1 Confirmation with Jeff and Dave, we interviewed Hollis Hedrich
On today’s show we interview Hollis Hedrich – Bitcoin is floating around $18,000 – where is it going next? There’s more purchases of Bitcoin than it being mined – what does this mean? Ethereum 2.0 upgrade and more with our special guest, Hollis Hedrick of “Blockchain Global Advisors.” . Join us!
Jefferson: Live from BTC Managers World Headquarters.
This is one confirmation with Jeff and Dave and Dave is on a holiday break and I’m here with a special guest, Hollis Hedrick. Why don’t you go ahead and introduce yourself to our listeners.
Hollis: Well, hello, Jefferson, thank you for having me. I really appreciate it.
Yes, my name is Hollis Hedrick. I have a consulting company called, “Blockchain Global Advisors.” And I’ve been in the finance sector for over 30 years now. I am a Fractional CFO for companies as well as providing Bitcoin education and cryptocurrency consulting services.
Jefferson: Awesome. Awesome.
Glad to have you on the show.
Well, news of the day Bitcoin is floating around $18,000 It seems like anybody in everybody getting into bitcoin. We got MicroStrategy just ratcheting up there buys another $400 million. There’s other institutions, they’re also buying $400 million. I read somewhere on BTC manager that there’s more purchases of Bitcoin than it being mined. What does that mean, Hollis, can you explain that a bit?
Hollis: More purchases of Bitcoin that have been mined. That’s possible.
Jefferson: In every week, right.
So, there’s every week or so only somebody picked coins that are newly minted. There are more purchases, new acquisitions of Bitcoin over and above that, which means liquidity in the market seems to be going down.
Hollis: Well, that means somebody selling I mean, there’s more-see, I don’t really even understand what you’re saying though. I mean, that’s a confusing statement to be honest.
Jefferson: That’s what I’ve read. And I didn’t understand it, either. And I was hoping, “well.”
Hollis: I didn’t read it either. So, I need more information as to what they’re actually proposing. I mean, they’re saying that. Well, that’s obvious, though, there’s going to be more sales of Bitcoin. Bitcoins traded 24/7 in every marketplace on the entire planet short of North Korea, maybe. So, we’re going to have massive amounts of sales and transactions, shall we say, and not much mine, there’s very little Bitcoin is actually being mined. Even at this point.
Jefferson: That’s interesting.
Well, I also read about a week ago that a Iran was investing heavily into bitcoin mining.
Hollis: Well, that makes sense. That makes sense completely, because Iran’s been locked out of the traditional financial system due to the US and Western sanctions. So they’re basically looking for a way to do business. And that’s not a unique thing for them. It’s not a unique thing, that is. It’s is a unique thing on a sovereign basis, I think. But there’s a lot of other entities who are conducting things the same way, not just with Bitcoin, but with other crypto as well.
Jefferson: And same with the current graphic card market, you can hardly find a brand new graphic card right now. According to Nvidia, they sold a huge portion of their newly minted graphic card to cryptocurrency miners.
Hollis: Yes, I’m not really sure what the current status on that is. They had in 2017, when the craze hit there, you couldn’t buy a graphics card for less than double what the actual price is. I had specific experience with that, as my son was trying to find a graphics card at the time. So, I assumed that, that could be the case today, but I don’t know.
Jefferson: So, I’m trying to lead up to something.
Do you think that this is in another bubble? I hear some of these people, they come up on CNBC or Bloomberg or whatever, and they compare it to tulip mania.
Hollis: Well, that’s ridiculous.
Jefferson: Exactly.
Hollis: That’s completely ridiculous. Is it a bubble right now? No, I don’t think it’s a bubble at all right now. But it certainly will become a bubble again. This is really the 4th cycle that yeah, that we’re in right now, and the prior three have all been fairly similar, just at different price points, where you get this irrational exuberance, shall we say is, is one way to describe it. Driving the price up in a way past the technicals and then it crashes and resets, and then we do it all over again. So, that’s essentially where we’re at right now. But, we’re under the all-time high of the last cycle, which was, $20,000. And what we’ve seen in the prior three cycles is, approximately an 18x move from peak to peak. So the prior cycle, the high of that cycle was $1,178. And then it peaked out at $20,000. So that’s about an 18x move.
So, there’s been a similar pattern in the prior two. In the prior two cycles as well. And now, if that plays out again, we would expect the price to reach $360,000 per coin, and then crash back to somewhere in the neighborhood of $60,000, or something like that. I mean, those are all just, that the type of headache really, but that is based-look, we don’t have anything to really basis on, this is something completely new. There’s never been anything like Bitcoin in the history of the world. This is the first iteration. People try to tie it to traditional financial metrics, and how other aspects of the financial system operate. And that’s really kind of a fool’s game. Because, it’s so different from everything else.
So all we can really do is, look at what it’s done so far in the very short history that it has and say, well, enough. If it does that, again, this is what it’s going to do. Now, at the $360,000 price point, that doesn’t seem outrageous to me, given all of what’s going on, and the sheer amount of fiat currency that’s in circulation right now. A lot of which is actually costing people to hold through negative interest rates. So I think it’s possible and we’ve seen some mainstream financial people call for prices in this cycle to be somewhere in the neighborhood of $300,000 $300, 20, 000, I think was something that was one of the major banks called not too long ago. So we’ll see.
But in my opinion, it’s definitely not in a bubble now at $18,250, which is where I just saw it was a moment ago.
Jefferson: That’s fascinating. And I really appreciate that.
Well, I’m also looking at, Bitcoins, younger brother, if you will, Ethereum, they recently did this whole 2.0 upgrade. Can you tell me more about what that’s about?
Hollis: Yes.
Well, the situation with the Ethereum is that, it was designed from the start using a proof of work algorithm, which provides the highest level of security in my opinion. But for that level of security, you compromise speed and efficiency and throughput. So for Bitcoin, that’s fine. Bitcoin is fine, being slow.
But Ethereum is not. Ethereum for it to be successful, needs to push through hundreds of thousands of transactions a second or whatever, a lot. So it, it can’t function any longer using proof of work, which means it’s slow and expensive. So, for a smart contracting platform, which is, it’s apples and oranges to Bitcoin.
So, for a smart contracting platform, it’s got to be fast and it’s got to be cheap. So in order to do that they’ve had to completely change the way that the entire platform works. So yes, this month earlier, they launched Ethereum 2.0, which is a protocol based on—
Jefferson: Proof of stake.
Hollis: Yes, proof of stake.
Which I’m not going to go into the details on. But it is a lot faster and a lot cheaper ultimately. But that system isn’t completely up and running, the system itself is but the old contracts, the existing contracts have are still on the old proof of work system. And over the next few years, they’re going to be migrated through additional upgrades and forks, on to the proof of stake algorithm. platform. So, it’s not a done deal by any means and the risk is still high.
I like Ethereum a lot. I think that Ethereum most likely will be the smart contracting platform that dominates the future. But it’s not a guarantee by any means, at this point. And what investors need to understand is, the different risk profiles between Ethereum and Bitcoin, in fact, the different risk profiles between Bitcoin and everything else. Because, Bitcoin doesn’t have to do anything else, it literally could be just fine, the way it is, it doesn’t have to be fast, it doesn’t have to have a huge throughput, all it has to do is be secure, it has to be the most secure way to store value, which is exactly what it is today. Because it’s very simple.
So, if you have a billion dollars, are you going to put that in the second most secure bank, in your opinion, or the most secure bank?
Jefferson: Good point.
Hollis: You’re going to put it in the most secure bank, right. Because that’s all that matters. You don’t care about your checking account, you don’t care about buying cigarettes or chewing gum, with that billion dollars. All you care about is security and that’s why Bitcoin doesn’t have to do anything else. Because people are confused, they think you have to be able to buy cigarettes with Bitcoin, you don’t have to buy anything, you really don’t have to buy anything with Bitcoin. All you have to do is be able to protect your money. Then when you take it out, and you put it in something else, if you want, you can buy anything you want, and buy anything you want with Litecoin to change a little bit of into Litecoin, and you can buy all the cigarettes you want.
So the risk profile of Bitcoin is night and day, with everything else. In my opinion, it’s very low risk. And that’s a very controversial statement. But I do not believe that there is any possibility of Bitcoin being shut down. I believe that Bitcoin already has the network effect, which is absolutely critical in this regard. And I think it’s set up well for success into the foreseeable future.
All the others, you can’t say that about.
They all have to do something else. And that puts them in a completely different risk profile. That’s what I think is the starting point for people when they’re considering what they want to invest in. And that’s the way that I kind of look at things and not kind of look at, but that’s the way I do look at things in general, not just crypto, but, I tend to look at the risk first. There’s a very specific reason for looking at the risk first.
And the reason is that you don’t want to look at the benefits first because then you get lost in the benefits and you never think about the risk oftentimes. So, you look at the risk first and then go from there. So, all the others are significantly higher risk, I mean, not just that they’re much, much higher. So, you want to get your position in Bitcoin. Then if you’re interested in the others, that’s fine. Start taking a look at those but first get your Bitcoin position.
Jefferson: That makes sense.
But that said, I think a lot of these investors, early investors, if you will, they may first find out about cryptocurrency through one of these other projects, for example DeFi or Polka dot, pick something.
What would you say to those particular investors that are to a large degree during a speculative investment. I would say to avoid those speculative investments at this point. That would be my advice. The DeFi protocols are extremely interesting. I think they hold great promise and great value. But my concern is this, is that I’m not convinced of the security. Here’s the thing, where we’re at right now, really the only thing that’s important, in my opinion is that people obtain a position and they hold the position for a number of years. Because the appreciation that we’re going to see in crypto and Bitcoin in particular, even from where we’re at now at $18,250, is going to completely shock everyone. Okay, so don’t waste your time, effort and take on additional risk, trying to skim off a few points. Okay, that’s my opinion.
Put your attention and your efforts into acquiring a position and hottel it sit on it, okay. Because that’s where you’re going to make your money. I’ve seen so many people get lost into trading. I don’t like trading at all. I’m not a trader, I don’t I have a philosophical aversion to trading to begin with. Because what trading essentially is, it’s a zero-sum game. When you trade any asset, okay, you’re not creating any value.
All you’re looking to do is take value from somebody else, and put it into your pocket. Okay, if you’re good at it, and you’re lucky, that’s what happens. If you’re bad at it, somebody takes your value and puts it into their pocket. But the reality is that under no circumstances any value actually created.
I have a philosophical aversion to that, in general. So, I don’t trade, I don’t think traders are bad people. It’s an activity that I don’t take part in. And I think that where we’re going with the world, that type of activity is not going to be the way things work in the future. I know that’s a very controversial statement, because it means that everything’s going to change, which is exactly what’s going to happen.
Jefferson: I agree with you on that.
But to take a small step back to trading for a moment, just to share a short story, I did meet one such trader that was actually very, very good at it. And I tell you, they’re a completely different person than you and I. Their head works completely differently. And they operate sometimes and split-second interval, they spend hours optimizing thing down to get that extra 10th of a second, because that’s the difference between a profit and a loss for them.
Hollis: That is today most certainly a 10th of a second. You’re slow at a 10th of a second.
Jefferson: Yes, exactly.
[laughs]
You’re frigging tortoise.
And that and that’s another reason why average people, average people should not engage in trading cryptocurrency there is absolutely no justification for it whatsoever. Because, first of all the markets don’t operate like anything they’re used to. So, they’re going to go into it and expect things to work in a similar fashion and they don’t, the volatility is just is so much greater. The markets are moved because they’re so small. They’re moved in different ways and they’re moved by different entities. There’s certainly manipulation. There’s no doubt about that. It’s a different form of manipulation, though than the traditional financial markets which are also all manipulated today.
Jefferson: Yes.
Hollis: But people, they’re not they’re not prepared for it. So again, for the average person, don’t get involved in in trading, don’t get involved with DeFi yet. I think d phi is going to be something we definitely want to take advantage of and work with in the future. I just don’t think that now it makes sense. I think the risk is elevated and the real returns are going to be gained just through simply huddling.
Jefferson: Right, that makes sense.
Again, this is such a fascinating time just to touch on the other thing, you also touched on that the world’s going to change. I’ll just share with you a minor tidbit when I wrote my book, “Seven Deadly Crypto Sins” in which I analyze all the things that Vitalik Buterin was saying, I pretty much correctly predicted that DAO was going to lead the next charge and it sure it did. You can see just like everybody’s setting up and DAO. So, what do you think things are like going to be, say two or three years from now?
Hollis: Oh, gosh.
I don’t know. It’s too short of a time period.
Jefferson: Okay, 10 years.
[laugh]
Hollis: 10 years.
I think that—
Yes, I don’t even know if it’s in 10 years.
I’ll tell you where I think we’re going though, we’re going to a world that is the complete opposite of where we’re at today. Okay, we operate in an environment that is, I hate to use the word immoral because there’s religious connotations to immoral but it is immoral.
It is completely manipulated. Every financial market on the planet is heavily manipulated with the golden precious metal markets being the most manipulated even more than all the rest, but they are all manipulated.
I think , people, they’re not focused on doing the right thing generally. They’re focused on doing what’s going to get them the most money. As crazy as it may sound, I think that those things are going to change and that we are in a paradigm shift from this paradigm based on corruption and immorality and corruption most certainly everything has been corrupted, you look at the all our political systems, you look at our financial systems, you look at just the systems in general, and they are all corrupt.
Let me talk for a moment about where that corruption stems from, and it’s my opinion that that corruption stems from, a corruption of the money supply. Because the money supply is the basis for societal cohesion. Okay, we must have money that can be trusted. Otherwise, everything breaks down. And that makes sense. Because the money is the lubrication of society. It’s what facilitates the economic activity, the business activity, it facilitates everything, it’s like the foundation. And when the money supply is corrupted, as it has been entirely since Nixon took the United States off the gold standard closed the gold window in 1971. The money supply has gone from bad, which it was at that point, still but bad to worse.
Jefferson: Yes. That’s been the thing.
I saw a chart somewhere. If you had a dollar—
Hollis: That corruption filled society through all levels of activity. It’s infected everything, shall we say. So I believe that we are on the a complete breakdown of the monetary system. I think this is fairly obvious when you look at interest rates, and the amount of money that’s having to be created now to just keep things afloat. And that’s not going to get better. There’s no way it can get better. There’s no way in my opinion that a corrupt system can be uncorrupted once it’s corrupted. So, it’s going to continue to advance and basically implode completely at some point.
And when that happens, I believe that, that’s going to have a devastating effect on all the economies around the world. Because, every economy in the world, every country in the world is on fiat now is run on fiat currency, there’s no real money in the world today. So what’s going to happen is, we’re going to get a wide scale wipe out, shall we say, of all the currencies in the world, and it’s going to happen fairly quickly, I think once it gets going. Basically, that’s going to open a window, and that window is going to be filled by crypto and people are going to-I see it working, I see it playing out just perfectly be in timing wise.
Because right now we’re building the infrastructure for crypto, it’s still so new, it’s only 10 years old. I mean, this is still in the very beginning, even though bitcoins at $18,000 today. It’s still in the very beginning. But what’s happening is that we’re building the infrastructure for it, and building, , all the systems and that are going to be used or needed for everything to actually run on crypto. When the system that we have now the monetary system that we have now is, done finally.
Then crypto is going to be perfectly positioned to just move in and take over. I think that’s what’s going to happen. So, whether that takes 10 years, I could see it happening. I see the breakdown of the monetary system—
Jefferson: Already.
Hollis: Yes.
I’ll tell you Jefferson that, most of these trends have been in place for quite a while now. I mean, this whole system, this whole problem that we’re in, it started back with the collapse of Lehman Brothers in 2007. We are in a depression that started back then. The roots of it went much farther back, the trigger point was that. Nothing was ever fixed. It was basically just papered over most people, a lot of people understand this, that just massive amounts of money were printed, just to keep things afloat, and now we’ve reached the exponential stage. So, that’s how I see it playing out whether it’s 10 years, I don’t know, maybe fewer, I couldn’t see it much longer, but it’s gone on much longer as it is back in 2012, I would have never. If you’d asked me in 2012, whether I thought we were going to be in 2020 and everything was still going to be kind of limping along as it was, then I would have said no. So, who knows.
Jefferson: Good point, I’m with you there.
Well, if I can make one small prediction near term prediction. I would say that any company, that basis if future on Ethereum 2, has a very good chance for growth. I really, sincerely believe that if they start now, and they start building it now and planning, building it all that takes time, right.
Hollis: Yes.
Jefferson: Two, three years from now, when things start to really pick up again, I think they’ll be well placed versus a company letter doing things like Facebook Libra.
Hollis: Yes, I would agree with that as well.
Now’s the time to get started if you’re in business on moving things onto a smart contracting platform and figuring out how it’s going to work with crypto, because that is the future. I have very little doubt of that in my mind. Of course, we can’t be sure of anything, the only thing we can be completely sure of is that our consciousness exists. Other than that, there’s zero that we can be assured of.
Jefferson: I’m defiantly with you on that one.
Hollis: It seems highly likely from my 40-years-experience and in business almost.
Jefferson: Well, I really appreciate having you on the show today. There’s a lot of fun and insightful even I learned something today and I always like learning something new. So, thank you very much for that.
I just want to lead off.
Do you have any final thoughts for our listeners?
Hollis: Yes, sure.
If they want to learn about crypto, that’s basically what I’m focused on now. I’m trying to educate people and help them understand how to use Bitcoin and crypto and just as importantly, why to use it. People invest in crypto are interested in it and sometimes they’ll ask me, “what should I invest in this?”
I’m like, “well, okay, but why?” Tell me why bitcoins important, and then then I’ll tell you whether you should invest or not.
And if you can’t answer that question, then you should definitely not invest.
Because the problem is that it’s so volatile that if you don’t have an understanding for it, and really have a belief in it, and I’ve seen this happen many times that you’ll just get you’ll get kicked out of your position, you’ll sell at the wrong moment. Because when it goes down, the stress will be so much you won’t have anything to fall back on. So, you have to understand it, you have to understand why. And then of course, how and also very importantly, how to protect it. So if people are interested in that I have a webinar, I give on a private basis for I charge $350 for that. It’s basically a two hour program comes with a set of notes, and also a set of internet links for further study. But, I’d also do that not on a personalized basis for free, just to help anybody, no matter their circumstances, understand it and hopefully get involved because that’s another nice thing about cryptos, you don’t have to be a big shot to get involved with this. Bitcoin, can be divided down into a Satoshi and no matter what amount of money you have, you can still obtain some.
So, I offer that webinar for free also not on a personalized basis. But it’s every Wednesday night at 4 o’clock pacific time, California time.
You can get to that by going to my website, which is bcglobaladvisors.com my company is Blockchain Global Advisors. So if people want to learn about that for free, or if they want personalized instruction, they can pay me $350. And I also have consulting services that I provide, subsequent to that if people want to go further with security or whatever other, portfolio design, things of that nature.
Jefferson: Awesome deal.
We’ll have all these web links available on our website at btcmanager com just click the one confirmation link and you’ll see the links to Hollis’s websites.
For my final thoughts. I just want to share with you, I really think that this whole journey has been absolutely amazing. I would encourage anybody to check out even some of the YouTube videos that are out there from Andrea’s if you’re a beginner. There’s a lot of people like Hollis here that can help you on a one-to-one basis. And you don’t have to go at this alone.
So again, this is one confirmation with Jeff and it was great to have you.
