CNX Podcast
The Chiang Mai Community Podcast, where businesses, brands and interesting people get heard. Hosted by Ash Pemberton.
CNX Podcast
Zen and the Art of Bitcoin: Stefan King's Story S01/E13
Step into the tranquil revolution of Bitcoin with Ash and Stefan, the Bitcoin Buddha, on the latest episode of CNX Pod!
In the heart of Chiang Mai's tranquil streets, Ash and Stefan engage in a captivating dialogue that transcends the ordinary. Stefan, known as the 'Bitcoin Buddhist monk,' isn't just a bystander; he's a guardian of digital ethos, navigating the waves of the market with Zen-like calm. This episode unfolds against the mystical backdrop of Chiang Mai, weaving a tale of enlightenment and financial renaissance.
Join us as Stefan unravels Bitcoin's journey - from its philosophical parallels with Buddhist wisdom to its disruptive potential in traditional banking. This isn't just a story about Bitcoin; it's a reflection on humanity's evolving relationship with money. Explore Satoshi Nakamoto's world, blockchain's intricacies, and the future of finance in this captivating episode.
From the vibrant streets of Nimmanhamen to the Lunch Club's buzz, we invite you on a journey where innovation meets ancient wisdom, and the digital dawn illuminates a new monetary era. Tune in for insights, excitement, and a touch of digital enlightenment!
https://linktr.ee/cnxpodcast
All right. All right. I am here today with the Bitcoin king. Hello, Stefan. Hello.
Stefan:Hello Ash
Ash:I would call you the Bitcoin Buddhist monk. Oh,
Stefan:Wow that is very flattering
Ash:let me tell you why Over the last couple of years that I've really got to know you and talk to you about Bitcoin, you have this Buddhist attitude towards it, which is you don't get overly carried away by the highs. You don't get depressed by the lows. You'd never brag or boast about your knowledge or your holdings. You actually don't even talk about value. But what you do want to do is bring stability and growth. And that's why I drew that comparison with the Buddhist philosophy.
Stefan:Yeah I take that. Thank
Ash:Yeah, sure. That's why I wanted you here because I think people in Chiang Mai, my listeners could really benefit from just some straight talking, just some facts and some simple approach and simple understanding about what is quite baffling to most people.
Stefan:Yeah, that's the case. It can be very confusing.
Ash:How long have you been into Bitcoin?
Stefan:I've been into it as a host for meetups in Chiang Mai since 2016. That's how I got to have this local image of Bitcoin, then you should be talking to Stephen King if you want to learn about Bitcoin
Ash:So I first got to know about you through the dynamite circle. I call it the DC. I've mentioned it a few times on this podcast. I don't think that you were too surprised when I just walked up to you one day in Salad Concept and went, Ah, you're Stefan. Let me introduce myself to you because that's very much the DC culture. I then got to know you. I call you like a founder member of Lunch Club, which is something that we do here in Nimmanhamen just to meet up and talk to fellow people and not lunch alone on a Tuesday, meet new people and talk business if you want to.
Stefan:It's a beautiful tradition.
Ash:Yeah, cool. Thank you for coming so regularly. But you are a technical copywriter, and then a technical project manager. You write case studies and white papers about the blockchain space. And now you are the author of Blockchain Startups. So this is a book that really focuses on Bitcoin and Ethereum. It empowers entrepreneurs to disrupt finance and to help people build a future beyond traditional banking.
Stefan:Yeah, it's a massive opportunity that you have now. The possibility to create transactions to manage money flows outside of the banking system. I did a lot of thinking about what does that mean from an entrepreneurial point of view. like I didn't want to write about what it's like to be a good speculator, how to deal with it at a technical deep level. I just wanted to show people, look, this is a list of options for disrupting existing finance related industries if you use blockchain stuff. And at the time I was inspired by both Bitcoin and Ethereum for that kind of Wild West entrepreneurial drive. that's why I wrote that book.
Ash:I would summarize you as a freelance Bitcoin consultant. you are very generous with your time and with your knowledge. And really that your mission is for the greater good of mass Bitcoin adoption.
Stefan:That's what I'm trying to promote. many people can really benefit from having a correct and deeper understanding of what kind of opportunities are possible with this.
Ash:I love that about you. I think that you're a true believer in Bitcoin, and that's why I was hoping that we could run through a kind of Q& A that I'm calling Bitcoin for Absolute Beginners. What is Bitcoin? It's
Stefan:Many things throughout history have been used as money, like gemstones, seashells salt big stones as well, yap stones they're called. There's really interesting stories in the history of money where there's just all these different things. In prison camps, cigarettes become money. and since a long time, we've had a very sophisticated financial system that runs on what is called fiat money. And Bitcoin was created to specifically address the challenges of that fiat money system, and to bring back some of the qualities when most of the money was gold. So it's actually taking the best of the fiat money system and the best of the gold money system, and creating a new currency. and that is what Bitcoin is. And what we see now over the last roughly 12, years or so that Bitcoin is slowly becoming a part of the economy. it's slowly replacing other forms of money because the best money, the best stuff, tends to replace. Things that are just not as good as money. The advantage of fiat money, especially electronic fiat money, is that you can transfer it across the globe real easy. it's called transportability across space. if you have a global economy that we've had for decades now, and starting sort of 150 years ago, you had these people who had to pay for stuff that is going across an ocean. So you had to have banking relationship on both sides to square the books for those payments. And once you have a telegraph or a telephone and then later internet, then you can just do that. That is a big advantage over gold So that is one of the reasons that the fiat money system was created. Because you can have these very quick kind of exchange of information about money and about balances. And Bitcoin, you can teleport to any kind of Bitcoin address belonging to any kind of person that could be anywhere in the world. And the cost for making that transaction is completely independent of how much money you're transporting. that is such an amazing experience to show the people the a Bitcoin transaction and how easy and quick it is on the phone. And then you just tell them, look if you were in Kenya or Australia, it doesn't matter. It will just work exactly the same. You just need an internet connection.
Ash:That's true for fiat currency too, and when we say fiat currency, I just want to make that clear. We're talking about all currencies that people trade and use in various countries.
Stefan:Yeah, that is like ordinary money that everybody familiar with is all fiat currency these days.
Ash:Fiat currency can be easily exchanged
Stefan:Yes.
Ash:and can be sent electronically. that's the same for Bitcoin.
Stefan:Yes.
Ash:So what's the best thing about gold and what similarities does gold have with Bitcoin?
Stefan:gold has a few qualities that make it really useful as money. Especially if you don't need to transport it across large distances, So it's easy to carry, it's relatively easy to measure, you can divide it up in pieces. It doesn't rust, it doesn't corrode, it always stays the same stuff. also relatively easy to assess how much of it fits in. You get by weighing it and testing it, still it sounds a bit complicated to our modern ears, but at the time, that was a relative advantage compared to gemstones, for
Ash:So that's why gold became so popular in, terms of holding a store of value.
Stefan:Yeah. later, because so many people were holding it as a silver value, it becomes also effective as a medium of exchange. you can just pay almost anyone with a certain amount of gold or smaller amounts with silver, like in the marketplace for ordinary people to use copper or silver. And then. For bigger transactions, gold.
Ash:Can I dive in? what's the best thing about gold?
Stefan:important to understand how it relates to Bitcoin for gold. you have this slow buildup in history that more people value this property to save for the future and then exchange it with each other for that reason, because it's very good at that. And it can be used as jewelry. You can show off your wealth as well then if so many people across so many different economies agree on the value of it, because all these markets are connected, You can also price your thing in gold. So a lot of the names of currencies that we have these days, they actually started as certain weight of gold or silver. So the dollar comes from the word taller, I think, and that is some German word for a certain amount of gold. And of course the pound sterling also refers to a weight unit.
Ash:Okay. Awesome. Maybe we can just keep it short and simple. Satoshi, what's his full name and what's his motive?
Stefan:Satoshi Nakamoto was a pseudonymous person who invented Bitcoin. it could be group of people working together, And they wrote a white paper that says hey, this is how you build it. I discovered this solution to a difficult problem, how to coordinate. Between people that don't know or trust each other. That was a famous computer science problem that had to be solved. And he did that, and he built the software with a bunch of friends. And then everyone now has Bitcoin. available to everyone to use or to buy, sell.
Ash:Let's presume that it is one person. Nobody knows who it is.
Stefan:Nobody knows who it is. They were very good at Keeping their identity hidden. that is a very difficult job to do these days, but if you are an expert at cryptography, which was one of the requirements of being someone who can build Bitcoin that means that he just made sure nobody knew who he was, because it could be used against the system, if people could, for example, tar his name Anything could be used to discredit this person and then that would diminish name of
Ash:Sure. before we finish on Satoshi Nakamoto, that's a Japanese name. So he's a Japanese person.
Stefan:We really don't know because it was a pseudonym was most likely not Japanese because when he was posting on this forum, he was using British English and he was. Typically, the average timestamp of the post that he was making was on the American East Coast. If we assume that this person worked during ordinary office hours, then it must have been somebody, a resident of the United States. could be deliberately done to confuse people. Japanese name, British writing style, and an American time zone, and then just, where's that person? It makes it more enigmatic.
Ash:Yeah, it could be a team of people.
Stefan:that is quite a common thing for people who research this to draw that conclusion because it was integrating, like Bitcoin, the system integrates a handful of innovations in cryptography and brings them together in a unique way. there is this admiration for the flawlessness of that achievement. It didn't make a single mistake in the design of the system that later had to then be repaired in some sort of ugly obvious way. That didn't happen. all the choices that were made about monetary policy, about the way the network functions the way that the value can be interpreted of the coin, like all those things. chosen perfectly. it's very hard to be perfect as a person, you cannot do everything yourself, right? You have to sometimes work together with people to get things done. I can personally imagine that there must have been a little hotel where just people got together in a conference room and they already knew each other from these different projects that were required as building blocks. And they sort of got together as like, okay, why don't you. with your beautiful English writing style, just post on the forum. you invent the monetary policy because you know so much about economics and like a bunch of people getting together, I can totally imagine that.
Ash:I understand it needs to be from an anonymous source so that they can't be discredited. I What would be the motive of the founders, to do this?
Stefan:there is a subculture on the internet cypherpunk ideology, which is obsessed with privacy and control of information. And it's also very liberty minded, liberty oriented. So you want to have as little control from the government on your life as possibly can. That is what a cypherpunk believes, the people that were working on those technologies that make Bitcoin possible, they were all those kinds of people. they saw a particular problem with fiat currency, namely that it's created by a central bank. And central bank has an enormous amount of power over the economy. that is usually to the detriment of the people that actually use the currency. So their motive was to replace money that requires a central bank, because you have to trust the central bank to behave in the interest of the people using the money. And that is always a bit of a. question mark. In many countries that these bankers have no chance of winning the population's trust. They just start inflating the currency. They print too much, right? And you get this hyperinflation and you get these currency bills that say this is 20 billion Zimbabwean dollars and you can buy five eggs with that, and it's just one example for many. This happens all the time. in Western countries, we are used to trust the money in a, to a higher degree, because most of the time we don't have ridiculous inflation. But still, there is this sneaky kind of small inflation that makes it impossible for you to save in currency. That you are forced to invest your money, because if you hold it, it just becomes worth like 2 or 3 percent less every year. If you just want a kind of protection against that. That does not require you to learn how to do real estate, to buy mutual funds. can just buy Bitcoin of course you were still subject to the volatility of the Bitcoin price because right now it's hard to find out how much they actually should be worth, right? So you get a lot of speculative bubbles, et cetera. But at least, you can be sure that there's no central bank who can create more Bitcoins. Because the bitcoins get created as a reward for running the network by the, miners, that's like a whole technical discussion how that works. key point for the beginner is to understand that you don't have anyone inflating the bitcoin supply beyond the total possible number of 21 million bitcoins. And with dollars or euros or whatever other currency, we don't know how many there are, and you don't know how many more they can create.
Ash:Absolutely. So Central banks control the economy by simply printing more money.
Stefan:is one of the ways they do it. yes.
Ash:With Bitcoin, there There can only ever be 21 million. Yes. How many are there now?
Stefan:I don't remember exactly, but it's about 19 million or something like that. And there's another issue that a lot of these bitcoins have been lost. So the actual number that is available to spend is already much lower than 19 million. a very interesting thing to look at the supply curve, because at the beginning of the Bitcoin network, the reward for supporting the network was much higher. And it halves every four years. most of the bitcoins have already been mined, and they're in somebody's possession, or they have been lost. the remaining few million it's gonna take another 150 years for that to be mined, until you had hit this top of 21 million.
Ash:years How would someone lose a Bitcoin?
Stefan:Bitcoin exists as a balance, an amount that sits at an address, which is essentially a big number. This just looks like a bunch of random characters. Yeah. that is it. Very different from how you traditionally deal with fiat currency. So if you have a bank, account number that's a tie to your name, to your passport and to your address. if I'm sending money to you, then there's two banks with two customers that, work together so that I can send money to you. Bitcoin is also at the level of addresses and transactions pseudonymous. So you can maybe figure out who that particular address belongs to. If you. Research or ask around or whatever, like theoretically that's possible to tie an address to an identity, but actually that's not that easy. It's not a default, as with a bank. It's sitting at that address, and the way that it is secured, that only you can spend that, is with a type of cryptography where you have a so called public key, which is the address. And a private key, which is another secret number that allows you to spend the Bitcoin that is sitting at that address. And that is usually handled by software, Bitcoin wallet Now, if you lose that secret number, if you lose the phone that knows the secret number, and you don't have a backup in your laptop or on a piece of paper and all those things. then you can no longer spend that Bitcoin.
Ash:I get you. I have a bank account, I lose my bank book, I forget my bank account number, I go into the bank I prove my identity and they reissue that bank account number to me. You're saying with Bitcoin, is no one to turn to if you lose your private key.
Stefan:Yes.
Ash:What should people do? To protect their private key. How can you avoid losing your investment in Bitcoin?
Stefan:there's two answers to that. The simple but slightly wrong answer is to just keep it at a Bitcoin exchange. So that is a company that basically manages your Bitcoin balance for you. And the advantage of that is that you can very quickly sell it or trade it for another digital asset. or you can just take it into your own possession, but then you are responsible for the key management. So you have to understand this concept of the two secret numbers that allow you to spend a particular Bitcoin balance. You have to probably also know a bit more about how these wallets work and what the risks are. But once you are confident in your understanding of how these wallets manage these keys, then it's Superior to having it at a Bitcoin
Ash:exchange.
Stefan:Because you feel more secure in your ability to not screw up these keys, than you are about trusting this exchange. Because exchanges are not quite as good at banks as keeping their currency safe. There's this illusion that they are like a bank, because the app or the website is very similar to a banking app. But for criminals to steal a large amount of cryptocurrency is a lot easier than to steal a large amount of fiat currency from an institution. that happens if you have a vault with, I don't know, like, how many bitcoins in it hundreds of millions of dollars worth of bitcoin that belongs to your customers, but somebody gets in through the back door with a clever hacker and they steal all that, then, Company still owes those bitcoins to the customers, but they're gone, so you're screwed. You don't have your bitcoin anymore. that is something you should really worried about if you have a serious amount of bitcoin. You can better learn how to keep it safe yourself and take your chances with that. Because the more you know about how those keys work and how wallets work, the better your chances are at keeping Your Bitcoin in your own possession.
Ash:you think that's what's holding back people from using Bitcoin?
Stefan:Yes.
Ash:What can we do about that? If I had Bitcoin on my phone, would it not be safe?
Stefan:Depends on how much it is. I've always had some Bitcoin on my phone. I just enjoy paying for it when I get the chance. but I don't put serious amounts of value in Bitcoin on my phone because that is not safe. There's many things that could happen and then I don't have that anymore. That hasn't happened to me ever, but you only put larger amounts on a wallet if you, the wallet is really set up to be maximally safe. And there is another distinction that you could research if you like. There's this thing called a hot wallet that's always connected to the internet, like it would be if it's on your phone, or your laptop, very easily accessible through the web, and there's cold wallets, that it's not, connected to the internet, the private keys are just not talking to anything or anyone, it's completely impossible to reach them, of course at that moment in time you can also not really spend it, But if you are saving for your future, you don't care. You just put it in a very safe place that hopefully no one knows about, and then you can safely hold larger amounts of Bitcoin.
Ash:Awesome. During then, you talked about if you hold a lot of Bitcoin in a vault, now, I instantly kind of picture that. Yeah. But this is a digital vault, and Bitcoin is purely a digital currency. from time to time I see pictures of a coin that's minted. Is that just a token? Is that just a souvenir?
Stefan:have played around with it. creating metal coins that have a Bitcoin logo on it. And there was some clever scammer who even sold them as if they were Bitcoins, maybe this was like years ago or something that it still worked that people could be as confused and say everyone is talking about a Bitcoin. I see that there's this copper thing here. Let me buy that. But obviously people don't fall for that anymore.
Ash:Okay.
Stefan:It's just a beautiful logo, and then you can create pictures of it, because if you are writing about it for example, you were a financial journalist, and you have an article, and you need some illustration for that, You cannot really see Bitcoin. There are digital numbers on a computer network, so you don't really have a picture of it. but there's a logo, and if you put the logo on a coin, then it looks like a Bitcoin, right?
Ash:for sure. You also talked about the exchange. So I've used an exchange. I have a relatively decent understanding of how an exchange works. just list off the names of the biggest exchanges.
Stefan:biggest one that are, that are online right now are probably Binance, Bitmax Bitstamp. Yeah. In Thailand you have Bitkub,
Ash:is the one I've used. And for people who are residents of Thailand, can we use Bitcub
Stefan:No. they somehow have tightened up the rules about foreigners opening new accounts. That's no longer possible. And started requesting people to verify again if you already had an account as a foreigner. And when I try to do that, it doesn't actually work. So it's not a very good experience. It's very common for governments and government agencies to change their mind about what they want people to do and not do with Bitcoin. So it's not surprising that they might change their mind next year again. You have to just be prepared. If you are beginning, you say like, Oh, I'm just going to open a Bitcoin exchange account just like a brokerage account. It can be that hard, right? Actually, you have to be prepared for a bit of a hassle. If you want to get Bitcoin with your fiat currency, or if for labor you do, whatever, it doesn't matter. It's actually complicated to get started with it. It's a bit of a hassle. And sometimes people are negatively surprised by that. They expect this to be a online banking experience, which it is not.
Ash:just run through one scenario. I am a foreigner living in Thailand. I could be from America, Europe, anywhere. but I'm a resident of Thailand and I'm living in Chiang Mai. How do I buy my first Bitcoin?
Stefan:you want to buy the exact, Amount that you want and it's a larger amount and it's probably best to try to get an exchange account in your home country like i'm from the netherlands, right? I have a dutch bank account and I have the ability to open an exchange account in the netherlands With my dutch bank account and I have to still prove residency in thailand But they will accept that And then I have Dutch or European based exchange account and you would be able to do it with Bitstamp in this case Because British and any European person can open a Bitstamp account with their home country bank account. and then you have a fiat balance, on this exchange account and then you say Hey, okay, I'm going to buy some Bitcoin with this and then you have the Bitcoin. Basically the exchange now owes you that Bitcoin. And then you have the option to keep it there. If you don't want to worry about key management and storage, If you say, I want to take full control of it and I don't trust this exchange, then you have to transfer it away from that exchange into your own wallet that you control.
Ash:So I bought 10, 000 euros worth of Bitcoin. I'm keeping it in an exchange. So that I can sell it, send it, spend it, and that's my advantage. If, however, I want to take it offline, I put it into my own wallet.
Stefan:it offline, which is my
Ash:you can't spend from an
Stefan:you can't spend it an exchange. and that's an anti money laundering measure that when Bitcoin leaves their possession, their control, they are basically responsible to where it goes to and they have your passport number and your address and they say, Ash is withdrawing this. We are sending this like one, two, 3, 000 worth of Bitcoin to Ash. And if you tell your body is oh we'll just pay my bill for this work that you did for me by withdrawing Bitcoin to your address. And it goes to your friend's address and they don't have the information of your friend. So then he could theoretically be a terrorist and then the police goes to the exchange and says Hey, why are you allowing Ash to transfer his Bitcoin to someone that you guys don't know? So that is the kind of complication that you have if the fiat money system interacts with the Bitcoin money system. The Bitcoin money system doesn't deal with any of that, doesn't care about identities Like passports and addresses. And it doesn't exist on this blockchain idea of how money should work, but governments are forcing these exchanges to behave like banks because of these laws, which makes total sense. And if you are willing to comply with that, then that is the way to do it. You can, of course, bypass all of that. If you know someone who has Bitcoin for sale and then make a private deal with them. And then nobody knows that you did it But then you have to know a person who wants to sell or buy the same amount that you are interested in. And maybe you have to buy at a premium because it's anonymous. You didn't have to do the passport hassle. wait for approval and send a picture of yourself declared to the world at large. Ash has this many Bitcoin.
Ash:Cool let me just run through that scenario one more time. So I've bought 10, euros worth of Bitcoin. I'm holding it on an exchange. I now decide that I want to give you 10, euros worth of Bitcoin. How do I send it to you?
Stefan:then you first have to withdraw it from the exchange into your own wallet for example, on your phone, or on laptop and you have to feel a bit confident about that situation that there's now 10, 000 worth of some imaginary digital asset on your laptop, and that this is like very uncomfortable at first.
Ash:sure. And it's that long encryption private key. That is my security that no one else knows. That's why it's uniquely mine.
Stefan:yes.
Ash:And now, if I want to send it to you,
Stefan:Then I can send you a wallet address that I control. And then you put that wallet address in your wallet and you press send and you set the amount. And then you have to wait a little bit for the transaction to be confirmed in the network and then the Bitcoin is in my wallet.
Ash:now I'm feeling more confident. So I've taken the Bitcoin off the exchange. It's in my wallet. Now my wallet has the ability to transact with anyone else's wallet.
Stefan:need to explain yourself to any authorities or whatsoever. Yeah.
Ash:So when you said you could do a trade with somebody who just wanted to sell you some Bitcoin. That means wallet to wallet. Okay. What are the restrictions or legal implications of setting up a wallet?
Stefan:Most countries There's no real law that says you cannot do that. There is usually an obligation to declare to the tax authorities that you have a certain asset and that includes Bitcoin.
Ash:Yeah.
Stefan:that's the only constraint really. you can have a wallet and you can have Bitcoin on it. That's in most places allowed. There is some banana republics where they try to prevent that from happening because of high Inflation. And then you have to be sure that nobody knows that you have the Bitcoin, but it doesn't stop people from doing it. like with drugs, drugs is obviously illegal and the government does not want people to use it. And that obviously means that nobody uses any drugs ever. So it's like that.
Ash:me the name of some wallets,
Stefan:wallets come in three varieties. So you have hot wallets that are online and they usually sit on your phone or desktop. My favorite one for that is called Exodus.
Ash:on
Stefan:Exodus wallet is the Apple experience of wallets. Then there's a whole bunch of smaller ones that are also good at so called lightning transactions, which are much lower cost and much faster. for example, I have Phoenix Wallet. I like that one. There's Wallet of Satoshi that a lot of people use. Moon Wallet. that's the ones that I would recommend at the moment.
Ash:good. Here I am, back to the scenario. I'm an expat in Chiang Mai, I'm a foreigner. can I Google for one of those wallets, download a wallet, And own a Bitcoin wallet, even though I don't own any Bitcoin.
Stefan:Yeah, everybody can just download this software and install it very easily. It's always free. You have to be sure, though, that you're not downloading a fake wallet, because you can have a scammer, for example, that then develops an app that looks like that wallet and has the same logo, and then if you put the Bitcoin in that, then they steal it, because they know the private keys Of that wallet. But if you double check that the name and the logo is really the one that you're looking for then you can install that safely on your phone or on your laptop.
Ash:You said there are three types of wallet,
Stefan:Yeah. The standard hot wallet, the lightning wallet.
Ash:And then the third.
Stefan:The third is a cold storage hardware wallet. that can be something you put together yourself, like a laptop that you prepare especially with the high technical standards for safe storage of Bitcoin for a long time. That is a specialist job. Most people including me should just buy a hardware wallet. And there's a few well known reliable brands out there that you can research. And the ones that have been around for the longest are most likely trustworthy. They are probably constructed in a way that, is not too controversial. And if you have that hardware device, which is something you just easily can connect to your computer to make transactions, Bitcoin keys themselves are always isolated from. the internet. So there's no virus in your computer that can try to steal the private keys. That's the advantage of these hardware wallets. And that is the current best practice for storing Bitcoin for the long term.
Ash:You didn't mention the names, but I think one is called Tresor and ledger. Nano. Are there a lot of them?
Stefan:yeah, They have different pros and cons. for example some of them only do Bitcoin. people that are not interested in other digital assets. And some of them, they say Oh, you can do these 20 or 50 or a hundred different coins. You can all put them on this hardware wallet. And all that extra functionality you don't need if you only want to save Bitcoin or you can have two different wallets to even control the risk further. I would say at least. 15 different hardware wallet companies that are worthy of your attention. If you're serious, if you really want to compare the ones that I've used personally, I've only used three types.
Ash:And just for people trying envisage this, the cold wallet is pretty much like a USB stick. Yeah.
Stefan:Yeah. a USB stick or something slightly bigger with little screen on it. definitely does not take up a lot of space. bury it under the ground, or you can put it in a drawer hide it in a very complicated place. have a lot of flexibility with that, yeah.
Ash:I could send from my cold wallet to your choice of wallet. All I would need are my private
Stefan:wallet would manage those private keys, you don't need to worry about that, as long as you have the wallet and the backup of those private keys, which is usually represented as a series of words. So you have 12 or 24 words. Some wallets use different technologies to create the backup that you don't have to remember or write down these words, right? But it's important that you always have this backup of the wallet in case the wallet fails. Then you can regenerate the private keys in the same type of wallet again, you have that backup phrase.
Ash:It's quite a lot to get your head around to make your first Bitcoin transaction yourself. How many people, do we know what percentage of people actually own or have traded Bitcoin, have gone through this procedure?
Stefan:of course it would be hard to estimate, but the numbers that I've seen over the years is typically between one or two and a half, three percent maybe of the global population that has some sort of possession of Bitcoin. So it could be on an exchange, it could be on a hardware wallet that there is some sense of, oh, I have this asset and I can send it to someone else in some one way or another. That's probably two or three percent of the population, maybe growing. And then if you say people that are confident about managing a hardware wallet with their Bitcoin or any hot wallets for a longer period of time and do that regularly, that is probably a much lower percentage, probably less than 1%. it's a lot of work to go through that initial Learning curve of figuring out how this works and being stressed out and sometimes needing coaching or researching online a lot. And it's a lot of Uncertainty And sometimes risk if you have larger amounts. If you want to get into it real quick then it's more stressful also, right? people are busy They cannot always be paying attention to these coins that is why it just takes a lot of time for more people to get on board with this
Ash:Why hasn't somebody or has somebody made it easy to do this?
Stefan:So far, it has not been easy ever to do it that you have both advantages of the ease of keeping it at an exchange and at the same time have complete security in your own hands. So it's a trade off that there is this general trade off in many things that if you want more convenience, then you have less security. you have less security and you have more convenience. if I have a bicycle in Amsterdam and it's very convenient to never lock it. I can just put the bicycle on the side of the road and I just walk into my cafe. The bicycle will be gone. So you do the extra inconvenience to increase your security by doing a serious lock. And if you really wanna be sure that the bike is there, you have to lock it to a lamppost with three locks. And you accept that extra security with less convenience, because at least your bike will still be there, right? So that type of trade off, you cannot really transcend. You can only wait for the next company to build wallet technology or exchange technology to just improve that trade off a little bit.
Ash:I love that example. And I saw you physically lock up your bike before we came into this podcast. So I know where you stand on that, I've bought Bitcoin myself and it was quite a scary transaction. The pressing of that final button and sending, my fiat currency, in this case, it was Thai baht because I did it with Bitcub before they put the restrictions on the foreigners. But it didn't happen instantly and there was two or three minutes of complete worry and desperation but I've also done it with a website called eToro I describe eToro to people as the Facebook of trading. It's one touch super easy trading At the time that I bought that I didn't actually own the asset I just was trading the value of it, and I wasn't getting a particularly good price. So I guess that's what you're saying, like with your example. if you want the best terms, if you want the best security, if you want to buy it at the best price without paying commissions, then you have to go through this learning curve to do it yourself.
Stefan:do, it yourself.
Ash:But it's clearly worth it. And then once you've learned it, and once you've got your system, and once you've got your wallet in place, it gives you quite a nice feeling of security. If you are a believer in Bitcoin, which you clearly are, and I am. I do believe that it's a great way to protect your assets in the future. Just jumping back to banking, and the future of the dollar, the future of the euro, and why I initially got into Bitcoin. I remember my bank in England, when I phoned them up to do some telephone banking, they diverted my call and they said, just to let you know, we can only guarantee a certain amount of money in your bank account. And obviously in the past, we've had banks fold, we've had big financial institutions fold, and people have lost a lot of money. So is that why you are into Bitcoin? Is it to protect your wealth for the future or is it because you think it's going to be a really good investment that's going to grow?
Stefan:I'm into it for both of those reasons, plus a third one.
Ash:The third one I'm guessing is that you actually believe it is going to be the future of transactions.
Stefan:Yes. I think that eventually more and more other types of money, other fiat currencies will be replaced by Bitcoin and then later on also other investment classes. to some extent. So for example, if you're forced to invest in a lot of real estate because you want to preserve your wealth against inflation then suddenly you are a real estate investor and that puts a lot of premium on real estate because everyone wants to save their wealth that way. Whereas actually real estate is just meant to be a house. It's not meant to be money. So if Bitcoin takes over that function of saving for the future, then real estate just becomes another asset It's no longer doing that job of preserving wealth for the owner necessarily, because they can use that with Bitcoin. that is the reason I'm inspired because it's just a new way of doing money that is independent of. a small group of people controlling it. And that just appeals to my kind of liberty minded values. That's why am excited about this to the extent that I am. But the first two reasons yeah, of course, I also want to save for the future. And Bitcoin is part of my portfolio. I like To have money that is not really constrained by any particular institution. That is also a beautiful idea. Like I can program a wallet the way I want and send the money to whatever entity I like. And that is up to me. I don't need anyone's permission. that is why.
Ash:I've had conversations with fund managers who invest in stocks and shares, and they quite simply said, No, we absolutely would never invest in Bitcoin. That's changing now, isn't it?
Stefan:Yeah. There is recently been some good news on that front. That's. So exchange traded funds are now allowed on Wall Street. uh, You typically have a type of fund where there's a certain group of assets that's being bought and you can just buy that whole fund as a share on the exchange. So that's where the name exchange traded fund comes from. And there was approval earlier this year for doing that with Bitcoin. So then, an ordinary financial manager, an institutional investor, somebody working on Wall Street, wearing a suit, managing their clients money, they can now buy Bitcoin through that ETF. So Bitcoin becomes part of the portfolio of all their clients. And that is one of the reasons that the price has been rising.
Ash:Let's touch on what you just said then. What are the other things that make Bitcoin so volatile? Typically, I would have said if you got a 8 to 10 percent return on your investment in one year, then that would mean that's a medium risk investment. most people in traditional investment circles would consider that to be a reasonable return. But Bitcoin moves way more than that overnight. So what makes the price so volatile?
Stefan:the core reason for the volatility is that it is unclear what it should be worth according to the majority of the people. So if you have a market and the market is really large and there's a lot of people buying and selling large amounts all the time, then no individual opinion or decision can change that price a lot. that is the case with fiat currencies. If I, for example, I'm a bank and I buy 20 million dollars worth of euros, right? I want to make that trade. Then those 20 million will never move the price of the dollar or the euro by itself. you and I won't notice the next time we pay for a restaurant bill, right? Because those markets are so big, the same for large shares. They, of course, are more volatile in currency, but still like reasonably. stable. And Bitcoin is something very new that is often misunderstood and only really understood by so few people that the negotiation or debate about what it should be worth is much more volatile, You just can't have one billionaire just decide I want to buy like 50. million dollars worth of Bitcoin, suppose that person decides that if they buy that in a short amount of time, that will move the price a lot. for the short term, why the price goes up and down a lot. But indeed, as I started, the fundamental reason is that it BVD don't know how much it should be worth.
Ash:It's only worth as much as the market says it's worth at any one particular time.
Stefan:Yeah, you have to find a buyer or a seller, and if that buyer or seller exists at that price level that you're willing to trade, then that's the price.
Ash:And earlier we talked about the halving and we talked about the capping of 20, there will only ever be 21 million bitcoins. And as we get closer to that, will that make the price more determined Will the price become more stable? Will the world put a value on it?
Stefan:don't think the price stability will depend on the halving. The stability of the price depends on a larger group of people agreeing on the value. And that just takes time. that will also mean a much higher price before it can be stable. so if you multiply the value of one Bitcoin with all the Bitcoins in existence, then you get something like a market cap. if that is really high, then there is not many people who can influence that price anymore. And it would also imply an agreement on a global scale on the usefulness of this new asset. And that agreement can not really fluctuate anymore that much with positive news or negative news. But at the moment, as we are moving toward that point, Bitcoin is still relatively small. The market cap is not as big as a large currency, for example. So it can be moved a lot, and people can have very different ideas and theories about what it should be worth. And that is the cause of that volatility, and it can only disappear with a higher degree of agreement, and more track record for the asset more people using it.
Ash:Thank you for answering all my questions. and I hope that some of the listeners have found that useful too. I massively appreciate you taking the patience to explain some of these basic fundamentals to me. You've been, for eight years, doing a Bitcoin meetup here in Chiang Mai, is that right? And what would people expect if they came to that?
Stefan:it's usually a small group between eight and 20 people. we always have dinner around seven o'clock and we informally talk about the market new technologies. Maybe It's a certain type of person that is consistently interested in Bitcoin. And then you might also want to talk. other topics If you are passionate, then you want to talk about it. Sometimes people will go there to trade. They want to buy or sell something. They can do that there too. If they find the person to trade with And there used to be also a large percentage of the people be total beginners. And that is where my job became to isolate the veterans from the beginners and explain things efficiently to the beginners so that the veterans don't necessarily have to answer beginner questions. I've done that a lot. but the last couple of years that is not really been necessary that much because most people that are interested in Bitcoin, they're already educated. And you can find so many resources online nowadays. Like when we were starting with that meetup, it was not really possible to learn efficiently about Bitcoin. You just had to find the right sources, which were always complicated. It's much easier now. So I don't have to explain to beginners that much more. I can just hang out with the veterans mostly.
Ash:the veteran as as I can. Where
Stefan:The meetup is at a restaurant called Sababa Hummus. The meetup
Ash:Here in Chiang
Stefan:Chiang Mai, there's two locations. Actually, we are at the location close to the moat on the southeast side of the
Ash:it also
Stefan:it's really nice food. And the owner also accepts the Bitcoin payments. I usually pay my bill there with a lightning payment. It's a good crowd.
Ash:And that's every Thursday?
Stefan:Every Thursday when I'm in town.
Ash:Beginners welcome?
Stefan:Yeah, always.
Ash:Absolute beginners welcome? do you offer a service where actually you would, I call it like the hand holding, some people that are very new to this would physically like someone next to them sitting by their computer helping them with the clicks and the downloads.
Stefan:Yeah, that's something that I've done for quite a few people. of course the conversation starts just casually. If you come to that meetup, I don't charge you money. You can just hang out and talk and ask questions and I'll explain everything for free. And then I might get to that point where I say like, well, you can buy this hardware wallet and then you can put it on there. And then people come back and say okay, I got the hardware wallet here, but can you help me set it up? that is the point where I say, okay, that's going to take a couple of hours and you need privacy and it's actually complicated, so I will do that. And then I charge a fee for that.
Ash:Sure. I would definitely use you for that service. I remember the first time that I did it for myself, and it was a pretty daunting task. it was hairy. I wondered if I'd lost money, and actually, no, it was a learning curve that I'm glad I went through. Because I feel pretty good about having some Bitcoin now, especially when, the market rises. I do believe that it's going to be, A great storage of wealth. And I hope very much that it does become more popular and has mass adoption. And I really do believe that is your incentive to wanting to put so much time and effort and sharing information and offering to help people. So I just really wanted to emphasize that, that I'm standing with Stefan now, and that's genuinely his motive in this, right?
Stefan:Yeah, that's something I've been very excited about for a long time, that is why I do
Ash:If people want to read your book,
Stefan:They can get it for free online these days. Yeah, you can go to my website stephantking. com.
Ash:stephanteaking. com and if they wanted to contact you about the meetup, could they do that from the website too?
Stefan:No, you can better contact me over Twitter or Facebook for that.
Ash:Sure. And search for Stephen King or Stephen T King.
Stefan:Stefan T. King, that is the extension of my name. and Stefan King on Facebook, and if you see that this particular Stefan King is in Chiang Mai, then it is me.
Ash:you're the one.
Stefan:Yeah, there's other Stefan Kings in the world. You have to make sure that you get to the right one,
Ash:And I know it's Stefan with an F, right?
Stefan:Yeah, F. A.
Ash:That's awesome, mate. I just so grateful for you to take all this time and explain it really answer all my questions. Cause you know, although I've been into it a while, I still consider myself a bit of a newbie, so you've really cleared up a lot of stuff.
Stefan:you're welcome. It's really enjoyable to discuss this.
Ash:Thank you very much, Stefan.
Stefan:Thank you, too.
Ash:Pleasure.
