A few years ago, I went to Vegas with my boyfriend. It wasn’t my first rodeo, but it was the first time I had gone with the intention to gamble. We had a suite at the Cosmo and I was beyond excited.
For the first night, I decided to wear a white For Love and Lemons dress and hit my first slot machine in the Cosmo lobby. The minute I sat down, the bartender asked me for my drink order and I asked for a vodka red bull. She immediately poured my drink and as I went to hand her my card, she said “No - it’s on the house.”
Damn, I’m glad I wore this dress. I thought.
But then a few slot machines later, I realized all the drinks were on the house. One drink after another, every time I pulled a slot, the bartender walked over to me and would ask for my next order. I vaguely remember a winning streak and a few people in the lobby cheering my on saying “you got this, honey!!” “where’s the honeymoon?” “put $50 on red” and “double down on this one!”
3 hours later, I woke up to my boyfriend holding my hair in the bathtub saying, “I think the house won this time.”
WTF is crypto?
A cryptocurrency (or “crypto”) is a digital currency that can be used to buy goods and services and uses an online ledger (the blockchain) to secure online transactions. It’s important to note that blockchain itself isn’t a device, a machine or a cryptocurrency even. It is a decentralized system. For the purpose of this article, I’m going to focus on crypto as an asset and currency rather than dive into blockchain. If you want to learn more, I’d start with this video here:
What is their purpose?
Crypto was created in 2008 during the financial crisis by a programmer (or a bunch of of programmers) under the pseudonym Satoshi Nakamoto as a way for people to control their money, without having to rely on companies, banks, or governments. As you can imagine, during this time people were fed up with their governments and looking for a more foolproof way to transact. And that is what crypto is all about -- unveiling the system. Everyone knows who owns what, how much exists, and can identify if there is ever a bad actor.
WTF Do crypto and Vegas have in common?
The Bookie - Blockchain enables crypto to exist. It is a decentralized ledger that stores data. I like to think of it like a bookie that knows who owns what and who owes what. The big difference though is that bookies operate under the radar - with blockchain everyone has access to who owns what and where coins are stored. It is a PUBLIC ledger that is intended to be more secure, increase transparency, and prevent fraud.
The House - You can buy crypto in a lot of different places like you can gamble in a bunch of different casinos. You can buy crypto on Coinbase, Binance, EToro, Robinhood - the list goes on. I could have gone gambling at The Wynn, but simply didn’t make it out of the Cosmo. But at the end of the day, most of these brokerages are not that different - some just offer more perks than others. Coinbase is like The Cosmo while Robinhood is like Bally’s. The Cosmo has 3 pools, numerous clubs, the best restaurants, and endless games kind of like how Coinbase offers 30 different tokens. Bally’s has fewer pools, restaurants and perks similar to how Robinhood only offers 7 coins. Always remember, you get what you pay for.
The Hype - A lot of crypto currencies depend on hype. Dogecoin is the perfect example of that. Dogecoin was created by a guy in San Francisco as a complete joke and the only reason it is valuable is because people keep buying it and playing into the hype. In Vegas, everyone was screaming at me to keep betting, putting money on red and bet just $50 more. I was driven by the hype to keep buying more. But remember how my night ended. Just because there is hype, doesn’t mean there is eternal value.
Tokens - Crypto currencies are tokenized. You can think of them like poker chips. You need to trade in cash to get coins like Bitcoin or Ethereum. The main difference between poker chips and crypto tokens is, each crypto token has a unique identifier and again, they trade on the blockchain. Poker chips are not unique and a lot easier to lose.
Fraud Prevention - In Vegas, you can’t really f around. You try to steal chips? Security will be on you faster than you can imagine. Unless your George Clooney, you’re not getting away with anything. Crypto operates similarly because it uses encryption to verify transactions. The aim of the encryption is to provide security and safety.
Things to be Mindful Of
They are risky - I don’t need to tell you that gambling is risky. How many times have you won your Bachelor or March Madness bracket? Crypto is no different. It is a highly speculative asset and/or currency. And depending on which one you're trading, some can be more risky and speculative than others. For instance, Bitcoin has been around for a long time and it’s backed by some pretty big name investors. That being said, just a year ago, it was trading at 20k, dropped to 3k then bounced back to 59k. Ups and downs so great, it reminds me of my period mood swings. I genuinely hope Bitcoin gets on the pill and stabilizes, but only time will tell.
There is a lot of buzz - Everyone seems to be talking about crypto lately. Your little brother, your grandma, your Uber driver and even the world’s top hedge fund portfolio managers. That being said, buzz isn’t always a positive indicator. Take me, I was probably 5 vodka red bulls deep in Vegas and feeling fine, but my buzz quickly turned into drunk and my drunk quickly turned into vomit. So when you see a ton of buzz and everyone around you is telling you to “buy, buy, buy” (and in my case, “drink, drink, drink”), it’s not always going to end happily. Make sure to drink water and think about what’s best for yourself.
Allocation - Crypto is a new asset class, so when you talk to people about portfolio allocation, you’re going to get A LOT of answers. Some people say they wouldn’t touch it with a 50 foot pole, some say it’s 100% of their portfolio, and others will tell you 5-10%. As you get to know me better, I’m always going to say - choose what is right for you and try to stay away from people that tell you affirmatively what to do. Because the fact is, what’s right for Mark Cuban and Paris Hilton might NOT be best for you. For me, I see crypto and blockchain as the future but with a degree of skepticism. That’s why I allocate a small portion of my portfolio to crypto, but I don’t put all my eggs in one basket.
Fluctuation - Crypto is VOLATILE. It’s volatile because it hasn’t quite stabilized. While some people use the coins for currency (you can literally use Bitcoin to make a purchase at Walmart), most people use them to speculate. As a result, coin prices can be all over the place. My theory on speculation is that people are looking for yield outside of cash and the stock market. Interest rates are LOW which means people aren’t making money by holding cash and the stock market is pretty high right now. As a result, people are trading crypto to find yield.
Environment - I’ve heard a lot of people talk about how environmentally friendly crypto is because it's not a paper product like cash. Those are also the same people that probably think the LED light fixtures at the Cosmo are saving the planet. Fact is, the lights are on 24x7 in Vegas and it's not exactly good for mother Earth. Bitcoin has a carbon footprint comparable to that of New Zealand, producing 36.951 megatons of CO2 annually. That’s not taking into account all the other coins in circulation. The energy consumption is mainly due to Bitcoin miners that use a ton of energy to generate new coins.
I want to be clear - I LOVE Vegas. I don’t want you to leave reading this article with a sour taste in your mouth about Vegas or Crypto. If you want to go to Vegas, I want you to go to Vegas, gamble, and gamble well. I feel the same about crypto. I just want you to read about it, dip your toes in (if it makes sense) and understand what you are doing. My philosophy is, if you don’t understand a product, you probably shouldn’t be buying it. Would you sit at a high stakes poker table with the poker champion of the world without knowing the rules? But if you know the rules, I don’t see why you don’t deserve a seat at the table.
If there is a topic you want to discuss, please DM me on Instagram @notyourbfsinvestmentadvice or email me at email@example.com. I also am building a company called Tardi to help individuals on their journey from cautious savers to savvy investors. If you’re interested in joining the beta, sign up here: https://www.tardiapp.com/
See you next week lover!
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