Kirk David Phillips (0:1.292)
Welcome to the Kirk and Robin show, episode number two, where we're just kind of dancing with crypto. So what's on your mind today? What questions do you have? All right. So my question today is something to do with crypto investing, feeling like a whole lot like gambling. mean, so what's the difference? Am I just gambling when I invest in crypto?
crypto or what? that is that like fodder you see on? Yeah, well, you kind of hear it. kind of hear it. You see it in the chatter around. You know what I mean? I think I know the answer, but I'd rather hear it from you. So well, let's break it down first of all. So I'm to take a take one from the playbook of Nelson Rose, who wrote a white paper on Internet gambling in 2012. So let's first of all break it down. What are the elements of gambling? Well, first of all, you have to have consideration.
Right. Consideration. Tell me what you mean by that. A prize and chance. Okay. So those are the three elements. So consideration is the same thing as any contract. When you talk about legality of a contract, you got to have consideration. That means the skin in the game. That means the thing of value money. Let's just say it's like that. Okay. So remember really like I'm an English major, so you really got to speak like a little bit.
slowly and really, really like break it down for consideration is just the money that you put into something. That's it. So $10, a hundred dollars, whatever that thing is. That's just the fancy term for consideration is a fancy legal term for money. Okay. That's basically what it is. right. can hang putting money up, putting money into something. All right. That's basically what that is. All right. Okay. Then you got to have a prize. So in, mean if you were, if we're gambling, right? If you're gambling. So
Uh, playing the roulette wheel. You've got, you know, there's a certain prize based on odds is to have, first of all, it's how much you bet. Uh, the position that you put it on, whether or not you win, that's going to determine your wager sort of how, how, like how risky of a bet you took is determined what your, what your prize could be there, but some kind of price, same thing with a horse race. You go bet on the horse race, uh, horses go around. And so if they get all kinds of different ways to bet on horse racing, course, but.
Kirk David Phillips (2:19.150)
Got first, second, third, you got trifectas. You've got all these different things. that's the prize aspect. we've got consideration, is money. So you got to go get prize. You'd have to have a prize if you were actually betting on something. Okay. I'm with you. So basically that's this, that's this stick with the horse racing for now. So yeah, if you go to the track, then you're going to go to the counter, uh, you're going to, you're going to place the bet, get the ticket. Okay. Then yeah, the prize is based on what you bet is going to determine the outcome of the prize or you may not win anything. So that's the thing.
That's where the chance factor comes in which I think is part of the psych that like the questioning here It's like oh, I'm taking a chance. It's like betting on something right, but you're distinguishing it. What's the third thing? Yeah, that's what I'm saying. The third thing is the chance factor. You gotta have that shit There's a chance there's a chance that you could win. There's a chance that you could lose. No, but that is okay So that's with betting but there is That is a similarity
Between betting and investing, correct? mean, you are taking a chance. You're always taking a chance. If you invest in something, up, go down, you can get nothing. That's true. That's true. But that's the chance is a little bit different in this case. That's why I say the one thing that's there, where there's a commonality is the consideration piece again, the money piece. So to get into an investment, you actually have to put money, put assets into the investment. That's how you invest. Same thing. You can't get in the game. You can't play a game of chance or you can't bet on a horse race.
Unless you put the money in, you got to bet on the race. So the consideration piece is always there. It's the other factors. Is there a prize? Well, when you're investing, there's really no prize, so to speak. I mean, the prize could be more metaphorical. The prize was I was savvy enough to buy a stock, Apple stock when it first came out. I heard about this guy, Steve Jobs and Steve Wozniak, and I it early. And I hung in there long enough and I didn't sell my Apple stock.
Right. Like that's the prize, but that's not what we're talking about. not how I relate to it. Right. Effective. There is no prize when it comes to true investing and when in gambling, there's a prize. It's either going to, you're either going to get a prize. And then the question is how much of the prize based on, you know, with what you bet and how you bet, or you're not going to get any prize at all. Is that the main, is that if we had to listen for the distinction with the prize kind of terminology be the main.
Kirk David Phillips (4:33.610)
And the concept of that be the, may be the main differentiator. We're not like trying to, we're not all like competing for a single or multiple prizes. has nothing to do with that. Well, yeah, it's, the, it's the prize factor plus the chance factor. It's like a probability factor, right? Cause you can calculate what the probability is, whether it's even on a Texas hold them. If you watch these, uh, ESPN championships on TV, right? They now publish at the bottom. They can tell you, they know what cards that
particular players holding give you a chance. It'll tell you a probability of him winning the hand based on every time a card is put down. It'll say, Oh, you'll see, Oh, he just dropped off. He just dropped off the cliff there. You know, that kind of thing. So you could like, these things are kind of like, they're, they're probabilistic. So you can know, you can kind of calculate these things as to what the outcome is. That's the chance factor.
And investing, there's not really any, you can't really calculate that. I mean, there's, you know, there's looking at, there's looking at beta, there's risk, you know, it's like risk adjusted returns and stuff like that. So you can kind of like estimate these things that helps you determine. Do I get into this in the first place? And then maybe you look at performance over time. Do I stay in this game? Or stay in this investment game, or do I pull out like that? So if you want to get technical, those are some, to me, some distinct, it might seem subtle, but those are really key.
distinct differences that determine, uh, make a difference between defining what investing is and what gambling is now. Yeah. With that same thing with the lottery ticket. So, uh, it's called the power ball ticket, $2. You get in, you got an extremely low chance of winning that. Now you've got, they have prizes where you could, know, if you would one number or two numbers, it's like a one or $2 reward like that. But to win the mega jackpot is extremely low.
So that's where chance comes in. That's where the prize is there. $504 million Powerball jackpot. And so on consideration, the $2 going in, see? So it's, really a distinct difference as I see it. I'm getting it. I'm getting it. Do you guys get this? I'm getting it. So that's, that's gambling. That's like, you know, going for a prize sort of thing. Now what that said, right? That said, let's still look at it because we could say, Hey, that is more or less like gambling, behavior of it.
Kirk David Phillips (6:48.306)
Not technically. So it's the question is, do you want to break it down technically or do you just want to look at like the behavior of it? So get too technical on me. But I like the behavior aspect because there is something about that. And there's a whole mentality around what we just got technical. That was OK. Thanks. Now I'm just talking about we're going to get any more. Behaviorally speaking, in crypto, so there's such a wide range that the landscape in crypto, as far as digital assets goes, the crypto assets goes, there's so many different types.
And the range is so wide and vast that yes, you could certainly say, oh, that's like gambling. So for one example, it could be the meme coin craze has been going on for 2024. would say was the meme coin craze still kind of going on, but you got your second. Yeah. So speaks the mentality of that. Cause there is sort of a, like, uh, you know,
Sort of a little bit of a greed factor or something around that isn't there like right then and it's and it feeds into like the gambling mindset Yes, exactly. Yes, it feeds into the gambling mindset idea. So like a pump that fun and so on. That's a It's a meme coin launch pad marketplace that's on Solana, so it's kind of one clear. It's one that
originated the the meme coin craze because basically it what it did is it allows anybody to go on there and create a meme coin. OK, very easily. That's why it's stimulated so much. where a lot of people are getting scammed, correct? Well, not necessarily, but like that. Well, it's almost like in that particular case you're considering if you're playing the game on that particular platform, you could think of it as, oh, a majority of these coins maybe launched their scams. I mean, that's the whole thing. Ninety nine percent of these things.
don't actually come out of the bonding curve. say they don't graduate. Okay. So where others can invest in these token. Okay. Okay. So the thing is, is that, uh, uh, you know, so just, just by, just by the regular going and the fact that you're using that platform, it's like, you know, the game that you're playing, you're playing with a lot of people just launching stuff that are trying to make a quick buck. it's like, how can I make sure to get into this coin when it's pumping up on the rise?
Kirk David Phillips (9:2.446)
It's going up on the rise. And then I'm trying to, and I got in early and I'm just trying to make my exit and sell my tokens before the market crashes. Which is very much a gambling mindset. Right? Yeah. Right. Right. So if you look at the chart, it was like, you'll see charts that are going up and say, bam, it just like drops all the way down. Like one red candle coming all the way down. Bam. Straight. Like, you know, in time zero one straight shot like that. So those are, mean, that's what people are trying to do. They're trying to go on there and make a quick buck and hope that they can exit before they get
Wrecked as we say they lose all their money Yeah, so that everybody's trying to play the same game which kind of gives the rest of crypto which is a vast universe a little bit of a bad name right because that's kind of where you hear about things Yeah, I would say I would say it does give crypto a bit of a bad name because then again if the meme coin craze thing is is making the news which I think that over the past decade that the let's call it the mainstream news has disproportionately given
and shine the light negatively on the crypto space, not the positive, I think, you know, then again, negative, negative, negative cells, on a 10 to one ratio over positive. it's probably evolving now too, given that like states and government are kind of getting on the crypto bandwagon. Yeah, that's, I the narrative is going to be changing for the positive here, but, uh, yeah. So I think that if that's the narrative bouncing around about these, these meme coins and stuff, yeah, it's going to be.
It's going to be both. That's going to be the thing that picks up on and possibly, you know, where you get these negative stories that are spun on it, but also what it's also unfortunate, the thing that will attract people in what I think is the non financial savvy is like, Oh sweet, quick buck. mean, I hear some stories of, somebody put a hundred dollars in or $500 and they turn it into several hundred thousand or maybe a million. And these things do happen. Right. Right. They're outlier cases. And in some cases it may actually be.
It may actually be the insiders or the people that created the tokens that are, are, that are pulling this song. Okay. Yeah. It's not like the average smog got lucky and just went ahead and bought whatever ABC coin and ABC meme meme coin. And then it went up and they made a whole bunch of money. So now, well, memes have lasting value when the, some of them, well, sure. They're going to take on their own kind of category. But the thing is there's like, uh,
Kirk David Phillips (11:25.070)
tens of thousands to hundreds of thousands, even in the millions of these things, depends what time period you're looking at of these things being created. Like I said, a lot of them don't pass and don't graduate from the bonding curve. That's just the way that this pump down fund does it so that the token is graduated. basically it's like they, they, they, they, they're started, but they don't, they never actually materialize. Okay. That's what it is. So there's so many people are creating these things and it just, you know, that's, that's the deal.
All right, so I'd like to segue just a moment. So talk to me like I'm an investor, right? I'm a crypto investor. I'm not a crypto gambler. I'm an investor. And I'm familiar with investing. I've invested in REITs. I've got a 401k. I've played around with the stock market here and there, right? You could call that gambling if you really wanted to, if you're really trying to make that comparison. But investing in crypto is really no different than
investing in these other asset classes. Is that accurate? Or I mean, it is different, but I mean, in terms of the way it's played and the expectation and so forth, it's like, I'm just investing in another. Well, yes, that's that's correct. Yes. Digital assets is another asset class. Yeah. OK. So brand new asset class. Right. And then there's just happens to be a lot of subsets within that particular asset class.
Me being one, your, your, your traditional investor mentality to it. So there's that, but then then there's also heightened responsibility perhaps or accountability to once. that's, that's a good point. Yeah. If you bring your savvy, I'm going to say financial long-term investing mindset to crypto, you're going to be a success there theoretically the same way you assuming you were a success over there in traditional finance.
you're going to be a success here. So this is why it always comes back to mindset every single time it comes back to mindset. So whatever you showed up with in crypto is already going to determine your outcome. Especially if you show up with that get rich quick mindset. Exactly. Watch out for that one. Which actually is really the way that I would say, you know, 90 % of we'll say retail, we say retail. means like the retail investor, but let's say 90 % of people actually operate, which is you phone. Oh, and fear of missing out.
Kirk David Phillips (13:47.086)
So you ape in near the end, near the top people, people, because of fear and missing out. That's what we call it. A crypto ape in, which means you just jump in right without doing any work. And then you jump in at the top, you know, a couple of weeks later, you're looking at your thing every day, see what the return is. If it's up or down, you know, it goes down, market takes a crash and your emotional state is complete chaos in the meantime. Yeah. Cause you're, you're not in it for the long haul. You're in it just to make the money quick and like, it's going to determine.
Yeah, you've never you never actually hung in the game long enough anywhere ever and they perhaps in your entire life, for example, that type of avatar person to actually see what success looks like. So of course it goes down. You say a couple of weeks later, this doesn't work. You pull your money out of the loss and you go about your way until you come back at a later time and repeat when the next FOMO things that comes along. know, when you're at the gym and you hear your your buddies talking about it and next thing you know, it's the next thing you say. you know, it's been a year, I guess.
Try this again. So anyway, this is all, you going to tell everybody, this crypto thing is a scam. It doesn't work. Right. Cause you got screwed because you played the game the way you usually play everything. Right. So yeah. So that's a, yeah, that's how it goes. So, um, yeah, it's really, it's really about the mindset that you come in with. know what your mindset is. We can actually determine your outcome. It's like, it's that easy. Right. Yeah. So don't forget about the crypto mindset course exclusively from here. Cause
It's, it's real good. It's all about that. crypto bullseye, the crypto mindset course. That's my unique, uh, my unique, uh, I like it. Yeah. It's a unique proprietary way of thinking about how to get into crypto. Yeah. So there's so, there's so many things to, uh, to invest in, uh, for the longterm. There's so many things I think that are going to accrue massive value in a brand new way. It's a brand new technology. That's what this is all about. So you have a spectrum on one end, that end, and on the other end, you've got all the other.
you know, the scams and all the other stuff that are going on. So unfortunately that taints the space, but this is not unusual and there's new technology or anything new. There's always something that comes along and taints, you know, the good part of, uh, the good part of the, of whatever it is. So, yeah, they're speaking to a whole bunch of stuff that I know we're going to talk about on other episodes, but it's like, you know, like you have the people who are like, okay, I want to get into crypto fast. And then they like,
Kirk David Phillips (16:3.928)
take whatever action, they do it really quickly and they don't know anything about anything, right? And they're already in the game, but you're like, oh, don't, you know, if you'd only just gotten a little bit of education here in the beginning, right? A little bit more about like how to prepare yourself mentally, you know, how to approach all of this, right? How to manage your security and your passwords and da-da-da-da-da. The things that, you know, you've seen people in your experience like come to you and go, oh, I did X and you're like, oh gosh, no, no, no, no, right?
So, um, well that reminds me of doing research on Reddit cause you can get some really great stories there, especially in crypto, but anything. So yeah, there's one that sticks out. That was, uh, let's call it, uh, John and Jenny. Let's say that's what their names are. Right? So, so John's talking to Jenny. They're actually best friends. All right. John's telling Jenny how he's been in crypto for a while. He's done really well. He just cashed out some Bitcoin or whatever it was. And he went and bought himself a car.
All right. And then, so it's like, wow, she's thinking, this is amazing. This is awesome. So he tells her, so they have this conversation. I don't take it that he's bragging, by the way, again. Yes. This is me reading between the lines. So, but he tells her, you know, he finishes up and said, look, if you want, if you're interested in getting into it, just, just let me know. I'd be glad to guide you and teach you how to do this. because they're friends and they're trusted and whatever. Right. So just get, just get back to me. He's not trying to scam her. Yeah.
Let me know. Well, guess what? She never contacts him or I should say the next time she contacts him, it's not, Hey, I'm really interested in this thing. Let's set up a call so we can get into it. I really want to get going here. Next time she calls, she says, you know what? Since we talked last, I invested $30,000 into one meme coin. So first of all, one, that's the first problem, which is everything, all your eggs in one basket and one meme coin. She lost all of it. So she lost her $30,000, which I guess to her was probably
for life savings at that point. Let me guess, she's pissed at him. She's mad at him. It's his fault. It's 100 % his fault. She's mad at him. It's all his fault. Oh my God. And if you see the banter on the replies on the- They had probably eviscerated her. Oh, they did. They had a field day with her. Had an absolute field day.
Kirk David Phillips (18:20.142)
100 % responsibility for your own stuff, That's right. That's all right. Even if your friend's the one that turned you on, you're still 100 % responsible. Number one lesson in life. You were 100 % responsible for everything that happens to you. And that is, especially when it comes to your money, that's a great place where that shows up, but it's everything else in life too. So she was 100 % responsible. He offered to help her. Painful. Okay. First of all, she doesn't know how long he had the crypto.
Right. I mean, maybe they thought about it. I'm just going to say maybe he didn't get into those details. We don't really know. Right. But she doesn't know how long he's been into it. Maybe he got in seven years ago and he's actually had a long term view. You know what? worked hard for this. think I want to take some profits and buy myself a new car right now. That's our one minute warning. It's more like a two minute warning because it's a we're going to run this. This show goes to 21 minutes as a nod to
Bitcoin's 21 million Bitcoin, the total total token supply of Bitcoin. So 21 minutes, a little nod to that. Yeah. So so we made sure we were anyway. So I think we I think we beat this one up pretty good as to what as to what gambling is. And there is a technical distinction between gambling and investing. Now, like I said, behaviorally wise, behaviorally, you know, those things could look like gambling. So it really kind of depends on what your definition is. But absolutely. Yes.
A lot of the people that engage in crypto can be doing that. The problem is people can't have more than one way that they go about stuff. So it's kind of like how you do anything, how you do everything. See hard records. So what it means is that usually you can't be like, Oh, I'm to have a long-term strategy over here. And I mean, some people do, but I think a lot of people it's like, they've only got one way that they can do it. So when they go in, they've got one strategy and that strategy is not going to set up for success. yeah, I would totally ask yourself.
Have you adopted a crypto mindset? And if you don't know how to do that, you definitely need to take our crypto mindset courses free. You should start there among other things to get your mind straight before you do anything. That's what you got to do and everything. Get your mind straight. your head in the game. Yeah. All right. So all right. Thank you. That was great. So with that said, let's have a great crypto day as always. As always, your goal was to get
Kirk David Phillips (20:42.186)
A crypto bullseye. All right. Yeah. Bye.
