HOW TO BE YOUR OWN BANK – Buy BOTH gold and Bitcoin!!

Hi everyone! I'm Irk and this is my channel 
Get Irked where I teach people how to invest   for the long term. In today's video, we're 
going to talk about bitcoin versus gold.   When it comes to the bitcoin versus gold debate, 
I like to subscribe to a stock market adage which   says "I'd rather be rich than right." There are 
people all over the place in the stock market   who really want you to believe their thesis and 
that's fine. If that's how you want to invest,   that's perfectly okay, but I'm a kid of the 70s 
in the 80s and I remember all the kids in middle   school fighting about which was better – the Sega 
Genesis or the Super Nintendo, and my logic was   if you could afford both why not just buy both and 
then you have the best of both worlds? And, that's   the same thing with gold and bitcoin.

There are a 
lot of bitcoiners who believe gold's going to go   to zero and there are more than enough gold bugs 
who think bitcoin is going to zero. That's fine,   but why not just own both just in case one does 
and the other one doesn't? The reason I say you   should own both bitcoin and gold is that they 
serve as a hedge against each other as well as   a hedge against inflation and the entire global 
economy printing money and devaluing currency.   If either of them fail, you'll be happy that 
you had the backup of owning the other one.   It's better than putting all your eggs in one 
basket.

Now, I've heard a lot of people reference   Warren Buffett's quote "it's best to have all 
your eggs in one basket and watch the basket   very carefully," but, are you Warren Buffett? What 
you don't hear is all the people who've done that   and failed miserably. You've probably heard of 
a few fiascos over the years that resulted in   people losing their entire money. For example, 
most Enron employees at the turn of the century   had every single part of their retirement in 
Enron stock which went to zero. Diversification   is the only way you can prevent having that 
kind of thing happen to your portfolio. Sure,   if something goes up dramatically and you're fully 
exposed to it you're going to see better gains,   but if whatever you choose as the horse you're 
going to ride for your entire retirement fails,   then you can't retire and life doesn't give you a 
second chance. You've only got a certain amount of   time on this planet and if you want to be able 
to build wealth you need to do it carefully.   Bitcoin is a cryptocurrency.

Instead of giving 
you a huge primer on exactly what cryptocurrencies   are – basically, they are digital assets that each 
have their own identifying number that are tracked   by a network of computers that hold something 
called "the ledger." If I pay you one bitcoin then   these computers have to verify that I hold that 
bitcoin. The transaction has to be confirmed at   least six times by six individual computers before 
it even makes it into the ledger and then all the   rest of the computers on the network must also 
confirm that transaction has taken place. It's   digital money where instead of having Visa 
or credit card company or your bank track the   different transactions that you have to ensure 
that you have the credit rating that you should   have or that you have the money in the bank 
account, the network itself tracks whether or not   you have the bitcoin that you're claiming to have 
and that you're going to use in a transaction.

Like gold, bitcoin has scarcity it's been limited 
to 22 million bitcoin that will ever be produced.   In addition to that, millions of those have 
already been lost either because they're on   cold wallets where the person has lost the keys 
and passwords or they were confiscated by the   FBI who also doesn't have the keys or passwords. 
So, millions of bitcoin are off-network so we're   talking about an estimated 17 million bitcoin and 
171,000 tons of gold. Let's talk about the two of   them in terms of scarcity. If you're talking about 
bitcoin with only 17.6 million versus 171,000   tons of gold, you might think, "wow, bitcoin is 
definitely more scarce because there's 7.8 billion   people on the planet there's no way with only 
17.6 million bitcoin that everybody can have one   whereas with 171,000 tons of gold everybody should 
be able to have some, right?" Well, let's take a   look at it. The smallest denomination of gold is a 
1/20 oz gold coin, and the one we're going to use   is the Canadian Maple Leaf because the American 
Eagle does not come in a denomination that small.   If all of the gold in the world was broken down 
into 1/20 oz coins, we would have 109 trillion   coins which works out to each person in the entire 
planet being able to receive about 14 coins.

That   seems like a lot, doesn't it? With bitcoin at 
only 17.6 million, it might seem like there isn't   enough out there, and a lot of bitcoiners will 
skip this next part when they're talking about how   scarce bitcoin is. Bitcoin is actually made up of 
satoshis and currently a hundred million satoshis   go into one bitcoin. That's a one with eight 
zeros at the end of it. With each bitcoin   holding 100 million satoshis, even taking into 
account the bitcoin that have been lost forever,   there are 1.76 quadrillion satoshis! That means 
that even if bitcoin was divided evenly with every   person on the planet getting some, each person 
would get 225,000 satoshis. To make matters   even more interesting, the code in bitcoin can 
be converted (if agreed upon by the network)   to have even more divisibility which means it can 
go out way past 1/100 millionth. In fact, if you   look at it in those terms and you look at it in 
terms of satoshi instead of terms of bitcoin,   it's infinitely divisible which kind 
of takes some of its scarcity away.   So, when you're talking about the asset of gold 
and you're talking about the asset of bitcoin,   the one that is truly more scarce 
– at least currently – is gold.

Let's say you want to get started and you want 
to get yourself some gold and some bitcoin – how   would you go about doing it? You have to remember 
when it comes to bitcoin while there are services   like Robinhood and Paypal and Square that let 
you buy bitcoin, you want to hold the physical   keys. You want to be able to transfer your bitcoin 
off-network. Paypal and Robinhood don't let you   do this – you have to leave the bitcoin on their 
network. Square will let you take the bitcoin off   their network, but they have a 1.75% fee to do so. 
So, what's the alternative? Crypto exchanges. Now,   you've probably heard of Coinbase – you may have 
seen my video about Coinbase – I don't recommend   you go with them.

I recommend you go with 
Gemini. Now, while there is a third exchange in   the United States, Kraken, it's not insuring your 
U.S. dollars against hacking or theft, so, I only   invest with brokers that have SIPC insurance that 
means I won't lose my cash if they get hacked.   So, Gemini is the better choice because Coinbase's 
fees are nearly double what Gemini's are. There's   a referral link below where if you spend $100 
on Gemini, we both get some free bitcoin,   so feel free to use that – feel free not to use 
that, it's entirely up to you. In order to get   an account on an exchange like Gemini, you need a 
driver's license, a social security number, and a   checking account or savings account so it makes it 
a little challenging to get started, however, it's   just as challenging to get a stock broker account 
where you can buy gold on the stock exchange   whether you're buying gold ETFs or goldminers, so 
they're about even when it comes to difficulty.   If you're talking about buying physical gold, 
you want the gold coins or the gold bars.

It's   relatively easy to go about doing this, as well. 
There are a lot of brokers. There are some that   will be local to you and then there are online 
brokers. Personally, I find that jmbullion.com   seems to have the most reasonable premiums out 
of anything i can find in my area. I live in the   Portland/Pacific Northwest area and my local 
brokers can't even get close to the premiums   that JM Bullion offers so it is cheaper online. 
You might be asking yourself, "what's a premium?"   Because gold has a spot price, for example, it's 
currently in the upper $1700s, however, you can't   buy an ounce of gold for the spot price because 
it costs money for the mint to actually make that   gold into a coin.

In addition, the brokers also 
need to make money because it's a business, so   the premium that you pay is a certain amount over 
the spot price. To make matters even more fun, the   more popular or scarce gold is at that time, the 
higher the premium will be. So, right now we're   seeing a limitation – particularly on silver but 
also on gold – on how many coins are available.   Therefore, the premium is often a lot higher. 
In fact, if you're talking about a silver coin,   the premium right now is 50% over spot if you want 
to buy one one ounce coin of silver. When it comes   to buying physical gold, I recommend sticking with 
the main companies and countries that you know,   and, for me, I like the American Eagle 
and I like the Maple Leaf from Canada.   If it's from the United States Mint or if it's 
from the Canadian Mint, it's trusted worldwide.   Now, while holding physical gold is good in case 
you have an emergency and you need to leave the   country or something – you can grab your gold and 
have something of value with you – you can do the   same with bitcoin.

So, transport is really kind 
of nice when it comes to those two. Naturally,   if you have a lot of money, bitcoin is easier 
to transport because you just need to bring your   crypto wallet with you. This one's a Trezor. I 
also have Ledgers. And, that's it – you have this.   It's got pins and keys to make it so that nobody 
can break into it. I can plug it into any computer   and be able to access my bitcoin. Whereas, if 
you're talking about gold, you have to take   the physical weight, and, if you have a lot of 
wealth, then it's going to be heavier and heavier.   Gold's not really a good example since one ounce 
of gold if you're talking about a coin is about   $2,000 USD right now. It would be better to break 
that comparison to silver. A one-ounce silver coin   is around $40 right now. For me, when it comes 
to putting all of my money into a single asset,   I have a rule that I always hold on to – "you 
don't ever want to be dead right." This is what   happens if you have the right-of-way on your 
motorcycle.

You decide to cross a stop sign even   though there's cross traffic coming. They don't 
stop, they hit and kill you, and you're dead.   You're right. You had the right-of-way, but, 
you're dead right and that's not valuable. I take   the same approach to putting all my money into 
one asset. If you're one of those people who says,   "Well, if there's an apocalypse, I want all my 
money in gold because it will continue to have   value," that's great, but, do you want to live in 
a world post-apocalypse? I really don't want to,   and, to me, that's the equivalent of being 
dead-right.

The same thing with bitcoin – even if   all the governments in the world allowed bitcoin 
to become the primary currency. If the economies   all collapsed to the extent that they would have 
to where bitcoin would become that currency,   it would probably not be a world you'd want 
to live in. Let's talk about risks facing both   of these asset classes. As for gold, it's been 
banned before, and, even though it's unlikely,   it could be banned again. Franklin D Roosevelt 
made it illegal for any American to hold gold   and all Americans had to change their gold into 
U.S. dollars at that point. From 1934 into the   early 1970s, Americans could hold gold as jewelry, 
but it was illegal to hold the coins or the bars.   Now, since the decision in the 1970s, it has been 
legal for us to hold gold and silver once more,   however, there's no reason – even though it's 
unlikely – that the government wouldn't ban it   again.

It's totally possible. Now, as for bitcoin, 
bitcoiners will tell you that the network can't   ever be shut down, and, while that is true, they 
don't need to shut down the network in order for a   government to ban bitcoin. All they have to do is 
ban the citizens from using bitcoin to transact,   and, even if you told me that you would take the 
risk and still hold on to your bitcoin and other   cryptocurrency, where are you going to spend 
it? Most of the major companies and individuals   will refuse to take it which means bitcoin's value 
will drop significantly at that point and the U.S.   government just effectively banned it by making it 
so that it's just illegal for you to transact in   it or hold it.

Bitcoin actually has two more 
risks from the government. Whereas gold has   become a commonplace investment and governments 
don't really care about it as much anymore,   bitcoin can undermine a country's fiat currency 
or the paper-based currency that a country prints.   Bitcoiners will tell you the end goal is to have 
bitcoin become the currency of the entire world,   however, so much of the power of a country is 
wrapped up in its own control of its fiat currency   that if bitcoin increases in value 
too fast, you may see a government   or multiple governments come up against it. 
Additionally, bitcoin uses a significant   amount of electricity. In fact, at the last count, 
bitcoin uses as much electricity in one year   as the entire country of New Zealand, a country 
whose population is over 5 million people! That   is one of the most anti-environmental concepts 
that you can possibly pose against cryptocurrency.   In fact, it's hard to know whether gold 
mining produces as much carbon footprint   as bitcoin mining does. Unless bitcoiners can 
get together and make the system more efficient,   it could be very easy in the environmental 
era we're entering into for a country to   want to ban bitcoin because of the amount 
of power and pollution the network produces.   Bitcoiners will tell you the problem with gold 
is that one day asteroid mining will be a thing   and suddenly there will be no scarcity of gold 
because we'll just be able to get whatever we   need from space.

Now, while that's a true 
possibility, I'll also make the argument   that nothing ever goes to zero in value. Even if 
there's a lot of gold found around on the planet,   there will be more industrial uses – it will pick 
up in use of electricity because it is one of   the most – if not the most – conductive metals 
for electricity which means the gold you hold   will still have a value even if it significantly 
drops. When you're thinking about asteroid mining,   you're probably also thinking about Elon Musk who 
has spotted an asteroid that has approximately 700   quintillion dollars worth of gold on it and 
is talking about having an explorative trip   in 2022. However, Elon Musk has a history 
of making huge claims that don't pay off   immediately in the time frame that he 
says them.

Even he, in other interviews,   has said that, at the earliest, we wouldn't 
be able to do any real asteroid mining for   up to a hundred years. So, asteroid mining 
– not necessarily a big risk against gold.   When you're talking about ethereal risks 
against bitcoin or other cryptocurrencies,   there are two that are very worrisome. One is 
called the "double-spend." What this means is   one single identifiable bitcoin is used to pay two 
different people in two different transactions.   The double-spend would invalidate the ledger 
and seriously diminish any kind of faith in   bitcoin as an asset. Now, while this is protected 
against, it's still potentially possible that this   could happen in any cryptocurrency, and, if it 
does, it's likely that cryptocurrency's value   will drop significantly if not go to zero right 
away. The second risk facing bitcoin and other   cryptocurrencies is hacking. Now, people have been 
trying since 2012 to hack bitcoin repeatedly and   with lots of effort and no one's been able to 
make a difference that the ledger wasn't able to   immediately catch and fix, but here's the problem 
– quantum computing is becoming a very real thing   and every time we've ever said "this can't be 
hacked," eventually, somebody hacks it.

So, what   happens if bitcoin gets hacked? The bitcoiners 
will tell you that they would get together,   analyze where the weakness in the code was, and 
create a new bitcoin, and then "fork" (or split)   the bitcoin from where the hack took place. 
So, they would come back to before the hack,   they would take all that data, and suddenly 
all those people would now hold bitcoin 2.0 or   whatever the name would be.

The problem with that 
logic is – how much faith does the public have if   that happens? We had our monetary system almost 
completely collapse in 2008 and people still keep   their money in the bank so maybe bitcoin survives 
and is able to maintain its value. On the flip   side, a hack shows a serious weakness in the code 
and the entire concept of it and bitcoin could go   to zero. But, as I've said about gold in the same 
way with bitcoin, that is an extremely low risk.   So, there you have it – those are some pros and 
cons to both bitcoin and gold. But, like I said   at the top of the video, I hold both of them. The 
amount that you should hold in your portfolio to   make it so that you're diversified is completely 
a personal decision and totally up to you.

As I   always say, I'm not a professional advisor and you 
should probably consult with one, however, if you   listen to experts like Jim Cramer from CNBC's Mad 
Money, he's recently changed his perspective and   instead of holding 10% of your portfolio in gold 
as a hedge against inflation. He now recommends   holding 5% in gold and 5% in bitcoin, but whatever 
you choose to do you have to be comfortable with..

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