Below is the transcript of our conversation. Enjoy. To keep up-to-date with our future Facebook Live event, remember to register for our mailing list here.
Stanley: Hi guys! Everybody, welcome to our first ever Facebook live event, and today our topic is going to be about, how to invest in risky assets like cryptocurrency, but in a safe manner. Of course, as you guys know, I’m not the expert of cryptocurrency. So, today I have two special guests that are experts on this topic, who has been studying this topic for many years, and they are none other than; number one, one of the famous of Singapore blogger; Budget Babe, hello Dawn, and also we have it, Aaron here from mrstingy.com. Hi guys!
Aaron: Hey, hello. Thank you for having us here.
Stanley: Yeah, no problem. So, maybe we start with Aaron, why don’t you give like a short introduction about what is Mr. Stingy, and why do you get interested in cryptocurrency?
Aaron: Okay! So, thanks Stanley for having me, I guess it’s – I mean it’s a blog about living life better really. So, and finance, money is definitely one of the key aspects in our life. So, that’s kind of, how I got started in writing about money and stuff. Cryptocurrency, digital currency, absolutely fascinates me, it’s something that’s new, and I am like super believer in it, and what’s gonna come out from it. So, that’s how I got interested. Yeah, I think expert is thrown around to loosely nowadays. So, probably not just an interested person in it, yeah.
Stanley: Yeah! okay, and then maybe as for you Dawn as well, I think you have made quite a number of interesting blog post about your crypto investment, and how is it doing, and you have been very transparent about it. So, why don’t you share a little bit about yourself, what is Budget Babe, and why are you so interested in cryptocurrency?
Dawn: Hi everyone, I am Dawn, I think like Aaron, I wouldn’t really call myself a crypto expert, and I think a crypto enthusiast will be the right word. So, I am basically, I’m crazy about everything entrepreneurs including insurance, savings, investment, [Inaudible 02:27]. So, I have to put it out there first though, when I first started, I was the biggest skeptic of crypto. So, I can understand for everyone else who doesn’t believe in it, I know how it’s like because I used to be there, but now that my eyes are opened I really do –
Aaron: It does take some time to warm up to it.
Dawn: Exactly, it takes a lot at first, reading and learning, but you know once you really understand, and I think beginning to value it, it’s where the defenders are comforting – not to get rich, but to change and improve the world. And then you know, if you put in your investment, and then you stop it, you think will definitely not change the world, I think that’s a really good investment. It means it’s not that different from stock market.
Stanley: Sounds good. Okay, yeah, before we dive right into the subject, just to make a quick disclaimer today, is just for educational purposes, it’s that we are not investment advisors. So, we’re not giving any investment advice about both crypto, and the stock market. So, going back to the topic; if you guys have any question, just type down your question, and I’ll be the moderator, and go through the question with you guys, and of course; we will try to ask these two great crypto investors as many questions as you can, and let me just kick start out, like if a new in someone new, who is interested to maybe like you know, just start investing a little bit about cryptocurrency, say Aaron in Malaysia, what’s the best way, so like what’s the best exchange to go to, or the best wallet to have, and what do you think about that?
Aaron: Right? So, oh you’re asking me, this is an interesting question for me, because I guess for full disclosure, I work, I have a full time paid job with crypto financial services provider, Luna. You know, I’m actually in their office right now. Yeah! so, Luno’s here and yeah I mean absolutely, I believe that if you wanna buy Bitcoin in Malaysia, Luno’s the place you go, I mean. The thing right now is that, we’re having some problems with our bank account, apart from that, I actually think that Luno’s the best place to buy Bitcoin in Malaysia.
Stanley: Yeah! Okay, actually I quite agree with, I was a customer of Luno until they closed down. So –
Aaron: In Singapore right?
Stanley: I actually have an account in Malaysia as well.
Aaron: I should research that hit, Okay?
Stanley: Okay, for you Dawn, how can Singaporean get involved in Cryptocurrency?
Dawn: So, I am going to split my answer in two ways, one will be the Singaporean, and one will be impromptu. So for Singapore [Inaudible 05:27]
Stanley: Sorry, Dawn maybe you need to speak a little bit closer to the mic.
Dawn: Oh! Yeah, sure, I think for beginners, the best way will be through coin biz, because it’s the most user friendly and it’s pretty secure to certain extent [Inaudible 05:43]. I think you have to come a lit Singapore, oh why would anybody if you have a set to the point they tried it and if you wanna put even more money and then –
Aaron: Yeah! I think if I can add to that Stanley, I think if it’s like a newbie, I mean we never ask people to join their life savings or anything. It’s always start small, start to learn, not to like try to get rich quick.
Stanley: Yeah! Exactly. So, it really goes to our topic on; how do you actually invest in risky asset now safely, but maybe at the start, we should have a pole do you consider cryptocurrency a risky asset?
Stanley: I can see a ‘No’ from Dawn.
Dawn: It’s only risky when you don’t know what you’re investing in, but I would say the stock market has risks as well. Although I will admit that volatility in crypto is more risky than that of the stock market.
Stanley: Okay, you bring up a very interesting point, because a lot of people misunderstand volatility with risk. So, even in the stock market, when something is volatile, it doesn’t necessarily mean, that is risky, and you have a good point there, and then and I’m glad that you point that out. So, if someone wants to invest in such an asset, where they – maybe they do not understand it fully yet, how would you, maybe tell them to get started like, when you first get started, how do you maybe position your sizing, and like how do you make a meaningful investment and yet not lose a pence. Maybe you share some of your strategies Dawn.
Dawn: Well, I think, when you first get started, you require a lot of effort, so I advise spending anywhere between five hours and six hours every day, reading and understanding about not just Blockchain technology, but about developments its up too, what their team is like, what do they aim to solve, how are they going to solve it, so on and so forth. So, you need to learn that the only way you’re gonna be able to make it. So, after you gained the knowledge, you know, what you want to invest in, and why you’re investing in it, and where the value would come from, then I would say; in terms of positions, I think the golden rule is only invest with money that you’re comfortable with doing. The truth is, we’re still in the early days of the crypto. The universe and it’s the high volatility. So, you can easily see, you’re in higher portfolio, go down by then you’re properly, and okay. No, because you need money, so only use money that you don’t need in the near future and something that you’re really right with, okay.
Stanley: And for you Aaron, when you get started investing in cryptocurrency, you how do you position your portfolio, and maybe you share a little bit about history?
Aaron: Yeah! So, I think for me career started, it’s like, I fully agree with what Dawn says, is that people should never like put something that the money, that they need or money that they borrowed. it is something that is extra, so even if things happen to it, or if you make a newbie mistake, and then something bad happens, you’re not gonna be in financial trouble. So, I think for me it was a lot of reading, a lot of studying at first, but then start small, with an amount, that no really you’re comfortable with, just to understand and learn. people call it skin in the game, because I mean, I think you can do a lot of reading, you can do a lot of talking to people, but unless you actually try with a little bit of your own money, that you’re not really motivated to learn. So, I think that’s important too if you are in that financial stable state, just to try with a little bit, and then learn from it, because that’s when it gets interesting.
Stanley: Yeah, well said. So, basically both of you are saying that we should really be investing on money, that is excess saving, rather than you know our core saving, and oh maybe even I see some people starting to buy a cryptocurrency with credit on credit cards, and things like that. So, that’s a big NO.
Aaron: Yeah, I think anyone responsible, will tell you that buying a debt is not a good idea,
Stanley: Yeah! Exactly. So, it kinds of link back to how I invest in the stock market as well, like people talked about very high risk stocks, and high growth stock, which is more risky, I can’t we have a quite small position on those, and maybe the ring pattern say; 80% on my portfolio are on very stable companies with good dividends, and then I only play with that 20%; where I can take more risks, and so if they make a good return, it’s still meaningful, but yet if I lose them still. You know, I can still recover from it yeah.
Aaron: Right! So, any stock tips for us Stanley?
Stanley: No, wait for your crypto tip First, hold your hoaxes. Okay, someone is asking actually, how do you value a cryptocurrency say, because inherently they are almost like gold or silver, there’s no intrinsic value, how would you go about valuing it Dawn?
Dawn: Okay! So, I think what we need to understand is that crypt’s really news. So, there is no universally accepted and something of that nature, but what hype or what category the coins are under. So, for instance there are some coins which serve a form of passive income, like by example on whocoin, which is the coin type by a change, actually dies regular, but they actually share this coin with the owners of the coin. so you could then go check them, by completing and estimating transaction quantity, earned from each section and in projecting how much you would get at the shampoo, on your so there could be one way. another way would be the utility of the coin, so if a client’s seeks to disrupt a particular industry, you probably want to know what the particular industry how do you want to understand what it is, and then to understand how much is that problem costing companies of it right now, and try to project in terms of the – how would a safety earn money, how they’re talking or the companies in the system, and you try to project it from there. So, there are many come there many complicated models, that you find in fact just a disclaimer, I did not really go so much, so actually be like my take is, that I would look fundamentally, and a qualitative value, and if it doesn’t pass a criteria then I’m not even…
Stanley: Okay, okay and what about you Aaron maybe you can share with us a little, but I’m not sure do you still own some Bitcoin right now, and how would you value your Bitcoin?
Aaron: Right so um I think when it comes to digital currencies Bitcoin any of the other coins like Dawn said, it’s like a really new industry it’s not like the stock market, where you have less discounted cash flows, and P/E estimates and things like that. I think to be honest even the experts are still building their own financial models. So, it is very hard to like come up with like a universally accepted, this is the way we’re gonna value coins I do follow a couple of people, which I wanna shout out their names here, I mean I follow them on Twitter, I find that they have really cool ways of valuing valuations, which again, I don’t know whether it will come true, or not. But like there’s this guy Chris Byrne is Burniske, and then the guy really woo these guys are on Twitter. so you can Google really you or crispiness valuation of tokens valuation of crypto currencies, but again it’s a really new industry, no one can predict with certainty, and I will say that the markets have seen a lot of speculation, so the markets may not be entirely driven by fundamentals. So, it hard to say that yeah, this coin is fundamentally sound, and then you see that the coin just drops, and you can’t say that oh my valuation is wrong, because the market is seems to be driven by speculation, a lot right now. For example, like a coin just for dentists is probably not gonna be like denta-coin, to me it doesn’t make sense, that is gonna take over the world because it’s just for dentists, whereas Bitcoin could be like one day away their offshore banks could compete with offshore banks, to stop a loop. So, that to me has a huge use case. So, and I have to believe like in the long-term viability, that’s when I will be more comfortable with putting my money hope that helps?
Dawn: I’m gonna jump in for a little bit as well, and I’m going to compare it with none, okay. Back in the days, the stock market has been around for a long time, and we have certain financial bed, Federation’s officials, anyone quantifying their work, but when companies like Google, Facebook, and all of those internet companies like when they started coming up, there was no basement, if you use PE, some of this company to be very much, Amazon spending cash a like so. How exactly do you manage them? But today we now have a lot on your mind. So, I see crypto isn’t a universal standard right?
Stanley: Yes! Okay, I think you make a very interesting point of, when the stock market was first started, things was also a lot Messier, and even though if you value stock very systematically, like a value investor you might not make money in it, because no one else is fooling your strategy, right. So, yeah I think you’re saying that the cryptocurrency is also trying to figure out their system, and so of course, it’s gonna be more volatile, and as the market matures, then you see a more proper and maybe more synchronized way of how everyone’s value, value things. Hopefully okay. Dawn some I think we have quite a few comments, that they can’t really hear you, so maybe you have to speak a little bit louder. Okay, going back to the questions that we previously have collected, and I think we collected a few questions. So, I think a lot of people maybe for those really just starting out, that’s very confusing. So there’s things like ICO, there’s mining, there’s a – you know, just buying Bitcoin, or lite coin. So, maybe Aaron you can share a little bit. So, what really is ICO or mining and what’s bad, and direct maybe but directly buying the coin itself, what are the risks and the pros and cons maybe?
Aaron: Wow, that’s like three and a half questions.
Stanley: Maybe you handle the ICO, and then Dawn go handle the mining.
Aaron: Okay, so um I mean it’s not the best way of explaining an ICO, I like to sort of use analogy, and ICO is like a way for crypto related companies to raise capital, and then with this capital; they can invest in their team, they can invest in the infrastructure, that they’re building, they can invest in marketing and sales. I view ICO as a way of fundraising, and sort of in exchange for their fun, you get token, and that token, or coin, is what will be used on the company that’s doing the ICO, that will be using their network later. So, for example, if Stanley wants to come up with Stanley coin, and Stanley coin is, you know used or a certain something for example, maybe hosting events Stanley my race, and I see oh the money will be used in the regeneration of profits, and business operations of Stanley’s operations. So, I mean again it’s an imperfect analogy, there are big differences, but I look at ICO’s as a way that companies raise money directly from investors, and the thing to keep in mind is severely unregulated. So, there are very high recipe, yeah.
Stanley: Okay, interesting yeah it is also kind of, because ICOs is only a recent phenomenon, and every time a new thing come up, like even Bitcoin, when Bitcoin first came out, I think in 2008 or 2009. So, most of the people using it are you know lot of scammers and crooks, so they tend to be always the first guys to jump onto things, because they are risk takers right. So, we sort of seeing the ICO trend, a lot of scammers are jumping on the trend as well, but as the market matures, maybe we’ll have more legitimate businesses or ecosystem, that really will benefit from having ICO. Would you agree?
Aaron: Yeah, I think the ICO space is being looked at very, very, very tightly by regulators, because it’s sort of like to it to a degree, even more sort of like, not in compliant with like existing regulations, because it’s sort of like, raising capital, raising money for business, but you’re not doing it, like the IPO, which is like the normal ways people raise money for companies, or like of angel investing venture Kind away, it’s so ICOs that totally unregulated, and it directly affects the public. So, I think regulation is definitely coming, and we are starting to see like established companies trying to do ICOs, I think maybe they have been like three or four public listed companies, that started to think about ICO’s and even telegram is thinking of doing an ICO. So, I think this the space will become more and more regulated which is probably good for the average investor.
Stanley: Yeah, interesting and maybe on Dawn. So, what really is mining, and how can we you know be a miner?
Dawn: Okay, I have to first give a disclaimer, I don’t really mine, because I don’t see the value of it, but okay um for the Blockchain basically mining involves stopping the complex mathematical problem, so that the transactions get validated. So, that basically don’t work of the miners and in return then they would get rewarded with the coins all that they’re mining, and validating the transactions for. So, I think if you want to get started, you be there is not mining, there’s also physical Hardware mining, we can go out there, and I like an ASIC Creek, and then get started in your own house, but I would always say going calculate your risks, every watchman because you need to generate, your fixed cost is in the electricity, and cooling systems, and the rewards are not always fits. So, anything it gets harder over time to get the coins, so I would say mining isn’t really for everyone, but yeah there’s some of the ways that you can get started, right?
Stanley: Okay, and what do you think of mining companies like you know Genesis, what’s your view the other feel hash flow – play or something.
Dawn: Important thing is that I stay away from mining, I rather spend the money into buying the coins, that I believe in rather than spending it on a mining contract, because I see better rewards over there.
Stanley: Okay, yep so maybe just to summarize a little bit. So, basically ICO is a way for people to raise money without going through the actual regulation or process, and mining are just you know, people who are maintaining the infrastructure of the coins, and we can become a part of that, either by buying the equipment ourselves, or maybe you know through mining contracts, with some of the big companies, but okay and uh interesting.
Aaron: Yeah, Stanley if I could jump in, I view mining more like, you’re lending your computing power to the network. So, you are getting paid for it, that’s kind of how economically it works, I’m lending my computing power to the network, to help the network, that’s why I’m getting paid, I think mining is a little bit of misnomer, or not really the best name.
Stanley: Okay, maybe going back to managing risk on your investment, such as cryptocurrency. So, we talked about so many risks associated with you talked about regulation risk, you don’t know what the regulators really want to do now, we talked about inherent risk with the coins, whether is really usable, the mining risk, the ICO risk, and what do you think, what’s your ideal position, or ideal scenario, where it that need to happen before you say, now I think cryptocurrency are considered safe, and defensive asset, rather than you know, you will become what you what people view as gold now, rather than viewing it as a very speculative asset?
Aaron: Well, that’s I mean, there’s a top one stand, because I mean, really I never get to a stage where you can call it defensive asset, I really don’t know, because I mean so-called depends, I mean it’s sort of like stocks right, means stocks have been around for like, I don’t know hundreds of years, but you don’t really call stocks, the defensive assets, either I think every asset class has its place in a portfolio. So, I don’t know where the crypto will ever, become like a defensive asset, but it’s gonna need a lot of time and a lot of regulation, I guess to some extent before the average investor can I guess feel secure it in crypto, digital currency so to speak.
Stanley: Isn’t it ironic? Though because the whole purpose of having cryptocurrency is to you know, be deregulated but then it needs to be regulated to give people confidence in it?
Aaron: I don’t think it’s a confidence question, and Dawn sorry I know I’m talking a lot, but you can jump in later, I don’t think it’s a confidence stick, I think it has a lot to do with understanding human behavior, and also educating people, because if you ask me, are the majority of people equipped to like be totally independent, and run their investments themselves? Probably not right now. So, I mean, my ideal state is when everyone yes they can be independent enough, to make wise financial decisions, but I think what we’ve seen is that we have to help them, a lot. I mean regulation may not be from government. So, it may not be from external parties, it could be like service providers, who actually make it very simple and very safe to do buy digital assets, yes.
Stanley: And then your thoughts Dawn, will crypto ever be a defensive asset?
Dawn: No. okay, I think again as we’re in the early stages, right um people need to start getting confident, and yeah I guess it’s a good Irony, at you pointed out my that’s just really how human behavior be why not then believe in it legitimacy run to attract that authority tells them yes and I think because of that you know I really applaud by zero in Japan, and Lincoln not in terms of honestly, everything has with everything even stocks, are not making and then if you invested in some stocks that went down.
Stanley: You know, well said! Okay. So, I think oh, so what we have discussed today is, basically saying that we can still invest in riskier, said yes no problem we shouldn’t say that just because maybe, you know you take yourself as a value investor, like myself, and you know, we should only invest in very undervalue stock, but not, I don’t think that’s the case. we should be more open-minded when new things come about, but when new things come about, this inherent risk with it, and it’s really very important for us, to you know size our position, to make sure that we don’t over leveraged yourself, or just expose ourselves to too much risk. Right, it’s really about not just what you buy, but rather how you buy it is also important would you agree? Yeah
Aaron: Absolutely you can’t sort of paint the same investment rule for every one of a broad stroke play right like it may make sense for me and Don it may not make sense for someone who has 12 months credit card debt so true.
Dawn: I would also say it’s a lot more work involved. So, people were gonna get that security, yeah because we can trust the exchange, the stock exchanges, pretty much scared and skew us, but that doesn’t happen with crypto. So, keep on you understand in fairness it’s not always just yeah true, and it’s a lot of studying. So, someone needs to be willing to study them, and I really understand, what if I’m not just dumping, but you know the founder is so and so, often a really big Fortune 500. You really need to understand what the point is, what is not.
Stanley: Well, interesting. So, is really like a cowboy town. So, every endpoint. there’s this with it the coin has risk the wallet has a risk the exchange has some risk so but you really need to be aware of all these risks before really investing in such assets why I think that’s all we have for today our session is up, I really want to thank both of you Dawn and Aaron for adhering to our Facebook life event if you guys want to follow maybe ever and you can share a little bit about what how people can get in touch with you and Aaron maybe yeah.
Aaron: Just wondering if there were any questions from the audience yeah they have been asking so I have been all those question I’m not really for me so okay yeah I mean again you guys can follow me on twitter you can follow me on my floss again Stanley maybe you can share the link with them it’s a website it’s called mr. Stingy but and yeah send me questions email me PETA me whatever and hopefully we’ll have a conversation
Stanley: Definitely and Dawn yourself, how can people get to connect with you?
Dawn: So, I’m pretty active on my blog, and Facebook, I post quite regularly it’s a bit of the view, and I actually I might just take this shot of our recent valuation it’s not something someone else or a fine cut went, and you know someone curious just to see how a bad region might look like, look at it I think. so yeah reach on my blog, and Facebook. I’m also on Instagram.
Stanley: I’m a follower of your Instagram. So, I’ll share all the link down with everyone later, so thank you once again Dawn and Aaron, I hope we can bring you up to our show again sometimes soon.
Aaron: Thanks, Stanley.
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