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Links and resources mentioned in this episode:
- Reasons Why Your Third Stimulus Check Could Be Delayed or Denied
- Where's My Stimulus Check? Use the IRS's "Get My Payment" Tool to Get an Answer
- What to Make of Bitcoin?
- On Purpose, With Tyrone Ross (Coindesk podcast) (opens in new tab)
- Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond (opens in new tab)
- CASEBITCOIN: Making the Case for Bitcoin Every Day (opens in new tab)
- OnrampforAdvisors (opens in new tab)
David Muhlbaum: We’re going to talk about cryptocurrencies today. No, really, Kiplinger is going to cover Bitcoin. And please, if your usual reaction to Bitcoin is to roll your eyes or put your hands on your ears and go “lalalalala" — we get it. But come on, aren’t you a bit curious about how all this wealth is getting made? Financial advisor Tyrone Ross is going to help us figure out whether you should own some Bitcoin and if so, how to buy it.
Also, still waiting for your stimulus check? Sad. We’ll give you some reasons why that might be and what you can do about it. All coming up on this episode of Your Money’s Worth.
David Muhlbaum: Welcome to Your Money’s Worth. I’m kiplinger.com senior editor David Muhlbaum, joined by my cohost, senior editor Sandy Block. How are you doing Sandy?
Sandy Block: Doing good, David.
David Muhlbaum: Good. Well, in our main segment, we’re going to talk Bitcoin, which in all honesty has been a heck of a topic to research. I’m constantly learning what I don’t know, but before we get to the future of money or whatever it is, we should check in on the currency of right now. I’m talking about stimulus checks.
Sandy Block: Stimmies.
David Muhlbaum: Stimmies. Exactly. Stimmies got name-checked on “Saturday Night Live” this past weekend, which I guess is a cultural watershed for anything, right?
Sandy Block: Yeah. Boomers Got the Vax was pretty funny. I’ve been showing it to all of the people of a certain age and there’s nothing funnier than a bunch of CPAs trying to sound street, but plenty of people are still waiting on their vaccine and also people are still waiting on their stimulus check too.
David Muhlbaum: Yeah. There’s a similar feeling there, a feeling like you’re missing out, but with vaccines, there’s at least supposed to be an order. Elderly, healthcare workers, people with disabilities, et cetera. But what’s the story with stimulus checks? I know we’ve had round after round. If you’re sitting there hitting refresh, refresh, refresh on your bank app and getting no love or money, well, why?
Sandy Block: There can be five main reasons. Rocky Mengle, our senior tax editor, one of our frequent sources and popular guests, has gotten it all lined up and we’ll put in a link to his piece because I think I’m only going to have time to cover two main reasons. I’m going to pick the ones that are less self-evident. You probably already know that if you make a lot of money, probably no stimmy for you at this time. One key thing to remember is that though we keep about checks, most of this money is going out to people through direct deposit.
David Muhlbaum: Well, that’s why I said bank app.
Sandy Block: Right. But let’s say you’ve changed where you bank since you last filed your taxes, this could be a year ago. Maybe you didn’t like your bank anymore. The IRS has a number of ways to determine where to send stimulus money. And one of them is the bank account you linked up with when you filed your 2019 or 2020 federal income tax return. If that account’s been closed, the bank says to the IRS, “Sorry, no one home.” It should get to you eventually by either a paper check or debit card by mail.
David Muhlbaum: Oh, and what if you have compounded the situation by, say, moving yourself somewhere else? A lot of people did that last year.
Sandy Block: That’s right. So now, you’re at the mercy of the U.S. Postal Service and the IRS. If the U.S. Postal Service is forwarding your mail to your new address, your third round stimulus payment will eventually show up in your mailbox. If you didn’t do that, and the payment goes back to the IRS, then the IRS will either wait for you to reach out and update your information or for you to make contact some other way, like filing your 2020 tax return at your new address.
David Muhlbaum: But in fairness to the IRS, it’s not like they’re trying to hold on to the money. They want to get you the money. It’s a stimulus. And so they have this system for you to say, “Yeah, I’m over here. Gimme stimmy.”
Sandy Block: Right. Exactly. And we get to boil this down to three easy words again, “Get My Payment.” Search is your friend here, search, “Get My Payment" and I assure you, you will hit the IRS page where you can put in your updated information.
David Muhlbaum: But not a vaccine appointment.
Sandy Block: No, that’s up to the states, and I’m still waiting.
David Muhlbaum: Right. When we return, Bitcoin for the beginner. We’ll have a discussion with a really fascinating guest who actually understands cryptocurrency and why it matters to us all, even if we’re not ready to invest in it.
David Muhlbaum: Welcome back to Your Money’s Worth. We’re very pleased to have joining us today Tyrone Ross, a man who has a hand in a number of fields. He’s a financial advisor, he’s an entrepreneur and he’s an educator about financial markets and investing. Those talents come together in his role as CEO and co-founder of Onramp Invest and we’ll get into what that does later. But the core of his knowledge portfolio that we’re going to try to tap today though, is Bitcoin. Welcome, Tyrone.
Tyrone Ross: Thank you for having me. This is awesome. I’m excited to break new ground with you guys here and hopefully have a measured and objective conversation about digital gold.
David Muhlbaum: Also on with us today is Kyle Woodley, senior investing editor for kiplinger.com, who understands Bitcoin better than I do, which really isn’t saying much. He’ll be asking the smart questions and I’ll be asking the skeptical ones.
Kyle Woodley: Hello, hello.
David Muhlbaum: Now, those of you who heard our introduction will appreciate that Kiplinger has been institutionally wary of Bitcoin as an investment. And we have a hunch that many of you might be as well. On the other hand, a bitcoin was worth pennies in 2009. It’s now trading for over $50,000. I’m not going to calculate the return on that, but it probably has more zeros ahead of the percent sign than any other investment of the last decade. Talk about your fear of missing out.
David Muhlbaum: And Tyrone, as I’ve repeated more than once, I’ve got a lot to learn about cryptocurrencies and so do most people, I’d venture. So to help with that, we’re hoping to cover a few of the classic journalism questions: Who? What? Why? And also come back to the core investing question, should people be investing in Bitcoin? But I think it might be best if we take them out of order. And the one I want to start with is “what.” Can you please explain to us, as succinctly as possible, what is Bitcoin?
Tyrone Ross: Bitcoin is simply internet money. That is the easiest way to put it. We’ve had everything on the internet besides money, and now we have money that is native to the internet. Simplest way to put it.
David Muhlbaum: Internet money. Okay. One of the things Kyle and I wrestled with ahead of our talk today were the definitional issues, Bitcoin, crypto, internet money, alt-currencies, and the IRS even has a term, what do they call it?
Tyrone Ross: Virtual currencies?
David Muhlbaum: Yeah. So there are a lot of different terms. And I think part of the confusion surrounding this topic is the intermingling of those. I’ve used the term Bitcoin so far and you’ve said internet money. Do you have a sense of what we should be using, going forward in this conversation?
Tyrone Ross: I think we should back up and start here. I hope most of the folks that are listening are skeptics. And I also hope most of the folks that are listening are also open to learning, because I was a skeptic, and there are still some things that you should keep a healthy sense of skepticism, when learning about something that is only 12 years old. Look at anything that is 12 years old, you can’t trust it, right? But if there’s anything that you can trust in regards to a new digital money or digital currency, by the way, it is all of these things, it should be Bitcoin.
Tyrone Ross: When we say internet money and let’s take out all of the things that you hear bandied about on CNBC and all over the place, a lot of that is bunk. But what’s important is you had the internet and the ability for folks to send money over the internet that was borderless, no third party, self-sovereign, all of these different things, immutable, that you hear thrown around, that is a breakthrough innovation, even Ray Dalio thinks so. He’s like, “Great invention. I stopped there.” Even if we get folks to do that, it’s great.
So I think if folks were to just simply, and I’ve been saying this for years, a lot of folks, Corey Hoffstein and a lot of the really smart people that are on Twitter, and I say, "Look guys, I know. I don’t care how you feel about it. Read the white paper. I think you’d have a hard time reading the white paper and going, ’There’s nothing here.’” So I think the fact that now I can send money anywhere in the world, to anyone over a phone with no KYC, AML or whatever, just me to you as, just like I walked up and handed someone cash over the internet. That’s a really powerful thing. So if I walk up and hand someone $5 and walk away, no one knows that transaction happens. Now we can do that with phones. That’s super powerful.
Tyrone Ross: I think if you start there and then broaden out what Bitcoin is to you, because a data scientist is going to look at it different than a financial advisor. I talk to CIOs of RIAs all day and they’re like, “Tyrone, is it digital gold?” I’m like, “Well, I don’t think so, but you maybe think so because it helps you understand it and you can’t go to a client’s portfolio and go, ’Hey, let’s trade out this digital gold for this digital gold or this internet money for this internet money.’” It’s easier to say, “This is similar to the gold that’s in your portfolio now with these different characteristics,” and the client goes, “Oh, okay.”
So I think Bitcoin is a lot of different things to different people, but the beautiful thing about it is it’s all of those things. I have people DM-ing me this morning, “Tyrone, I saw your message about PayPal. Does this mean you don’t think it’s a currency?” I’m like, “Yeah, it’s a currency, but it’s not a currency here in the U.S. yet until the laws change.”
Tyrone Ross: Anyway, I say all that to say, I think as you back up and you start to look at Bitcoin and you start to understand it, is it speculative? Yes. Is it young? Yes. Is it an investment for most people? No. Has it done well? Absolutely. So there’s still a lot of things here, but I think if people could just simply say, “Okay, there’s the internet. If I have an internet connection and I have a phone, I can send value...” Two things here that I think are also very important. I need everyone listening to separate the big B, the Bitcoin blockchain, from the little b, bitcoin, the price that everyone jumps up and down about every time it moves 2%. That’s very important.
Tyrone Ross: The other thing that’s important here is Bitcoin, and we can elaborate on this. As far as a blockchain and a transfer mechanism, it is super powerful and strong and secure. So when Bitcoin is the thing that everyone hopes it is, and it is right now, when you talk about trillions of dollars transferred, it is great for moving large, large, large, very large value of money or whatever it is through time, anywhere in the world, not for a cup of coffee, PayPal. So when you really start to understand Bitcoin, you’re like, “Oh, I get it.” So the “Bitcoin, not blockchain” thing, that doesn’t make sense. The, “Oh, it should be used to go to Dunkin Donuts.” Oh, that doesn’t make sense. So all of these things that are out there now, like this PayPal news today, going nuts, that’s just going to confuse people. Like no, you shouldn’t be spending your Bitcoin.
David Muhlbaum: One of the things you’re talking about is the influence and the significance of Bitcoin as a currency and as a phenomenon and the ability to move large amounts of money, as you said, is a core part of that. In some way, though, that’s the opposite of what it’s meaning is to the individual investor who looks at a portfolio of, I have this much money. I want to diversify it. I want to put some portion of it in an alternative investment. At least as I understand it, that’s investing in Bitcoin.
Tyrone Ross: If you consider Bitcoin to be an alternative, sure. And if you’re doing 5% allocation, where are you taking it from? Bonds? Probably right now, if you look at bonds, well, maybe not right. The 10-year’s moving again. So is it the equity sleeve? Or maybe it’s like venture, it’s a venture bet because it’s highly speculative? What are your goals? What is your tolerance for risk? That’s what I tell financial advisors all the time, why you need to be able to model it so you can say, “Hey, Mr. And Mrs. Client, you see these 80% drawdowns over here, how do you feel about those? And then every once in a while, you’ll get a 30% dip. How do you feel about that? Do you really think this is an investment still or something you’re comfortable with?”
Tyrone Ross: Different conversation with a 50-, 55-year-old, than the 35-, 40-year-olds that are used to it. The 40-year-old was 28 when Bitcoin was introduced to the world, they’ve grown up watching this thing go nuts. It’s normal. It’s a different appetite for risk and understanding of things just being, touch, touch, touch on my phone, digital, virtual. There’s demographics at play here, there’s an understanding. And listen, here’s what I know about the Kiplinger audience, I am certain that people that are listening to this podcast or read your wonderful magazine and your website and everything else, they don’t need Bitcoin. If they want to put a little bit of money into it, great. They’ve done very well; now, it’s about wealth preservation as opposed to wealth creation.
Tyrone Ross: Those of us that are younger are looking at Bitcoin and going, “All right. Best risk-adjusted returns 1, 5, 10 years. Annualized to a 100% or so." What did Paul Tudor Jones say? “It’s the fastest horse.” His job is to find the fastest horse. So if you’re younger, I think it’s hard to look away and go, “ahhhh.” So I think that’s just where we are, but to your point, yeah. If you look at it as an alternative, absolutely. But again, where are you taking that percentage from, in regards to your financial goals and other things there?
Tyrone Ross: Bitcoin isn’t an investment for everybody. I think that’s another thing that needs to change. I’m not even sure if it’s an investment, period. But it can be. But I think that’s something that people need to understand. It’s not about this being an investment, it’s speculative still, there’s still a mania behind it. And again, I’m big as a crypto-hippie as they come, but I think you have to, “Put everything in its place,” as my mother would say. “Put everything in its place and leave it there. Don’t try to make it something else that it’s not.”
David Muhlbaum: So we’re a podcast, audio-only, but when we record, we can see each other on video, just like on Zoom. So Tyrone, would you mind standing up and showing us what it says on your T-shirt?
Tyrone Ross: The T-shirt says, “Long Bitcoin, Short the Bankers.”
David Muhlbaum: Long Bitcoin, Short the Bankers. That’s great. Okay. I can see Kyle is dying to ask a question too, but I’m not giving up the floor just yet, because one of the things that struck me is that while you say you’re a Bitcoin hippie, you even have the T-shirt to prove it, a whole lot of the language that you use will be familiar to people who are more conventionally invested, bonds, equity, risk allocation. What are your goals? What is your tolerance for risk? You’re hitting the familiar financial planner touchstones. I think it’s going to be very reassuring in a way.
Tyrone Ross: For sure. And again, I think, listen, if you grew up reading The Intelligent Investor and Intrinsic Value and Discounted Cash Flows and Efficient Market Hypothesis and all that, it doesn’t make sense. You can’t bring that old hat to this ball, you got to put on a new hat, new shoes. It’s a totally different lens through which you have to look at Bitcoin. And again, everyone is going to come into it their own way. So I think, what I try and get CFAs and CFPs and my colleagues to do is, Yeah, you’re absolutely right. There’s no intrinsic value here, but you have to find the other valuation methodologies for Bitcoin and digital assets. So much so, the SEC tells financial advisors, “We are going to ask you for your valuation methodologies on this. You better have a good answer.”
Tyrone Ross: Even the use of market cap, not the best metric to talk about Bitcoin, but, “One trillion dollars in market cap value." The minute that headline crossed, I did an episode on my podcast. I’m like, “Guys gather around the campfire. That’s not the best use of this. There’s other ways, realized market cap, MVRV, all of these weird metrics that if you said to an advisor, they’re like, 'Huh?'” Or anybody.
Tyrone Ross: So again, I think what folks need to realize, again, 12 years, all of this needs to be expanded, but, I will say this, legacy financial institutions, we saw what Morgan Stanley announced, but the Barrons, the Kiplinger’s, the Wall Street Journals, there’s a responsibility for you all to get it right, and very right. Because those folks that are very well-to-do, knowledgeable, educated, traditional, as you call them, are looking at you all for the best-in-class information. And as far as crypto goes, it hasn’t been good. Not you specifically, but if you look at the traditional media, financial outlets, it’s been really bad information.
David Muhlbaum: I totally appreciate that. What can I tell you? We’re trying. But I heard you mentioned the phrase, “Old hat,” and that made me think about one old hat who really resonates with Kiplinger readers and that’s Warren Buffett. He had that famous line, “Never invest in something you don’t understand.” That seems like it could be a hurdle for some investors with Bitcoin. Can people invest in Bitcoin without really understanding it? And how do you figure out if they do?
Tyrone Ross: I love Warren Buffett too, personally, my favorite investor is Howard Marks, but I could appreciate Warren Buffett, more of a Charlie Munger guy, myself, but I could appreciate Warren Buffett. And I think people invest in things they don’t understand all the time, like marriages, but as a whole ’nother story, but whatever. Moving along. I get that, but people do it all the time. So I do think people can invest in Bitcoin without understanding it. Do I think that’s a good idea? No. Especially with something like this, because if you make mistakes in a traditional world, there are guardrails to save you. You make the mistakes here, your Bitcoin’s gone forever, or a scammer or somebody has your information or whatever. So you don’t want to jump into this and not understand it. We don’t have those guardrails here, so you want to be knowledgeable there.
Kyle Woodley: One of the things you just said is that, We, not like Kiplinger we, but like the financial media, the legacy financial media get wrong, is that we don’t necessarily talk about cryptocurrency in the right way. We don’t get things right. So, the best, most natural question is what do you see that we typically get wrong? On the highest bandwidth platforms, the whatever, the mistruth that you see out there when people are just casually talking about it?
Tyrone Ross: One is avoidance. Just avoiding it. Two, not outsourcing your ignorance. Bring in trusted professionals, and again, you trust me in the sense that you know that I was competent enough to come on here, and that I wasn’t going to carnival bark about Bitcoin going to a trillion and the U.S. dollar is going to nothing. That’s not happening. So folks that are objective, and again, I love Bitcoin. And then also being able to talk about it from a true use-case standpoint and build from there.
So let me go back to step one, avoidance. When you say cryptocurrency, that’s probably like that term cryptocurrency. Now it forces people to say again, they get excited about the PayPal news, you said a currency, and what is this crypto thing? Or are they all cryptocurrencies? Yeah, this probably isn’t the best name. You see Stablecoin thrown around. That’s probably crypto dollars. There’s probably a better name to get people familiar with them. So the jargon, virtual currencies, digital currencies, cryptoassets, Bitcoin, alt-coins. There’s just all of these things here where if you just go, “Everybody stop.” I just did this on live on Twitter for financial advisors, the space moves too fast. They need to slow down and they need their blind spots.
Tyrone Ross: What we need to do is, again, if you just stick with Bitcoin and understand it and completely pick it apart, you’ll go, “Oh, okay. Alright. This blockchain thing, chain of blocks with information, sounds a lot like a budget, but it’s just in blockchain. And then if I get a statement and okay, right. And put those things together, and then it works like a clock because every 10 minutes there’s a new block. Oh, all right.” Just really break it down to that rudimentary level and then understand, Okay. The IRS says Bitcoin is property, the SEC says it’s not a security, the CFTC says it’s a commodity. Right? There’s still a lot of confusion. That’s where people should start. There. “Oh, okay. All right. Not a security. So that’s why financial advisors go, 'All right. Not a security. I’m not touching it because I got my seven and this says only securities and securities only.'" But those of us who didn’t learn about it, no it’s great that it’s not a security, because that means...
Tyrone Ross: So when you go into all these nuances, I think if Kiplinger just did a, “What is Bitcoin” and not “Bitcoin from a Technological Standpoint,” but “What is Bitcoin? And it’s, “The IRS says it’s property. Here’s what property is. The SEC says it’s not a security. Here’s what that means. The CFTC says, it’s a commodity. Here’s what that means.” That’s a beautiful article. And people go, “Oh, okay.” Now you’ve got them, because that’s what they expect from you. I don’t want to go to Kiplinger to hear about SHA-256 (opens in new tab) and mempools (opens in new tab). I don’t want to hear that from you guys. What I want to hear is, “Oh, are the things that... Taxation. It’s taxable, there’s no wash sale rule.” There’s enough for everyone to pick their part of it and educate their audience on that. I think you guys could do a really good job of that.
No one’s going to come here for the technical part of Bitcoin. They’re going to come for, “All right. What does this mean in the portfolio?” “Okay. Well, based on... Seems like up to 5%, makes a lot of sense. Morgan Stanley just put out a report two and a half percent. At Onramp, we did a report right around 5%.” “So I’m figuring I’m one between 1, and 5% if I ever decide to do this.” So all of those things I think is a good place to start, but I think just starting to go into the outer fringes here of what’s going on and the other media chasing that rabbit does no one any good, because there’s enough outlets to get what you need from certain places. And I think that’s what your audience — what I would be looking for — from you guys.
David Muhlbaum: One thing I noticed in there is, you’re using specific percentages for allocations. Now, everyone should discuss how much they’d want to invest with their financial advisor and let’s hope their financial advisor knows something about internet money, but once someone’s crossed that threshold and decided “I want to invest in Bitcoin,” the next question is, how? How should they invest in Bitcoin? Because that’s different too.
Tyrone Ross: A lot of that has to depend on how are they trying to use it as a part of their financial goals or portfolio. If it’s, “All right, I want to put it away for a really long time for my daughter’s wedding, or it’s going in cold storage, away somewhere. And I probably need to use a qualified custodian option for that. But say I just want to mess around with it. Maybe it’s on my phone, a cash app or PayPal. There are so much nuance to go into that because the minute you do it, and let’s just say you have the tech savviness and you’re going to go somewhere and do it and you take the keys, and you have your public key and your private key and your mnemonic seed phrase and all these other things.
Tyrone Ross: Well, now we get into digital fiduciaries and estate planning, all of these things that are really, really important for folks to understand, because if you are the only one in the family who knows what the hell a private key is, and now you pass on or something happens to you, and then the Bitcoin is $5 million, but nobody can get to it. Now what? So I think these are all the contingencies that folks need to worry about. If no one listens to anything else in this podcast, everyone, please hear me, the greatest investment you can make into Bitcoin right now is learning. Listen to podcasts, read, ask questions, be frustrated, be confused, because here’s what I always tell people: When someone asks me what Bitcoin is, and I explain it and they’re not confused, I didn’t do a good job. If you get it right away, I did a horrible job. But if I explain to you and you go, “Huh? I think I kind of get it. Is it money?”
Tyrone Ross: My mother calls it the big nickel. That was a joke on Twitter for a while. She calls it the big nickel and my sister calls it space money. I’m still working on my family. We’ll get there. And those things aren’t necessarily wrong, but people are going to come to it at their own time. Read, ask questions, listen to podcasts, good ones, go to the right outlets, listen to this podcast, obviously, and then get the right resources. And then you’ll start to ask better questions and you’ll get better answers. And then you can determine, “No, this is still very stupid to me.” Or you can determine, “No, maybe this is something I’ll invest in,” but there’s a lot before you get there in terms of where, there’s no limit of retail outlets to buy it. And there’s no limit of ways to get it as an accredited investor or other ways as well.
Kyle Woodley: So two questions that I have. One is, obviously we want everybody who’s listening to this to always listen to our podcast and read our stories for about an hour a day or so, really put in the work, but obviously we don’t own the marketplace of ideas. So like your opinion, where are the best sources of information for people that want to learn about Bitcoin, that are starting from the ground up?
Tyrone Ross: I have it here. You guys can’t see it. I tell every financial advisor, every financial professional, and I need your audience, everyone bear with me here, do not get upset and angry. This book, Cryptoassets by Chris Burniske and Jack Tater (opens in new tab) one day is going to be the equivalent of Benjamin Graham’s Intelligent Investor for the crypto space. Heresy! I know. And here’s why this book is important, it walks you through what a blockchain is. Notice the name, cryptoassets, not cryptocurrencies, it walks you through what a blockchain is, take you to Bitcoin. First, how this all came about and then it walks you through everything that comes after. And you go, “Oh, okay. So all of these are in some way, a derivative of the Bitcoin blockchain,” after you’ve learned about it. Incredible book, I can’t recommend it enough.
Tyrone Ross: So I think that’s one. There is a media outlet, CoinDesk, that does a really good job, and again, full disclosure. I do a lot of work with them, I put on a Bitcoin FA conference with them. I have a podcast with them. They’re working really hard because they were straight crypto-hippie. They’re working really hard to educate audiences now, especially the wealth management and financial advisor space. And I’m working with them to do that through my own podcast. I would encourage folks here to listen to my podcast, as well. It’s for advisors by advisors. I have one dropping today, actually. It’s all about estate planning in regards to crypto. And I have a gentleman on there, works with trusts and estates, Frazer Rice. And we talk about all of the different issues that advisors need to be concerned with.
Tyrone Ross: There’s a site called CaseBitcoin.com. Awesome, awesome site where they give you basic information you can click through, you can read through. Really, really good resource. And I think after that, I think the best thing to do is Bloomberg Crypto is getting better. I know as a competitor, but Bloomberg Crypto is getting better. And there are some other outlets there that are doing a better job, Forbes and some others. But again, there need to be a Kiplinger Crypto. I’m willing to help you guys to get it right. And only because I think it’s familiar, those names are familiar and brands matter. I always say this, “The messenger is the message.”
Tyrone Ross: And I will say this, and I know those folks are competitors, but everyone should have their lane. Bloomberg and those others are chasing a rabbit. You guys have a real unique opportunity to carve out a lane of those things that I was talking about, those really key investment management, planning type issues around this, I think you guys can own. But those are the best resources, and those are the things that I tell people to read and, and say, “Look, go through it and then ask questions and come back to me and I’m happy to answer any questions you have.”
David Muhlbaum: Well, as long as we’re plugging stuff, let’s get to Onramp Invest. This is the firm you started. What does it do? What are its goals? Tell us.
Tyrone Ross: I’ll keep it brief because I’m doing our first state of the union in a couple of days and we have some big news coming soon, but there are a segment of the population right now that want digital assets from their financial advisors and cannot get them. Onramp is providing the tools, the data, the resources, the education for financial advisors to work with this new asset class in a compliant, regulatory manner, with their clients right inside their existing workflow. No TAMP (opens in new tab), no funds, no ETF. Like, everyone else is building the hotels, we’re building an interstate. We’re connecting it all. So a financial advisor can go into her workflow and model for a client, plan for a client, bill, do all of those things that they can’t right now.
Kyle Woodley: Out of curiosity, how much access does the advisory world actually have in this right now? If I have just, Joe Financial Advisor or whatever, can I just go to any financial advisor and invest in crypto through them? Does everybody have access right now?
Tyrone Ross: You can’t and that’s the thing that’s frustrating right now for a lot of the larger RIAs. What’s amazing is as we sit here right now, Morgan Stanley can offer their financial advisors and clients Bitcoin. Some of the largest RIAs in the country cannot. That is astounding. So, most RIAs can in some capacity, right, we’ve heard GBTC (opens in new tab) thrown around, there’s ads everywhere, it’s been on CNBC, so most can in that regard, but there’s also a large segment that can’t. And again, I think that there’s been so many emails and texts and things that I get from folks that say, “I asked my financial advisor about this, and he won’t talk about it," or, “he won’t do this,” or, “she won’t do that.” So advisors right now, again, just the regulatory hurdles, they don’t know what they can and cannot say.
Tyrone Ross: One of my mentors runs a multi-billion dollar RIA, and he won’t even come on my podcast to talk about it. He’s like, “No!” So that’s where we are. And he’s like, “I manage money for some of the wealthiest families in the country. I have a multi-billion dollar RIA, do you think I’m going to take a risk for a 1% allocation to some invisible money?” I get it, and I completely understand that. And there’s no reason for him to do it, but again, those that are building practices and those that have gargantuan firms with clients banging on the door about it, may have to answer that call.
Kyle Woodley: So Tyrone, several crypto funds already exist, but there’s a lot of anticipation for an eventual Bitcoin ETF, but you don’t seem to be a huge fan of investing in Bitcoin or digital currencies via any sort of fund. Do you care to elaborate?
Tyrone Ross: Again, I love the folks at Grayscale and I Dig and also their friends. I know them all. Again, me and Matt Hogan, while we’ve been at, I don’t know how many conferences arguing about a Bitcoin ETF, it’s stupid. And I just don’t think of any other way to put it. And we’re going to get it because Wall Street is greedy and they love money. So we are going to get it and I’m still going to have the meltdown that I’ve been telling everybody that I’m going to have.
Tyrone Ross: My issue is this, why take a Ferrari engine and put it in a Honda body? It doesn’t make any sense, like we’re going to take this beautiful, elegant asset that trades 24/7, 365, liquidity, borderless, self-sovereign, immutable, and we’re going to put it in this wrapper and make sure it stops trading. And then we’re going to put all these fees on top of it. I just don’t understand that. And I get it, again, because it’s a lot of money to be made and Wall Street loves money so the financialization of Bitcoin was to come.
Tyrone Ross: So we’re going to get these funds. We were just passing around the fees in our Slack channel, our Onramp Slack channel, of some of those Morgan Stanley funds. Oh man, I’d sling that bad boy too. There’s so much money to be made. So I get it. The fund structure, the ETF structure is all about the dollar, dollar bill you all, it’s about nothing else. It’s about nothing else. It’s about ease of access to sell and push on retail. And what Bitcoin was invented to do was to, was again, to be anti-establishment, but it’s gotten there. We are here now.
Tyrone Ross: But the beautiful thing is for those who still want to opt out of the system and get it directly, you can. And for me, this is why I am so passionate about it, because the one and arguable use-case that the Bitcoin has is for the underserved. And that is the Bitcoin blockchain, not the stupid token. It’s the power of this to give people who don’t have access to financial services, access to financial services. That is worth a ga-billion dollars somewhere in the solar system.
Tyrone Ross: So I think a fund, you can’t corral that, you can’t put the Bitcoin blockchain into a fund. So it is still going to operate as is. And that’s a powerful thing to me, and again, for people who grew up like I did, who had to use alternative financial services, the paradigm shift has been broken. I think it’s less about when we’re going to get a Bitcoin ETF, but more about when are we going to have a real-time payment system in this country? When am I going to be able to put my check in the bank and the money settles then so that if I get paid on a Friday and I’m going to get evicted Sunday. That my money settles now, and my landlord doesn’t throw me out. That’s a bigger innovation in our Fed, FedNow that they’re saying is coming in 2023. You got to love the name, FedNow, but we don’t get it for another two or three years.
Tyrone Ross: These are the things that I think people need to be concerned with and why Bitcoin is so powerful, as there are so many people in this country who are locked out of financial services and it’s breaking down barriers, whether you like Bitcoin or not, it’s forcing our financial services system to get their act together and stop being so antiquated.
David Muhlbaum: Those issues of access, of disruption, payment processing, the future of the Fed, all that, digital currency, they’re really important and I’m glad you brought them up. However, we are out of time, but Tyrone Ross is an easy man to find online (opens in new tab), and he’s got a lot more to say there. Plus he’s got a podcast it’s called, On Purpose. So please look him up, I’ll put in links. And I hope we can have you back here too, Tyrone, soon, to dig in deeper. Thanks very much for joining us.
Tyrone Ross: No, thank you guys for having me and making room for the conversation. And I think your listeners will really get something from this. I think there’s a little something for everybody. I appreciate you guys.
David Muhlbaum: And that will just about do it for this episode of Your Money's Worth. If you liked what you heard, please sign up for more at Apple Podcasts (opens in new tab) or wherever you get your content. When you do, please give us a rating and a review. If you've already subscribed, thanks. Please go back and add a rating or a review if you haven't already, it matters.
To see the links we've mentioned in our show, along with other great Kiplinger content on the topics we've discussed, go to kiplinger.com/podcast. The episodes, transcripts and links are all in there by date. And if you're still here because you wanted to give us a piece of your mind, you can stay connected with us on Twitter, Facebook, Instagram, or by emailing us directly at email@example.com. Thanks for listening.
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Block joined Kiplinger in June 2012 from USA Today, where she was a reporter and personal finance columnist for more than 15 years. Prior to that, she worked for the Akron Beacon-Journal and Dow Jones Newswires. In 1993, she was a Knight-Bagehot fellow in economics and business journalism at the Columbia University Graduate School of Journalism. She has a BA in communications from Bethany College in Bethany, W.Va.
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