In This Episode

There’s little doubt that one topic dominated financial headlines in 2017… and it took most investors by complete surprise. Bitcoin’s parabolic rise from $997 on January 1, 2017 to almost $20,000 has been nothing short of spectacular. It’s been a hot topic on the Stansberry Investor Hour for months. In part 2 of the Best of Bitcoin, you’ll hear from legendary investor Jim Rogers as he gives you his take on cryptos and what he sees as some the biggest obstacles to Bitcoin adoption and acceptance as a store of value.

Financial publisher and commodities expert Dennis Gartman talks with Porter about how we’ll remember “Bitcoin Mania 2017” once it all goes bust, and Doug Casey draws a connection between the enormous growth in global outstanding debt and the exuberant interest in crypto assets. Buck has an extensive interview with Bitcoin expert and editor of Crypto Capital, Tama Churchouse. Tama breaks down the three types of crypto asset classes you need to know about to fully understand the form and function of Bitcoin, blockchain, and the 1,300+ crypto tokens in circulation today.


Featured Guests

Dennis Gartman
Dennis Gartman
Dennis Gartman is the editor and publisher of The Gartman Letter, a daily commentary on the global capital markets, distributed to subscribers each business day. The letter addresses political, economic, and technical trends from both long-term and short-term perspectives. The subscribers include leading banks, brokerage firms, hedge funds, mutual funds, and energy and grain trading firms from around the world.
READ FULL BIO
Doug Casey
Doug Casey
Best-selling author, world-renowned speculator, and libertarian philosopher Doug Casey has garnered a well-earned reputation for his erudite (and often controversial) insights into politics, economics, and investment markets.
READ FULL BIO
Jim Rogers
Jim Rogers
American businessman, investor, traveler, financial commentator and author based in Singapore. Rogers is the Chairman of Rogers Holdings and Beeland Interests, Inc. He was the co-founder of the Quantum Fund and creator of the Rogers International Commodities Index (RICI).
READ FULL BIO

Transcript

Dan: Hey everybody, welcome back to another episode of the Stansberry Investor Hour. I'm Dan Ostrowski sitting in for Buck Sexton and Porter Stansberry to bring you part two of the best of bitcoin series to kick off our 2018. Now, as we move into the new year, there's no doubt that the bitcoin and crypto asset story is going to keep on rolling. By rolling, I mean a completely volatile wild ride, as the world is attempting to make sense of all of this. I know I am.

In just a minute, you'll hear Porter and Buck talk to some of the most brilliant and famous names in finance and investing on what they have learned about bitcoin, crypto assets, and the future application of these revolutionary technologies. You'll listen to investing legend Jim Rogers, who called in from Singapore, to tell Porter what he sees as some of the biggest obstacles to bitcoin adoption and acceptance, as a store value.

On the best of bitcoin part two, you'll also hear discussions from famed financial publisher and commodities expert Dennis Gartman. We'll also talk to globetrotting speculator Doug Casey and we'll welcome back Tama Churchouse, editor of Crypto Capital. He's really the one bitcoin and crypto asset expert we've had on the podcast who's accurately explained cryptos and helped us all really crystalize an understanding of the nature of bitcoin in the thousands of other crypto tokens out there. But first, a quick note of thanks to all of you out there listening in dozens of countries around the world.

Whether we happen to find you right now in your car, at the gym, at home, on the train or on a plane, we're grateful you choose to take an hour of your time each week to listen to the discussions and interviews on the Stansberry Investor Hour. You're the reason we produce this podcast, so let us know how we're doing, dear listener. Write to us at [email protected] even if it's just to say hi or jump on over to the Stansberry Investor Hour page on the apple iTunes store. Rate the show, leave us a comment, and share the podcast with a friend. Okay, let's get started.

Now, if we've learned anything together on this podcast in the last few months, it's that bitcoin, the blockchain technology it's all built on, and the rise of functional crypto tokens have real potential to radically alter the methods in which we trade just about everything. It's easy to see how all the new technology we're learning about could be a harbinger of how financial transactions will work in years to come. Not to mention, a completely new and decentralized way to exchange economic value.

Revolutionary to say the least. I mean, don't you think it's about time it doesn't take a check five days to clear a bank? Think about that for just a moment. What does this ancient process of taking five days for a check to clear – why does this process even exist in a day of instant transactions on cell phones and computers? You know, on a deeper, more societal scale, if you read just the first page introduction of Satoshi Nakamoto's white paper on bitcoin, which we'll post a link to in the weekly podcast e-mail update. Now, if you read that first page of the white paper, you'll see the creator if bitcoin, Satoshi, is mostly concerned about how heavily we rely on centralized third-party financial institutions to process electronic payments and settle transactions.

It really has to do with basic trust, so Satoshi devised a way for transactions to depend on decentralized cryptographic proof instead of trust. That's a wild concept. Now, this allows, you know, willing parties to work directly with each other without the need for a trusted third party of a bank, a broker, title company or I guess any other variety of settlement institution. So, what I'm suggesting is the great bitcoin rally, if you want to call it that, is just as much a symbol of individuals being tired of elitist centralized institutions controlling the world's finances. You know, it's just as much about that as it is about a new technology and method of exchanging economic value.

Bitcoin, crypto assets, and blockchain represent a transition from our current world to the next and it's going to be beautiful and ugly all at once. The genie is clearly out of the bottle and much to the dismay of people like Jamie Dimon, who lament the idea of bitcoin publically but secretly invest in the underlying technology. You know, it's all here to stay. So we're here to help you make more sense of it all with part two of the best of bitcoin from the Stansberry Investor Hour.

All right, we're going to go back to episode 16 from September 7 of last year when bitcoin was trading at only $4,600. I know that is really hard to believe. As of this recording, at the beginning of 2018, bitcoin trades over three times that price at just above $15,000 or so. Porter interviewed famed financial publisher and commodities expert Dennis Gartman, who recently, just in the last few days here, came out and said that he's very bearish on bitcoin and predicts that it will trade below $5,000 kind of once it comes back down to earth. In this quick excerpt from that September interview, Porter asked Dennis about his view on the speculative bitcoin bubble. This is what they had to say.

Porter: The other topic I've been dying to speak with you about for months is bitcoin. Just to give you my take on it, I think the computer programming behind bitcoin is some of the most elegant and beautiful programming I've ever seen. It's really, really an amazing breakthrough of math and of thinking about the role of money. I just think it's really cool stuff. On the other hand, I think the soaring value of bitcoin is just proof positive of the nature of the speculative bubble that we're in right now across all the markets. What's your view?

Dennis: I couldn't agree with you more. Bitcoin, etherium, and the other almost 1,100 various cryptocurrencies – and remember, when bitcoin came out, we were told it was going to be a finite currency that was going to take over from the fiat currencies reported on and supplied by the central banks. That was supposedly the finite nature of bitcoin was supposed to be its driving impetus. We've found out since then, it's now actually infinitely large, because there are, as I just said, over 1,000 over cryptocurrencies. The Chinese basically put the kibosh on bitcoin and other cryptocurrencies over the weekend when effectively, it's not quite a ban, but effectively, they banned the trading of cryptocurrencies in China.

They were 20 percent of the world market. I'm afraid this is one of the great examples of a tulip bulb mania that just caught, for lack of a better term, the millennials, who have been the great supporters of it. I'm afraid that's going to come a cropper. On the other hand, what you said about the blockchain is absolutely correct. It is an elegant use of the computer system. It will replace the methods and the manners in which we trade almost anything and everything. If we've learned anything from bitcoin, it was a tulip bulb mania supported by a truly ethereal, elegant computer technology that will serve us all well in the future. I couldn't agree with you more.

Dan: Okay, Dennis and Porter seem to agree on one thing, bitcoin and the underlying computer technology are game changers and, you know, has the potential to affect the way many businesses will operate in the future, whether they like it or not. It's obvious Dennis is a bear on the subject when it comes to investing, so it'll be interesting, you know, to watch his prediction over the next few months. What do you think, dear listener? Is a bitcoin crash inevitable or is the market cap going much higher before settling down?

What do you think are the most fascinating aspects of, as Buck Sexton puts it, this radical financial transparency? Let us know by writing to [email protected]. Also, if you want to get all the show announcements, notes, and links to everything we discuss in the podcast each week, just go to www.investorhour.com and enter your e-mail. Every Thursday, we'll send you our weekly update and all the things you need to get the most out of the Stansberry Investor Hour will come right to your e-mail box.

Now, let's go back to episode 24 from November 2 when bitcoin was trading at only $7,000, about half the price of today. Porter interviews legendary investor, Jim Rogers, and gets his thoughts on the bitcoin bubble. Now, listen closely for the disappointment in Jim's voice when he tells Porter that he has not been in on the bitcoin trade. Now, why is that? What's more interesting, however, is what Jim thinks about how governments will handle crypto assets in what he sees as the biggest obstacles to bitcoin adoption and acceptance as a store value. Here's what Jim and Porter had to say.

Porter: I want to move on to the virtual crypto asset, cryptocurrencies, and I wonder if you have any opinion at all whether you should own some bitcoin or own some other crypto asset. Have you looked into this new asset class? Do you think it's all a fiction of the credit bubble or do you think there's something more to it?

Jim: I hate to tell you Porter, I have never bought nor sold any cryptocurrency. I wish I had, you know, I'd be as rich as you, if I bought bitcoin -

Porter: Jim, by the way, that's not fair, because the very first time I interviewed you, I asked you about your net worth and you refused to answer. So no snide comments about my net worth.

Jim: I'm sure you're wealthier than I am. Smart as you are, you got to be.

Porter: That's ridiculous.

Jim: Let's go to something else. I never bought any of them or sold any of them. As I look at them now, you know, read that there are 2,000 cryptocurrencies here in the last couple years, months anyway. And if you look at the charts, many of them have gone straight up. Now, if I want – if I didn't tell you that was cryptocurrency, if I just said those are some kind of securities, you would say – especially you with your knowledge and experience, you would say well, that's the bubble.

Whatever that is, it's a bubble, and especially if I showed you that some of them have already gone to zero in the last few weeks or few months. I don't know. I know it sounds like, feels like, smells like a bubble developing. If not, then it won't be successful, because a huge bubble in the Internet in the late 90s. You've heard of Amazon. It's a company that has done extremely well even though that was a bubble and even though it collapsed. Don't think it doesn't mean that there won't be successes. I don't know is my basic answer to you.

Porter: I think that's a great answer, Jim. I don't think – I haven't really heard an answer that's different than that from someone whom I really respect and I feel like is knowledgeable about the space. But there is one thing I think I would just share with you, because I think you have a curious mind, too. Please understand, I'm not trying to sell you on crypto. I have no particular interest in crypto and I don't care one way or the other what you decide. Are you familiar with the work of Coase, the old Chicago professor of finance and business for lack of a better word? I'm not quite sure what he actually taught. Have you ever heard of Coase's theorem?

Jim: I read your stuff and I know you've got a young guy who's very knowledgeable and optimistic about cryptocurrencies. Is this the same –

Porter: No, this really has nothing to do with Tama Churchouse. You probably know Peter Churchouse, his father, and they're an old Asian finance family and that's great. I respect what Tama's done. He's on the board of a couple of different of these companies. He's very plugged in, but my interest in them is not financial, it's theoretical. Anyway, Robert Coase, the University of Chicago, back in 1937, and again in the early 50s, he published a series of papers that he actually won a Nobel Prize for later.

I'm pretty sure 1991, but the point is he envisioned a day where property rights would become so certain and transaction costs could fall so low that the essential purpose of the firm or of the corporation or the limited liability company or whatever could disappear. And what's interested me so much, and I just wanted to point in this direction is this idea that you can have a functioning organization that does not have an owner per se. It's being exhibited by a lot of these new public domain software companies.

So no one owns the software. Instead, you own a token that allows you to use the software. It's a very different kind of model and I know you're a curious mind and I just wanted to throw this out there for you to look into, if you're curious, because this is a whole new – potentially, a whole new type of commerce. By the way, Jim, I understand exactly how crazy that sounds. That's exactly bubble speak and I'm very aware of that and I'm very aware of the size of the credit excesses and how much free money is sloshing around.

I think the idea that nobody owns the corporation, but people have rights to use the software, it could be the dumbest idea in the history of capitalism, but it's out there right now and it seems to be working. One of the crypto asset companies that has been organized this way is called EOS. EOS, believe it or not, has sold $500 million dollars' worth of these tokens to use their software. That's a pretty big IPO.

Jim: Well, as you know, Porter, in the history of the world and the history of capitalism, the crazier the idea, the more likely it is to succeed someday, so just because something sounds crazy, that doesn't put me off. That actually interests me, arouses my curiosity even more. I don't know enough to comment on this particular situation, but I will certainly – when we hang up, I'll start to look.

Porter: I'd be really interested, because I respect you so much as a thinker. I'll follow up with an email about this stuff and I'll point you to a couple links. I'd just love your take on it. It's a very interesting thing in my mind, because there's been so much capital that's been put into these new kind of electronic networks and as you've seen Amazon take advantage of it in terms of retail space and I've taken advantage of it as a publisher, I feel like there's a lot more that the internet is going to do for us. I think we're still in the early stages of that.

I just want to go on the record of saying I'm not saying that anyone should buy an EOS token and I'm not saying that anyone should buy bitcoin. I'm just saying that it is a very interesting time where there is a lot of potential that's being unlocked in this technology and how it will all unfold is still very much unknown. But a big part of it is going to be what government is going to get behind it and sanction it? I think that Asia is ahead of the rest of the world in that regard. Jim, have you see anything in Singapore or in your travels in Asia? I mean, nobody travels as much in China, that I know of, as you do. Have you seen any of this crypto stuff in storefronts or your travels in Asia?

Jim: Yes, I've actually seen restaurants that take some of the local cryptocurrency. I don't know if they still do, but certainly a few months, at least in the summer. Yeah, in the summer, I saw restaurants and shops that had signs saying we take X, whatever X currency happened to be. So I've seen it, but to your bigger point, or I'll try to make a point, the computer – the Internet has already changed everything we know. You are right, it's straggling. It's beyond most people's imagination including mine of what's going to happen. My children will never go to a bank or post office or maybe even to a doctor in their lifetime, when they're adults that is.

Everything is changing. We know the world has a money problem of various sorts. We know that everything has been changed by the computer and will be, so yes, the computer and the Internet are going to change money as we know it. If you go to China right now, Porter, people don't have money. It's astonishing to me. They buy a cup of coffee, they put their phone on the thing and there's the cup of coffee. It's paid for and they look at me pretty funny when I say I have some cash I want to pay you. They say we don't want to take cash, you know. Cash is not efficient.

As you know, governments don't write cash, because A, it's expensive and B, they can't control you as much if you use cash. But if you have everything on your computer, then the government will call you up one day and say oh, Mr. Rogers, you've been drinking too much coffee recently. You know, they'll know everything you do and where you do it. So governments like to get rid of cash. Everybody's going to get rid of cash, so it's all going to happen. It's all going to be on the Internet. How it evolves, I'm not smart enough. I'll have to read your publication.

Porter: Jim, you're kind and wicked all in the same breath. A man I greatly admire.

Jim: By the way, I want to just quickly say – we both should talk about this for a second. Two or three other things could happen. One, governments could issue their own cryptocurrency. They could control it that way, because governments don't like any of this. They don't like gold for that reason. They want to be able to control everything you and I do and they want to know everything.

Porter: And by the way, I'll just end with very quickly, China appears to be headed in that direction. They have outlawed all of the other ICOs and they appear to be in the process of handing down a set of rules that require all cryptocurrencies to be trackable.

Jim: Hey, I say we have to watch what governments do, because governments don't like you and me, they like to have all the power themselves. But the other thing, of course, if, God forbid, there should ever be some kind of disaster and there's no more Internet, even temporarily, what are you going to do? You go in your refrigerator and you bring out your tomatoes and you can swap them or eat them, but after that, you don't have any Internet, worldwide or even regional wide, you don't have any money. In that case, I would certainly have a little silver and gold or a few bags of sugar or something in the closet. Because barter is going to be the only way you'll survive.

Dan: Okay, up next, we'll go back to episode 28, recorded on November 30, 2017, when bitcoin was just about to break the psychological $10,000 mark trading at around $9,900 back in November. So Buck Sexton interviewed Tama Churchouse, editor of the Crypto Capital service from Stansberry Churchouse Research. Tama purchased his first bitcoin for $100 in cash and has been traveling all over the world the last few years learning everything he can about cryptos and blockchain and we're about to pass some of that knowledge onto you. You'll hear Tama get into a deeper discussion with Buck on why it's important to understand the three different type of crypto asset classes and why the market cap for bitcoin could easily reach into the trillions. Here's what Tama and Buck had to say.

Buck: So let's get into it. Bitcoin is going even crazier right now. Right now, you got bitcoin $10,000 or so. How high can this actually go, you think, Tama? You've got hedge fund manager, Michael Novogratz, who said this week that bitcoin could be $40,000 by the end of 2018. What's your forecast? I mean, how do you actually put a value to an asset like bitcoin?

Tama: Yes, I mean, the way I look at bitcoin is I look at it as its potential as a global reserve currency. So a global decentralized reserve settlement currency. I kind of look at it as potentially reaching on par with say a G3 level of money supply, which would kind of put it into the trillions of dollars. So, you know, that's kind of the upside potential I see in bitcoin and that's kind of the way I look at it. I don't value it in the way of a traditional currency. I look at it as what can it potentially become and what can it potentially serve in terms of as a global digital goal, digital reserve currency. Kind of the upside that I see is potentially a market valuation, you know, in the trillions, low trillions of dollars.

Buck: Can I just ask real quick, I mean, for listeners who this may be their first experience hearing about bitcoin in any detail, what's kind of your intro description of this cryptocurrency and how can you tell us about mining?

Tama: Yes, the way to think about bitcoin is first of all, bitcoin is really the proof of concept of all cryptocurrencies. It's really the godfather of all the thousands of cryptocurrencies that are out there at the moment. The way to think about bitcoin really just briefly is it's the first trustless decentralized medium for exchanging value. If you think of every single form of ledger that exists, whether it's your bank account or your bar tab, it is centralized. So that balance sheet is centralized by a particular party, whether it's your bank, as I say, or your bar tab.

What bitcoin and the blockchain behind it allowed was for the first time it was possible for people who didn't know each other to come together and achieve consensus in a completely secure and decentralized manner and be able to agree on what the state of this decentralized ledger was. So I could send you $1,000, you know, around the world in bitcoin and that transaction could be processed, approved, secured, and done so in a decentralized way and in an open and a transparent way. Now, the miners are the guys who do that. They're the economic actors behind the bitcoin network itself.

They are the guys who take all the transactions, bundle them together into a block, put it through a relatively computationally intensive process, and then add that block of transactions to the blockchain. That effectively updates the state of the ledger, as it were. So, you know, if I send you a transaction, $100 worth of bitcoin, that transaction will get bundled together by the miners into the block, added to the blockchain, and then the ledger will now reflect, you know, a debit of $100 worth of bitcoin from my account and a positive plus $100 to your account. It doesn't require any centralized intermediary. The miners are the guys who support the network and process the transactions.

Buck: See, I've been watching Narcos season three, which I highly recommend. There's a point at which – without getting into any spoilers, the good guys, the police, they get their hands on a ledger and it has all the different payoffs in it. So I'm just trying to extrapolate from what you're saying here. It's almost like everybody would have access. They would all have the ledger, so to speak, right. Anybody who's engaged in the transaction, they would all have an independent copy of whatever has gone on and if that's what you mean by decentralization, right?

Tama: Absolutely. Anyone and everyone can go on, download what's called a full node, which is a full copy of the bitcoin blockchain. That runs at about 150 gigabytes at the moment. That file effectively contains the entire history of every single bitcoin transaction. Really what the miners are doing is simply updating that spreadsheet, as it were, on a periodic basis. Everybody is agreeing on it. It's done and that's what I mean by decentralized. So there's no single entity behind the state of that ledger. It's agreed to in a mutual way.

Buck: Tell me a bit about blockchain. You mentioned it when you were talking about bitcoin, but once again, by way of perhaps a refresher for a lot of the folks listening, but for some people maybe the first description of blockchain technology they've heard from an actual expert in this space, how should just everyday folks who are thinking about investing in this or getting involved in some way, how should they think about blockchain and even for those who don't care about bitcoin necessarily as an investment, blockchain technology may be very important for the future.

Tama: Yeah, I mean, it absolutely will be. The way to think about it really is if you look at the 1990s and the big dot-com boom and you look at what the Internet really was. The Internet was really about the kind of democratization of value – of information transfer. So I would be able to send you an e-mail or someone would be able to send information around the world. I could access information and it completely democratized that transfer of information. But what you couldn't do was transfer value, so if I wanted to send you an e-mail, I could do so, but I couldn't send you a real – I couldn't send you tangible value.

You know, I couldn't send you currency without several intermediaries. I couldn't send you kind of the economic interest in a particular underlying business without the involvement of settling intermediaries. What blockchain technology allows us to do is kind of really for the first time is exchange in a peer-to-peer exchange of value and do so in a way which is completely secure and completely decentralized. And currency is the easiest way to think about it first, so bitcoin and other cryptocurrencies, the easiest way to think about it, these cryptocurrencies, crypto assets really just bitcoin, dash, monero, they're really just forms of currency.

But once you kind of peel back the onion, what you start to see is that you can send a lot more than currency. You can send, you know, an exchange economic value in an underlying decentralized business, for example. Not to get too ahead of ourselves, but we're really just only at the very, very early stages of what this technology is going to allow us to do. It's really going to fundamentally transform the way every single business operates and it's going to completely disintermediate a lot of existing businesses.

Buck: Among those existing businesses, I'm assuming that it's something you know a lot about, having worked in it. Financial services never really will be the same as a business, right?

Tama: Well, I mean, having worked in banks for a long time, there's a couple of things. Banks are weighed down by a lot of legacy software compliance issues. There's a lot of people who have vested interest in maintaining a status quo and maintaining their role as an intermediary, because intermediaries make money. They exist to make money. If I can exchange money directly with you without an intermediary, then I'm cutting their business, I'm cutting their lunch. And that exists not just on money exchange, but financial assets and everything in between.

These decentralized companies that have been built, for example, don't really require an auditor, for example, because everything is actually recorded on a distributed ledger in the same way that I don't need an auditor when I look at the bitcoin blockchain. I can see every single transaction that's occurred there. So blockchain has the ability to really just cut out so many layers that just don't need to be there, so many centralized intermediary layers that their kind of sole role is to take a cut of whatever transaction that doesn't actually need to be there, and is really not going to be there in the future.

Buck: We're speaking to Tama Churchouse of Stansberry Churchouse Research here, everybody. Tama, tell me a bit about the other crypto assets and tokens that are out there. People talk a lot about bitcoin, but there's etherium, NEO, ripple, dash, Zcash, PotCoin, all this stuff. Are these currencies to be used only in certain online ecosystem or what are all these other currencies that are out there? What are some of the differences we should be aware of?

Tama: The way to typically break it down is into kind of three layers. Overall, you've got the entire kind of crypto asset space and you've got a couple thousand crypto assets, which are out there trading at the moment. The way to break them down really is first and foremost, you have cryptocurrencies and those are assets like bitcoin, bitcoin cash, like Litecoin, dash, monero, and these are really some of the oldest and longest running blockchain assets or crypto assets out there.

They really function as a medium of exchanging value in a cryptographically secure way. So they don't really do anything else above and beyond that. They're just a mechanism of storing and exchanging value. The second layer we have is what you call crypto protocols. That really includes things like etherium, NEO, EOS, Cardinal, and what these are – you know, one way to think about them is if you look at the Internet, you know, the Internet is built upon a layer of protocols, TCP/IP/HTTP/SMTP for e-mail.

You've got that layer of protocols, which really form the backbone of the entire outstanding Internet infrastructure. At the moment, what these tokens are doing is building a new layer of protocols that in the future, you know, decentralized applications are going to be built on. That's kind of when we look at etherium and those kind of assets, those are protocols. Some people also call them smart contracts or programmable money and in many ways, they're kind of like a 2.0 version of what bitcoin kind of proved that it could do. The third type of crypto asset out there are really crypto enterprises or applications. These are usually very specific.

For example, decentralized storage token, for example. If I own some of this token, then I could store my files securely in a decentralized manner. Think Dropbox, but completely decentralized, for example. Or there are gambling applications out there or there's messaging and so on and so forth. A whole layer of applications, which have been built on top of those protocols that are being constructed at the moment. So those are kind of really the three types of crypto assets that we see out there at the moment.

Buck: Now, tell me a bit about the bitcoin exchange Coinbase that now has more users than Charles Schwab, the brokerage. Schwab has 10.6 million users, as of the end of October. Coinbase reported 11.7 million users and Coinbase just jumped to 13.3 million, as of this past Sunday. Tama, I've actually been talking to a couple friends of mine, who have just recently gotten involved in Coinbase and I think that begs a question. When everyone around you – everybody from the people who are completely novice to the finance world, as well as individuals that you just kind of hear talking about this in passing, makes you think is this possibly a bubble or do you think bitcoin is still just a fringe part of the financial universe? That's what I want to know. Is this a bubble?

Tama: The first thing I would say is the pace of games in space in the past few days, past couple of weeks, has been unsustainable to say the least. You know, it's moving too far, too fast from my perspective. It doesn't change the underlying premise and it doesn't change the underlying promise of what this technology is going to deliver, but at the same time, it's not sustainable to see 10, 20 percent price increases day on day, you know, for weeks at a time.

So that would be the first thing. The second thing I would say is yes, there's a lot of unsophisticated money that is kind of pouring into the space. I get e-mails pretty much every day from friends of mind saying hey, how do I buy it, is it too late, is the price too high? You know, my typical response is "do you have a proper portfolio that you're running already, some bonds, some ETFs, some stocks, maybe some real estate? If you do, then great and maybe you can take a little bit of small portion of your investible assets and look at crypto." But I certainly think it's one of the last things you look at, not the first thing.

And the second thing I would say is I was speaking – I'm here in Singapore at the moment and I was speaking at a conference today, a couple hundred people, on view outlook for 2018. And afterwards, there was a group of people clustered around me and we were talking. This lady said bitcoin is going to close in on $10,000, I think it's too expensive. I said listen, I don't mean to be rude, but if you know what the market value of bitcoin is and she couldn't answer. She was like $80 billion, $100 billion? And to me, that was extraordinary that someone would be talking about the dollar denominated price of a unit of one bitcoin without any kind of understanding of the market value, which is really the important thing that people should be focusing on.

Not the – you know, the fact that it's hitting $10,000, yes it makes a great headline and so on so forth, but what people should really be focusing on is what is the outstanding value of bitcoin in circulation, which is around $165 billion dollars now and where do you think that can go. So kind of forget about the idea of what one bitcoin is worth and think more about what is the value of this currency in circulation and put it kind of in that perspective. And one final thing is, you know, I look at a lot of these cryptos at the moment and to be perfectly honest with you, there are cryptos out here which are trading for hundreds of millions, even billions of dollars that are going to get a zero. So there's going to be a fairly major bloodletting at some stage and there needs to be. There needs to be a big shakeout in this space and that's going to happen. Whether it happens next week or early next year, I don't know, but it's going to happen for sure.

Buck: That was a question that I wanted to ask you about Tama, specifically, is that if someone is going to invest in bitcoin, do they have to be prepared for it to go to zero. It sounds like some cryptocurrencies you would say that's the case, but would you say that about bitcoin itself? If someone's going to invest, should they be at least psychologically prepared for the possibility that bitcoin all of a sudden just completely crashes?

Tama: With bitcoin in particular, I don't think it's going to zero anytime soon. You know, one of the main reasons is bitcoin is kind of underpinned by a large layer of what I would call bit bugs. These are the guys who don't sell under any circumstances. They are just holders or hodlers, as they're known in the space. They don't sell and they're kind of like gold bugs. You know, from my cold, dead hands, as it were. They're not going to sell, but what bitcoin is, is extremely volatile. You should be, you know, prepared to see corrections of 30, 40, 50, 70 percent, you know, if you're going to get involved in the crypto space.

You need to be prepared to stomach a huge amount of volatility. That's the price you pay for the kind of upside that you can get. You know, we launched Crypto Capital just over a month ago. Bitcoin is up 90 percent since then. You know, it's pretty crazy, but what goes up can also correct pretty rapidly as well.

Buck: If someone was wondering right now, Tama, we're about to get into how they can subscribe to your Crypto Capital newsletter, which highly recommend for all those listening who are interested in doing this – interested in investing and looking at this. If someone wanted to start, what is step one? If someone listening says you know what, I would like – I want to put 10 percent of my portfolio in some of these cryptocurrency assets. They have to go onto the exchange? – what is the process of actually investing and buying actual – let's just assume bitcoin, let's just stick to bitcoin for now.

Tama: Sure, the first thing I would say is 10 percent is probably too much. Start with something a little smaller than that, but the step-by-step process is pretty straightforward and we lay this out in a lot of videos and what not in Crypto Capital, but it's pretty straight-forward. First of all, you open an account with a crypto fiat exchange. A crypto fiat exchange is an exchange where you can exchange, deposit dollars, and buy bitcoin. The major two ones in the U.S., for example, are Coinbase which we mentioned earlier and Gemini. So you log on, open an account with them, go through a relatively straightforward KYC know your customer process, submit document and ID and then you can deposit a few thousand dollars by wire or bank transfer into your account.

You then have a pretty standard-looking trading dashboard where you can put in your order for a particular amount of bitcoin. Bear in mind, you don't have to buy whole denominations with bitcoin. Bitcoin is divisible down to eight decimal places. You can buy $1,000 worth of bitcoin or $2,000 or $5,000 or what have you. You put in a fairly simple limit order and then you have some bitcoin. Once you've got bitcoin on the exchange, you know, typically we recommend that you don't leave it on the exchange. That you move it to a wallet, so there's a whole range of different wallets that you can use.

A wallet is really just a piece of software or even a piece of hardware that acts as kind of an interface, a bridge between your bitcoin and the blockchain itself. There's a whole bunch of different wallets out there. You can even have your wallet printed on a piece of paper, on a USB stick, or on just your computer or your mobile phone. That's really it and for the vast majority of people, that's kind of what I recommend. Buy a little bitcoin, tuck it away, and really forget about it. If you're kind of looking to roll up your sleeves and get more involved in the space and there's plenty of tokens that outperform bitcoin, you know, pretty dramatically.

One of our recommendations, for example, we only launched last month, last month was up 450 percent, it's a pretty crazy white-knuckle space. But regardless, what I would say is look, just try and soak in as much of this as you can. Unfortunately, it does take quite a lot of – you really do have to roll up your sleeves and make an effort to learn as much as you can, because you're not going to find there's a real lack of good information out there. There really is no Wall Street Journal for the crypto space. There's very few reliable sources of information with a huge amount of misinformation out there as well.

So it really does take quite a lot of navigating to familiarize yourself with it. It really is the future. I would strongly recommend people – even if you don't buy into the whole crypto asset space, that you at least understand what's going to happen next and that's kind of what we hope to help people navigate their way through it, as it were.

Buck: To that end, Tama, how can people contact you about subscribing to your Crypto Capital newsletter?

Tama: You'll find us on www.SstansberryCchurchouse.com. That's our website and you'll see on our publications – we have a few publications, one of which is Crypto Capital. You can call our hotline, which is open 24 hours a day, well during the week I think at least, or drop us an e-mail or even subscribe online relatively straightforward and we have a full one month's trial period. So folks can try us out. We've got about two or three hours' worth of videos that are instructional guides. You know, really just trying to handhold people as much as possible into going through the process of doing this, navigating the space securely and safely. That's really the priority. If you're interested in a subscriber to Crypto Capital, you can call us on 855-599-6002.

Buck: Tama Churchouse of Stansberry Churchouse Research. Tama, great to have you. This is fascinating stuff, appreciate you joining on the podcast, come back soon.

Tama: Thanks a lot, Buck, it's been a pleasure.

Dan: All right folks, for our last interview, we're going to go back in recent history to just December 14, when bitcoin had already rocketed past $10,000 and was trading at around $16,500. My oh my, where will all this go? In just a moment, you're going to hear from globetrotting speculator, Doug Casey of Casey Research. Porter asks him if there's any connection between the enormous growth and global outstanding debt and the rise of cryptocurrencies. And Doug tells us that we're clearly living in a financial twilight zone where everything in the world is overpriced except for one area that's cheap today. Here's what they had to say.

Porter: Let's get to the current rage. A very simple question, do you think there's any connection between the enormous growth and global outstanding debt, particularly in the major Western economies and the soaring price of bitcoin and other cryptocurrencies?

Doug: Yeah, I do. All of these central banks, not just the Federal Reserve in the U.S., but all these central banks all around the world, Chinese, the Europeans, the Japanese, they're creating currency units by the scores of trillions, and they're backed into a corner. They actually have no alternative to doing that, so all this new paper money or digital money, if you would, that's being created now, on a weekly basis almost, has got to go someplace. And that explains the bubbly stock market. That explains the hyper bubble in the bond market, because governments are the biggest borrowers. It's flowed into these cryptocurrencies as well, so I always look at the bright side of things. It's going to destroy the entire world monetary system, what's going on. But I always look at the bright side and the good news is it's creating bubbles everywhere. Right now, the bubble is in cryptocurrencies and bitcoin, so I'm all for it.

Porter: And how do you reconcile your own appreciation for the technology and the software and the elegance of bitcoin as an enterprise computer revolution, a network effect revolution – a revolution in cryptography and networking and communication, and your admiration for that with the fact that the price has now, in your opinion, become a bubble? Do you – are there any cryptocurrencies that you would buy? Would you be an investor in an ICO at the right price or is the whole space, in your mind, now unsafe for investing?

Doug: You know, Porter, I was given my first bitcoin in Cafayate, Argentina in 2013. I bought a – a very smart Belgian guy lunch and he said "Here, I want to give you this." And he gave me a physical bitcoin. They exist, incidentally. I still have it. It was worth about $13 at the time. Over the lunch, he explained to me why he was big in bitcoin. He's got to be worth $100 million or more at this point. I have no idea how many of these things he bought, but it didn't click in my mind why it was going to get big. It's a transfer mechanism. Now, I'm not a computer jock. I have an iPhone 7, but it's not even charged. I don't even use the damn thing. I don't like it.

I'm a technophile, but I don't like to clutter my mind up with these things. I consider the cryptocurrencies at this point – they're way too expensive to play with. It's not like they're $10 or even $100 or even $1000 anymore for bitcoin, so I don't want to play that game. I like to bottom fish. Yeah, the trend is your friend and I bought a bunch of cryptos early last summer and I've about quadrupled my money. Actually, it was our mutual friend, Tika Tiwari, that actually said something that made this all twig in my mind and made me understand oh damn, this is – in the past I said yeah, cryptocurrencies can be a money, but where's the value, the use value of the things?

I didn't really – yes, they have tremendous use value as a transfer device where you don't have to use the banking system and the fact that three quarters of the people on the planet don't have bank accounts and have to deal in worthless currencies. Well, not totally worthless like kwachas and pulas and dirhams that are of little value within their countries and zero value outside. That's why these people all over the world are going to bitcoin. So – but I don't want to – yeah, it can go higher. The trend is your friend. But I'm very leery at this point.

Porter: Doug, that then brings the question, if you're leery about bitcoin and you think the stock market is a bubble and the bond market is a hyper bubble, where do you put assets for safety first and is there any possibility of getting a decent return?

Doug: Well, we're living in a financial twilight zone, as far as I'm concerned where something that I thought was metaphysically impossible has happened. Everything is overpriced in the world, which is – it should be impossible. How can everything be overpriced? Not quite everything is overpriced and there's one area that is cheap today. That's commodities. I say that a little bit – look, the longest bear market in human history is the commodities market. They've been going down for about the last 10,000 years in price relative to the world at large or human labor.

And they'll continue going down in price. That's the long-term trend, but right now as we speak, commodities are down generally about 50 percent. Some are down more from their last peak, which was roughly 2010, 2011. And with the governments printing up all this money, there's going to be a bubble, I think, in commodities. We're talking grains, metals, cattle, things of that nature. I think there's going to be – I hope there's going to be a hyper bubble in the mining stocks. Why? Because it's always been one of my specialties is mining-exploration stocks, which is a ridiculous area to be in. It's a 19th century choo-choo train business that I have to explain how I ever got involved in it to real financial people, but I think that's going to happen, Porter.

Dan: Okay everyone, that wraps it up for part two of the best of bitcoin here on the Stansberry Investor Hour. If you missed part one, just go back and listen to last week's episode where Porter and Buck talk with Wall Street Journal senior reporter and author of The Age of Cryptocurrency, Paul Vigna, permabear and former hedge fund manager, David Tice, and more bitcoin basics from Tama Churchouse. So that's just in last week's episode, but let us know what you think. Write to us at [email protected] and to make sure you get all the latest show announcements, notes, and links we talk about on the show every week, go to www.investorhour.com, enter your e-mail, and you'll get our weekly e-mail updates.

Once again, this is Dan Ostrowski in for Buck Sexton and Porter Stansberry, who will be back next week to resume your regular programming on the Stansberry Investor Hour. Love us or hate us, just don't ignore us. Thanks again for listening everyone, we'll see you next week.

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