00:00 Well let's talk to Justin Urquhart-Stewart who's an investment manager and business commentator.
00:03 Good to see you as always Justin, welcome back. So a lot of excitement about this announcement
00:08 from the SEC. Why are people excited? Well frankly I'd be rather better off with groats
00:13 than coin if you understood what they are. Most people don't understand what bitcoin is. Well it's
00:17 a bit and it's not even really a coin. And it's very very expensive to actually mine, generated
00:22 by computers, very expensive to actually operate. And how does it actually operate? Well that's
00:28 actually the most interesting bit because it runs on blockchain. And blockchain just merely means,
00:32 it's the best description, it's a bit like spider's web. Any touch of spider web, any bit of the web
00:37 knows what's going on. So with bitcoin on that you know exactly where they all are and who owns it,
00:42 particularly if they're rather dubious characters. But actually as an investment item it's very very
00:47 unreliable. We had one mad country, El Salvador, decided they were actually for a while going to
00:52 make it their own currency, which was absolute lunacy. Mind you their previous currency was the
00:55 colon, which probably didn't help much either. So the whole point with this is it will create a big
01:01 boost for ETFs. But exchange traded funds basically, they were the idea of very simple investing in
01:07 indices. So you invest in forms of tracker funds and they're supposed to be low risk and understandable.
01:12 Well now you're lobbying in a stick of dynamite into that to actually make it a lot more riskier
01:16 and a lot less understandable. Does this legitimize cryptocurrency? That's the big question.
01:21 That's what they'll have you believe though because it's yes back in the main law in the mainstream.
01:26 So it will give a level of credibility to it. But the trouble is most people don't understand how
01:30 they operate, don't really understand the risks. Some people have made a lot of money out of it
01:34 because it's well glorified gambling. But an awful lot of people also lost an awful lot of money out
01:39 of it. So we need to be extremely careful. So frankly mixing up these two, you know one old
01:45 let's say old-fashioned but very effective measured investment which people understand
01:49 with something which is extremely risky, unreliable and could be very expensive. So I think the
01:55 regulators here have been good to be skeptical up until now. I'd be interested to see what's the
01:59 rules are going to put in place. It needs tight rules to run it. So if you are an investor and
02:04 suddenly you now have a way to buy bitcoin without technically buying bitcoin through these ETFs,
02:09 should you jump headlong into it? I mean you talked about risks. What are they? What should
02:14 people be looking out for? People have to look at what is in terms of risk of actually losing
02:18 your money. Yes that does happen quite a lot. Actually making sure your money grows over time.
02:23 To make money out of investment is a long-term thing. You compound the dividends over time and
02:28 that's how you grow money. If you're actually just going to sort of have a bet on that, well that's
02:32 why we have race courses. You go and enjoy it that way around. That's it is an old-fashioned
02:36 form of gambling. I fear with this you're encouraging people who are used to tracker
02:40 funds, ETFs and things like that, lower cost and now you're introducing something into it which
02:45 they don't understand and that's going to be dangerous indeed. So for professional investors
02:49 that's okay but for Joe Schmoe sitting there with his or her armed well-earned funds, they're going
02:55 to be very careful indeed. Let's look down the track then. Are you expecting more cryptocurrency
03:02 regulation? Would that make us happier and more confident? It's going to need much more clear
03:09 and understandable regulation but even if it is regulation you only have to look at banking over
03:12 the past two decades and that actually didn't do a lot of good for anybody. So you know it's important
03:17 to be really skeptical over these things but especially to actually say understand how does
03:21 it work, how does it operate, what are the risks here, is it measurable and it's half the time
03:26 in Bitcoin. You have no idea what this thing is going to be like in a year or 18 months time.
03:30 I invest in a business, I have a reasonable idea what's likely to happen. Yes there could be crises
03:35 but if I can spread my risk, unfortunately spreading risks in this case will bring in
03:39 other Bitcoins. We've already seen some pretty strange ones arriving and no doubt there'll be
03:43 more. So this I'm afraid will be encouraging an area of the market which is not sophisticated
03:48 enough yet to really be in the mainstream but it's sophisticated enough for the professional
03:53 punter to thoroughly enjoy but for most investors stay world clear. So what does this do for the
03:59 price or the value of Bitcoin? If there is somebody who wants to get into it and buy some, have they
04:05 now left it too late now this news is out, is the price going to rock it? Oh the price, yes we'll go
04:09 up because there's going to be now you've sort of made it clean legal and decent. So yes you'll find
04:13 a lot more people because we've become a fashion fad but remember this year's fashion fad tends to
04:17 be next year's tank top and I'm the proud owner of many tank tops. So you know it is something which
04:22 people should be aware of but be careful what's inside your funds because you may not know that
04:26 Bitcoin or other cryptos are in there. If they are then you have to take that risk as long as you
04:32 understand it but for most people I'd say make sure you know what's inside of it and make sure
04:36 some of those things are out of it. Justin great to talk to you as always thank you so much for
04:40 coming on the program. Justin Urquhart-Stewart the investment manager and business commentator.
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