An Update On Bitcoin & Other Cryptocurrencies (Video)

This morning, Karl Eggerss joined Sharon Ko on CBS to discuss Bitcoin’s big move in 2019 and what the current status is and how other cryptocurrencies are affecting struggling countries.

Sharon Ko:                         2019 has been a banner year for investors. Bonds are up 8%. Gold is up 9%. Stocks are up 18%. Bitcoin is outperforming these traditional assets, at 182% as of last night. Here’s financial expert, Karl Eggerss now, with the trends and risks of digital currencies.

Sharon Ko:                         Karl, it’s been a while since we had you on to talk about Bitcoin. Let’s start with a refresher, what is Bitcoin?

Karl Eggerss:                      Bitcoin is a digital currency. It’s called a cryptocurrency. The idea is that, their origination was a lot of people got frustrated with governments kind of controlling what their currencies were worth, so somebody, nobody knows who, there’s rumors who started it, but basically, they invented their own currency. It’s not going to be tied to a government. It’s going to be completely independent. That was the genesis of it. Since then, it has grown in popularity. The problem is it’s very volatile. It’s hard to store, but it’s basically digital currency. It’s not a piece of paper, like a dollar bill. It’s a digital currency, it’s called a cryptocurrency. It’s supposed to be very secure, but in the past it was used for illegal activity because nobody could really track it necessarily, or who was using it. That’s why the governments didn’t really like it, originally.

Sharon Ko:                         Now the popular one is Bitcoin. There’s a ton of different cryptocurrencies, but there’s a limit with Bitcoins. When you talk about the volatile price of it, the price can change, but there is a finite number, right? When it comes to the amount of Bitcoins that can exist?

Karl Eggerss:                      Correct. Yes.

Sharon Ko:                         Can you explain that?

Karl Eggerss:                      For now. I wish I could explain it, it’s been kind of difficult. Because it’s a formula, there’s only so much they’re going to mine. They call in mining. Now having said that, I know some people believe well how can the price go up and down if there’s only a certain amount of it out there? Well, if you had a piece of jewelry and it was the only one, what would happen to the price? It would go up because there was less supply, more demand, just like the stock market. If a company has so many shares of stock, and that’s it, more demand, less supply, the price goes up. That’s very similar how Bitcoin works. It does change, literally on a 24-hour basis quite a bit. Again, there’s other ones along side of it. Bitcoin is just the main, the one with the big name.

Sharon Ko:                         There are a lot of companies right now in the U.S. that are adopting Bitcoin as a form of payment, Whole Foods, Subway, Amazon. What are some of the negatives that you see with that?

Karl Eggerss:                      Again, the fluctuation that when you go to buy something, you don’t really know how much you can buy with it because it changes so fast. Just to be clear, there’s about a thousand cryptocurrencies give or take, on any day. Some of them are fad, some of them are fraudulent. It was a great example, in December of ’17, when Bitcoin reached this astronomical number and crashed about 84% over the next year. December of ’18, it was sitting at $300 and since that time, it’s almost tripled. It’s a great lesson that these manias, everybody was talking about it, in 2017, and then as it started crashing, the ‘I told you sos’ came out, everybody abandoned it, it was just a fad. Now, after all the dust has settled, here it comes back again a little bit. It is worthy of talking about, but it’s very difficult to determine which cryptocurrency will be the winner. Will there be one? Will there be multiple? That’s really the challenging part, because a lot won’t exist.

Sharon Ko:                         Let’s talk about Venezuela. The country has faced an incredibly high inflation rate. They’re using Dash as a form I guess of payment to buy things. It’s literally saving lives. Do you see this as kind of being just the beginning of a financial revolution as possibly more other countries adopt it?

Karl Eggerss:                      Yes, because what happens is countries that are struggling will literally print more dollars. Everybody thinks a dollar bill is some fixed, something backing it. It’s really not. It’s really the government printing as much as they want. A lot of these countries just keep printing their currency, that makes it worth less as we talked about with supply and demand. The people living there are seeing dramatic inflation. They’re seeing all kinds of problems. Some believe that the United States is heading down that path unless we do something, so they’re adopting cryptocurrencies to say, now the government is not in the way, and I feel more safe owning that. When we’re talking about cryptocurrencies being volatile and price going up and down? Some of them aren’t volatile, relative to their country’s currency, like Venezuela.

Karl Eggerss:                      That is a place where you’re seeing it helping and it’s changing lives potentially. It is interesting to watch that. Of course we’re quite a bit a ways from that in the United States, but many people believe if we don’t stop printing money in the United States, and keeping interest rates extremely low, and doing all these things, that we may be headed down that path.

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