed to it. And if I did, I'd like to. Meeting, and even just the networking would be fun and interesting. But yeah, I mean, I listen to interviews with the founders all the time and I'm like hard no. Just listening to a podcast with them. It happens all the time. And then there's sometimes where I'm like just lit the fuck up after listening to how passionate some of these guys are.

But then you got to be careful too because then that's where all the scammers are When you can feel that energy coming off of them, right? That's something I've learned the hard way as well.

[01:10:26] Gerbz' Thoughts on the Election

Leanne: So I think for the listeners that have made it all the way to the end, they got to hear a Gerbz prediction. I've seen you tracking the election coming up, I've heard friends talking about the interest rates are going down probably because they want to make it look good for the public. They want to really be happy when they're voting.

So I mean, that's a positive that we think is coming to the banking world. So you're tracking the election as a mark in your spreadsheets, what's going to happen? Do we get our money ready to buy in the dip? Or are we going to the moon because they're gonna back some crazy crypto thing that helps it explode? Tell me.

Gerbz: So yeah, you saw on the chart, I have a vertical line of when the, when election day is. And I just thought that it was interesting that it correlates almost exactly with six months after the halving. In every previous cycle we've started our big bull market, and the halving is a four year cycle.

The election is a four year cycle. I've heard that we're having like, we're reaching this part in the world where like, all these cycles are coming into sync with each other in this four year cycle. And it's not just a crypto thing anymore.

Hey, maybe the reason crypto actually moons every four years is because the market gets some clarity over who the next president is and then it just goes up. Maybe the halving has nothing to do with it. I don't believe that, but maybe. It's just, I noticed that the election is, it happens to be dated at the same time that I think we're going to break out of this kind of, this range that we're trading in right now.

Leanne: So you gotta buy before the election And get the bump.

Gerbz: Or, and all of the above, put in a limit order in case the market doesn't get what it wants. But here's the thing I've discovered over time, is that the markets love clarity. It doesn't, they don't actually care. I mean, it does care whether like red or blue wins the game. There will be a momentary boom or bust based on who wins, but what the market really loves is just knowing what to do next.

Like now, okay, for the next four years, this is gonna be our president. Now we can put together a plan, and I think the market likes that more than anything. So I'd throw out there if blue team wins, we might dump and I would buy that dip all day. If red team wins, we might freaking moon and we might miss our chance. Both are 50, 50 literally.

Coran: But how come you don't know exactly what's going to happen to the millisecond? Come on, man.

Gerbz: Have you guys heard of stock to flow or have you seen that yet? That's actually the chart I was showing you a little earlier, was the stock to flow model. It's something I've been following for a long time. Stock to flow, it's a commodities formula. Based on the stock, meaning how much of a commodity already exists in the world. Like, let's say gold. How much gold has been dug up? They know in tons how much gold there is. And then flow, how much new gold is being pumped out of the ground every year.

And I think gold is, it's flow is like 2 percent or something like that. And this ratio of stock to flow, gold has the highest stock to flow ratio of any other metal. And it's the reason why gold is used as money for thousands of years. It's because it can very predictably, they know that only about 2 percent more is going to be created every year.

This is sort of what Satoshi hacked in this weird way by creating this very specific halving issuance formula over time. And what this guy Plan B discovered is that you can take the stock to flow formula, apply it to Bitcoin and it freakishly maps to it like magic. So this purple line is the stock to flow of Bitcoin and the colorful one is the price.

And you see every four years it's going to get that major spike. Here was the spike in end of 2012. Here's the spike in 2016, 2020, and you see for example in 2013, it blew past the stock to flow formula. Right now, we sort of pegged it almost to a tee in this last cycle which was interesting.

And now it's been two cycles of people knowing the stock to flow formula So anyway, when you mentioned like how why don't I know to the millisecond? There are people working on knowing to the millisecond. It actually maps really well.

Now, do we get like, extreme greed and extreme fear along that? Yes, we do. And there's no way to really account for that. But I think it works well and this is not my prediction. This is Plan B's prediction based on stock to flow. He calls $530K Bitcoin price this cycle. That's what stock to flow calls for right now.

Might we just tag it and bounce off? Are we going to blow, have what I've called previously a blow off top like we did in the previous two cycles? Maybe. But I put my money on, if I had a goal. I put my money on 500 being like, the highest it could possibly go. Which is a 10x from right now.

Leanne: Time to buy some more Bitcoin before it goes boom.

[01:15:48] Buying Crypto

Gerbz: Before we go, tell me, so where are you at on your journey in terms of you, you have an exchange where you buy Bitcoin only? Maybe some ETH, maybe some Sol. Where are we on that? And then what would be maybe like next steps? What are you thinking might be next steps?

Leanne: We've got two places we can buy. Uh, we've got our cold storage.

Gerbz: Yeah, are you using the cold storage yet?

Leanne: I haven't put it on there yet because I decided to be cool and stake it on Coinbase. And then I learned from you that probably is not the best way to stake it. I could do better.

So now I have unstaked it. So I need to move it. We got some ETH and some Bitcoin. We bought a hundred bucks of Solana like two years ago and it's worth nothing. So, you know, that went to like five bucks. I think the next step is to decide how much of our portfolio we want to assign to crypto and put some buy orders in and then probably get some more to hedge against other assets, inflation.

Try to ride the market a little. Actually be a holder? Hold, hodler? Hodler? What do you think?

Coran: Yeah, I'm kind of interested in turning active income into a portion of Bitcoin buys. And that's what I was asking before, do you just leave cash in the exchange or whatever, ready with your limit orders? So I feel like that could be a path forward as active income coming in, some could just flow and be ready for buy orders basically.

DCA in over time. That could be interesting. So now you've showed me this kind of crossover between real assets and crypto, that's got me thinking on a whole other level. But also maybe talking to you offline about interviewing people, getting a group together to potentially invest or just ask questions of these newer projects. I think I'd be super interested in that.

Gerbz: Cool. We can co host, we can get that real assets guy on and co host the pod and grill him.

Coran: That'd be fun. That'd be really fun. But there's so much, there's so much of that that's in between. Like, we've had so much trouble over the years moving money internationally that even what you were saying about, buy $500 of Bitcoin, send it to someone, cost pennies. It's like actually, the shit we've had to deal with over the last decade is ridiculous.

The amount of money we've paid out and the amount of time we've lost moving money. Excuse me, is ridiculous. Yeah, so I'd love to, yeah, there's a few jump off points here.

Gerbz: Cool, yeah. I always thought my tagline for BitLift since the beginning has been, we don't just stack crypto, we use it. So like, even though what I want to just do is keep stacking it, like, I think it's so important to use it. Yeah, I don't want to spend my Bitcoin because now I have less Bitcoin, but if you don't use it, you don't, you're missing out on understanding it at its core.

It's like being a real estate investor and not having a tool belt. Like at some point you got to know what it is you're investing in. And I think using it, it's fun. You, can have both too. You can have your investment portfolio and then we can set you guys up with a hot wallet, which is a wallet where you're not jumping through all these hoops with writing down all your words and like protecting them on geographic like chipping it into stone.

You know, we can avoid that part with some of your money and just use things. Try things, poke around, get rugged and get robbed. Like that'll happen. You got to do that at least once. Like...

Coran: We've done that in the real world. Why not do it in the crypto world? Hey, there were rappers involved and it was cannabis it's a safe bet.

Gerbz: Exactly. Hey, I mean, crypto's no different. Those same guys are probably in crypto now.

Alright, cool. Well, you know where to find me as your journey continues. We can do a follow up at some point with some fresh set of questions, and I look forward to it.

Coran: Yeah, this was fun, thanks