Sorry Will, you are a much better poet than I!

In today's podcast we talk about the differences between centralized and decentralized exchanges as well as some news items.

Hey everybody.

The one on this podcast is a financial advisor.

All information presented on this podcast

is for informational purposes only.

Now that we have the legal stuff out of the way,

let's jump on in.

Welcome to the Generational Wealth

with Cryptocurrency podcast.

I'm your host, McIntosh.

And today we're going to be talking about

how do you buy crypto?

So these last few weeks,

we've been talking a lot about crypto.

And one of the things that I have pretty much avoided

is how do you actually buy it?

Because I wanted to give the listeners

some basic knowledge about crypto

before they truly think about investing.

Understand with crypto, as with any investment,

of course there's risk.

The cryptocurrency market can be quite wild at times.

We've discussed this.

But that being said,

there are obviously lots of people who are choosing

to invest in crypto.

Again, just as a brief recap of my theories on this,

I would recommend that you,

if you're going to invest in crypto,

that you really look at it over the long term.

We're not trying to make a quick buck here.

We're looking at five to 10 years down the road.

So where do we buy our crypto?

Well, there's a number of options.

So there are two main categories

of places that you can buy crypto.

These places are called exchanges.

And the choices are,

you can either buy it

from what's called a centralized exchange,

or you can buy it from a decentralized exchange.

What do I mean by that?

Well, with a centralized exchange,

you have a company who sets up a business,

who their business is to provide this exchange service.

They charge fees for that as part of that,

and that's how they operate.

An example of this certainly would be

probably the most prominent one at this point

would be Coinbase,

a company that actually just recently went public.

They were valued at quite a bit.

And Coinbase has been around for a long time.

I believe I bought my first coin from Coinbase.

I looked back at my transactions on Coinbase,

and I go back to 2014.

I don't think I'd bought anything before then.

So anyways, they've certainly been around for a while.

Solid company, going public,

I do believe ultimately is going to be

very beneficial for them.

So anyways, they're certainly one of the candidates.

Another one would be Kraken.

Kraken is a company that's based out of San Francisco,

if I'm not mistaken, another large centralized exchange.

And then you've got places like Binance,

and Bybit, Polonex, I believe is still around.

So Gemini is another one.

These centralized exchanges to an extent can come and go.

If they're early in their history,

I would be a little bit suspicious of them,

not that I would necessarily assume

that they're being malicious,

but they have growing pains sometimes.

As an example, I think I was looking,

well, I was cleaning out my passwords.

I move into a new computer,

and I found a account on an exchange called Liqui.io,

something like that, almost like liquid, but it's not.

And I had made an account on there at one point

to buy some currency that was not available

on the bigger exchanges at that point.

And I made my purchase and eventually sold that

or moved it off, moved it to another exchange or whatever.

But the reality is that exchange is no longer around.

I actually went to their website and it's gone.

And to be honest, I don't even know why.

I don't remember, I haven't looked it up.

One very famous example of a crypto,

of a centralized exchange having a serious issue

was Mt. Gox, which was one of the oldest crypto exchanges.

It was certainly at a point in time,

it was the world's largest crypto exchange.

And unfortunately, it had about 850,000 Bitcoin

were stolen, hacked from their website,

from their network really.

And I do remember that I actually had some money

on Mt. Gox, not a huge amount.

At the time, I didn't really have a very large amount

in crypto at all.

And eventually I recovered some percentage of it.

They were required to pay back that.

And I didn't get all of it, like 80% or something.

But of course, I also lost the opportunity cost

because it was months later,

it was probably six months later or something

that I got that back.

It may have even been longer than that.

I don't know, it's been quite a while.

So these are things that you have to keep in mind.

We're gonna come back in just a minute

to how you keep yourself safe,

because that's a very important topic

when we're talking about this.

But we're gonna talk about decentralized exchanges first.

With decentralized exchanges,

they're a smart contract running on a network,

typically Ethereum.

So they don't, it's not the same experience.

They do tend to do better during massive spikes.

When you have, when the price of a coin jumps a huge amount,

it may swamp a site.

They may swamp a centralized exchange, okay?

The decentralized exchanges certainly recently

have done much better during these large run-ups

in Bitcoin and Ethereum pricing.

So there's other benefit.

You are more in control of what's going on.

Something that you fundamentally need to understand,

a centralized exchange is very easy to think of.

It's like a bank.

You go to the bank, you put your money in.

Now, you can trade that money

and do other things with it once it's in there,

but you are going to the bank

and you are taking that money

and you're placing it with them.

And they will tell you that money's yours,

but the reality is they basically have an IOU

that they hold and that money is not yours.

They don't keep, let's say I deposited $20,000 in my bank.

That money's not gonna sit in there safe

until I withdraw it.

They're gonna do things with it.

And with a centralized exchange,

you don't own that crypto once you send it to that address.

Now, you may have a login and a password

and a wallet on that centralized exchange,

like your bank account,

but the reality is you don't control it.

You don't own it.

Now, with the decentralized exchange,

you're a lot more in control.

You're taking it from your personal wallet

and you're typically using it to swap for something else.

It goes from your wallet to the smart contract to the swap,

and then you take the coins that you get back

and they go into your wallet.

So as long as you're managing that wallet properly,

that seems a very safe system and it certainly can be.

Now, in just a minute, I'll describe an issue

with decentralized exchanges

that a centralized exchange doesn't have,

but you can see certainly that that's a difference.

Now, my recommendation would be

don't put all your eggs in one basket.

Now, when you're just getting started,

you're not gonna wanna have multiple accounts

on multiple exchanges and things all over the place.

If you're only investing a couple hundred dollars

or a thousand dollars, I wouldn't worry about that too much.

I would go with a reputable exchange, Coinbase, Kraken,

and I am not getting any benefit from saying this.

I actually have accounts on both of them

and use them for trading.

I use them for holding my crypto, some of my crypto,

but I don't keep everything all in one place.

I don't wanna get in a situation like Mt. Gox

where they were shut down for quite a while,

and I lost, like I said, I lost some money there

that wasn't returned.

The percent that I got back

wasn't returned for months and months.

I don't want all my stuff in one place for that,

especially as my stash gets larger, okay?

So that's something you should think about.

If you're serious about this

and you're getting a good stack,

you probably want to invest in,

you wanna manage some of your coin in a software wallet,

like Metamask, or even a hardware wallet,

which is a little hardware device

that you can literally store your coins on.

In a digital representation, of course,

they're not physical,

but they're stored digitally on that little hardware,

they're stored digitally on that little hardware box.

So you can throw that in a safe,

and only you know the passwords,

and you're good to go.

There's no way you could be hacked

if your money were in cold storage like that.

It's just not gonna happen.

You may lose the password,

the device may burn up in a fire, I suppose,

and those are things you even need to think about

as you go through this process.

Certainly the password's fairly easy.

You might wanna keep the password

in a couple of different places.

Offline, not online, but don't rely on your memory,

because five years from now,

you may not remember that password.

And what you have stored in there

may be worth a lot of money,

and you have no way of getting it out.

Certainly with fire, again,

if you really are getting a good amount of money

and you treat it like cash,

would you keep $10,000 in cash

sitting on a shelf in your house?

Probably not.

You're not gonna leave $10,000 on a shelf.

You're gonna put it in a safe,

and that safe's probably gonna be a fireproof safe,

and maybe it's rated for a few hours.

Again, you may wanna split things up.

You may wanna put part of your money

in one hardware wallet that you keep at home,

and one in a safety deposit box.

It's all relative, and it depends on the amount of money

that you actually are managing, okay?

One key difference, this just came to me,

and I wanna emphasize this.

We could do a whole podcast about this, but I won't.

One key difference between managing this,

managing your crypto, and managing, say, a 401k,

or money in the bank.

You manage your money.

It's your money.

It's your crypto.

Nobody else does.

It's not really Coinbase's.

You're giving that management over to them

when you allow Coinbase to hold that money,

but when you have it in your wallet, you manage it.

So that makes it safer,

but then you need to think about things like passwords.

You need to think about things like,

what happens if my house burns down?

Because statistically, there's a percentage of houses

that catch fire, and they burn,

and you don't wanna lose your hardware wallet

because of that.

So these are good problems

if you're thinking about these things, and don't panic.

It's okay.

Start small, build into it.

There's plenty of time to figure out

hardware wallets and things like that.

Even if you said, oh, I've done all my research,

I'm all in on crypto,

and I wanna put 10% of my savings in crypto,

and you've got a significant amount of money,

and that 10% is tens of thousands of dollars, maybe.

I would not recommend, even in that case,

that you just take tens of thousands of dollars

and just go out and buy a bunch of crypto.

Don't do it.

Ease yourself into it.

Figure it out.

There's a lot to learn here,

and you can't learn it all in a day or a week.

It's going to take some time,

and it means you may lose some money.

Not lose money, it may mean you lose some opportunity costs

because you didn't put it all in,

but you're saving yourself from potential disaster

because you made the wrong choice.

Oh, and I went and bought, oh, I don't know,

not to pick on anything, but Dogecoin,

and it went down.

I bought it at the peak, and it went down.

Now it's down to a quarter,

and my money went in half, and it may never go back up.

Now what?

Well, you shouldn't have invested completely in Dogecoin.

So anyways, I think that's probably enough about that.

So you've got centralized exchanges.

I've listed a number of them.

You've got decentralized exchanges.

I did want to go through a few of those.

I was actually looking at a list here on CoinMarketCap.

I've mentioned this site a few times.

It has a list of top crypto decentralized exchanges,

and it's very interesting because the top one, two, three,

four, the top four decentralized exchanges

actually are half the market share, almost exactly,

and these are not small volumes.

I'm going to read these out to you.

You may have never heard of these.

That's okay.

You may have heard of them.

DYDX is actually number one right now.

Its 24-hour volume was $800 million, almost a billion dollars.

Uniswap, version three, 800, just under 800,

799, 988 million dollars, so it's right under DYDX.

PancakeSwap, $718 million, and then one-inch liquidity,

which there's two entries for it,

one that's called a liquidity protocol,

and one that's an actual exchange.

Together, they're about 600, I can't do,

675 million, roughly, so they make up the top four.

There's others, SushiSwap, you may have heard of.

I, most of these you probably wouldn't have heard of.

Believe it or not, it's actually not very difficult

to build an exchange like this.

The trick is creating the, kind of the marketing opportunity.

The early ones, like Uniswap, for example,

was a very early one.

They had a big advantage.

So these decentralized exchanges, like I said,

you're doing a wallet-to-wallet transaction almost.

There's a smart contract involved.

Of course, that's the whole point.

So you're taking your money, oh, I've got 10 ETH,

and I'm gonna trade you for,

I don't even know what the ratio would be,

but let's say half a Bitcoin.

I'm sure that's not even close to being correct,

but 10 ETH for half a Bitcoin, and we do that.

And there's fees that are paid for the network,

and your money goes from your wallet to their wallet,

and from their wallet to your wallet.

And that's all managed by that smart contract.

Now, I mentioned there is a drawback.

It's very easy to put coins on this, and it's interesting.

There's a new meme coin,

and I've not done an episode on meme coins,

but things like Dogecoin, Shiba Inu.

Well, there's a new one called Flokey.

It's only been around since June.

And apparently Elon Musk has latched onto it.

So it's had a huge spike in the last little bit.

The thing about Flokey at this point,

and this is very, very typical, coins don't just,

well, it's not on a centralized exchange.

Let me say that so that you'll understand why,

what's going on.

Flokey's not on a centralized exchange,

and that's very typical for a new token.

They don't just pop up on an exchange.

So they're all done through PancakeSwap

and some of these other exchanges,

these decentralized exchanges.

The thing is, it's very easy to make one token

look like another token.

You say, well, that's crazy,

but a name on a token is just a name.

And a reputation, it's very easy to create a clone,

essentially, and then somebody, an anonymous wallet,

can simply sell those coins on a decentralized exchange

to someone who's thinking that they're getting

another token.

There will be differences and you have to be very careful.

But it is possible, and it certainly happened with Flokey

where some people got scammed.

You hear a lot about scams in crypto,

a lot of it is because of a lack of information.

So if you don't understand something, stop.

Just don't do it.

In the case of a token like this,

you can go to the website of the originator,

the Flokey token.

I don't recall offhand what it is.

I'll look it up real quick.

I'm definitely not recommending

that you invest in this token.

I'm just using this to help you understand

and I'm just using this as an example.

This is not investment advice in case you didn't get,

in case you didn't get the hint.

If I'm not mistaken, the website is theflokeyinu.com.

So it's a play on Shiba Inu or whatever.

It's called Flokey Inu, I don't know.

I guess apparently that's the name of Elon Musk's Shiba Inu.

Elon Musk apparently actually has a Shiba Inu

and I'm probably butchering that name, but regardless,

and its name is Flokey Inu.

So somebody said, oh, I'm gonna run with that.

They created a Flokey token

and then somehow he's got involved.

And if you know the real owner,

you can find out the contract, the originating contract,

and then you can actually look that up

and make sure that you're doing it correctly

when you're doing an exchange like that.

You have to be careful.

People do get scammed.

So again, this is just a warning.

Now, I don't know what Flokey Inu is gonna do.

They've got lots of things going on here.

They're way too early for people

to be seriously investing in them.

If you're moving into this,

don't go out and buy Flokey thinking it's gonna moon.

It may, most likely it won't.

Most crypto coins don't.

It does not have a proven track record.

But they have a roadmap.

Apparently they're partnering up with Elon Musk's brother

to do this charity thing about real,

it's something about gardening,

which I actually find interesting.

But anyways, and they've got a game that they're working on.

So if they pull it off, it may go very, very well.

Six months from now, you may be going Flokey who?

Isn't he like some Norse God?

I don't know.

So who knows?

But the point is you could very easily get scammed

trying to buy this coin on a decentralized exchange

if you're not careful and know what you're doing.

Now, that's one reason you would buy from a central exchange

because they're not gonna put a scam coin on their website.

It would hurt their reputation tremendously.

A decentralized exchange by its very nature,

they don't have control over that.

You don't understand how a decentralized exchange works

if you're saying, well, why do they even allow that?

There's not a real good way to manage that.

So you just have to be careful, verify what you're doing.

So anyways, enough about that.

You can choose to use what you want.

Typically for people, they're gonna start

with a centralized exchange.

And that's what I would recommend.

Long-term, that may not be what you do for various reasons,

including worried about the central exchange being hacked.

Maybe you want tokens that aren't available

on that central exchange or whatever.

All right, so that's gonna wrap it up on our exchanges.

What do you actually do on an exchange?

It's pretty straightforward.

You go set up an account.

You're gonna need to fund that account.

You do that by hooking.

If you're on a centralized exchange,

you're gonna hook that up to your bank account

or a credit card.

And that's how you go out and buy your ETH

or your Bitcoin or ADA or whatever.

So decentralized exchanges,

you already have to have that in there.

So that's a bit of a trick.

You may end up going through a centralized exchange

to start with anyways, if just to get the tokens

that you begin with.

Another small category of ways of buying crypto.

You can actually buy crypto with PayPal now.

You can go buy BTC with PayPal.

I actually think that's pretty cool.

Now, I would tell you might not be how you wanna do it

because you can't get that Bitcoin off of PayPal

at this point, which I don't think

is a long-term plan of theirs.

They have to, they're not,

I just don't think they built that feature in.

Maybe you've got a big PayPal account

that you've sold comic books or baseball cards

or something and you collected your money with PayPal

and now you wanna buy crypto with it.

I don't know.

You've got that option.

Robinhood is another way of doing it.

There's other various little things like that,

ways of doing that that don't neatly fall

into a centralized exchange or decentralized exchange

that we've been talking about.

But certainly these exchanges are the most common way

of getting your crypto.

All right, we're gonna shift gears.

We're gonna go to the news for the week.

So we're gonna talk about two new items

and then we're actually gonna talk about El Salvador

for just a minute, a little update on things

that are cooking down there.

So first of all, I did wanna say congratulations

to the Cardano team.

They did have a successful upgrade.

Last episode was right before the upgrade

and I said I wasn't sure how it was gonna go.

Well, Sunday, two, three days ago at this point,

they pulled it off.

As far as I can tell, it went without a hitch.

Now, remember what I said, don't buy into ADA.

Well, I said don't buy into ADA right now

because of all this upgrade and that kind of thing.

The price of ADA has been going down and it still is.

I don't truly understand at this point why

since it's been live for three days without any issues.

I would have thought any price drop

would have reversed by now.

But as of today, it's still going down, no big deal.

Long-term, we'll see what the Cardano team can do,

what developers on the Cardano network can do

with smart contracts.

I'm looking forward to it.

I think competition is great in this space.

I think we should welcome it.

What's the other news item?

The Ukraine.

The Ukraine has legalized crypto and crypto operations

in a almost unanimous vote.

The parliament adopted a law that both legalizes

and regulates crypto.

So they're starting to build a framework.

They're starting to build a framework

on how to work with crypto.

And you're gonna see all these countries doing this,

whether they choose to make it legal tender

like El Salvador did or not,

they're going to be passing laws over the next few years

to both legalize it and regulate it.

And that way, in the countries

that are going down this route, they can tax it.

They can look at it from that aspect.

From other places, it's just to provide

that regulatory framework.

So there's that.

El Salvador, I wanted to give an update on this.

If you recall, I thought it was very interesting.

So El Salvador has been,

I think it's been right about a week

since El Salvador has actually, the law was passed.

So let's see, this was published on the 14th.

So that was yesterday on Tuesday.

And yes, so it was roughly a week ago.

So about a week ago, El Salvador passed their law.

If you remember when we were discussing El Salvador,

I said that roughly 70% of the country was unbanked,

meaning they don't have access to a bank account.

And that's a challenge for any country.

Can you imagine if 70% of the United States

did not have access to a bank account?

Now, these people truly don't have access.

I don't know what percentage of the people

in the United States don't have a bank account.

It's not 70.

There is a decent percentage,

but it's almost always by choice.

In El Salvador, a lot of times,

they live hours away from one of the major cities

and there's no bank.

Well, 70%, keep that in mind.

So to prime the pump, just,

I don't know if you've heard this or not,

but El Salvador, the country, bought 400 Bitcoin.

Offhand, I don't know what that means.

But as of right now,

they've got 200 Bitcoin ATMs up and running.

They actually have 50 installed in the United States.

And those allow the users of the Chivo app,

which is a Bitcoin wallet

that the country of El Salvador developed.

It allows users to top off their app with no commissions.

Los Angeles, San Francisco, Atlanta, Chicago, Houston,

Dallas, El Paso, El Doral, Laredo, and McAllen

all have working Chivo ATMs.

So that's cool, but this was the interesting thing.

This article I was reading,

it said that 500,000 people

have already got a Chivo wallet.

Now, this is in a week, 500,000 people.

Now, maybe that's not a mind-boggling number to you,

but keep in mind, the population of El Salvador

is only six and a half million people.

And if you run the percentage,

that means that in a week, 7.7,

almost 8% of the population of El Salvador

has a Chivo wallet in one week.

Now, every household, every person, I should say,

in El Salvador is not gonna need a Chivo wallet.

If you're two years old, you don't need a wallet.

So they will never reach 100%,

but I'm gonna guess this number's gonna blast

way up there really quickly.

Now, the rollout hasn't been perfect.

There's just no way possible on a national scale like this

that it's going to be perfect.

But overall, I think it's gone very well.

The people will get used to it,

and they always have the choice of US dollars.

They do not have to take Bitcoin as a individual.

Businesses have to take Bitcoin.

That's part of the law.

Any retail shop that you go into,

they're gonna have to take Bitcoin,

but they can always turn around and sell it.

One of the big worries, I think, is they're like,

oh, it's volatile and the price swings.

I've seen this a lot.

Yes, ladies and gentlemen, it is volatile

and the price swings.

I think it went up.

Let me see.

Pause for dramatic effect.

As I recorded this, we're at 46,965,

so almost exactly 47,000 US dollars.

And in the last 24 hours, it's gone up $1,500.

Now, it was a good day.

It went up.

Maybe a few days ago, it went down.

It is volatile.

But all you have to do,

all you have to do is back up a little bit

and look at the long picture.

Bitcoin now been around for more than 10 years.

The price is going up.

The price will go up over the years.

Now, the issue is if I'm poor

and I get some Bitcoin and then I turn around

and I have to sell it in a month

and the price has gone down 5% or 10%

and I've lost 10% of the value.

And that's tough.

They may choose to, I would probably,

hey, people in El Salvador, this is not financial advice,

but I might tell them that they probably need to keep cash,

at least an emergency fund,

so that they don't have to worry

about these price fluctuations

and just buy that Bitcoin as you gain it and hold it.

Because five years from now,

their children will thank them

as their children potentially come out of poverty

because of this kind of stuff.

I see the potential of this as a life-changing event.

Now, they don't have to.

They can keep doing things the same way

and Bitcoin's just another currency

and they can turn right around and dump it back into USD

and nothing's going to change for them.

And that's the reality.

Anyways, I thought that was cool,

really good penetration of that app

in a very non-technical,

well, what most people would consider a third world country.

All right, so that's it for this week.

I've gone pretty long this week.

I'm going to try and keep these down,

but there was a lot to talk about.

So next week, I think we're going to talk

a little bit more about hacks,

about how you can protect yourself.

Most of it's just common sense.

It may be a very short episode.

Don't click on the link that you get sent

in your instant message.

I mean, we know that, I hope we do.

The internet, it's interesting because

if you've been around through the evolution of the internet,

the internet has scams, just like crypto has scams

and it's the same stuff.

You send out messages to people who aren't expecting it

and they think it's something and click on it

and this, that, and the other.

You learn how to navigate these things.

You learn what not to do.

You learn what looks suspicious.

So really, it's probably not a whole lot,

but we'll talk about some general principles,

some guidelines.

And then episode nine,

the next episode coming up after that,

we'll be talking about dollar cost averaging.

I've mentioned it, but it is the simplest

and one of the most effective investing plans that there is.

So we'll talk about that.

And then we'll go on from there.

So thanks a lot for listening.

You can always give me feedback,

mcintosh.fintech at gmail.com.

Would love to hear from you guys.

One of the things I would actually ask that you guys do,

we're starting to build a little bit of an audience

and I work full-time.

This is not a full-time job for me,

this podcast or crypto at this point.

And so, I'm not glued to my computer 24 seven

gathering crypto stuff.

I would love to hear from you guys.

You can send an email to that,

the address I just gave mcintosh.fintech at gmail.com

with maybe news you come across

or maybe you got a question about something

or maybe you got an idea for an upcoming episode.

Would love to hear from you.

I am actively looking for ways

to get the listeners more involved.

Want to hear from you, okay?

So you guys have a great week