 Okay, welcome back to Think Tech, I'm Jake Fidel here on A Given Friday Afternoon, the four o'clock clock, but it's actually 10 o'clock in New York metropolitan area. Here on the Prince of Investment, I'm standing in for Prince and we are talking to James Foytland. He is a retired financial advisor in New York City and we are going to talk tonight, if you didn't know about this, about Bitcoin and about blockchain and get clarified about it. Hi, James. How are you? Great. Great to see you and hear you. Yes, yes. So, tell us about your experience with Bitcoin and blockchain. Tell us the difference. Tell us, well, give us a primer on what it all means because there's so many people have no clue about what it does, what it means. Well, I talked to Prince and I mentioned the first time I was on the show a number or maybe last year, I was very skeptical about Bitcoin and well, I differentiated it from blockchain technology. I was a little, I was very suspicious for a good reason and I think people should always be really careful. You basically have two different things. You have an underlying technology known as blockchain technology which links verifiable data together and that data cannot be tampered with. So for example, if you were to say, if you had a call for sale in Hawaii and I am here in the New York metropolitan area and I said, wow, I really like that antique jaguar, the problem nowadays is you would show me pictures of it and I would have a lot of trouble figuring out, oh, it would take time for you to prove to me that the car I saw in those pictures was really the car I was going to buy if I flew all the way there or I didn't buy it. And of course in the meantime, I would have to convince you that I had the money to buy the car so you didn't show it to anybody else. So you would do a bunch of things. You might take it out for a test drive and put a video on. You might show me your paperwork that's on the car, different things like that and you exchange a lot of information. It would take a while. With that chain technology, I would be able to immediately verify that you own that car and basically you'd be able to immediately verify that I have the money that I would be able to buy the car. And what we often talk about in the financial sector is something known as settlement. Settlement is the lack of a, to make it simple, is basically when you have to pay for things. It's the closing of the transaction, right? Yes, yes, absolutely. So if you were to say buy a stock today, you'd have two days to pay for it. Well, launching is really all about settlement. It bridges that trust gap because, for example, think now we're so used to it we buy and sell stocks, we buy and sell cryptocurrency, we buy and sell things all the time. But think about this, if you wanted to sell 500 shares of Microsoft in Hawaii and I wanted to buy it in New York, how in the world do I know you actually have the 500 shares of Microsoft? And if you do have it, how do I know it's yours? In other words, it's free and clear and you can actually sell it. And then you're looking at me and you're like, well, how do I know this guy in New York has the money to buy this thing? So over the, basically Wall Street has been constructed, the whole financial business has been constructed because when you open an account, say Merrill Lynch or E-Trail or TV or whoever it is, vouches for you. When they say this guy over here, he's got 500 shares of Microsoft, it is. And we know this other guy in New York, he's a little crazy, but he has the money and he can buy the stock. So we're going to put him together. Now with blockchain, you would make that like instantaneous. So there would be, like again, I'm going to go back to the most obvious thing. Have you ever bought anything online that when you got it, it looked totally different than what you saw online. I just bought a drone. It looks really cool in all the videos. It flew around and it was really inexpensive. So my expectations were kind of low. I get this thing and it fits in my hand. That's how small it is. So well, it didn't look anything like that in the video and I'm not really disappointed because it was very inexpensive. It was way smaller. And the way the video, it looks, I thought I was going to be able to fly around and fly or chase my neighbors all down the block and keep it on my mother and things like that. It doesn't have the battery life. There's a lot of, there's a lot. With blockchain, I would have known all that like, instantaneously. And it would have all been accurate data. And the reason they call it a blockchain is because it is changed, it is linked to data. And the only way you can change that data is if you were to sell me the stock. And now I own the stock and that will change that world of data. And the reason I spoke to Prince and I said, you know, I've been really thinking about this a lot. And I think there's a lot of misinformation flying around about what this technology is really going to do and what really is so important about the blockchain. And what it really comes down to is, I don't know how long you've run around and been on the internet from the very beginning. And for a guy who was not a technology guy, I was on the internet pretty much as early as you could be. I actually used the Univax reader before Netscape. So I was on the internet a long time and when you first started out with the internet, you had this free flow of information and it was kind of like the Wild West. All the time through the establishment of some huge companies, Google, Facebook, some people would say Apple, some people would say Amazon, you've created a very centralized now structure. And basically we have to go through Google and Google is going to tell us what we're allowed to see and what we're not allowed to see. They're going to tell us what's right and what's wrong. Well, blockchain re-de-sexualizes information. But instead of like the original internet where you had the Wild West and you might be talking to a hacker who's stealing all your data and got away with your bank account, now you're going to be protected because all this information is like your personal data is locked up. And the other, that brings up the second issue. Why do we get all this stuff from Google for free? And why does Facebook let us use Facebook for free? Well, nothing is really free. What are they doing? They're basically reading all our data and they're finding out everything we're doing and they're repackaging and selling that data. And I think there's been a, you know, there's a, well, there's some of this that I think is acceptable because, for example, if I go to the bank and use the ATM machine, in reality my data is out there with the most data but it's protected. You've probably read stories recently about things like people have Alexa and Alexa basically folk or called their friends. Like they just said something in casual conversation and Alexa ordered it online for them. Oh, wow. Right. Now this is, yeah, this is kind of scary because I'm like, wait a minute. There's a lot of stuff I may say. I might talk to my cat a little bit at night and I don't want people to think I'm crazy. And I really don't want Alexa sharing that with the whole world. But now with a newer internet with a blockchain-based technology internet, this data is all going to be protected. We're not going to be sharing our personal data and if we do share it, we're going to control what we share and what we don't share. Well, let me ask you some questions so far. I mean, we're already beginning here but this is really, you know, it's a good explanation to me because I don't know too much about it. So first thing I get is that this has got to be living somewhere in the cloud. As you say, block means it's chained together and it's safe. But it sounds like it has the ability to change everything. You talked about settlements and closings and whatnot and going directly to trust, sort of machine trust, if you will. That facilitates market process. It facilitates buying and selling. It facilitates making deals. It actually would bypass a lot of market process we've developed in the past 100 years and it would expedite that. It would make it safer and would make it direct. And so I don't know, you have to tell me how far advanced are we with blockchain. But it sounds to me like this has the prospect of changing everything in our economy. Am I right? Yes. And, you know, you mentioned an interesting thing. When you talk about like real estate is a perfect example. Think about this. I'm in New York and I really like that. I think Hawaii is one of the most beautiful places in the whole world and I really love to buy a house there. You know how hard it is to go back and forth from New York and sort of buy a house and like not really know anybody and, you know, not really know anything. And I'd have to, you know, only take a lot. With blockchain, I would know I could immediately tell the deed of that house like who owns it. And then that brings up other things. For example, I would, things where they say like 80% of all title searches miss something. And I had this experience in New York where we bought a condo sort of like a townhouse in the city. And the title search in the current era in like the late 90s found something that the last time it was sold in the 1960s the title search did not find. So we had to address an issue that was on the property from like 1940. And it was an imagine, you know, you imagine all the banks that have been taken over to change names and everything else. So clearing this up was not easy. I mean it was cleared up, but it was a little, it was crazy. Well listen, you know, it opens the question of whether you can cheat. I mean, you know, and theoretically everything's in the cloud and everything's blockchain together and protected. But if I'm a smart guy, make me a Russian hacker. Make me a whole building of Russian hackers. And I want to cheat because I know there's a lot of assets there and a lot of leverage, economic leverage. And I find or I look real hard to find a way to cheat on this system. That is either to do fraud on the asset being sold or to do fraud on the money being paid and re-diverted. And if cheating is possible, you know, you talked about being suspicious over this system that certainly, you know, is the kind of thing people would be suspicious over. How do we know, how do you know, James, that this isn't, you know, the subject of some scam? How do you feel comfortable about it? Well, I think now it's sort of been floating around for probably 10 years. And there's been, as you pointed out, there's probably been Russian hackers and North Korean hackers and probably hackers in our own CIA or who knows in our own security services who have tried to crack these codes and break into the, break the blockchain because not just to steal data, but just to see how safe it really is. And it's the nature of the way the code is constructed that it's really impossible to break into one of those links. Now, I don't want to say impossible because you've probably been around for a while and every time, you know, like the Titanic can't be sunk, right? Like anytime somebody says that. I'm single, yeah. Or we joke, or we are in New York, as soon as they say, oh, it's going to be summer now and it's not going to be cold anymore, then it snows the next day. So you don't want to, you know, nothing's going to be perfect. But I think over this time, you really haven't had any major hacking in the actual, in any of the blockchain codes, which is pretty impressive. And I think there's a huge amount of development trying to do all kinds of other things. And then this brings up something even other interesting. A lot of people nowadays are fearful. You probably read these things all the time about we're going to have AI, we're going to have all this computer learning, and it's going to displace man. And we're all going to be a bunch of bums sitting on a street corner drinking Thunderbird out of a brown paper bag. With a guaranteed income, though. Right, with a guaranteed income so we can float Thunderbird. And then we're going to be sitting around. But I look at it different. I think the blockchain and all this technology is going to do the reverse. I think it's going to totally de-sexualize things. I think instead of having an Uber company where you hire all these drivers and then run around, the drivers with all this technology are going to be able, they're not going to need Uber anymore. But we're still going to need the drivers. Well, let me ask you this though. So somebody has to invent this. Somebody has to code it. Somebody has to code it on a platform. Somebody has to maintain it. Somebody has to improve it. Somebody has to make sure it works the way intended and all that. So it's decentralized. It's in the cloud. Who exactly is doing this? Is there some guy in a basement somewhere? Are we going to say in Hoboken? Who is writing this code? There probably is right now, while we're talking, there's probably somebody in Hoboken listening to Frank Sinatra and making some kind of blockchain thing. There's big companies. There are the major players, like people like Microsoft. There are banks. The Bank of America is very involved in this. There are international governments. One of the big things with settlement is moving money around. For example, if I want to send you $100 right now, it's not like I put the money on a carrier pigeon and he flies to Hawaii and drops the money off in your lap. That system is very complicated. There's a deduction on my end from money that I have, credits that are basically all digital. It's not like I can go to my bank and go show me my money. I don't want to see somebody else's money. I want to see my money. And the bank would laugh at you because they'd say, well, we don't really have any money anymore. It's all digital. We don't even know a bunch. So to move that money around, and then think of getting a one-step further, now I just moved to England. So the money has to be transferred from New Wales. Maybe it's going to be pounds soon again or whatever, it's some pounds, right? It's got to go into dollars and it's got to get all the way to Hawaii. So now we have even more complexity. And what is really happening, it's deducting the pounds in England somewhere and it's adding in dollars in Hawaii. Well, that transaction through certain blockchain, certain kind of technologies that exist right now, suddenly can happen instantaneously. And I don't know if you remember like either when PayPal first started or if you've ever set money in Western Union, I can still remember when Western Union did like five days and like all kinds of stuff. Even in Western Union, you can go there with a proper ID. You can send the money almost in. When you press send and the person on the other end has the money immediately. Well, here's it. You know, it goes back to the thermos bottle. You know, for my whole life, I've been asking this one question about the thermos bottle. How does it know? How does the thermos bottle know? How does it know that it's to keep it cold or to keep it hot? No, yeah. So the same thing. How does blockchain, however this is organized in the cloud, whatever, how does it know you have the money? Who tells it that? How could it be confident? This would be the design. You would have a specific system based on blockchain technology that would be basically international settlements. And that would be an entire separate technology or project. A lot of blockchain people call it projects. So this would be an entire project. This has been working already pretty heavily worked on because imagine a bank. Hey, if I can send money instantaneously, maybe I can charge my customers a little bit. I can hold the money for an extra couple of days and not really tell them and I can send the money so I can play games with money. Sounds like hiding to me. I can remember. It's really famous. A lot of people in South America build your way because you can transfer money from your way. You can just show up with a bank with a bag of cash and send it to somebody else. No questions asked. However, it takes about two weeks for the money to get delivered. So where does the money go in the meantime? Well, somebody is doing something with it and making money off it. And so banks have always worked on what we used to call Wall Street the spread. In other words, if you buy a stock, it costs you $10. If you sell the stock, it's $9.50. That's the spread. Because of technology like blockchain, that spread is shrinking even like it's getting really tight. And then like you also pointed out that many of the things that we use like in a lot of cases now, we're just not going to need a lawyer to look up a deed because we can see it. We don't want to assist them in saying, hey, I want to buy this house in Honolulu and this is the address. And boom, I can find out all the information immediately. Who owns it, what they paid for it, where it was bought, what the mortgage is, and if they, and then I can contact that person and say, you know, I really love your house. I'd like to buy it. And I know you're getting up there at age and maybe you want to sell and get a smaller place. So I can get all this information. Well, when you query that information, you're going to find out about that house. Are you querying an existing database or are you querying a blockchain database that's separate? Yes. Well, what's going to happen is a blockchain is going to take over. For example, I think the international settlement is basically mostly done by a thing known as Swift. And Swift is like 50 years old. And Swift transfers the money all around. That's sort of the system. Well, once you have blockchain and you might have things like there's something called XRP which is kind of known as a Swift goal or you have some other systems like that, they're going to replace what the bank uses. And as a customer, you're not going to really know that they're using whatever they're using. You're just going to notice the services a lot better. So you probably, you could probably still use the same interface. So like your checking account is not going to look vastly different. You'll get the same bank statement. You just, if you want to send money, it's just going to be a lot faster. And like I noticed now with PayPal, PayPal has instantaneous. So if I pay a little extra fee and I need that $30 that somebody sent me on PayPal because I sold something on eBay or whatever, I can do it. So for a little extra fee, money will immediately be in my bank account within seconds. And with a cheapskate like me, I'll send it, if it gets the next day, then I'm okay. So I can buy lunch the next day. But that's where we're going. We're going to instant. And as soon enough, there won't be an extra fee. It'll be the standard approach, the standard account. Now you mentioned AI a little while ago and I wonder what role AI plays in blockchain now and what role AI will play in blockchain. Because when you add the two together, it's going to get some high octane, no? Yes. Yeah, I think there's right now, I've noticed that, and I've seen it with younger people, let's call them millennials for lack of a better word. There's a lot of concern that they're going to come out into this world and they're going to be just obsolete immediately because all the technology is going to overwhelm them. AI is like sort of computer driven, like you're trying to make a machine really think and break it down. Now, is a machine really going to be able to think? Maybe. Maybe it's going to be able to play chess. Maybe it's going to be able to do certain processes. Maybe better than we can do and faster. But I think it's going to be a while before we get something like 2001 Space Odyssey where you have how and how besides, we're just going to eat the people that are there because they're frozen and they're nice and we throw them out and we can just eat them and things like that. I think that's kind of very different. I think a lot of people are worried about that. And like I said, I think the net result of this is going to be the reverse of what everybody said. I think we're going to eliminate a lot of this centralization. And what's the problem in all our lives right now? The problem in our life is not that we live in a beautiful place like Hawaii and we had nice fun sets and things like that. The problem is we have to pay taxes and all kinds of stuff and we see how much money really gets wasted. Like I was in New Jersey and I think in New Jersey, I think it cost like a million dollars to fill a pot hole. And I know if I went to Home Depot and bought that car myself and filled it myself, what would it cost me? Like 20 bucks? But by the time I pay my taxes and it goes through the system and 27 layers of bureaucracy, get a piece of that money because they all have to be paid because they're doing other things as well. And then by the time it gets to that guy who picks up the shovel and fills it, it's an enormously expensive thing. Well now with a lot of newer technologies like blockchain, we may be able to eliminate a lot of that. I'm sure the government is not going to want to do that, but at least a lot of businesses are definitely going to want to do that. And a lot of entrepreneurs are going to look and say, if I don't need a lawyer to do this, this is going to make this a lot cheaper. If I don't need an accountant, because I have all this data right up my fingertips, that's going to save me an enormous amount of money. Well, this goes back to what I was thinking before, namely that this is going to change everything. And I hate to say this, you're a retired investment counselor, but gee whiz, do we need banks anymore? Do we need stock houses anymore? Do we need stock exchanges anymore? Do we need real estate closures? Yes, this is what's very interesting, because as you're aware in 2008, we had this huge crisis in finance, and it pretty much, the whole banking system basically blew up. For many reasons that would take like two or three of these shows to explain in detail. But since then, what happened? The reality is the government couldn't even deal with it. So what did they do? They sort of locked it up and put it like, almost like put it in suspended animation. And we needed to sort of throw it out when they started, when they over time and when they got further away from the event, where they might have a better chance of fixing it. And so what's happened? And we're suddenly in this age, 2016, it kind of started eight years later, we're starting to throw these things out. And what are you seeing? All these big banks are getting these huge funding in 2008. Well, what else is going on? Well, because of this fall, and the fact that the government kind of froze everything in place, we had no new investment banks, we had no new banks, we really kind of created a monopoly that just sort of maintained itself. And now things are changing again. So now we're going to go, we're going to start to be sexual again. So a lot of Wall Street firms like Merrill Lynch and E-Trader are waking up in this world and they're suddenly sitting here going, wow, what's going to happen to, like how are we going to run our business? Are we still going to have investment banking? Is there going to be trading? Is there going to be retail brokers? Probably not. I mean, I can tell you that basically the internet was the end of retail brokers. There probably would have been a way to, a retail broker having an issue of blockchain when they come out at the same time might have been able to establish himself as kind of the center of a wheel with a lot of spokes. And while customers would have been able to access the internet, they still would have been able to pick up the phone and say, hey, I don't really understand this. Can you explain this to me? And that could have been all sort of captive in sort of a retail broker situation. Because why did people go to retail brokers? Well, despite a lot of the negatives and maybe the cost, people like somebody to talk to. I used to say people like somebody to blame everything on. So if the stock went down, you could blame your broker. If you bore yourself, well, you were the idiot. But now you can just say, oh, it's that dumb broker. He told me to buy this and that's why. But James, we have to get to one question before we close. We only have a couple of minutes left. And that question is recognizing that we are on the cusp of a huge change in the way our trading system, our exchange, our markets work in this country and therefore the world, recognizing that and understanding it. And you're in a great spot because you've seen it and now you can look at it at 50,000 feet. What do I do to capitalize on my knowledge in this regard? What do I do to make a few bucks? Because now I understand where the world is going. What do I do? Well, this is what I've been banging my head because when the internet popped originally, it was really obvious kind of like at least what to try. Maybe not what was going to work, but it was really obvious in that direction. Blockchain, because it's used for boring stuff, like do you really care about deeds for real estate? Do you really sit around and get excited about real estate? Maybe if you're a realtor, you might get excited about real estate transactions, but nobody else does. Or like at life insurance. Life insurance is really exciting. I mean, I know the French did a show on it and I'm thinking to myself, man, if people don't fall asleep after their first 15 minutes, don't look amazing. Well, it's necessary and this is not the meaning in any way. It's just not very exciting. And the problem with blockchain is a lot of the stuff that's being used like transferring money. Like, well, I know I need the money and it's great that you sent me the money. I really don't care how I got it as long as I get it. I don't stay up night going, wow, I wonder how they get that. And this is one of the problems. But I think that first of all, I think if you're a high level risk taker, I think some of the crypto currencies you can fool around with, this is really speculating. So I wouldn't take a second mortgage out on the house. I wouldn't sell my life insurance policy to do it. But if you had money to lose, I think you could, at least more than two years ago, you could fool around with this and have some feeling that you might really know what's really going on. I also think there's a lot of companies like Bank of America that own a lot of patents that are fooling around with these things and trying to morph into the next big step. The one thing I would be really careful of is a lot of these centralized things like Google, like Facebook, that might, you know, this may be the end of their dominance. And they may, you know, maybe a time where you're going to, you know, I mean, I think Google is getting it to come up very shortly anyway, whether it's antitrust or whatever. I think there are some really big issues. But the idea is very provocative. It's a seductive idea. And it's one of the other shows, perhaps to talk about how these big tech companies would do it if they could do it. And look what happened with Facebook. Just a few weeks ago, they were into some kind of Bitcoin cryptocurrency and now they're out of it again. And I was getting pretty nervous about that, so I'm glad they did that. Well, James, it's wonderful to talk to you. We haven't hardly even scratched the surface here. I'm so glad I stepped in to meet you and to have this conversation. James Feutlen, our retired investment counselor. It's so nice to have you on the show. I hope we can do it again. Yes, absolutely. Aloha, Aloha, take care. Enjoy the late evening. Thank you.