Where did it come from, why was it created, and why am I hearing about it now?

Securities offered through TFS Securities, Inc., Advisory Services through TFS Advisory Services, a SEC Registered Investment Advisor Member FINRA / SIPC. TFS Securities, Inc. located at 437 Newman Springs Road, Lincroft, NJ 07738 (732) 758-9300.

Welcome to the EnjoyMore30s Family Finance

podcast. The only podcast dedicated to making life more

enjoyable for young families by hitting on the financial topics

that tend to weigh on us, stress us out, and distract our focus

from simply enjoying life.

Hello, and welcome to the fourth series in the

EnjoyMore30s family finance show. Should be a lot of fun, at

least as much fun as finances can be. And it really includes a

little bit of everything this season. What makes me most

excited about the season, though, is that it has really

universally applicable concepts. If you're joining us for the

first time, we've already covered a number of different

areas in the first three seasons. Series 1 was Your Money

Mindset, where we covered a lot of those overarching concepts to

help you getting your mentality on the right track and how you

approach money, why you're even working so hard in earning it to

begin with, what direction it's going in and what you need to do

to protect your family in the process. Series 2 Your Money

Multipliers built on that, diving into easy simplified cash

flow techniques and other opportunities to kind of further

maximize and secure your situation. Series 3, we

completely change gears going to Your Parent's Money Mindset,

where we tried to help you be able to converse better with

your parents about money and take potentially huge steps

forward in avoiding headaches, and some case taxes and maximize

not only making life more enjoyable for you, but your

parents as well, which is really fantastic to be able to go

through.

That brings us back to the fourth series here, which is

titled Your Major Money Misnomers, topics that me as an

advisor, I see come up time and time again, that people have

incorrect assumptions and approaches about obviously, you

know, in my opinion, at least. So today, we're going to start

off with one of the most popular ones crypto currency. I pushed

this episode all the way to the top this season because we've

been seeing a growing trend of similar questions from clients,

and seen some not necessarily best actions in regards to

crypto and I really felt the need to be more immediately

attended to. So today we're going to cover what you need to

know about the origins of cryptocurrency, the reasoning

for that creation, and what you can do with that understanding

now when you see the headlines. My wife and I have a couple of

really good friends going back to our college days. Unlike us,

they very much enjoy cooking. And as we had kids earlier, have

many times come up and made some really great meals for us. One

limitation, though, that our kitchen imposes is that we don't

have some cooking tools and you know, whatnot, that let's say

more culinary inclined people tend to have. I don't have a

zester or a pasta maker or open bowl of coarse salts to kind of

pinch in, add in as needed. Not not exactly us. I also don't

have one of those meat tenderizers, which to me, I

would just call you know, a hammer. So this wonderful couple

came up to visit us make dinner for us all. I didn't have this

meat tenderizer we're trying to find an alternative, and I wound

up getting them, you know, a small frying pan. That seems

like a good work, right? It did work as well enough, I guess as

far as I could tell. But later I noticed it was most definitely

broken, the handle had cracked right through. Now unless

they're listening to this, they still won't ever know which is

great, because the meal was wonderful. The pan was cheap.

And it was all definitely worth their graciousness, and

providing a great home cooked meal they otherwise did not have

to give to us. The point here though, was that the pan was not

a meat tenderizer. It was a pan. And when you use a pan as a meat

tenderizer it's not really surprising that the pan had a

negative outcome.

So what you need to know about cryptocurrency is that how many

people are currently using it, which is an extremely

speculative manner is not how it was created to be used. It

wasn't developed as a means of get rich quick wealth creation.

The word currency as you know it to this point has been defined

as kind of this medium of exchange for goods and services.

Usually it's issued by some kind of government, and it's

generally accepted as a method of payment. You have $1 bill in

your pocket, you go to the store, and they will take that

dollar bill in exchange for that Snickers candy bar. The dollar

bill is just a piece of paper, but it is a relatively stable

established medium of exchange. This way you don't have to trade

you know a goat or bushel of hay every time you have a sweet

tooth. We have this standardized method of payment to purchase

things from each other. You've heard of euros, yen, Swiss

francs, they all work the same way. They're just currencies

issued by other government entities. And right now there

are roughly 180 recognized currencies worldwide.

Cryptocurrency though, is a digital currency. It's not

issued or insured by any government. As such new

cryptocurrencies can be created and as of January 2021, there

are over 4,000. So when you hear the word Bitcoin, aetherium,

Dogecoin, or whatever the new one may be tomorrow, these are

all just different virtual currencies that people have

literally created all over the world. So you may be wondering,

why did anyone go through any of the trouble to create it? After

the 2008 financial crisis, a group of coders who like many

people, were not happy with the roles banks played in the

crisis, and wanted a means to remove the banks as a required

intermediary in processing financial transactions. They

created Bitcoin, which is considered kind of the original

and largest cryptocurrency and most likely the one that you're

most familiar with. Because it is not using banks, or any

government involvement it needs its own peer to peer system to

process and validate transactions, which is probably

have guessed it does so digitally. To try to somewhat

simplify the mechanics of this basically, there is a huge giant

network of computers out there of those people that are

participating. And they're using complex algorithms to validate

these transactions. This is where you get the crypto part of

cryptocurrency. Now as a reward for participating their computer

power into this crypto aspect to make the whole system work,

these participants are rewarded with shares of Bitcoin. So if

you've heard of people mining before, this is essentially what

they're doing. Because there is no central authority that's kind

of the whole point of it. This makes it completely

decentralized. And because it is virtual, unlike your dollar

bills, and needs to be stored in a special what they call digital

wallet. Can't just walk into your bank and deposit some

crypto.

Now proponents of cryptocurrency like the fact that is not tied

to the decisions of any government, no bank involvement,

and therefore the inflation that can result from actions of any

individual government are not tied to any cryptocurrency. You

also can see potential advantages in developing

countries where say a family working in a developed country

may want to easily move money to friends and family back at home.

So now that you have a little bit of a better idea, maybe of

the origins and the reasoning and the original purpose, what

you can do is come at what you hear from headlines from friends

and family members, hopefully with a little bit of a different

context. Because what has really grabbed headlines and

popularized Bitcoin and cryptocurrency as a whole is not

as decentralized network or possible avoidance of

traditional currency inflation. That's really been true all the

way back to 2009. It's how drastically the value has

fluctuated over the last few years. It wasn't really until

2017, where you saw these big valuation changes that have

gained in such popular notoriety. Now, depending on

when you get in or out can result in you hearing these huge

boom stories or also these huge bust stories. There really is no

question that the value has been incredibly unstable among

cryptocurrency. And the speculation has been just

completely extreme. There is no underlying company or government

that can be said to contribute to its actual valuation. As an

example, Elon Musk tweeted earlier this year, April 2021,

and sent the price of Bitcoin down over 50%. This leads us all

the way back round circle to the definition of currency: a medium

of exchange for goods and services that is relatively

stable. So while an argument certainly can be made for the

possible shortcomings of current government monetary policy and

the banks that are involved with it, and there is no denying

cryptocurrency uses just remarkable, remarkable

technology in his data validation process. As of today,

you can't use it to buy your groceries probably when you go

tomorrow, or the next time you go to Target. And it really has

been anything but stable. So those two core components of a

traditional currency stability to some degree, and the ability

to you know, readily trade it for other things.

So a quick recap of today is that there are a wide range of

opinions out there on what cryptocurrency may turn into,

from the future of how we conduct business to just a

passing fad but hopefully this at least gives you a little bit

more information on its origins after the financial crisis, and

the role of banks in that. The reasoning for its creation to

remove those banks from being required intermediaries, and

potentially avoid government based currency inflation. And

finally, why you have been hearing so much about it lately,

which are for completely different reasons. The one

really main thing to take away from this episode, and I'll

reiterate one more time because of that is why its founders even

created it to begin with. It was an alternative means to the

traditional banking system, not as a means of extreme

speculation and quick wealth creation. Just like any other

thing that we've talked about, whether it be traditional

investments or insurance, it's all about are you using it for

the right purpose.

Thanks for tuning in today. As always, if you are able to

implement what we cover, then that's fantastic. You have less

to worry about them before and you can just focus more on

enjoying life. If you are wanting help with these things,

though, or have questions you need help in clarifying, check

out the Ask Joe section on the show's website

www.enjoymore30s.com. That's enjoy more three zero s.com. If

you enjoyed this episode, please make sure to subscribe and

review us on Apple podcasts or wherever you listen. There are

literally millions of young families out there I'm trying to

reach and help just like you.

The next episode is Packed For the Financial Trip You're

Wanting To Take and where we're going to connect on how it's

important to tailor the financial recommendations you

hear to what you were actually trying to accomplish. Until next

week thanks for joining me today and I look forward to connecting

with you soon.

The conversations on this show are

Joe's opinions and provided for general information purposes

only. They do not constitute accounting, legal tax or other

professional advice for your specific situation. You should

always seek appropriate advice from a financial advisor,

accountant, lawyer or other professional before acting upon

any content or information found here first. Joe is affiliated

with New Horizons Wealth Management LLC, a branch office

of TFS Securities, Inc., and TFS Advisory Services an SEC

registered investment advisor member FINRA/SIPC.