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The Future of Millennial Investing: Crypto and Beyond

Jack Manley and Elliot Kallen, Meet the Expert

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Welcome to Season 3, Episode 2 of Meet the Expert® with Elliot Kallen!

In this episode, Elliot Kallen brings on Jack Manley, Global Market Strategist from J.P. Morgan, to explore the intersection of cryptocurrency and millennials. Cryptocurrency has gained significant attention in recent years. As digital natives who grew up in a world of rapid technological advancements, millennials have embraced cryptocurrency as a way to take control of their finances, bypass traditional financial institutions, and invest in the future. 

Meet Our Guest

Jack Manley, Global Market Strategist at J.P. Morgan

Jack Manley | Executive Director, Global Market Strategist | J.P. Morgan

Jack is a frequent guest on CNBC, Bloomberg, BNN, and other financial news outlets and is often quoted in the financial press. He graduated from the University of Chicago with a Bachelor’s degree in History. He is responsible for delivering timely market and economic commentary to institutional and retail clients across the United States and Canada. In addition, he is a contributor to the J.P. Morgan Long-Term Capital Market Assumptions and has authored numerous papers on both global and domestic economies and capital markets.

Elliot Kallen: Good morning and good afternoon, everyone. I’m Elliot Kallen, CEO of Prosperity Financial Group and I’d like to welcome you to another episode of Meet the Expert. This is gonna be a fascinating show because it’s going to be about millennials, which lots of people from the older generation don’t understand. Millennial investing, generation X, the demographics, and how they think differently than the baby boomers of the world. 

The second part of the show is going to be the most fascinating, and that’s because we’re going to talk about crypto. We’re not going to talk about FTX collapsing and how that happened. Maybe we’ll mention it. This is about crypto and the future of blockchain. What is it? Why is it? Why do you even care about having a crypto wallet? Things like that? Because I get asked, “Elliot, can you help me with my crypto wallet? Can you help me with my crypto Roth IRA? What is that?” We’re going to talk about that too. So this is really exciting. Let me welcome Jack Manley, who’s the Global Market Strategist for JP Morgan. Welcome, Jack.

Jack Manley: Thanks very much, Elliot. It’s good to be here.

What are the differences between Baby Boomers, Gen X, and Millennials?

Elliot Kallen: Let’s talk about three levels of investing or the three types of people that invest. That’s the Baby Boomers, who are they? That’s Generation X and the in-between eras, the Millennials. Who are these people and demographically how are they different personality-wise? Can we start with that? Because you are both an expert in that demographic marketing of this as well as crypto. We’ll get to crypto shortly.

Jack Manley: Yeah, that is I think the sort of foundational question you got to ask about this stuff. I’d like to think that as a millennial myself, I do have some sort of degree of authority when it comes to speaking about this generation in particular, you know, when we think about the baby boomers, those are going to be the individuals that were born right in the aftermath of the end of World War II. This boom of babies as all the servicemen are returning back home to the US, and that baby boom generation lasted through the early 1960s. 

Now shortly after the baby boom came Generation X. Generation X is the generation that is sort of defined roughly as being either the children of older baby boomers or sort of the rough contemporaries off by a few years of those younger baby boomers. So Generation X is defined as being born between 1965 and 1980. 

Then you have millennials. A lot of people talk about what Millennials are, and how to define them in the easy kind of age bracket. If you were born between the years 1981 and 1996. Now, interestingly, millennials back when I was in high school are known as Generation Y. So following up off of Generation X, right, there was a rebrand there that happened sometime within the last five or 10 years. Now we’re known as millennials and the generation after us, that’s another one that a lot of people pay attention to– the Zoomers, the Tiktok-ers.

That’s going to be Generation Z. So remember we go from Generation X, Generation Y (now known as millennials) to Generation Z, born between 1997 and 2012. Now because Millennials got that rebrand, I would expect that Generation Z gets a rebrand at some point. As I said, you know TikTok-ers or Zoomers, that kind of thing is floating around a little bit. But, Elliot, you know what is shocking to me when I was first doing this research is a lot of people think of the baby boom as being the biggest, most demographically significant generation in this country. 

And for a while it was but time works against you and age works against you. What I think a lot of people don’t realize is that there are more millennials out there, about a million people more than there are Baby Boomers. And there are more Gen Zers out there, about 5 million more people than there are Gen Xers. So this younger generation of Americans, basically people 40 and younger, make up more of the population than those of us that are older. So a pretty significant demographic story that I think a lot of people don’t fully comprehend.

Do millennials value trust as much as older generations?

Elliot Kallen: Well, that is interesting and I didn’t know that. So, we call those the Entitled Generation, which is a put-down, let’s face it. The Spoiled Generation, let’s put those aside because they’re just people. But there are different values because they were raised at different times. 

My father was born in 1915. So he had the Great Depression. He had World War II, and by the time he had children post-World War II, it was already the 1950s. We’re still very conservative in this country, before the 60s and 70s kind of through that from right to left, and everything changed and went inside out upside down. We’re still living in more or less that world today. Definitely not the 1950s and 40s today. 

So, the question that comes up is, how much do millennials value trust and advice compared with a generation or two before that? My world is about trust. If I earn you 40% this year in your account, but you don’t trust me, you’re still gonna leave me. If I lose you 25% but you trust me and you know I’m watching this and doing the best I can but the markets kind of going against us – you’ll give me the benefit of the doubt. What about millennials?

Business professionals shaking hands and building trust

Jack Manley: Yeah, so when it comes to how people my age, and perhaps people slightly younger than me or slightly older than me approach money management, that advice more broadly. I mean, you said to yourself, Elliot, you can’t think about this stuff as kind of a monolith. Everybody’s going to have a different opinion. That’s just kind of natural. But if you were to put that aside for a second, there are I think, a couple of different things that kind of define this generation that kind of set it apart from older generations. 

One of them is that millennials and by extension, Gen Zers are extremely well educated, much better educated than their parents or their grandparents at least when you measure it by the percentage of the population that has either a four-year college degree or some sort of post-college degree, whether that’s Master’s, a Ph.D., MBA, JD, med school, whatever. Whatever it may be, the percentage of people under the age of 40 with those advanced degrees is significantly higher than people older than that. I think there is kind of this understanding of, “I have a lot of education. I learned a lot of stuff. Maybe I don’t need as much help from somebody else.”

Maybe there is a false sense of security there. You know, that’s for other people to determine. But I do think that there is a sense of competence there in younger individuals because of their educational attainment. That is a little bit different from what you see from older folks. The other thing I would say that is a massive difference is that younger people were sort of born into the age of the internet. You know, I remember as a millennial sort of right in the middle of the pack. I’m 31 going on 32 this year, Elliot. I  remember growing up when we had dial-up internet, and you weren’t allowed to make a phone call when you were trying to browse the internet then eventually dial-up transitioned to DSL.

I remember when my parents got their first cell phone, and I remember when I got my first cell phone. I remember when the iPhone came out, and I remember when the iPad came out.  I was young enough that I was able to adopt this stuff. But if you think about people that are born in the late 1990s or early 2000s, they came of age with these things and there are some young individuals out there that don’t know a world without high-speed internet or smartphones or supercomputers in their pockets. And I think that it’s the rise of the Internet for lack of a better term, the social internet, things like Wikipedia, all of the information that exists out there on the internet. I do think that a lot of people, younger folks in particular, feel like they can kind of go at it alone. 

The last thing I’d say though, Elliot, is that the other issue here when it comes to having a conversation about advice as a relates to younger individuals is that we are experiencing what is known as arrested development. And maybe some people that are listening have watched the show before. I’m a big fan of the show myself, but arrested development means that we’re just developing a little bit later than our parents might have or our grandparents might have. 

Cellphone with internet access and wifi connection

So it’s not we’re not starting families. It’s not that we’re not getting married. It’s not that we’re not buying houses. We’re just doing all those things 5, 10 years later than our parents would have. And if you are 30 and single, you don’t own a house,  you don’t own a car, and you don’t have any kids, your financial needs are not particularly complex. So if I’m sort of in that camp, what do I need financial advice for, right?

“At 31, I have a very simple financial situation. Give me 5 or 10 years and that will have changed in theory. Then all of a sudden I do start to need some advice.”

So, even when you put aside the educational component, even when you put aside the internet, smartphones, and what that’s done for information access – I do think there is also this idea of arrested development. That means that we’re looking for advice, maybe just at a later point in our lives.

How does the student debt issue in this country hold millennials back from investing?

Elliot Kallen: Great. So just a few more questions about millennials and then we’re going to talk about what’s exciting out there, which is really getting back into crypto. Alright, so when we’re talking about millennials, I know they have the highest student debt and they have the best education. That high student debt, is that a burden to them mentally?

Jack Manley: It is. When you said that we are an entitled generation, I mean, you’re right. Everybody says that about us. But I do think it is important to stress here that there are certain burdens that we face as a generation that older generations simply did not deal with. And the best example of that is going to be the student debt burden. Student debt in and of itself is not a new thing. Student debt has existed for 100 years for as long as debt has existed and as long as you could go to some sort of institution of higher learning student debt has existed. But the statistics here around Millennials compared to what you see from the Baby Boomer generation with receiving Gen Xers, I think is pretty significant. 

The latest survey that I’ve seen out there is that if you look at 40% of all Millennials out there have student debt, and that student debt is going to account for just over 40% of their annual income, right? It’s almost 50% of what they bring in every year. That’s the total loan balance. When you compare that to what was going on with Baby Boomers back when they were our age, fundamentally different story.

“It’s not 40% of baby boomers that have student debt. It’s 17% of baby boomers have student debt. It’s not a student debt-to-income ratio of 43% like it is for millennials, it is a student debt-to-income ratio of 10% for Baby Boomers.”

So the financial burden there is significant and I think one of the scariest things when it comes to having a conversation with people my age. We’re able to track the ratio of wealth to income going back about 40 years. 

So basically how much money you have versus how much money you make and you want that number to be higher, right? You want that number to be higher because of what may have happened to your stock portfolio or your bond portfolio or the value of the house that you own. And what we can do is compare how different age groups have done over the last 40 years. What is fascinating is that generally speaking, America has been very, very good in terms of delivering that wealth to individuals. That ratio of wealth to income has increased for every single age group over the last 40 years, with one exception, and I bet you can guess what the exception is right? 

It’s those of us that are under the age of 35, the only demographic group over the last 40 years that has seen our wealth-to-income ratio decrease, and I would argue that at least a decent portion of that is this very large student debt burden. The other thing I’d say on this, Elliot, is that when you have all the student debt floating out there, I think it does encourage a little bit of decision paralysis. 

You know, you have so much to worry about. You’re fresh out of school, you got all this debt, you got to pay your rent, you gotta pay the bills, in some cases for the first time ever, right? You’re kind of out on your own and a lot of young people get paralyzed by that financial burden. They feel like they don’t have the luxury or the time or the ability to invest. And that in and of itself is its own problem, right? Because as you know, as a financial planner, if you don’t start early, it’s a lot harder to catch up. And so that’s another issue I think that is associated with that student debt issue. That is worth talking about.

How do we communicate long-term financial values to millennials?

Elliot Kallen: So we’re talking with Jack Manley, who’s a Global Market Strategist at J.P. Morgan and I’m Elliot Kallen. 95 through and 480 503. Let me give you one more spot there and then we’ll go to crypto if that’s okay with you. I have twin millennial children. And when they were going to school, the study of the Roman Empire happened two weeks ago and then it became World War II, and then Vietnam and it was over. Their perspective of time is somewhat irrelevant to what really happened. 

I think for my children, World War II happened a few months ago. It literally is that and if you ask kids they have no perspective anymore about that or what happened. And so here I am in this industry, talking about people long term, staying in the market, building a portfolio, and thinking about retirement planning. Retirement planning for people is a million years from now because that’s when retirement is. 

40 years, 30 years, it’s a million years. My son actually asked me, “Did you watch Babe Ruth play baseball?” And I said, “Oh my goodness, Babe Ruth played in the 1920s and 30s. My dad watched Babe Ruth and went to Yankee Stadium.” A few minutes went by. He couldn’t grasp that. The timeline of this generation is just shortened to ridiculous lengths. So how do we, and not just the financial industry but everybody out there, how do we communicate this long-term constant to millennials?

Jack Manley: I would think that this kind of comes down more broadly to communication in general with the younger audience. I think some of what you’re describing there, Elliot, has to do with how we consume our information. And you know, again, this generation is not a monolith. For example, I’m not particularly big on social media. You know, I have an Instagram but I don’t really do much with it. I don’t have a Facebook, I don’t have Twitter, or Tik Tok account. But if you think about the way that younger individuals consume content, a lot of it is digitally focused, which I think makes sense. Especially because we all have our smartphones in our pockets. But a lot of them are also bite-sized. 

It’s condensed. It’s basically like the whole format of Twitter. You got 150 characters to get your point across. You better be pithy and get down to it immediately. So, I do think that rather than trying to tell these long, long drawn out kinds of stories, it is important to figure out how to more accurately or appropriately communicate with this younger generation. This means kind of making it to the point, being a little bit more digital focus kind of being a bit more focused on reigning in the story. You know, it’s kind of funny from my perspective at JPMorgan and doing a lot of writing for our blog that we maintain on the website. I was a history major in college, Elliot, and so I did a lot of reading a lot of research, and a lot of writing. 

I’d like to say that that major was very, very helpful for a lot of the things that I do right now. But the one exception to that is the writing component. I had to completely relearn how to write when I entered the real world because, in school, you’re taught all about page minimums, right? You have to write a minimum six-page paper a minimum 8000-word paper. Now you’re dealing with page maximums. 

Now you’re dealing with word count maximums, our marketing department constantly beats me up when I try to write something for them and they say you got to chop this down by 100 words, you got to chop this down by 200 words. So it kind of again, you’re even seeing this filter through into our side of the industry. You got to be punchy, you got to be to the point and I think that that’s how you communicate.

Crypto-Defined and Blockchain Technology Basics

Elliot Kallen: So let’s transition this, Jack, back into crypto. Because crypto is the new Wild West. Millennials are the ones investing primarily in crypto. They’re the ones that are going to be excited about crypto. Baby Boomers, they’re just gonna shake their heads. It’s a crypto wallet, but what is it and why is my wallet gonna get stolen or read by somebody that has no concept of that? So let’s talk a little bit about this wild west. There are coins. There are tokens. There are platforms. We’re confused. 

A variety of cryptocurrency tokens and coins

What’s Ethereum? Is that a token or platform or coin? Mining Bitcoin. How do I mine that? Is there a shovel? How does this all work here? So let’s spend a few minutes explaining to us and we’re gonna have people that are novices listening to this and we’re gonna have some people that are super sharp and already in the coin and crypto business. So we were putting this out on two sides. If it’s too simple and you’re listening to this, bear with us. We’ll make it more complicated in a moment. And if it’s too complicated, bear with us. We’ll simplify it for you as well. 

Jack Manley: So when it comes to the crypto landscape, I think the first thing that’s really interesting to do here is when you’re talking about Bitcoin or Ethereum, or any of the other kinds of coins or tokens, to use some of the words that you were using, Elliot, they’re all kind of captured under this umbrella of cryptocurrencies. When we say crypto, it’s short for cryptocurrency. I think that cryptocurrency is a misnomer. It is an inaccurate way to refer to what these things are. I come at this from the perspective of being an economist and my boss is a Ph.D. economist at JP Morgan. 

“A currency satisfies two real things. The first one is it has to be an effective store of value, and the second is that it has to be an effective medium of exchange.”

So, what does that mean? Let’s take the US Dollar as an example. If I were to go to the bank and draw out $1,000 in singles, stuffed them under my mattress, and came back 12 months from now, that $1,000 in singles would be able to purchase more or less what it was able to purchase today, minus of course the impact of inflation. So, the dollar is an effective store of value from that perspective. 

When we talk about a medium of exchange, it means being able to go into a store and purchase something with that currency. You can go anywhere in this country and in some cases really anywhere around the world, pull out cold hard US cash and buy whatever it is that you’re looking to purchase. Now let’s contrast that to cryptocurrencies, to Bitcoin, to Ethereum, to whatever it may be. First of all, you cannot go to Starbucks and buy your latte with a Bitcoin right? So it is not a particularly effective medium of exchange. Then we think about if it’s a good store of value, I would argue very clearly not. I mean, what kind of store of value fluctuates from $85,000 a unit to $16,000 a unit over the course of a nine-month period, right? So the volatility in the value of some of these cryptocurrencies is just way too wild to call it an effective store of value. 

Let’s say for kind of laying the foundation. Cryptocurrency is a misnomer. These things are not currencies, at least not right now. They are tokens to your point they are. I think that’s probably the best way to think about them, they’re tokens. There are now a couple of different reasons why you may want to own one of these tokens or one of these assets. 

One of them is that crypto has historically speaking been a pretty decent diversifier in a portfolio in the sense that if you give it a long enough time period, it is not correlated to anything. You know, you can look at what’s going on over the last 18 to 24 months and say that crypto is very highly correlated with risk assets. So the S&P 500 sells off, and the crypto market sells off. They’re selling off for similar reasons, namely higher interest rates. 

But if you wind the clock back for five years, crypto is much more tightly linked to what’s going on with gold than, to what’s going on with interest rates. Three years before that, it was more in line with stocks, three years before that again, more in line with gold and bonds. So fluctuating correlations mean that it sometimes can be a good portfolio diversifier if you’re a long-term investor. 

The much more exciting way to think about crypto is blockchain technology. A lot of people will talk to you about the blockchain. They may not know exactly what the blockchain is. An easy way to think about this is the blockchain is a database that stores information very similar to the way Microsoft Excel stores information. But whereas Excel or a spreadsheet manages that information in rows and columns, Bitcoin or blockchain rather does something called blocks. Basically, a block is an assembly of all this information that is verified and linked up together and then each block is linked through a chain by someone who is mining. 

Mining Bitcoin, No Shovel Required

Mining itself is a very complicated procedure. You do not use a shovel or a pickaxe for it, thankfully. You do need, at least historically speaking, a very, very powerful computer. You need those very powerful computers to solve very, very complicated sorts of computational problems. And by solving those problems and verifying a transaction, you create a block and you were rewarded for that work by a new Bitcoin in this instance, showing up. But blockchain showing up is very, very cool because what it does is it allows for sort of a decentralized disintermediated power structure between two entities. 

Elliott, you’re in a good mood and you want to send me 1000 bucks today, right? Because you love this thing so much. You’re gonna send me over some cash. I’m not saying you have to but you know, it would be nice. If you were to do that, how will we do it today? You get on your bank’s platform, type in some information, and you’d hit go. Four days later that money would show up in my bank account, right? That is insane. 

“This is the 21st century. We have supercomputers in our pockets. Why does it take three to four days to send money from one person to another person? That can be fixed through the blockchain.”

Another good example of this is looking at supply chain efficiencies. There was a very famous E. coli outbreak at a national burrito chain a few years back, you may remember when that happened. It took them months to figure out where the bad lettuce came from. And it totally tarnished the reputation of the business for years and years. 

Well, if you had bad inventory, managed through the blockchain, you’d be able to wind back the clock at any given point and see exactly where that bad crop came from, shut it down, and reopen your facilities. So if you want access to the efficiency that is granted to you through blockchain technology, you got to pay to play and the way that you do that is by owning the token and owning a stake in the infrastructure. And so now this asset is not just a diversifier. It’s almost an equity-like investment in some sort of technological innovation or revolution that is coming our way. Almost as if you were able to invest in the internet 30 or 40 years ago. 

How can the transparency of blockchain technology allow illegal activities?  

Elliot Kallen: From an illegal side, Jack, I know the Department of Justice has just opened up a number of inquiries about illicit activity through blockchain. Drugs, whatever. If this is so transparent you can’t do anything, how can we have illegal drugs being sold through it?

Blockchain technology

Jack Manley: People that want to do bad things do like the idea that it is disintermediated, they liked the idea that there was no centralized authority, and they liked the idea that you can anonymize yourself in the ecosystem. I said earlier, it’s not an effective medium of exchange. I guess I should clarify. That it’s not an effective medium of exchange for a cup of coffee or a roll of toilet paper. It is an effective medium of exchange if you want to buy an AK 47 on the internet or you want to buy you know, crystal meth on the internet, or if you want to do illegal things with criminals. 

“Cryptocurrency has historically been the medium of exchange in that space. What’s very interesting about this is that government authorities all around the world, not just in the US with the Department of Justice, are very keenly aware of how bad this is.”

It wasn’t that long ago, I think was this time last year, when there was an energy pipeline on the east coast of the US that was held for ransom by internet pirates, and it sort of shut down energy transmission for a couple of days and exacerbated all the energy problems that we were facing. Well, guess what the pirates are looking for, or what the ransom was being paid in? Cryptocurrency. in Bitcoin so you have a lot of attention being paid to this space. 

It’s a double-edged sword here, right, because a lot of people that like the idea of investing in cryptocurrency or Bitcoin more specifically, without all the illegal, shady, nefarious stuff that’s going on in the background, are excited about this idea that it’s going to become more regulated. When it becomes more regulated, all of a sudden institutional investors are going to be more interested in when institutional money comes in. 

It legitimizes the space and now all of a sudden, this isn’t fringe Wild West technology anymore. It’s mainstage, normal, in the same conversation as stocks and bonds. But the reason it’s a double-edged sword, right is that the more focus that’s paid on it, the more regulation that is associated with it, and the less useful it is in terms of satisfying a lot of the reasons why people like Bitcoin as an asset, as a currency. It’s because of its anonymity and of its decentralized structure. So you are giving up some of the benefits that make Bitcoin worthwhile in exchange for increased legitimacy. That is going to be a very interesting tug-of-war as we move through the next few years. Kind of figuring out where that shakes out in terms of demand for the token.

What is the financial outlook for cryptocurrency in the next 5 to 10 years? 

Elliot Kallen: When you put on your futures hat, talking about the next five or ten years, give me the future outlook for crypto, Ethereum, and Bitcoin.

Jack Manley: I’d say first of all, that none of this stuff is going away, or at least at a high level, the concept of cryptocurrencies and blockchain technology. They’re not going away. Some of the world’s largest companies are already building in-house blockchains to solve some of these problems that we were just talking about. J.P. Morgan has its own blockchain. You cannot buy a JPM coin because it’s all internal. It’s not a publicly available blockchain. But we have a blockchain that we have been developing for years now to streamline some of the banking processes that we do as a large financial institution. 

Another good example of a very large company that takes advantage of the blockchain is Walmart. Walmart uses blockchain technology to sort of figure out logistics around a supply chain issue. So some of those issues that I mentioned were the E. coli outbreak at the burrito place. Well, that’s not really something Walmart necessarily has to worry about with Blockchain technology. So this is already adopted. It is already proven. 

The problem though, Elliot, is that because all of this is based on technology, there’s nothing really physical that goes into it. You just need to be a smart, capable computer scientist basically to engineer this stuff. The barriers to entry are very, very low. And because this is such a new industry, there is a ton of creative destruction going on out there. There is nothing stopping you or me other than a lack of education from creating a coin tomorrow that is better than whatever the coin of today happens to be. 

So, as long as there is that ability for creative destruction to keep sort of changing the industry, you never want to invest in just one or two tokens because that one or two tokens may be worthless tomorrow if they get disintermediated by something new. Whatever the new flavor of the week is maybe tomorrow or the next week or the next month. 

When I think about what the implications are for this over the next five to ten years, not only is this stuff not going away but you got to pay attention to it. When you decide to be an investor in the area, you have to be very broadly diversified. You don’t want to own one token or two tokens. You want to own 10, 15,  20, or 100. The nice thing is you could buy all this stuff with fractional ownership, so you don’t need to buy a whole Bitcoin at $19,000 a coin or wherever it is right now. You can buy two cents of Bitcoin if you want to do that. 

A Diversified Crypto Wallet 

So, you build a portfolio with a lot of these different coins. I would guess based on the institutional adoption that 10 years from now we’re going to be thinking about cryptocurrency as we think about good old-fashioned equities. Portfolio managers will be putting together portfolios of tokens that solve specific problems, that will look like they’re undervalued, that have a good fundamental tailwind, and in theory, the good ones will make their clients a lot of money.

Elliot Kallen: I can tell Jack that you believe crypto is here to stay, Ethereum is here to stay, but not necessarily Bitcoin, correct? 

Jack Manley: That’s kind of the way I think about it. I don’t really understand what the point of Bitcoin is, frankly. Ethereum as an offshoot of that has a little bit more flexibility. It’s more of that platform rather than currency and it makes it a lot more interesting.

Crypto wallet

Is a cryptocurrency US Dollar on the horizon?

Elliot Kallen: Why don’t we have a crypto dollar?

Jack Manley: Ha, I think it’s more of a question of when and not if. We know that the People’s Bank of China, PBOC, has been pursuing a crypto yuan. There is no real reason why we couldn’t digitize the US dollar through Treasury and the Federal Reserve. My guess is that things like that move very, very slowly because this is a large economy and it is a large bureaucracy. You can’t really play around too much on the edges lest you, you know, throw the entire global economy into chaos. I would not be surprised Elliot if, in a few years from now, we do start to hear much more concrete discussion around a crypto dollar and around a dollar that exists on the blockchain. 

Elliot Kallen: Wouldn’t put basically all the other tokens and currencies out of business?

Jack Manley: Not really because in that case, the crypto dollar would be a currency that wouldn’t be a medium of exchange, it would be a store of value. The USD coin or whatever they would call it, it’s not going to fluctuate the way that Bitcoin currently fluctuates, but that USD coin, or that fed coin, or whatever it may be, is not going to be a platform upon which these efficiency improving programs are built. 

There is still going to be a whole other ecosystem out there based around that Ethereum of architecture that solves those very specific problems. Problems like clearing derivatives trades or transferring assets much more quickly, or figuring out supply chain issues. I do think there is room for both of these things. But, that again is another reason why I’m not a big believer in Bitcoin, in particular, it’s the Ethereum ecosystem and then whatever else comes more legitimately through the US government.

Elliot Kallen: Any other coins, Jack, that you are a big fan of?

Jack Manley: Well, I can tell you I own a few different coins. I came in last year and I owned Ethereum, Cardano, and Solana, or was it, Solano and Cardona? I don’t know. Those are two different coins that are good examples of disintermediating finance and a peer to peer cash transfers.

“They made me about the 50% return over the course of three weeks and I was like, Man, this is the greatest stuff ever. I can’t believe I didn’t get in on this sooner. The portfolio is now down about 80% from those glory days of about a year ago, so I have felt the crush just like everybody else.”

But Elliot, I will tell you three years ago I thought all this was a bunch of nonsense. Now I think that most of it is nonsense, but some of it is kind of interesting. I am not a big whale in this space. I wish I had that kind of money to toss around. But I think that what you want to do is you want to buy back that diversified kind of basket of all these different coins. Some of them are going to stick some of that some of them won’t.

Closing Thoughts and How to Get Started

Elliot Kallen: So to wrap it up here, you’ve been great Jack, I really appreciate this. If my clients come to me if prospects come to me and said, “Hey, I watched this pretty exciting episode and I need to have some of my portfolio in crypto, Bitcoin, and Aetherium, but I don’t even know how to do it.” How can I help them in two or three different ways?

Jack Manley: So there are a couple of different exchanges that you can use here. So you can kind of do a little bit of due diligence and figure out which exchange makes the most sense to you. I personally use Coinbase which is not an endorsement of Coinbase. I’m just telling you, that’s what I happen to use. They seem to be quite liquid, quite solvent, with no real problems on that front. 

You will not be able to buy these tokens, at least not right now through your bank, or through most brokerage platforms. You typically have to go through a specialized provider, although many of those are regulated by the US government, unlike say maybe FTX to mention something that you brought up earlier. That’s one thing. 

Another thing I would say is that you have to figure out how you want to hold this stuff. You were talking about wallets earlier. Elliot, it all has to do with how much money is on the line. It second has to do with how distrustful you are of institutions. Then, a third is it has to do with how trustful you are of your own ability to not screw stuff up because you can keep your assets on an exchange on the website. You know you get an app you login to view them just like you would view assets in your brokerage account. 

The problem though is just like with your brokerage account, this stuff is not FDIC insured. And if some crypto pirates were to show up, hack, and take all your money, well you’re just kind of out of luck, right? So for people that have a ton of money in cryptocurrency, what they usually do is they take that offline, off the exchange, and put it onto something physical like a USB thumb drive as an example. 

So now you have removed the risk that is associated with any one particular platform getting hacked and having your money stolen. But, if you’re gonna take all that money and put it on a USB thumb drive better not lose it, right? Because if you lose it, you’re in the same kind of situation. You’re in between those three things to figure out how you want to hold this stuff. 

Finally, Elliott, even if you’re a big believer in this space, just given how volatile it is, just given how nascent the industry is, we talk to clients about holding cryptocurrency. It’s not 10% of your portfolio. It is probably low single digits. If you really want to get wild with it, maybe 5%. But you have to be very, very comfortable understanding that whatever you put into crypto you can lose tomorrow. That’s just the nature of the beast right now. So don’t put in any more than you are comfortable losing entirely and as a result that usually shakes out to around 1 or 2% of your portfolio that gets into crypto.

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