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Could Cryptocurrencies Replace The Physical Currencies?

Sean: We have Ana. It is a very interesting question that she asked. I am on the stock market and crypto. And I’m planning to open a small business later. So the stock and crypto came first before the business. Right? Is it smarter that I use the money for business or better to add on my portfolio?

Fitz: Alright. So this is a classic question when it comes to financial planning. Which is the better option? So again, I would ask Ana to ask herself, what do you really want to do? And just based on your question, it seems that you really want to start that business to become an entrepreneur. So I would say that you can definitely use the money to start your business. Of course, when it comes to planning for our retirement, which is very important, I tell people that, investing in the stock market, in mutual funds, or even in crypto, these are investments that give you capital appreciation. So they just grow your money. But when you reach your retirement and you stop your cash flow, you stop working, your expenses would need to be addressed. And having a source of income, not just your pension, but other sources of income would really help.

So I am an entrepreneur by heart. I advocate for having multiple sources of income. I would say that you’re actually on the right track, Ana, by being aware that it’s important to put up your own business, so that you can create your own cash flow. But of course it’s important to plan your business well. One of the common mistakes that I see with people who start their business is they don’t have enough capital when they start their business. So again, the importance of having a business plan so that you know exactly how much capital you need. So if you find yourself lacking capital, you can definitely use investments to be able to reach the money that you need to be able to finally start up your business. So for you, Anna, I would say start that business because I’m feeling that that’s what you actually want.

Sean: That is really a hundred percent correct. And I can’t add a lot to that. Basically, what I could say is if you can project how much your small business is or can make on a monthly basis, and then crash it or you have to try and measure it up against what you’re making with a stock market and crypto. The good thing about businesses is it’s a lot more controlled by you.

Fitz: Exactly.

Sean: With the stock market and crypto it’s a lot less controlled. I’m not saying you can control the business a hundred percent because there’s still the economy, your customers, your marketing, all of these other factors. But it’s a lot more controlled by you, which is a big advantage if you have a huge amount of discipline with yourself. But it’s a big disadvantage if you don’t have a lot of discipline. Just stick to the stock market and crypto. So it depends on a lot of factors.

But how I see it, whether I would invest more in my business or on the stock market and crypto, assuming that you already have that business running now, which right now you don’t, but if you do have that business running, and this is how I decide, should I pour it more on the stock market and crypto or in my business? If that money can generate a lot more income if I inject it into the business, I’m going to inject it into the business. Otherwise it’s going to go through other investments.

We have an interesting question from Patrick and he asks, do you think crypto or digital currencies will replace the physical ones that we have right now?

Fitz: For me, I don’t think it will be replaced, but I believe that crypto and digital currencies will be part of the mainstream way that we do commerce in the future. And in fact, this is what the people who are hodling. That’s their term, HODL, hodling cryptos. They believe that cryptos and digital currencies will replace the physical currencies. And if you can read through the Reddit threads that discuss this, then they actually make good points. But personally, I believe that it won’t replace the physical currencies, but it will become part of our commerce. So that’s my answer to this.

Sean:  Patrick, it’s so interesting that you use the word physical currency. You know, if you read the book Elon Musk, which is a biography of the guy, Elon Musk. He mentioned there that the founding of PayPal actually came from a one big idea. And that idea is money is low bandwidth. What that implies is, how many times a day do you actually hold the physical paper money? Not a lot, especially nowadays during the pandemic. How many times a day do you hold that versus the transactions you make on Grab, on Lazada that are completely digital?

So currency is a lot less physical now. It’s mostly digital. It’s mostly bits and bytes. And money’s low bandwidth. PayPal was founded years and years ago and was sold to eBay years and years ago. And that’s the start of the digital currency, but it’s now being transformed into something that would be called the cryptocurrency. So digital currency has been around for quite some time already, but the cryptocurrency which uses the block chain technology, that’s pretty much a new one.

And if you’re asking, will it replace the physical currencies? Personally, I believe that there’s a high chance that it would, but someday we don’t know when that someday is, if it’s near or far away, we just don’t know. But there are a lot of regulations that have to come in between before we finally embrace that as an official currency.

With that, I’m going to go ahead and follow up with his question. What is your take on Bitcoin?

Fitz: I’m one of those people who believe that it will continue to go up as more people get interested in cryptocurrencies. Of course, there’s always a chance that Bitcoin will be the first cryptocurrency that will be widely accepted as a form of payment.  But if you want to make money out of Bitcoin right now, the best way is to still trade it. I don’t really believe that it’s a good long-term investment, but it is a good short term trade.

And one warning that I give people is that try to avoid those cryptocurrency or Bitcoin investment mining opportunities, because a lot of them, 99% of them are scams. At this point in time, it’s really hard to mine Bitcoin, you will need a lot of resources already. So some website asks you to invest or crowdfund people’s money to be able to mine Bitcoin. Most probably those are scams. So be very careful.

So if you really want to make money from Bitcoin, trade it, learn technical analysis, learn charting. Go to threads where they discuss cryptocurrencies, because that will really help you understand the market movements of Bitcoin. And you can make money from the price movements of the cryptocurrency. So, yeah, that’s my take on Bitcoin.

Sean: I couldn’t agree more. Same. I think it’s good for trading. I also trade. I buy and sell and I use technical analysis. Who else taught me? I went into Marvin Germo’s Stock Smarts. That’s where I learned it all. Really, really good workshop. So do yourself a favor if you want to trade Bitcoin and any form of other stocks, enroll, I don’t know when he’ll have it again, but definitely enroll in his Stock Smarts workshop.

We have a question from Mitch. Do you think our government has to do something in order to encourage patriotic investors? More and more people are seeing the rewards of investing in US stocks vs. PSEi.  Thank you Mr. Marvin Germo. Shout out to you. So, but yeah. What do you think about it?

Fitz: Well for a financial planner, I would always encourage people to invest where they believe they can get the best returns. When it comes to patriotic investors, I believe it is more important to be a patriotic spender. So it doesn’t really matter if you earned your money from investing in the global market. But if you spend that money to fund the local economy, you buy local products, you support local businesses, then I think that would be a better way to help the country. Nothing wrong with investing in the global market as long as you bring back that money to the country and you help the local economy.

I think that the government has to do something about this. I guess the best thing that the government can do is to help entrepreneurial people in the country to flourish and to grow in the country, to grow their business in the country. I think that’s really a struggle for so many years, not just in this government, but for the past decades, as an entrepreneur. It’s really hard to really put up and grow a business in the Philippines. Even just the business registration can take a lot of time. So I guess that’s the best area where the government can help us to encourage more local businesses to make it easier for Filipinos to be entrepreneurial. So that’s my answer to this.

Sean: I completely agree with you. It’s becoming easier. I think, like the SEC online registration and the DTI online registration. But I think maybe if the pandemic did not hit, they wouldn’t prioritize it that well so maybe the process is still slow. Good stuff that came out of the pandemic, maybe that, it made the government make it easier. Right?

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