Episode 5 Bitcoin Podcast Transcript

good morning it is
sunday the 31st of january and this
is the bitcoin briefing bitcoin
currently
sits at 33 800 which is about four
thousand dollars down from the pump
a couple of days ago after elon musk
changed his twitter bio to bitcoin
and said in the end it was inevitable
we will of course cover this story uh in
the second half of the show
but first let’s get into our main story
of the day which is
visa announcing that it’s going to start
offering support for cryptocurrencies
the uh announcement was made on a first
quarterly earnings call and uh yeah
let’s listen to it the voice you’re
about to hear is
mike milotich who’s the senior vice
president of investor relations
at visa there’s a growing interest in
digital currencies and i wanted to take
a minute to talk about how visa things
about crypto
in general and our approach in this
space we see ways that we can add
differentiated value to the ecosystem
and we believe that we are uniquely
positioned
to help make cryptocurrencies more safe
useful
and applicable for payments through our
global presence
our partnership approach and our trusted
brand
mike i’d like to to let you know that
you know
visa and mastercard and all of you
companies are more than welcome to come
to to bitcoin and build on top of it
that that would be
wonderful but please don’t kid yourself
that we need you guys here to make the
the environment safer for us the real
reason why you’re moving into this space
is because you can see that you need to
accumulate bitcoin and cryptocurrencies
and um you’re going to do that with this
new um
well this new business model that you’ve
got and unless visa are going to start
offering some kind of insurance service
they do on their credit cards with
bitcoin then i can’t really see how it’s
going to make it much
safer what this really really represents
again just like
paypal is a large company that is coming
into the market
and they’re allowing you to hold
cryptocurrencies in their custodial
accounts
and then using that you’re going to be
able to you know use your card as you
would normally do
and then it’s going to credit and debit
the
uh the holdings of bitcoin and other
cryptocurrencies that you’ve got
now this is not the right way to to do
bitcoin or crypto
but again it probably is a good thing
for for the market in
in the short term uh you are not going
to allow people to withdraw
their own cryptocurrencies but rather
use that as a kind of reserve asset
in the in uh
you know a wallet that they control the
keys of and then you’re going to be able
to use your card as you would do with a
normal fiat card
and then presumably the balance is going
to be updated uh but you don’t really
own those coins
you know as as as we all know if it’s
not your keys it’s not your coins
and whether or not you’re bitcoin or
with paypal or
visa or any of these other companies
really their tokens against
um against cash in the future that may
fluctuate
um unless your coins are in your your
own wallet then they’re not really yours
nevertheless this is a good thing for
the market because the more established
companies and you know
visa certainly does have a huge massive
payment network
this can only be a good thing for for
for the community
um though it does bring up some
challenges with with
you know interference and um you know
who knows they could be lobbying and
pushing for different regulation
and and uh other annoying and nefarious
and interfering
and stuff that they do let’s move on to
the next part of the call where
visa differentiate the two different
sides of the
of the crypto market where they’re
calling uh
any cryptocurrencies like bitcoin ripple
anything like that they’re calling
digital gold and then they have the um
another another side which is the stable
coins now the reason why
i think they have this guy has
specifically said that the the
cryptocurrency assets
are digital gold is not because he’s
trying to validate it
but because he and as he says they’re
they’re used as an asset that people
hold and not
trade because of course if we don’t
trade them then we would need somebody
to do the trading side
and you you know somebody has to come in
and be the the
medium of exchange and surprise surprise
that’s exactly what visa does
so they’re setting their flag in
you know they’re pitching a flag in the
crypto space but they’re coming from
and it’s quite a clever clever point of
view
that that because
bitcoin and cryptocurrencies are just a
store of value
and not a medium of exchange that we
will of course need visa
to uh to build on top and turn these
these static assets which of course
they’re not these static assets into
something more liquid and
can be used on a day-to-day basis
holding bitcoin
and buying stuff with visa and then
letting visa
you know manage your own ledger is just
is not bitcoining
at all and it’s exactly the same with
paypal
but you know we are still pretty early
in this space
and if if these large organizations like
paypal and visa
presumably mastercard in the future want
to start coming here then you know i
guess it is a great way for
from entry level low information users
people who are using bitcoin for the
first time maybe you’ve got a paypal
account with their visa card and they
think oh i might buy some money by some
bitcoin
and then they get into the space they’re
sort of edging around the
the rabbit hole of of bitcoin and
inevitably they’ll fall in and stop
using these these legacy companies
okay let’s carry on we think of the
crypto market in two segments
first there are cryptocurrencies that
represent new assets
such as bitcoin second there are digital
currencies or stable coins
that are directly backed by existing
fiat currencies
we see all currencies in that first
segment as digital gold
they are predominantly predominantly
held as assets that are not
used as a form of payment in a
significant way at this point
our strategy here is to work with
wallace and exchanges
to enable users to purchase these
currencies using their visa credentials
or to cash out onto a visa credential to
make a fiat purchase
at any of the 70 million merchants where
these is accepted globally
this is similar to our approach to
connect close with wallets such as
line pay and pay tm
for the second segment fiat backed
digital currencies including stable
coins and central bank digital
currencies
these are an emerging payments
innovation that could have the potential
to be used for global commerce
much like any other fiat currency we
think of digital currencies running on
public blockchains
as additional networks just like rtp or
ach networks
so we see them as part of our network of
network strategy
it’s very very interesting how they have
sort of cut and dice the crypto market
between the the store of value on the
one hand with bitcoin and
other cryptocurrencies and then on the
other hand the medium of exchange which
is the stable coins
obviously backed by by uh other assets
and kind of put themselves right in the
middle of that
and said that people want to use these
but to use these you need visa
and then for all of the global payment
revolution really that you might have
thought bitcoin was was
was for no no no no actually it’s going
to be these regulated stable coins
and we’re going to use them just like
our original
rtp and ach payment networks
so i mean it’s clever it’s also quite
transparent
um now these are not the first of course
a big company that are trying to fuse
their you know like a physical a
physical payment card with
with with bitcoin we’ve had block fi and
uh bitpanda and crypto.com 10x tried to
do it
that you know this is this is not new
innovation really
but i guess it’s a kind of step in the
right direction towards adoption
but it’s just so funny to see these
these huge companies
that their world has been rocked right
now by by cryptocurrencies and any of
them they’ve got any vision can see
that over the next 10 years retail
banking visa and mastercard any of these
these western union that they’re all
finished
if they don’t do something and this is
what they’re trying to do they’re
building the minidisc player
before mp3s come out they’re like toyota
and other firms building hybrid cars
while elon’s building tesla
it’s it’s you know it’s slow steps in
the right direction i guess but i just
think it’s gonna be too late i mean
that’s quite exciting isn’t it really
i mean it’s inevitable that they were
gonna
come to the party it’s just such a shame
they’ve spent years and years trashing
the space
and now when they do come they think
they know best and
you know are here to protect us thanks
visa
okay so let’s move on to our next story
of the day which is elon musk
pumping bitcoin from the low thirty
thousand dollars to
uh nearly 40 40k before it corrected a
little bit back down to where we are now
now it would be easy to say that the the
only reason why the bitcoin price pumped
was because elon posted
this changing his bio to bitcoin and
then posting a tweet
in the end it would be inevitable that
you know elon is
a rock star really we all know he’s
sitting on a huge amount of cash many of
us
are waiting for him to do a michael’s
sailor and put some of his balance sheet
into
into bitcoin but that’s maybe a half
or three quarters of the of the reason
for the pump
we also have to remember as we covered
in the last couple of days there’s been
this huge
war among retail investors against
financiers who are shorting assets such
as gme
amc blackberry silver has been
possibly targeted as another one of
these short squeezers
and for those of you who have been
following elon and
tesla elon hates short sellers
because they’ve been constantly dogging
his his stock
undermining him spreading fud and and
doing anything they can to try and make
the tesla shares
you know fall and this was even before
the tesla shares started
just rocketing up um a few years ago
now it’s important to point out that
this pump was
relatively short-lived and a huge amount
of shorts were wiped out
but you know we we went up to 38 8 000
and we’re back now to 34 8 000. so there
was a bit of a dump
after the spike but really that’s
irrelevant what is important
is that we’re getting very close to this
to this tipping point
and i think elon musk will be the
tipping point when he does the same as
michael saylor
and move some of his balance sheet into
bitcoin okay so if we have a look at
this balance sheet and we’ll take
2019 because the data for 2020 isn’t
isn’t available yet but in 2019 he had
six billion dollars
or tesla at least had six billion
dollars
and what’s really important is a working
capital of 1.4 billion
working capital of course is essentially
what’s left over if you just
sell and liquidate everything that you
own so there’s a fair amount of of
working capital in the company michael
saylor when he bought his first round of
bitcoin
i think he bought 500 millions worth and
then went on to use
loans and bonds and other things to to
buy the other
uh half a billion he may even have more
than that now
so elon wouldn’t need to borrow anything
he could in fact he could
going by if he has the same amount of
money now as he did in 2019 and it’s
likely he’s got more
he would only need to convert half or
even a third of that
to to have more of an initial investment
than michael saylor did
and i think obviously tesla’s ability to
raise capital and if they wanted to do
that is
probably infinite is probably infinite
at this point
but you know the real benefit for us as
a community is
not him buying half a billion or a
billion dollars worth of
of bitcoin michael saylor as he said he
did it over a period of time
with uh slow and methodical and
coordinated buys he did not move the
market at all
at least he claims when he bought that
so it’s not to say that if elon was
suddenly
start buying up a lot of bitcoin the
price would increase you know
there are a lot of people selling at the
moment in the market um
it’s not about that it’s it’s it’s more
about
confidence and when you start seeing
that one of the most
progressive and technically
forward-thinking
and successful companies in the world
like tesla you know it is going to be
one of the biggest companies in the
world it’s so much bigger than just a
car company
it makes almost as much money from
software and other things as it does
from
actual automobiles it’s a future
beer moth and for them and certainly for
elon
the contrarian to to put his faith
in or maybe you could even rephrase that
not put your face in bitcoin but take
your face
faith away from from cash
it’s uh it it is huge and this is
exactly what could cause a landslide
and and be that tipping point for for
companies more and more companies saying
actually hang on we need we need to
have a bitcoin strategy and uh we
need to move some of our
some of our balance sheet into bitcoin
because you do not want to be the last
company
to to make the decision you know you’ve
been burying burying your head in the
sand
for for years saying that you hate
bitcoin you’re never going to do it well
all of your competition are starting to
to
move or convert part of their balance
sheets into the currency
and then uh you know you’re left with
with cash and bitcoins
10 million dollars and you know you’re
just done at that point you can’t keep
up you’ve lost your competitive edge
all right so this is the bitcoin
briefing and we’ll have more news for
you tomorrow
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