Flip the Switch Episode 15: Bitcoin, Bitcoin, Bitcoin
SOPHIA: This week on Flip the Switch. Home Depot is investing heavily in e-comm next year. Google and Amazon are in a big fight and we’re paying the price. Revolut merges mobile banking with crypto-currency trading. And finally, some tips and tricks your business should consider during the holidays.
Our main discussion revolves around the Bitcoin madness that has been making headlines over the past month. We cover why the price has skyrocketed so dramatically, market cap potential and whether or not it’s too late to get in on the fun.
Let’s get into it.
00:59 AUSTIN: welcome to Flip the Switch presented by Power Digital marketing. This is episode 15 and a big happy holidays to you.
01:06 PAT: Really looking forward to this episode guys. I know we’ve been a little bit out of touch over the last couple of weeks.
01:10 AUSTIN: It’s cause we had some big interviews.
01:12 PAT: Had some big interviews coming through. Those are going to be great episodes we’re going to put out pretty soon here. But really excited to dive into it a bit today, and talk about some topics that have really been on top of everybody’s news feed, and top of mine over the last couple of weeks.
01:24 AUSTIN: Yup. Yeah, per usual, we’ve got some great information about Amazon and everything that they’re dealing with… I guess they’ve got a little something going on with Google, so we’re going to hop into that…
01:33 PAT: Yeah. They’re in a bit of a tussle. They’re squabbling.
01:37 JOHN: A little bit of beef. I think they call it “beef.”
01:41 JOE: The holiday dinner…
01:42 PAT: They call if beef, but it’s different. They’re squabbling. It’s totally different but it doesn’t matter.
01:44 AUSTIN: Anyways, yeah… All right guys, let’s go ahead and get into it. First one up we’re going to start with is Home Depot.
01:51 PAT: Yeah, so, pretty much. news came out this week… this is off of Fortune magazine… we can see that Home Depot is spending an extra 5.4 billion dollars both on improving their current stores, but also investing in e-commerce over the course of the next 3 years. So when they came out of the ’08, ’09 financial crisis, Home Depot took a really big hit. So the way that they dealt with that was by pulling back on some of their home improvement lines. Sending some of the sales plunging.
But they were also investing in their infrastructure. So they improved the stores, improved their checkout processes, invested in better training. And now that the economy is expanding some more, we’re seeing a lot of that growth not just with the indexes, but specifically in some of these verticals that they dabble in.
Basically they’re looking to invest some of their money in their online infrastructure now.
02:37 AUSTIN: Yeah, this is the trend that we’re seeing with these large retailers is moving to online. We’ve covered a couple times in different episodes with Walmart and Target on what they’re doing. And then, if I’m correct here, Home Depot’s actually moved into the 4th largest e-commerce company. So they’re following that trend of seeing where their customer base is moving to.
And online retailing is that. It’s peaking if you will at this moment. And they’re continuing to drive that further along if they can.
So they’ve seen about 6% growth since 2014. In their overall revenue generated due to the increase in e-commerce and then also, they’ve honed in on their core competencies, like you were saying. So training, and in-store help has gone through the roof.
03:20 PAT: Exactly. So to my mind this really ties together perfectly why brick and mortar and e-commerce can play together well. If you’re investing in your infrastructure, e-commerce needs to be a component of that and a key driver. Btu you need to make sure that you holistic business experience is what you want to actually deliver to the customer. It’s like, when they go into a brick and mortar store, you want that level of service. That level of care. And that level of, I guess, specificity. That the consumer’s also seeing online.
So if there’s a massive disparity there, that’s where a lot of brick and mortar companies will see a huge drop-off in either in-store or e-comm sales. You’re not really putting out the same brand-product for both platforms.
03:58 AUSTIN: Right, and I think speaking to that their biggest rival is Lowe’s. They’re another home center where you can get all that good stuff. I think what sets them apart is their in-store help, and what they’re employees are able to do for the customer.
And then also their prices. They’ve been able to maintain a low price point even through the hard times. So they really just buckled down on trying to lower costs as a company, so it didn’t’ affect the price-point for the retailer or the individual purchasing with them.
04:26 PAT: Yeah, exactly. And that’s just… it goes to show that in this day and age, that customer experience is the most important thing. That’s where people base their perception of your brand. Like, “how easy was it for me to use X?” Or, “How easy was it for me to buy Z?”
So it’s like, you need to make sure that you’re really catering to that customer experience. Especially when there’s solutions like Amazon out there. That’s one click that you can just do everything you want super-easily. That type of ease in the customer journey need to be reflected in the e-commerce and also in your brick and mortar. Which is why it’s so good to see them investing in their brick and mortar infrastructure too. And trying to reflect that.
05:01 AUSTIN: Yeah. And they’re not necessarily building more stores, they’re just making their current ones better. So that is a very interesting thing. And I think what we see a lot with Home Depot is it integrates into its local community. The one that’s been there has probably been there your entire life or it’s been that main focal point for the community. So they’re building upon that, and then they’re investing more dollars into that moving forward.
They said the big mistake they made back in the day was when they were doing very well, they didn’t invest more to keep that going. So they got hit very hard with the 2009 crash because people couldn’t invest in making their homes better.
05:33 PAT: Right. Exactly. They didn’t have homes to improve. And so now that we’re seeing this economic expansion, I think that this is a really smart opportune business decision by the C level at Home Depot. And it’s keeping them in that same conversation as their competitors. And also, we’ve seen it pan out for Walmart and Target just this year. So it’s a great move, and I’m really excited to see how it does for them in terms of not just their earnings, but their overall revenue for the year next year.
05:55 AUSTIN: Yup. Definitely gonna be fascinating to see what they get into.
All right, switching gears into our next one. Let’s hop into our favorite topic, Google and Amazon are fighting.
06:04 PAT: Oh, they are fighting. And it is going to be bad. It is going to be bad. So what you can see if you go on quartz.com. That’s where this is where this is being reported from. If you tried to watch YouTube on an Amazon Fire TV this week, you encountered a message saying that starting on January 1st of 2018, YouTube is not going to be available on that device.
Pretty much what’s happening is that there’s a squabble going… squabble–not a beef…
06:29 JOHN: How many different words can we use for… tussle, squabble, beef.
06:33 AUSTIN: Tiff.
06:34 PAT: I digress. There’s a squabble going on between Google and Amazon, and the reason why is because Amazon is repressing some of Google’s home solutions. Their searchability and their accessibility on Amazon because it competes with some of Amazon’s products.
And this has been going on for a while. And clearly, and deservedly so, Google is frustrated because Amazon is such a huge e-commerce marketplace. If they’re… not tampering, necessarily… but competing head-to-head with their solutions and Amazon’s always going to undercut them in price and decrease the Google product searchability, it’s going to hurt sales a lot. It’s really going to hurt sales a lot.
And so what they did to respond to that is Google pulled YouTube off of Amazon Fire TV and Amazon Echo devices. And the reason that’s important is because YouTube is the most commonly used app on both of those Amazon devices.
07:26 AUSTIN: Right. And so Google has Chromecast as well which I think they’re really trying to make a push for in 2018. So the big discrepancy there is market-share, and Google and Amazon have been reliant on each other in the past. As we’ve seen, there’s a lot of overlap with YouTube taking control. But then also with Amazon being an e-commerce giant. So they’ve relied on each other to give and take.
But now what we’re seeing is Google is really branching out in other areas as well. And then Amazon is also… I think more so than Google they’re trying to make a big push to make other verticals a big part of them generating revenue. Which we’ve seen them buy entire vertical integration lines. With different industries such as sportswear. So it seems to be that they know the telecasting and the online media and content is another vertical that they’re looking to take over. And Google is not giving.
08:10 PAT: Right. Exactly. It’s because it’s hot right now. Everybody is looking for that type of solution and Amazon knows that, because they’re privy to millions of searches that are e-commerce and transactionally oriented a month. And that’s why they can get into some of these other lines. That’s why they’re doing what they’re doing.
My thing about this is that for a company that is so consumer-centric and worried about the customer experience–how can you allow a tiff with another massive superpower in the tech space to get to the point where you’re actually going to be devaluing the customer experience.
And this actually goes back into the last conversation that we were just having… about how Amazon’s always worried about the customer experience, and Google has too. Google is trying to make customer experience easy, and they reward advertisers and online marketers for making the customer experience easy. Why would you use such an integral part of a good customer experience as a pawn in this game that you have against a big, giant like Amazon?
What’s the payout?
09:00 AUSTIN: Yeah, and when we’ve seen large tech companies fighting against each other… like Qualcomm and Apple fighting over certain types of phones… that’s been more of a behind the scenes type of thing. Where it’s not directly effecting the consumer and the consumer’s day-to-day. That’s more so building the product long-term.
This will directly affect consumers starting in January. So people are going to be affected by this and say, “Hey, where’s this? Where’s that?”
So it’ll be interesting to see the fight back. Amazon is clearly going to get a lot of upset customers. And then Google’s going to get what they want, which is a lot of upset Amazon customers.
09:32 PAT: Yeah, exactly. And it even says in the article here, “the continued Amazon and Google both into the holiday season as well. As consumers consistently look for streaming TV devices to buy that won’t limit what they’re going to watch.”
09:45 AUSTIN: Yeah, you can bet this fight’s going to continue. Because if there’s one market we know that’s growing exponentially it is this personalized television market as natural cable TV and traditional cable TV goes out the door. This is definitely on the rise so we will continue to monitor the fight for this technology.
10:03 PAT: Absolutely.
Going into our last piece here. We’re going to do a little bit of a startup update so to speak. So there’s a company called “Revolut” that as of tomorrow will roll out a feature that merges mobile banking with crypto-currency trading. This is awesome because it combines, again, 2 of our favorite topics. Entrepreneurship/business and crypto-currencies. So basically what they’re doing is merging traditional banking and cryptos in the sense that they’ll let you buy, sell, trade and hold Bitcoin, Lightcoin and Ether along with 25 world fiat currencies.
This mobile banking startup has like 90 million dollars in funding behind it. There’s clearly a lot of VCs that have a huge investment in this. Which I think can definitely be a testament to the validity of crypto-currencies and their popularity right now. But the really interesting thing about it is they also guarantee the most competitive rates on crypto- transactions. So they’re only going to charge a flat 1.5% fee up-front with no other hidden fees that a lot of other platforms will have. That’ll include anywhere from 5 to 9% increase after that.
11:08 AUSTIN: Yeah, so just like with currencies you’re doing Forex which is foreign exchange change… cryptos do have a moving rate for their transaction fees. And that’s just dependent on how the networks functioning at that time. So if there’s a ton of traffic, you’re going to see a higher networking fee. If the difficulty rate for mining is higher, you’re going to see a higher networking fee for those transactions, because just like when there’s a lot of traffic on the highway, you’re going to have to spend more money on gas.
So this is the same situation here. And what these guys are doing with their business model is eliminating that cost. So you always know you’re going to have a fixed cost. What do you save? About half a point?
11:42 PAT: No, 1.5% up front.
11:43 AUSTIN: So 1 and a half up front on all transactions and then to decrease and to eliminate Forex transaction costs and then that changeover is huge as well. Because that’s a moving rate that Forex traders have to deal with all the time.
So, it’s definitely a revolutionary push. And I think the big push here is try to capitalize on how popular crypto-currencies are right now.
12:02 PAT: Oh, yeah. And just on that note too, Revolut has signed up over a million users in Europe alone in the last 2 years because of the interest in mobile banking and things like that. And they’ve already saved those customers 160,000,000 dollars in foreign exchange fees.
12:15 AUSTIN: Yeah, that’s pretty good marketing.
12:17 PAT: It’s not bad. So and that kind of speaks for itself. It’s growing really fast. It’s increasing new customer sign-ups nearly daily. And these new features are going to roll out tomorrow. So if you’re looking for a place clearly to… that you can really do a good job of combining some of your holdings. Making sure that you have fiat currencies… that you can trade those as well as some of these crypto-currencies that have been really popular as of late. Bitcoin especially. Which I know that we’re going to get into in a minute here. This could be a really cool tool to at least take a look into. I think it just comes down to that dilemma, “Would you rather pay a 1.5% fee up-front? Or would you rather just kind of gamble and depending on the amount of Forex you’re doing pay more down the line?”
12:55 AUSTIN: Here’s probably the most revolutionary thing that I think Revolut is doing. They’re going to offer a debit card with fiat currencies. Whether that be US dollars… and that’s also going to be hooked up to your crypto-currency account.
So let’s say you’re running low and you’re trying to do a transaction with your debit card in cash, they’re going to transfer the amount needed in crypto-currency to fiat for you automatically when you try to do that transaction. So now, basically, your crypto-currencies become your savings account and your checking account all rolled into one. And you can also go and do legitimate transactions on a day-to-day basis as it automatically converts into US dollars, Euros, Franks… whatever it is.
13:33 PAT: Yeah, and so there’s a couple thresholds on how much that you can spend per month. That’s obviously going to change a little bit. Right now I think it’s 5,000 Euros per month, and then you can do that with 16 different currencies with no fee incurred. So it’s a really revolutionary time. And I think the biggest takeaway from this is we’re seeing more day-to-day accessibility and usability in the crypto space in general
13:53 AUSTIN: You are very right, my friend.
All right, so let’s go ahead and get into our main topic which we’re just going to keep rolling on crypto-currencies and specifically Bitcoin.
14:00 PAT: Yeah. So, over the last 2 weeks we’ve seen the price of Bitcoin fluctuate a ton. We’ve seen it go from first there was a dip of a few thousand dollars a couple weeks back. It dipped down to like the 8 thousand dollar mark. Then got up over 10. People were freaking out that it hit the 10,000 dollar mark. Then it hit the 11,000 dollar mark. Now it’s creeping up… I think it passed the 12,000 dollar mark today.
I think the big discussion that we want to have around this is why is this happening? What’s the potential for this to continue to happen? And what are some of the factors at play that are helping with this price manipulation?
14:36 JOHN: I was just going to say one thing, right when we first started this podcast… I remember in an earlier episode, we discussed how big of a deal it was that it was creeping over 4,000 dollars. And that took years to get to that point. And since we’ve been doing this podcast, it is now almost tripled to I think nearly 14,000 dollars.
14:55 PAT: It’s 14,179 dollars today…
15:00 AUSTIN: It was at 12,000 this morning…
15:01 JOHN: Yeah, I think I told you guys this morning or whatever… we were coming out of a meeting and I said, ‘in other news, Bitcoin’s at 13,000 dollars.” So in a matter of about 5 hours it has jumped another thousand.
15:11 PAT: That’s really, really astonishing. I think when we put together the episode it was almost 12. And then we saw, “Oh perfect. It’s going to be about 13,000. What good timing.”
And then it crept up just another casual 1,100 dollars. While I was talking. I gotta refresh this page. It might be going up again.
15:28 AUSTIN: Yeah, so that’s definitely a bit terrifying. So let’s get into… before we get real excited on how much it’s increased, let’s talk about a little bit of why that’s happening and how we’ve reached this point. So the real issue with Bitcoin has always been the legitimacy of it as an asset class and as something that can be traded. You know, is it a currency? Is it an investment vehicle? We still don’t really know.
But what we do know is that US companies and US trading institutions are legitimizing it. And the way they’re doing that is by the futures markets. So what we’re seeing is the Chicago Mercantile Exchange and the CBOE which is very similar, just a little bit smaller are both legitimizing futures trading. And what we mean by that is now they will act as the broker, the beneficiary between the deal of either betting on Bitcoin to go up, or selling on Bitcoin to go down. Shorting. Right.
So what this does is it legitimizes it. And the reason why is because this is regulated by the US government. So we’re entering into that world where they have an exchange commission that monitors this and makes sure there’s no foul play going on. So what they want to do and what they want to control… it’s the biggest issue that’s always been with Bitcoin is manipulation.
16:34 PAT: Like a huge influx of people buying and then all selling at the same time to make the price go up and down. It’s the same thing as stock pumping, right?
16:43 AUSTIN: Right. So stock pumping’s illegal in the United States. And the SECs done a really good job of trying to minimize that. And the way they do that is by monitoring how this is happening. Is insider trading happening? That type of thing…
So basically Bitcoin’s just been one gigantic insider trading situation, because the big players, the ones who have a lot of volume, they talk to each other and they know when it’s going to go up. So because no one’s watching them, no one is telling them not to, of course they’re going to, right? They’re going to make their money in every way that they want to.
So what this is gonna do is kind of put a strap down on that. And we’re gonna find out if this currency is legitimately an asset class that’s going to keep going up. Or if this is finally going to meet it’s maker and be pushed back down and into reality…
17:20 PAT: I think that’s an interesting point that you bring up because you know there’s definitely a lot of big players that got into the space when it was really, really low in terms of value. I even read something about some guy, he bought a hundred Bitcoin a few years ago, and then spilled PC on his laptop and his Bitcoin holdings would have been the equivalent of 71 million dollars. So these are guys who got in pretty early. Probably bought it, a lot of them, at a low price. If that’s the case and they are doing some of that potential insider trading type stuff to manipulate the price. Doesn’t that delegitimize Bitcoin as a currency in general?
I mean, cause that goes back to a lot of discussions that we’ve been having. How is that legitimate? How in any way is that legitimate?
Because the value of it is just agreed upon what people will pay for it. If people are manipulating what people will pay for it… There’s no backing. It’s not backed by the gold standard… these are all things that skeptics have brought up for the last 3, 4 months.
18:14 AUSTIN: And I think what we’re seeing absolutely to your point is just greed. I mean, at this point, I don’t really know where else to go with it. As someone who really believes in the technology and has for about 5 years, when I found out about it. 2011 was the first time I heard of it.
I thought it was great, you know? An electronic ledger decentralized with no government in the way. It’s a fantastic thing. But what’s really come into play here is how much money people can make off of it. With no one stopping them
18:38 JOHN: Yeah, the Winklevoss twins… according to some of our colleagues today. Are the first Bitcoin billionaires because of the surges?
18:49 AUSTIN: Yeah, I mean, 15,000…
18:51 PAT: Cause that’s what they need. That’s what the Winklevoss twins need. A little bit more money.
18:54 AUSTIN: Weren’t they involved in that thing called Facebook?
So yeah, we look at this now and it’s just… it’s out of control to a degree right?
19:06 JOHN: It feels like a circus show now, rather than like something that you’re waiting to kind of bottom out, or at least reach a stable point. Now it’s just… it’s going up, it’s rumors, it’s headline news, it’s everybody just throwing all this shit into the mix that then drives the price up. And everybody’s getting rich off of it, and then it crashes for a day. It doesn’t seem like the legitimacy factor is in play even though the price is going up. Which is what I think people were expecting, is for the price to go up and then it be more legitimate with the higher price.
That fact is the opposite for me, as the price continues to go up. It’s not a legitimate currency anymore because what the hell are you going to buy with 1 Bitcoin, you know what I mean?
I don’t know, it’s just the price going up so far in such a small amount of time to me just… it makes it too hectic I guess.
19:59 AUSTIN: Yeah, and we’ve never seen anything like this before. So there’s nothing to compare it to. As humans…
20:04 PAT: it’s on another level than the dot-com boom and bust.
20:06 AUSTIN: Yeah, it is.
20:07 PAT: It’s surging in a way that it’s like this type of 2 to 3 month span of popularity hasn’t been replicated in any industry, ever.
This type of growth has never happened in any industry ever before.
20:18 AUSTIN: And just the technology itself, it doesn’t make any sense, right? People are always just asking, “Well, what is it? I don’t know what it is, but I don’t want to miss out on it.”
That’s the conversation that we hear. And a lot of jokes about it, but it’s true.
20:28 PAT: Yeah, “I don’t know what it is. I don’t know what’s going on with it. But I’ll tell you what, I’m all in.”
20:32 AUSTIN: Of course you are because as humans we naturally don’t want to miss out on something. And if we look around us it’s… FOMO the acronym– Fear of Missing Out. But you don’t want to miss out on it, right?
And so this is actually the biggest problem that I have with this is all these people, everyone that’s talking about it does not want to miss out on making some money here. But what they don’t understand is you’re just fueling the fire for the gigantic loss that’s going to happen. Because I think there’s only one comparison you can make to natural asset classes and investments… is that at some point it’s gotta drop.
21:03 PAT: Yes. It will. I mean, it has to drop. And everyone that like has been talking, “Oh, it’s a bubble, it’s a bubble.” And then you have people that are crypto advocates saying, “No, it’s not a bubble.” But it is. No other sustainable investment has ever appreciated at this value. And it’s so quickly, obviously, at this rate without crashing at some point. Or some regulatory body stepping in and correcting.
21:27 AUSTIN: And there’s literally an investment vehicle being created and opening for business on Sunday that does that. It’s the ability to short the price and to create an opportunity for it to go down. And all these people… these big hedge funds, these big funds… you can be that they’re thinking the same thing we are. They just have the capital to put behind it. The same people that have manipulated this price to just skyrocket, you gotta imagine them having the conversation of “how do we make it go down? So that we can do it again.”
21:53 PAT: Yeah, and if the entire thing is greed… exactly what I was going to say… if the entire thing is greed-fueled what’s stopping somebody from also manipulating the short? And ensuring that it crashes?
And now there’s so many people that are bought in. There’s a statistic that came out that Coinbase has more traders than Charles Schwab does now.
22:11 AUSTIN: Charles Schwab?
22:12 PAT: Charles Schwab. Talk to Chuck about that one, you know?
22:15 AUSTIN: I think Chuck would have to say about that.
22:18 JOE: Well, with all that though now it’s just becoming like a gamble with all of this stuff. Rather than becoming what the technology was created to be, which is a currency. And a currency doesn’t go up and down and people bet on it and whatever… The currency is there to value other things. And Bitcoin is now just Bitcoin and whoever jumps in, jumps in. Whoever doesn’t, doesn’t.
22:39 AUSTIN: I think you could make an argument that all stock trading and all Forex trading is necessarily an educated gamble to a degree. This is just a very, very extreme one. A very violent one. And I would probably put this more along the lines of Las Vegas gambling, right?
Because it just seems like we’re playing craps and we’re hoping to land on the 7 or the 11, right? On the first roll. And we’re hot right now, and we keep landing on 7.
23:03 PAT: We’re feeling real hot. I got the hot hand. I’m gonna stay at this table because I’m afraid of what’s going to happen if I step away from it.
23:09 JOE: I feel like it’s a gamble though, because when you’re invested in somebody’s stock… the people who are invested in it don’t necessarily have control over what’s going to happen to it.
Whereas with this, it’s like… you know, I don’t know… maybe I’m wrong here. But I feel like with Bitcoin it’s been in the control of what people say about it.
23:26 PAT: Yeah. Well to that point to you think about investing in a stock. That’s you buying a certain part of a business. Part of a bigger entity that you can identify and you can see whether that bigger entity is performing well, in ways you agree with, or in ways that you disagree with. And as a result of that, you can decide whether or not the stock is going to go up or down.
With Bitcoin, it’s all based, and all predicated on other people’s behavior. And how many people agree that it’s worth that much. Because there’s no superior entity to base that valuation off of.
23:56 AUSTIN: And the people with the most volume. So as we said it’s news and rumors will get these things going, but the people that hold the majority of these, they’re the ones who are going to dictate what’s happening.
And they’re creating these gigantic price spikes when they’re buying so much at one time, which they can do because they have the capital.
Another thing to remember is Bitcoin was created in 2008. So that means that there is people that found out about this a long time ago, believed in the technology a long time ago. And they have a ton of them. And they got them for nothing. And they’re holding them and they have the most and at the end of the day, they’re going to get to decide what to do with it. It’s still a decentralized platform, meaning we’re going back to a very capitalistic root here. Laissez-faire if you will. But the biggest player’s going to dictate what’s happening.
24:38 PAT: Yeah. And I think that’s why, you know, if it is going to be traded as a future… it’s important for that regulatory body to be there. We’ve seen several examples of ICOs for instance where people have really just gotten cash from others… alt-coins backing the ICO whatever it is and then just bailing. And there’s no paper trail. There’s no way of proving that they went anywhere. So that’s something that the regulatory body’s going to need to address.
But at the same time, my understanding was that the entire appeal of a decentralized currency was for this to not happen.
25:07 AUSTIN: Right. Totally. And that’s what…it almost seems utopian at this point, where in a decentralized world everybody gets a piece of it and everybody wins.
But guess what? This is the human race and people are greedy and it turns out that whoever holds the most volume is the winner.
25:23 PAT: Yeah. They’re going to try to exploit other people’s buying decisions because they have the power to do so.
25:27 AUSTIN: Yeah. So I wanna talk about ICOs cause I think they’re really important and on the cusp. But before we transition to that, let’s put our takedown on what’s going to happen here. So I know we’ve talked negatively a lot about this. And it’s going to pop. But let’s do short-term and a long-term price of what we’re going to do even just to the end of this year.
So I don’t think this going to stop going up, for the rest of 2017. So we’re going into the holidays, people are hyped, people are excited. I think the futures trading is actually going to help. So I think people are going to bet on the price going up, which is going to drive the price up in the short-term.
And then what’s going to happen Pat?
26:01 PAT: Austin, this thing is going to crash so, so hard. This thing is going to crash… I don’t know if it’s going to happen this time next year. I don’t know if it’s going to happen the year after that. But you can bet that… the price may stabilize for a little bit at a high point when a regulatory body steps in, because there is a little bit of that reassurance in the trading and things like that.
At the same time though, the skeptic in me wants to think that once a regulatory body steps in and is actually observing the marketplace to the point where they can detect market manipulation, the big players that hold all the volume that have been doing the pumping and dumping are just going to pull all their money out. And then the valuation… when people see sells… cause everything has been so emotionally driven with Bitcoin. When people see that many sells happening all at once over the span of like 3, 4 days. Where people are dumping 75% of the coins that they own. People are just going to sell, because they get scared.
26:53 AUSTIN: Right. It’s called a “panic sell.” And it’s happened for the entire duration of investing and stock trading. It happened in 2009 with the crash when all the banks went down. Panic sells occur when you see large volumes being dumped at a single time. And I think that this is going to happen in January. And I’m not necessarily saying that the Bitcoin’s going to just die in January. I’m saying that there’s going to be a big drop in January, because there needs to be a correction when a bubble of this size occurs. And when a price rises this quickly a correction needs to occur.
27:24 PAT: I think too, it’s… just putting a number on it… it’s going to break $20,000 I think potentially before the end of this year. I really think that. And you just think about the time of year that it is… People are in a buying mode. It’s the holiday season. People have a little bit of disposable income because they’ve saved up for holiday shopping, things like that.
They have a few extra thousand dollars lying around. They’re thinking to themselves, “I’ve been reading about Bitcoin on the New York Times. I’m going to see what that’s all about.” get Coinbase, start throwing some money at it, it’s just going to kind of spiral after that. A lot of spending is going to happen.
And then the correction is going to occur. These people are going to lose a lot on their investment because they’re buying at such a high price.
28:01 AUSTIN: You’re very right. All right, I think that segue ways us really nicely into the second half of this conversation which won’t be as long, but is important still. It’s on ICOs. So this is a little bit more in line with stock trading, and I actually like this a lot more and this is where… the direction I’m headed with my investments into 2018. Because of its legitimacy as backing a company. So just like stock is issued, there’s the ability to issue coin instead of stock. So you’re providing capital for companies to hopefully produce strong revenue.
And I’m picking out companies that I like and then investing in them through–via crypto-currency. So… sorry, go ahead…
28:37 PAT: No, all I was going to ask is for our listeners that might not be as well attuned to it, could you explain briefly what an ICO is and a couple of examples that they might have seen before…
28:47 AUSTIN: Sure. So, “initial coin offering” is what that stands for. And just like an IPO, which you guys might all understand…
28:55 PAT: “Initial public offering.”
28:56 AUSTIN: Thank you. And that’s right when a company issues stock for the very first time. A company issuing coins for the very first time is going to do the same, exact thing. So they’re going to have an allocated amount of coins available. And then they’re going to have that at a starter price. So you can get in on the ground-level for whatever that price they dictate. The only thing here is it’s all in crypto-currency. So you’re either going to have to buy it in Bitcoin or Ethereum which is another leading crypto-currency. And so all these ICOs, they actually function as a side-chain, as a side block-chain off the Ethereum block-chain. So what the major difference between Ethereum and Bitcoin block-chains are that with Ethereum you can build other pieces… other block-chains on top of that block-chain. And then Ethereum will validate as the all-encompassing bank if you will. They’re the “backer” of all these side chains.
So what these companies have done is they create their own personalized side-chain, they issue the coins for those side-chains and then people buy them up. If your company’s good, if they’re building a great technology, if they’re going to do well, the price goes up. Just like a stock, right?
If they have good revenue returns, the price goes up. So… and on the flip-side, if they suck and they’re screwing everybody over the price goes down. So this one, I think, has a little bit more legitimacy to it in the long-term. The only problem is manipulation in itself.
So we wanna get into that a little. Because there’s still no regulation with that.
30:10 PAT: No. and so what we’ve seen before… like Austin mentioned you know, a company will have an ICO. There’s a certain amount of coins that are available. People will buy into it. Because of the fact that it’s decentralized, deregulated and potentially… even if their block-chain has been essentially approved by the Ethereum block-chain which gives it a lot of legitimacy to these investors. There’s nothing stopping these guys from just taking that money and running.
30:33 AUSTIN: Absolutely. And just because they create a block-chain that issues coins doesn’t mean that their company’s functioning off that block-chain. Or their actually producing anything.
30:40 PAT: it doesn’t mean that they’re a legitimate company…
30:41 AUSTIN: Yup. So what a lot of these companies have done… and this has been happening both food and bad… is they issue what’s called a “white paper” right off the front. And that’s basically a plan to build X, Y and Z.
So I’ll give you a great example of one that I really like that has done this. And they’re legitimately building it and I think they’re going to do great.
They’re called “Power Ledger.” it’s an Australian solar power company. And what they do is they broker solar energy. So let’s say that you have excess amount of solar energy as a large commercial company that runs that. And then you’re another commercial power company and you need more solar power. You can use their block-chain, their company to buy and sell that. And that’s legitimate. They built it, they issue a white paper saying, “Hey, we really want to build this. We need the capital for it. Then we’re going to build it and it’s going to be great.”
They did that. That’s super-awesome.
On the flip-side, we’ve seen people use that they same way… they go, “Whoa. We’ve seen a lot of companies do really great. This one looks legit too. Let’s invest in them, let’s buy all their coins.” And then they’re gone.
31:35 PAT: Yeah. Exactly. They issue the white paper, and the white paper is really the only work that they put into this ICO…
31:41 AUSTIN: Yeah, so you’re going on a little bit of faith here. Definitely with this. And it is a little bit of the Wild West. But I think this is kinda the next direction of what regulation is going to want to get into. And also the next direction of legitimacy for block-chain technology and investment opportunities.
It’s because there’s that little bit of tangibility with an actual company. And people want that. I want that as an investor. I want to know that my money’s worth something. That it’s going towards a project, it’s going towards a revenue driving stream somewhere…
32:07 PAT: Yeah, it’s not going toward some theoretical idea… realistically, like it is with Bitcoin…
32:16 AUSTIN: Yeah, no one knows what they’re buying…
32:17 PAT: Yeah, everybody just knows that they’re buying into what could be a really good idea if it’s applied the right way.
32:20 AUSTIN: So Bitcoin was the very first block-chain ever created. It is the genesis of this brilliant technology that has fueled a lot of business models. And it’s going to be fantastic for the future.
32:30 PAT: And it’s been cool to see all the innovation in the crypto- space as a result. It’s like a whole new gold rush. It’s a new industry that’s unexplored and people are trying to find ways to improve it and bring new technologies into it. And bring new processes into it. But with that–just as there always will be with opportunity–there are people coming and trying to exploit that fact.
32:46 AUSTIN: Absolutely. That’s the gold standard, right now. The gold if you will. Outside of that there’s really no value. We’re talking about Bitcoin. So we like ICOs. I expect ICOs and these other coins–these alt-coins is the term that a lot of people are using for it. I expect them to start doing better at the turn of the year. Right now they’re very cheap. You can do your own research.
Power Ledger was a company that I really liked that I threw out there. Another one that I can legitimately back is called Civic. They’re out of California. They do a great technology, should look them up. And then probably the biggest one, I think. This one’s going to be the largest is called Neo. And they’re out of China. And they’re very involved with the Chinese government and with Chinese banks. So actually Joe and John are the ones that told me about that back in, I think, June. So they’ve done really well.
So there’s some legitimate companies with some fantastic technology that has actual usage. Day-to-day usage. So that’s what we’re really excited about seeing come to fruition in 2018.
And we definitely just want to put a safety net and a warning on if you were investing in Bitcoin right now, you better be watching that very, very carefully because this is going to crash.
33:50 PAT: Yup. You’ve gotta watch it every single day, and like Austin was saying too, just look out for price manipulation indications too. If people are buying a ton, or selling a ton all at the same time, there’s likely some sketchy behavior going on. You’re going to want to be really, really skeptical in terms of how much you’re willing to put in or take out as well.
34:08 AUSTIN: And you know, the next question that’s probably going to pop into your head is probably, ‘Well, when do I sell? When do I sell?”
I think the question… you basically have two things… you have one thing that you need to answer right now, and it’s 2 pronged here. So you’re either going to go, “I’m a long-term holder. I believe in this technology and I think it’s going to do great over time.” Or, “I’m trying to make a quick buck.”
If you’re trying to make a quick buck, I would suggest selling probably today. Because of the rapid amount of growth that is occurring is just unrealistic. This is not going to keep going, and in 6 months, you could be broke.
If you’re a long-term holder of this and you believe in the project… you think, “Hey, this is where I want my investment dollars in.” Stick by that. Even when the price drops, because you’re going to lose money right now that you might have in 6 to 8 months. So either… you need to answer that question right now. Believer in the technology–long-term usage. Or trying to make a quick buck.
34:55 JOE: I’m seeing a “Big Short” type movie playing out in my head right now. Where we’re all going to get followed around in about 10 years. And we’re all going to win Oscars for this conversation.
35:03 AUSTIN: I call Steve Carrell.
35:04 PAT: I call the acceptance speech.
35:06 AUSTIN: That’d be fine. You can totally do that Patrick.
35:10 PAT: Awesome guys. Moving into our last segment here. We wanted to give you a few tips and tricks for digital marketing throughout the holidays. It’s a super-busy time of year. We know that Black Friday and Cyber Monday have already come and went. That being said, user activity is still going to be really, really high through the end of the New Year. Not just because there’s some price discounts being offered, but also because people are generally in that action taking state. They’ve done their information. They know what products they want. They know where they’re going to look for it. And now they’re going to start converting.
So we want to give you guys some tricks and tips on how you can best bucket those users. And get some good lifetime value out of them. So the very first thing that I would do from my own perspective–I would make sure that I was running an email campaign that’s advertising my specials. That I’m appending a specific holiday special–what’s called UTM–to that URL. It’s a unique tracking measurement and what it will do is tell me the source and it has a bunch of unique components to the URL. So there’ll be like a question mark and then a ton of gibberish. And after that question mark, that’s all user-specific data. So we can put UTMs in there that tell me as an advertiser, “Hey, all these people came from email, and it was for the holiday special offering.” From there I can create audiences around those users and then push them new ads throughout the rest of the holiday season if they don’t buy when they come through email. That ends up being the most cost-efficient way to go about it, because if you have them on an email list, you can market to them really easily. It’s a kind of low-cost and they’re really qualified cause they’ve already given you their email address.
And then when you’re running like re-targeting ads… image based re-targeting ads cost per click are usually in the 30 cent range. So it saves you a ton of money and you can acquire a lot of good conversion value that way, which just helps you return. So that’d be what I would do.
36:56 JOE: Kind of to play off of that in terms of the advertising side of things, I think a big issue that people run into during the cyber weekend as well as the holiday season. From an advertising or creative perspective is wanting to do these huge, blow-out, kind of artsy, very holiday focused creative. But I think people need to really be focusing on the messaging and the sales and the offers you’re giving. If you think about it, during Black Friday or even during the holidays, you’re looking for deals, you’re looking for sales, you’re looking for the most money you can save. So making that very apparent in all of your ads, even in the hero messaging of your website–if you’re updating those types of things–just be focusing on what you have to offer. Making that very apparent. While having the holiday-themed aspect of it supporting what you are trying to sell or what you are trying to offer your customers. Because at the end of the day, people will like looking at that. People love Christmas. They love hearing the music, seeing all the snow, etc.
But it’s the deals that they want. They want to save money. They want to be able to impress the people that they’re giving gifts to, or they’re receiving them from. All the while saving the money. So make sure that’s very apparent to your customers.
38:09 JOHN: I got two words, and it’s free shipping.
38:13 AUSTIN: Real original.
38:17 JOHN: Yeah, it’s just the same thing about deals. But mainly free shipping. I usually… I mean, I scour for deals when I’m doing Christmas shopping or whatever it may be. But free shipping is a big one. If you’re not offering free shipping in the month of December, that’s just a horrible mistake.
38:36 AUSTIN: I get that feeling when you’re checking out and you don’t see the free shipping… it doesn’t come up all zeros. It’s almost kind of pains you a little bit. Because so many people know to do it now. Because it really does affect the buyer.
38:46 JOHN: Take the hit. I mean, if you’re not paying free shipping you’re going to take an even bigger hit. But you gotta take that hit to having to pay for people’s shipping…
38:56 AUSTIN: It’s funny. People will spend X amount of dollars on whatever, but when they see that, like, $13.27 start getting added to the end of their shopping cart, that could be game over.
39:03 PAT: I’m that guy. I’m out of there. If the shipping cost more than like 5 bucks, dude? I’m out of there.
39:11 AUSTIN: Cut that cost somewhere else internally, right?
39:15 JOE: Two words, Pat. Amazon Prime.
39:16 PAT: How did I not know that Joe was going to say that?
39:19 AUSTIN: Joe is the genesis of Amazon Prime. First mover.
39:25 JOE: I’m the Bitcoin of Amazon Prime…
39:27 PAT: we need to steer this conversation away from Joe so fast right now.
39:30 AUSTIN: All right, all right. But I’m going to hop into this now. So coming from the organic, SEO perspective now. And this one’s actually kind of a long-term play, so you have to set yourself up for the next year and the years to come. And that’s by doing a landing page that’s optimized for Christmas gift ideas. So every year people are typing in “Christmas gift ideas” and then the year. Or just “Christmas gift ideas.” so if you wanna show up and you want to rank on the first page, you better do your work up front for the long-term play. so what I mean by that, you can start right now, you can start this year… put up a landing page and have all the copy and all the content being about your products and how that is the Christmas gift of the year. Or just a great Christmas gift to buy.
And then every year, you just leave that landing page up forever. And then every year you can switch out the copy to say whatever year it is, right? And then Google will recrawl it and see that.
But the point of this being that Google rewards authority and longevity. So what you want to do is never take this landing page down. And then that way you’ll be gathering that authority, you’ll be gaining that authority as your website gets older. That webpage will get older, and it’ll create more value. You’re going to set yourself up to rank on the first page for that long-term.
And then what you’re probably thinking right now is, “Well, I don’t know what I’m going to be selling next year. I don’t know what products I’m going to be offering. I don’t know what the price is going to be.”
That’s okay. During that downtime when you don’t know, just throw a form on there with an email in there so you can do email captures. So then that way, you can go, “hey, find out first which deal is going to be coming your way.”
So that way when people do hit it, you’re capturing emails but also, you’re also gaining authority and not taking that webpage down.
41:01 PAT: Absolutely. Great insight there, especially on the organic side.
All right, everybody. That just about wraps up episode 15 of Flip the Switch podcast presented by Power Digital Marketing. Thank you guys so much for joining us again today. We will give you another great episode next week. We have some great interviews coming down the line, so be on the lookout for those.
But until then, this has been Pat Kreidler, Austin Mahaffey, John Saunders and Joe Hollerup signing off.