Welcome back to geek time. We're gonna be talking about cryptocurrency for the advanced lesson. Hey, what's going on? Lulu?

Well, I'm prepared to be even more confused.

Hahaha. Don't worry. I think this might be easier.

Yeah, in the previous episode, we were talking about how cryptocurrency has no central authority or central regulatory bodies to really oversee it. For me, that just sounds like a problem waiting to happen, really sounds like troubles. Because definitely, some people are gonna use it for criminal activities, you know.

Exactly. That's one of the things that a lot of people talk about cryptocurrency is the fact that it's connected to crime, which is - you can say that for just about any currency, but cryptocurrency is like the major tool for criminals who are online.

Because there's no regulatory body. There's anonymity. Just really a hotbed for a crime.

Right. You've like - we've talked about the Silk Road before.

Emm. Dark web.

Yeah. Using the dark web that are connected to buy and sell goods. All those goods are sold or bought with cryptocurrencies.

Because it's much harder to track and to trace.

Yeah. It's nowadays the markets are trying to get people to have their name connected to their wallet, but not every market requires that.

And so, there is a bunch of people out there that have cryptocurrencies that have just a wallet with no name attached to it.

Yeah. Because that was the original aim, that was the original meaning of cryptocurrency, right? They don't want a centralized authority to control all these money transfers. Would there be a lot of money laundering in cryptocurrency?

Yeah. Like cryptocurrency, just in like 2021 alone, there was something like $8.6 billion of money laundered using cryptocurrency. That's not even the beginning, like every year that happens, there is other issues involved with cryptocurrency. When you have so much crypto, you can actually use that to affect or inflate the market. You have people that have large sums of cryptocurrency, not only are they using it to launder money, but they are actually able to increase the value of the currency they have, by just selling it to each other for the same amount of money, which increases the amount of trades, which makes people think that it's worth more, and then people buy it for more.

Oh, okay. I think I've heard of this. This is called wash trades, right?

Right. It happens on the stock market too, gold markets, but it's rampant and in some markets with like cryptocurrency.

Yeah. So, it's the whole idea is I have some cryptocurrency, I just sell it to you, you sell it back to me, I sell it to you, you sell it back to me. And so, by doing that we're trying to make it seem that large amount of this cryptocurrency is traded on the market, therefore inflating the value of it.

Right.

I think the other problem with cryptocurrency is a lot of people obviously use it for speculation. So, like really really - like gambling.

Right. Just like buying stock, you want the value to go up. People are investing money in the cryptocurrencies. And when you see like the increase in like the value of Bitcoin over the years, went from something that was worth pennies to being worth thousands of dollars. I think it's worth $30,000 now, and it’s worth $60,000 I think at the beginning of the year something around there.

And so, people can take a small investment and make their investment increase 10 times or maybe even a hundred times their original investment.

It's a market for gamblers. However, like we talked about last time, most of these cryptocurrency, they do not really have the staying power. They will not be able to really maintain that high value over long term or keep growing. It's very volatile to go up and down fluctuate wildly.

Mhm. Yeah, when we look at just like we mentioned Dogecoin earlier, but you could have like five Dogecoin for a penny in 2020. But then like one Dogecoin hit like 60 cents at the beginning of the year, or even maybe it was last year just at the end of last year.

But now it's still worth even 8 cents. So, if you could have five for $1 and now one's worth 8 cents, that's still like increasing the value 40 times or something like that.

I see, it's almost like an underground casino, this whole cryptocurrency trading.

Yeah.

Yeah. The dark underbelly, which brings us to the question, since there are no central banks to issue or to create these currencies, who can make cryptocurrency?

You know. Nowadays just about anyone can make cryptocurrency, really all you need is a blockchain, right? You need the blockchain, so you need to set it up. There is blockchains that are already available for people to use.

So, I don't even have to be a blockchain expert to make cryptocurrency?

No.

Some people will take the blockchain. And if they're good with code, they'll modify it slightly, and change it up a little bit, or they'll just use the blockchain that's there, and they'll just leave it as it is. And basically, they just set it up and can pay for the maintenance of it. When people start a cryptocurrency, they basically decide how it's going to be run. There are people gonna get paid for giving their processing power. Are you going to be the one who's like processing it and controlling the ledger? Well, it might work when you first start, but eventually you're gonna have to move out. But yeah, you do need to pay people for their processing power if they do lend you that.

Okay. I'm gonna ask a question I probably will regret. So, Brad, was your educational background was what – you know - in science and technology? Are you technically able to create your own cryptocurrency if you wish to?

Like, I don't think I could write my own blockchain, but if I went online, I could get the blockchain and I could easily start it. I think most people who know how to use the internet could just go on YouTube, watch a video and after like learning a few of the basic things, just buy a blockchain and start their own cryptocurrency. It won't necessarily be legal.

You don't learn anything on YouTube.

Yeah, it won't necessarily be legal. You have to register cryptocurrency in order for it to be legal in many countries. And so, you can't like use it for you like a way to buy or sell something within that country unless you've done that. But anyone could start one.

I see.

But I thought the whole point you are talking about the legality of it, but I thought the whole point of cryptocurrency is so that they don't have to be controlled by these financial regulatory bodies?

When you're moving and buying or when you're buying something online and selling something online, you don't really need to worry about it. But if you want to have like a cryptocurrency that you can use when you go to a store, you know, that store has to be able to accept that currency. And if they do that, they have to pay taxes, that currency is something that they're getting. And so, they have to be able to put that on their taxes.

I see.

Like if you're online, sure you can get around that because a lot of people who buy or sell things online, just don't record it or don't tell anyone about it. But when you're actually running a legal business, you need to have a legal cryptocurrency.

Emm. So, a lot of it, it just sounds like people trying to exploit the legal loopholes in this.

And what gets even scarier is something called the “Pump and Dump” scam and that's been happening a lot in recent years.

What is a “Pump and Dump” scam?

So basically, someone who has some sort of like clout on the internet will start their own cryptocurrency, and they'll have the cryptocurrency to buy and sell something they want to start or something new.

And so, they tell all the people that follow them and watch their videos or something about this new cryptocurrency or someone might start a cryptocurrency and then convince influencer online to talk about this cryptocurrency.

So, it depends on who's actually behind it. It may be the influencer or it may just be like an outside body.

I just feel like you're talking about you and me, you start a cryptocurrency and I give you a shout out - “Bradcoin”.

Yeah, I don't think I'd ever do that myself. But yeah, like someone will start a cryptocurrency and they'll get people to buy it.

Once that person gets money for their cryptocurrency and the value goes up, then they just start pumping all the currency they have as much as they can onto the market at that higher value. And then they just drop it and like just leave it and that currency will die out and all the people they got to invest will just lose their money.

That is a total scam. So, it's more like I'm issuing or I'm printing all these coupons and say, “They are worth something, collect them, collect them.” And then, I just shut down shop after everyone paid me and then I just move out and then all of these coupons or tokens or coins so to speak become useless.

Exactly.

That is really scary. That is why definitely not something I would try lightly a cryptocurrency, because it just sounds like a lot of the things are under the table or they're just not very clearly defined.

Yeah. You make money, but there are so many more ways for you to lose money in this.

Yeah. I like it's just not something I really want to get into. I don't want to start a cryptocurrency, even if I was not trying to do a “Pump and Dump” scam, it still just, there's just so much involved that you would like you have to look at the people who started this right took them years and years and years to get something going.

Yeah.

And, you know.

I see. And perhaps they're just doing it because they are cypherpunks. They're not doing it to make a quick buck anyway.

Yeah.

Alright, thank you for educating me about cryptocurrency.

Now before I didn't know

No problem.

I was a bit worried about this. Now after knowing a bit about this, I definitely know that's not for me. So… Yeah.

Exactly.

So, thank you for the information. Thank you for the talk. And for those of you who are listening to us. Again, if you have ever had any experience investing in cryptocurrency or even started your own cryptocurrency, which I don't even know if it's legal in China, but leave us a comment in the comment section. Thank you Brad for coming to the show.

Thank you, Lulu.

We'll see you next time. Bye.

See you next time. Bye bye.