Today's guest is a very longtime friend of WHVP. Jeff Opdyke is an author at International Living and I'm very excited for today's conversation because we will not only touch upon Jeff's position as an author, but we will also talk about his passion,  Bitcoin, cryptocurrencies and the block chain. He's extremely knowledgeable in this area and I can't wait to hear everything that he has to share about those topics.

One very quick disclaimer before we head into the conversation. Please note that all of the views shared by my guest today, are his and are not necessarily shared by WHVP. No segment in this publication is a purchase recommendation, and this conversation is for information only. 

Jamie: Hello Jeff and welcome to the show!

Jeff: Thanks for having me.

I think we booked a very good day for our recording because just right before we started I saw Bitcoin rise above USD 50,000, so I'm very curious to hear your thoughts on that. But before we head into it maybe we can start with you just briefly introducing yourself.

So, you know, right now I work for International Living based out of Ireland and we go all over the world writing about pieces regarding second passports and investing overseas. I'm the editor of a new publication that starts in March called Global Intelligence Letter, which is a little deeper into investing overseas like a passport, visas, working overseas all the interesting things that a lot of Americans are looking at these days.

And yeah, I go back a long way with your dad, more than a decade now. In fact, I'm referencing him in my March issue, because he and I used to hang out at the Splendid Bar in Zurich. So, I'm referencing him in the story I'm writing on the weak US dollar that we're going to see going forward. I expect the US dollar is going to be much weaker going forward because of the COVID crisis’ impact on the US debt in America that's just spiraling out of control. And you know some background about me, I spent 17 years at the Wall Street Journal, which is how I ended up in personal finance and global investing.

I definitely encourage everyone to reach out to you and check out the publication that will come out in a couple of weeks. I will link to it in the show notes. I lead into our discussion today with the mention of Bitcoin and the reason I did that is last time we spoke a couple of weeks ago you told me that you are really geeking out about cryptocurrencies. I would love to hear a bit more about your connection to that topic. Why are you so passionate about it, how you've learned about it what do you think is interesting for people to know?

You know everybody thinks of Bitcoin which is the big granddaddy or the original gangster as they say. It's been around since 2009. But, but these days there are like 8000 cryptocurrencies and a lot of them are not any good. Let’s be clear about that, a lot of them are just junk stuff, but there are a handful that are good. By a handful I mean there are easily several 100 that have real-world uses. You have to look at Bitcoin not just in a financial context, meaning a reserve store of value like gold or something you're going to use to buy your groceries or gasoline. There's so much more going on in the world of crypto these days. And I like to say that it's basically a once in a species change that is coming to us. This is going to radically change everything that people have come to assume as normal in the financial world. Everything that you and I take for granted that we've known for our entire lives in banking, mortgage lending, or buying and selling a house will change. The way these currencies operate allows businesses and consumers and investors and savers to be substantially more efficient. You're basically getting the middleman out of the process; you know I tell people this all the time and they think I'm joking. But we are approaching a point where, if you are a real estate agent, you might want to start looking for a new career because what's happening with crypto and in particular, one called chain link is going to absolutely do away with the real estate industry. It's going to do away with title companies, it's going to do away with mortgage lenders and escrow agents. Those people are going away of, you know like rotary dial-up payphones did some time ago, that's what crypto is doing.

Okay so, two follow-up questions. First, how so? And secondly, is that actually the cryptocurrency that we're talking about, or is it the underlying technology?

Well, it's both. It's the cryptocurrency that is being used on the blockchain. Let me back up and answer your first question. There's this company called chain link, and it serves as what's known as “an oracle”. It can take real-world data like hard physical data and turns it into blockchain data. Imagine a situation in which you own a house, and suddenly that house and the property associated with it become part of the blockchain. Alright, so the title and everything about that house are part of the blockchain. In that world, I could go online as the owner of that property, and I don't have to go through some real estate agent. There's going to be an electronic version of a real estate marketplace at some point, and you're just going to be able to list your property there for sale. For example, for the cost of USD 250,000. Those dollars are not going to be paid in Bitcoin or Ethereum, they're going to be paid in dollars or they're going to be paid with francs or British pounds or euro or whatever it is, and they're going to be tied to a “stable currency”, a stable coin. There are a bunch of those stable coins out there. There's one called US dollar coin and US dollar token, there's one for the Swiss franc, there's one for the Euro, there's one for the pound and Canadian dollar, etc. So, I'm going to go list this property I own on the blockchain for sale for USD 250,000, payable to me in US dollar coin or US dollar token or whatever the stable coin is I choose. Someone is going to come along and they're going to want to buy that. And you're going to link into a “smart contract” and the smart contract is going to be offered by a company like chain link. They operate smart contracts on the blockchain. And these contracts are smart because they only kick into place when certain parameters are met. So, the buyer and seller will set the parameters of the block of this contract, and the buyer will have to put up some reserve capital like a down payment to start the process. When that process starts the blockchain knows to start the entire process. Now they're going to find out what the taxes due on this house are, they're going to find out if the title is free and clear, all that stuff is going to be on the blockchain. You know they're going to put that the down payment in escrow, then at some point the entire purchase price needs to be in escrow. The signatures of both buyer and seller are going to be verified on the blockchain. And the entire process will happen literally on the blockchain. There will not be a real estate agent in the middle of that, there won't be an escrow agent in the middle of that, there won't be a title company in the middle of that. Everything will happen on the blockchain.

You mentioned that there are several 1000 currencies and that a handful of them are valid. How do you do the due diligence on all those currencies? How do you know which is valid, which has a future and which is stable?

Each project has what's known as a white paper, and some of them have a “light paper”, which is sort of a lesser version of the very technical white papers. You can read through that and you can understand what this company seeks to do with the currency that it is creating or the tokens that it is creating and then you can gauge for yourself whether this makes sense. There's one called WeChain. They are changing the way of how food safety and drug safety can be assured. They're basically going to do away with pirated goods, because with this particular token, you can, as a producer of, let's say, Gucci handbags, you can track the production of your handbag. From the moment the leather arrives in your factory until that bag is actually on a store shelf somewhere in Zurich, the consumer can go to that bag and I can flash my camera at it with the QR code reader, and I can see every single thing about that bag. When the production began and all the indicators that prove this thing is legit and real, it's not some kind of knockoff that was made in Bangladesh or whatever. So, you're going to see, like, like pirated goods, they're just going to go away for the most part. There's now a process to guarantee that what you are buying is in fact legit. It's going to be the same with food and pharmaceuticals, for instance, it's going to be able to take a reading and know that this particular food item or cargo has never exceeded a certain temperature, it has been in transit for X number of hours. It's going to know all that stuff. It's all this supply chain management, that happens now across a variety of different, sectors and scenarios, it's all going to be in one place on the blockchain so everybody can track it. It's going to change the way Supply Chain Management works. And that means that a company like WeChain which powers that network is going to be worth a substantial sum of money at some point.

What do you think is the timeframe for those developments? I mean this all sounds very interesting but also somewhat futuristic.

Next Thursday! I'm joking about that, but not so much. Because all this is happening now. There are companies that are already signing on to this. I think New Balance the sneaker company has signed on with WeChain, if I remember correctly. Walmart has linked in with somebody, the Chinese Food Safety Commission is linked in with somebody. You're seeing all of this, takes place right now, in real-time, it's not like this is a promise that's going to happen in 2027, it's happening today.

Okay, so most questions I receive about cryptocurrencies are a bit less broad and more specific towards the investment side of things. Maybe we can also briefly touch upon that as well. For example, do you think Bitcoin or another cryptocurrency will replace gold?

I mean, all these other currencies are going to be doing the things that they need to do. Bitcoin is not going to have an impact on WeChain or Cardano or Polkadot. Everybody's excited about Bitcoin so other coins go up in price as well but that's just sort of an emotional reaction. In terms of use, the workability, or the feasibility of various other coins, that's not really an issue. I can see ultimately Ethereum is going to be a much more important coin to the world than Bitcoin will be. Right now, Bitcoin is, you know, like the crypto version of the US dollar. And I don't mean that in terms of its worth $1 and it spins like $1, I mean that in terms of the US dollar being sort of the fuel that moves the world. Everybody needs dollars for all the things they do in the world. Bitcoin is sort of the fuel that makes the crypto sphere go around in its own little network and there are several networks that are beginning to open up, we can talk about that in a moment. For me, if you think about Ethereum, it is like a rail yard or the rails of a train track. They're laying these rails, all over the place as infrastructure, and all of these other cryptocurrencies are building on top of those rail lines, and that's what's moving the crypto sphere, the fact that Ethereum is out there building this infrastructure. As for Bitcoin, it's taking shape, as, sort of the standard for gold as a store of value. But I'm not saying it's going to replace gold. Gold will always have its role, but we have to sort of look at this from the perspective of the generations that are coming to power right now financially. That's millennials, and it's the gen Z's. Those guys don't really care so much about physical gold. To them, that's just a grandma and grandpa kind of world. To them, owning Bitcoin is makes a whole lot more sense. They don't really care so much about the volatility of Bitcoin, because they see the future of the technology. This is a generation that grew up in the wake of 2007 and the destruction of what happened globally. Particularly in America, where the government responded by bailing out the banks that caused the problem. Never holding anyone accountable who caused the problem and not really stepping in to help the average Americans. These are kids who saw their families suffer, and they want to right social wrongs, and they see a decentralized world of cryptocurrencies and Bitcoin and Ethereum as the way to make society better than what governments can do with fiat dollars. I think that's what's going to be driving Bitcoin and all these guys in the future.

What do you mean with the networks opening up that you just mentioned?

Like I said Ethereum is not just a coin it's a network on which all these other crypto projects are building all kinds of services. Alongside Ethereum, there are other networks that are happening, including Cardano and Polkadot and now there's Avalanche, and there's Tezos. But the three that I'm really focused on, I think are probably going to rule the world in the way that Apple, Microsoft, and Google rule the world, are going to be Cardano, Polkadot, and Ethereum. Ironically the three guys who run those all started Etheric together. They've all split apart, and you know, Vitalik Buterin still runs, Ethereum, Charles Hoskins now runs Cardano and they're all similar projects and building on ecosystems. They want to become the networks on top of which all these other projects run. 

If we go back to what I was talking about a minute ago, about the millennials and the Gen Z's they want to re-write the world. Right now, you don’t get any money for investing your savings anymore, you have to go be risky and go into the stock market and do those kinds of things, particularly at a moment when the stock market is egregiously expensive. But in the decentralized finance world, I can take my cash out of the bank, and I can go to a crypto exchange, and I can change it for US dollar coin a stable coin that basically floats around $1. My cash is safe. I can take those US dollars and US dollar tokens into US dollar coin, and I can invest them in a place called Nexo which is in Zurich. I can invest them at a Celsius wallet based in New York and London, and I can get returns on those things as much as 10 to 12%. That is paying me 10 to 12% and my money is not at risk. It's like putting it into a CD. I'm just lending money to guys who want to go trade the crypto market and I'm getting paid enormous returns for this, with no real risk to my dollars. That's what's going on these days, you can get safe returns with enormous numbers, just by putting your money, outside the traditional banking system and into the decentralized finance world.

Everything that you have just covered, I'm sure that our listeners are going to love you. Where can people find you if they want to hear more from you?

Just go to www.internationalliving.com and sign up there and you'll find all about us.

Awesome! Thank you for a great conversation, Jeff.

This is a transcript of our podcast episode number ten on Swiss Asset Management Talk. You can listen to the conversation here.

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