S2E16: How Diamonds Can Fit Into Your Portfolio with Cormac Kinney
In this episode, Henry interviews Cormac Kinney, Founder, and CEO at Diamond Standard. Diamond Standard is the producer of the world’s first diamond...
23 min read
The Rocket Your Dollar Podcast : February 5, 2020
Two years ago, if you wanted to learn about stocks, bonds, currencies, commodities, you'd go on Google, and you've got a bunch of different ways to learn about them. However, if you wanted to learn about cryptocurrency, Bitcoin, or blockchain you'd have to go to Reddit or Twitter. Jason Yanowitz, Co-Founder at BlockWorks Group, ties together digital assets with traditional finances in a responsible way and educates organizations how they can too.
Thomas Young: Welcome back everybody to Rocket Your Dollar. Today, I'm excited to have Jason Yanowitz with us on the podcast. Jason has a really interesting story and today he's working on a company called BlockWorks Group, and it's an events and media company that sits right at the intersection of digital assets and traditional finance. Before BWG, Jason helped build the business development team at Sisense, a data analytics startup that raised nearly $300 million, and he's also spent some time in the venture capital space at Intuitive Venture Partners. Jason, thank you for being here and I want to jump right in, but I want to allow you to introduce yourself and tell me what you're working on today.
Jason Yanowitz: Yeah, no, thanks for having me, Thomas. I will try not to bore the listeners too much here and so I'll try to keep it short and sweet and then get into the fun stuff. But yeah, so my background, I'm from San Francisco. Like you just mentioned, I worked, before BlockWorks Group, I worked at Sisense, which was a data analytics company that raised about $300 million to date helping companies basically mash up big sources of data and pull it all together and easily be able to figure out the analytics and make decisions based on large data sets. Before that, I worked at a venture capital firm in New York investing in, it was pretty general, so later stage tech, consumer goods products. The listeners will probably know Dollar Shave Club is a big one, and Life Science Investments, the [inaudible 00:02:06] for Alzheimer's drugs, things like that. And then before that, I was living in Budapest, Hungary.
That's kind of where I fell the... This was in 2015, I kind of fell down the crypto Bitcoin rabbit hole. A lot of the MBA students out in Budapest loved it. I mean, their parents lived under a communist regime and they loved just the concept of Bitcoin because it was self-sovereign money. Which meant freedom to them and the state was not looking over their shoulder every second being able to track their things. So that was 2015, that's where I fell down the Bitcoin rabbit hole and then moved to New York and got started in the venture space, and yeah, the rest is history.
Thomas Young: That's cool. And I think it's always really interesting with a new space like cryptocurrencies and the blockchain technology behind it, it's always interesting to note where people get their interest from, because I think everybody comes at it from a different place and the fact that you were in Budapest and sort of saw the real-world application of it, and then that's sort of what piqued your interest. I think that's interesting.
Jason Yanowitz: Yeah, exactly. For those who have been to Budapest... It's funny like you take the New York subway or something or you ride the transit in any major American city and folks are talking, people are listening to music, everyone's kind of chitchatting with their friends and their family. When you go to an Eastern European country, nobody's talking on the subway or the buses because, just 30, 40 years ago, when their parents were taking the subway and the public transit, there were cameras and there were recording devices picking up what people were saying and what people were doing, because they lived under the communist regime. So I mean, different times, but it's pretty applicable to Bitcoin and what's happening in the cryptocurrency space right now.
Thomas Young: Yeah, for sure. And like I said, I think that's interesting and you could see some of those holdovers and some of those may be thought patterns if you will, that are held over from generation to generation. And it takes sometimes two or three generations to kind of get out from under that. It's certainly an interesting space. I have friends that are Venezuelan and they're very interested in cryptocurrency just because of what's happening to them. So I think a lot of times in the U.S. we sort of don't have necessarily a need for the sort of benefits that these decentralized currencies have. But in the rest of the world, it's amazing, the power and the freedom that it can give a lot of people. I mean I think that's a really interesting space for sure.
Jason Yanowitz: Yeah, exactly. The one little one-liner that I'll use is... Bitcoin is tough to understand in general, because there's a lot of complexity that goes into it. It's kind of at the intersection of economics, political governance, philosophy in a way, math, computer science, things like that. But that aside, the United States is the hardest place... Folks who live in the United States have the toughest time understanding Bitcoin. Why? Because money works and the government works. So when your friends and my friends or colleagues or anyone like that says, "Why do we need Bitcoin?" Well, you probably don't need Bitcoin. Why? Why? Because you live in one of the greatest democracies that exist right now. Guess who does need Bitcoin? Folks living in Venezuela. We're recording this in January of 2020, during a lot of things that are going on in Iran, and the exchange price of Bitcoin in Iran right now is nearly double the price of what Bitcoin is in the United States. Why? Because folks are scared and they're moving their money out of the traditional financial system and into this alternative asset called Bitcoin.
Thomas Young: Right. And I think that's a really interesting distinction in that in the U.S. sort of in the past few years, is Bitcoin has exploded. It's been viewed as an investment or as a store of value. But in other countries, it can be used to transact here too, but it is used to transact more often outside of the U.S.
Jason Yanowitz: Yeah, exactly. I mean right now you have... Bitcoin is now, I'm going to botch the exact number, but the 10th biggest or the 15th biggest currency in the entire world. It did more transaction volume than Apple Pay, PayPal, Venmo did, in the entirety of 2019. So when folks talk about adoption, at least this is one of the main things that... Doing work with a lot of institutional folks helping them understand the space, and institutions could be a pension fund, endowment, family office, large hedge fund, venture capital firm, just a high net worth individual, you name it. Someone with a lot of capital, they're looking at the space, they're always wondering about adoption, right? And so what I'll tell them is, "Okay, when you..." They'll say, "Yeah, well I don't use Bitcoin to go buy my coffee at Starbucks."
Jason Yanowitz: Of course you don't. Did you use gold to buy your cup of coffee? Right. That's kind of annoying thing to respond with, but did you use the U.S. dollar to buy coffee? No, you didn't. You use credit. When you go to Starbucks and buy a cup of coffee, you're not using the U.S. dollar to settle that transaction in real-time. You are using credits, and then that transaction gets settled when you pay off your credit card statement. So yeah man, it's an interesting space. I think it's like you were saying, and what I was saying earlier is, it's a lot tougher to understand it in the United States and Western Europe than it is in the rest of the world.
Thomas Young: Right. And I think that's a great segue. I mean just the five-minute chat that we've had, it's clear that there are so much information and so much education around the space that needs to happen, which is a great transition for us to talk about what you're doing at BlockWorks and the sort of events and content that you put together to educate people around what the space is.
Jason Yanowitz: Yeah, so BlockWorks Group is an events and media company. We're in New York City. We are focused on one thing, which is helping institutional folks understand the emerging cryptocurrency landscape, the digital asset space, the blockchain, whatever you want to call it. Understand this new and emerging web 3.0. What we saw two years ago... I worked in venture capital. We were trying to talk to, whether it's the GPs of the firm or some [inaudible 00:08:31] partners, about the space. There was no real way to educate them. So if you want to go learn about stocks, bonds, currencies, commodities, you'd go on Google, and you've got a bunch of different ways to learn about them. If you wanted to learn about cryptocurrency, Bitcoin, blockchain, digital assets, whatever you want to call it, you'd go deep down the rabbit holes of Reddit threads and Twitter feeds and things like that, pulling up people like Crypto Whale and Crypto Panda who, you know, if you're a 50-year-old, gray-haired family office investor, you're not going to take your advice from Crypto Panda, right?
That's kind of what we saw two years ago. Since then, we've been building out events in places like New York, London, San Francisco, Chicago, helping institutional investors understand the crypto space. We also have the largest podcast network in cryptos. We have 20 different shows, we just hit 1.5 million downloads a month across the network. And then we also, the revenue model is, for those wondering how we make money, are we help companies who are looking to break into space, reach their target audience. So we help them with just general marketing, so this could be brand awareness, lead acquisition and customer acquisition, lead generation, things like that. And so you're working with companies, whether it's some of our clients like Fidelity, TD Ameritrade, all the way down to very small crypto companies, like a 10 person crypto company that just raised $5 million and wants help with customer acquisition. So that's the high level. That's the gist of what we're working on. Yeah, we're in New York. We're having a lot of fun doing it.
Thomas Young: Yeah. And that's fascinating because, what you mentioned earlier about where the education space was a couple of years ago, with the Reddit feeds and Twitter and all these things, it's almost like the cryptocurrency space had a bit of a branding problem. And not a branding problem in the sense that they had a problem. It's that they weren't appealing to the gray-haired 50-somethings that manage the purse strings of these big companies. But that doesn't mean that it's a bad investment or a bad space or anything like that at all. It just means that there was no one catering to that person. And I think that that's a hole that you guys filled, or are filling very well, and the success of your podcast and the success of your events speak to the hunger that there is for this, because nobody wants to get left behind. But then again, it's hard to be the first mover, especially when you're at a big company and managing billions of dollars.
Jason Yanowitz: Yeah, exactly. Exactly. It's funny that you bring up a branding issue. I'm interested right now in just the narrative of the crypto and blockchain space. I think you can do it from a couple of different lenses. One is... But just to tie into what you're saying with the general branding problem of the space, I think a fun little story that some of your listeners might be interested in and might not know, is that if you look at the state of the space from 2010 to 2015, it was basically... Bitcoin started as an E-test proof of concept. It then became a cheap peer-to-peer payments network. Then it was upgraded to a censorship-resistant gold. Then it was a private anonymous darknet currency. And this is in the stage when folks we're drugs using Bitcoin in 2012, 2013 on the dark web. Then it was a reserve currency maybe for the crypto industry. But the entire time it's hard for traditional folks to look at that and say, "Oh yeah, that's where we're going to allocate our capital. That's where we want to start spending money."
What happened is in 2015 a lot of the big entrepreneurs in the space, they hired a few different PR firms and a few different marketing agencies, got together and said, "Nobody's going to get behind Bitcoin if they don't understand the underlying technology of blockchain." So they launched a massive campaign saying, "Blockchain, not Bitcoin." These were some of the biggest Bitcoin investors in the world. What happened is in a year after that, after the campaign had been running, in 2016 we saw a lot of the traditional financial institutions, JP Morgan, Goldman Sachs, even just non-traditional financial institutions like IBM, Walmart, folks like that, start to quote-unquote "use blockchain technology" and pilot blockchain technology.
This was when you started to see Walmart, quote-unquote, "putting their supply chain on the blockchain." IBM helping De Beers with diamonds on the blockchain. That was 2016. 2017, the market ripped. Why did it rip? Because the year before that all of these banks started saying that they were using blockchain underlying technology. So you're spot on, man. It's just like any other startup. Distribution and marketing are some of the hardest problems to solve. But that's what happened in 2016 and that's what led to the market ripping so much in 2017.
Thomas Young: Yeah. And it reminds me of a lot of other technologies that have been developed for not quote-unquote, "kosher" uses. You look at image sharing on the internet, video streaming on the internet. I mean, this was all used for not totally above board industries. Speaking specifically about the adult entertainment industry pioneered a lot of the technology that today is so accepted and common and used everywhere. And so maybe that's a little bit of what happened.
I mean, you take a cryptocurrency like Bitcoin, it's developed to fill a need that is sometimes not the need that everybody has, especially the 50-year-olds managing endowment funds. But then it goes through that adoption, and then the mainstream applications become very apparent, and it grabs hold. And I think that's sort of what we... And correct me if I'm wrong, but I feel like that's sort of what we've gone through in the last few years, where it started, yeah, it was used for bad, as it was an exchange of value that was anonymous and helped you behave badly, if you will, and if that was your goal. And now we're realizing, well yeah, that it has some applications that aren't fantastic, but it's also got a ton of really useful good applications that will ultimately do more good than harm. Right?
Jason Yanowitz: Yeah, I think you're right. I mean frame it in maybe a different way besides saying Bitcoin is similar to the porn industry or something like that. I think, I mean you can look at any industry and it goes through... There are three development phases in any industry. You have the problem, then you have the protest, then you have the concession. So let's take the music industry for example. But in the 90s, major record labels didn't make popular music available online. And when they did it was across a bunch of different sites, a bunch of different formats. Everybody went to the store and they bought their labels or they bought their CDs, the newest album, things like that. So there's a major problem, which is music was not... You couldn't access music online. So that's...
Jason Yanowitz: Then you have the protest. In 1999 Napster comes out. This was an application with a library of all the music out there in MP3 format. But that was centralized, so that got shut down. Then you had a decentralized version of that, which was... If you ever used LimeWire or FrostWire. This was just a peer-to-peer network to move MP3 files from computer to computer, for people across the world. Now, it sucked. It was annoying to use if you ever used it, and I'm sure I broke two different computers by using it and got different scams and different hacks from that thing. But that was the protest, was this decentralized network.
Then the third phase is the concession. So this was when record labels started agreeing to 99 cent music on the iTunes music store. You've got a freemium licensing model with Spotify. So basically like in any market, what I'm trying to get at is any market you're going to see there's a protest, there's a problem, there's a protest and there is a concession. The protest is protesting a market inefficiency, and then the concession is a win that happens, via a major concession. So something that brings it back a little more to the normal side of things that society can understand like iTunes or Spotify, instead of a fully decentralized model, LimeWire but hey, you've seen it in music. You've seen it in a bunch of different industries. You've seen it in the movie space, and now you're seeing it with money.
Thomas Young: Right. I think you stated it a lot more elegantly than I did.
Jason Yanowitz: I just don't want people to start comparing Bitcoin to the porn industry, and then we get a bad rap, so.
Thomas Young: Right, right. No, and you're right. It is, the way you stated it, it makes a lot of sense and we have seen it across different industries, and we've seen it across different areas of the finance space too. I mean with what we're trying to do, bringing sort of a subscription-based retirement account. I mean it's just a different way of looking at things and advancing things, and a lot of it is responding to what people are asking for, what the need is, the problem like you said. So again, thank you. Thank you for stating it that way.
Thomas Young: So let's talk about BlockWorks and your events. Talk to me about what... If someone signs up for a BlockWorks event and they go, you said you guys are in big cities, New York, Chicago, LA, London. What can someone expect if they want to learn more about the crypto space and they attend one of your events?
Jason Yanowitz: Yeah, that's a good question. So I mean it's a white-glove service. So in 2017, for anyone who's been in the space for a few years, you had all of these IPOs coming out of nowhere. What happened is IPOs get a lot of money. They want to put their money to work so their marketing budget opens up. Where do you spend the marketing budget? You spend it on events, on the sponsorships. So then all of these events started popping up. And for lack of a better word, they were just really, really scammy. And you know, there was just nothing to these events. So what we strive to do is create an entirely different experience than what existed a few years ago. It's the best possible venue that you can get. It's the best possible food that you can get.
Everything down to the lighting has been thought through. The food has been thought through. And then the speakers, if you look at the speakers for... We have a conference called DAS London, you can Google. D-A-S London. The speakers are not from crypto companies. They're from... It's Fidelity, it's JP Morgan, it's Goldman Sachs, it's Citibank, right? It's the London Stock Exchange, talking about what they're doing tokenizing different assets on the London Stock Exchange. So that's kind of what we set out to do is create an environment where a family office investor, a portfolio manager at a pension fund would want to gather and would want to come, rather than just like, okay, how can we bring as many 22-year-olds interested in crypto into a room as possible and then charge sponsors [inaudible 00:19:07] to get in front of these people. It's a very different experience. So those are some of the conferences. We have one in three weeks in London, for anyone listening in London.
Thomas Young: And I think that's great. And I looked at your LinkedIn and I looked at your website, and you talk about responsibly educating people about these sorts of things. And I think that's not only a noble goal, but I think it's a valuable goal for the space in general, because like we touched on earlier, you don't want to have a branding problem or an identity problem when the underlying asset and the underlying technology has so many real-world applications. So I think what you guys are doing is great. And I want to ask you about... You talk about responsibly educating people. What does irresponsibly talking about blockchain look like? I mean, what are some of the bad that you're seeing in the space that you wish would just stop?
Jason Yanowitz: That's a really good question. I think that traditional media does not understand Bitcoin very well. I mean, most folks don't understand crypto and Bitcoin, but I wouldn't expect them to. Why would I expect them to understand something that they're not spending time learning about? However, when it's traditional media, for example, someone from Bloomberg, or someone from [inaudible 00:20:23] or Forbes, something like that, starts to write about the space with a lack of understanding about it that's when that can be... That goes from, "Oh, I'm exploring this space and trying to learn about it," to, "I'm irresponsibly talking about something that I don't know about."
If I was a reporter at Bloomberg and I knew nothing about self-directed investing, I wouldn't go start talking about Rocket Dollar, and what they're doing is a complete scam. Why? Because of A, I know nothing about your business. I don't know the people who work there, and I know nothing about self-directed investing in general. So it might be a better idea to go talk to some folks who work at Rocket Dollar and who work in self-directed investment space, and then go write the paper, instead of just shooting out a bunch of different complaints about it without taking the time to understand it. That's what I think is irresponsibly talking about the space.
Thomas Young: Yeah, and I sympathize with that frustration because when people talk about self-directed and talk about Rocket Dollar, they're saying, "Well, most people shouldn't be able to control their own money. They don't know any better." And it's like, well that's not necessarily true. And that's also why we don't sell to absolutely anybody that knocks. There is pricing in place, there are processes in place to get an account funded because it's not for everybody. And we're not advocating that you go throw all your money into a startup and hope that you hit a return. It's like there's a whole story behind it and there's a whole underlying thesis if you will. And so when you have non-experts or people with opinions and bullhorns, it's a dangerous combination. And if they're not educated and they're not versed in what they're talking about, it can do a lot of harm to something promising. And I'm sure you guys come across that a lot as well.
Jason Yanowitz: Look, I mean shout out Rocket Dollar for a sec. You guys have a guy, Mark Peck, over there. Or at least, I think. Does Mark still work there?
Thomas Young: Yeah, yeah. Mark's here.
Jason Yanowitz: Yeah. So, Mark has been to a few of our events actually, and I said, "Mark, why are you coming to these conferences? It costs a lot of money to attend. What brings you here?" He said, "My clients have started asking about the Bitcoin space and instead of just studying online," he's like, "I want to become an expert on the space so that I can adequately be their go-to source of information." When a client says, "Hey, should I allocate 2% out of 50 BEPS?" or whatever they're talking about to Bitcoin, Marc can adequately give a response and give guidance. And that's how you learn and educate responsibly, in my opinion.
Thomas Young: Right. And I'm going to take the chances to give Mark a shout out because that's the type of guy that Mark is. And a lot of people on our team, as we hire people and they start learning about real estate investing, or crypto investing, or startup investing, everybody on our team has that sort of learning mentality. But Mark in general drives that a lot. And so, want to give him a shout out because he does take the time to educate himself so that then he can educate properly, and not say, "Well, I think it's going to go up. You should bet the house on it." Which we don't want.
Jason Yanowitz: Exactly.
Thomas Young: So let me ask you about some of the trends that you're seeing, having been in this space for a while. What are you seeing from institutional investors and what is sort of, they're not necessarily appetite, but their view of these currencies? I mean, do you think they're bullish on it? Do you think they're excited about it? Or do you think that the buzz has sort of leveled off?
Jason Yanowitz: No. So I think they're more excited than ever. Why do I think that? I mean there's a qualitative way to go about this answer, which is, yeah, we talked to them, stuff like that. But it's important to view things in terms of facts, right? Cold, hard facts. Coinbase is seeing $200 million to $400 million of inflows from institutional buyers per week. That's not per year. That's not per month. That's per week. There's Yale's endowment, run by this guy, David Swenson, who has actively been investing in the crypto space. Andreessen Horowitz, one of the best VC firm world right now, launched its crypto fund. What you're seeing is let me back it up a little bit. Why you didn't see institutional interest in the space is because the infrastructure wasn't there. If I were to go short Apple right now, I'd pull up my TD Ameritrade, the catalog, I'd pull up whatever you're using, and I can go short, I can short Apple, I can go long Facebook. I can trade the 30-day call option on GE stock.
That didn't exist in crypto. That was not available for traditional institutions until very, very recently. When now you have folks like CME group getting into space. You have ICE, which owns the New York Stock Exchange, has launched its own company called Bakkt. TD Ameritrade is a frequent sponsor and speaker at our events. Fidelity launched Fidelity Digital Assets. JP Morgan launched its cryptocurrency. Goldman Sachs is working on a lot of things in the tokenization space behind the scenes that will be getting them out soon. So there's all of this institutional interest because, for the first time, the infrastructure is finally in place.
Thomas Young: Right. And it's just when the bubble sort of happened when Bitcoin reached 19 thousand or 20 thousand, I don't remember what it was, a couple of years ago, it wasn't... There was a lot of talk about whether institutional investors were going to get into it. It's not that they weren't or that they were nervous about it or scared about it. It's that they... I mean these are huge, huge pools of money and huge companies that require a little bit of time to adopt these things. So it's not that they didn't want to, it's that they may be just weren't ready.
Jason Yanowitz: Yeah. So two things to touch on. One is the 2017 bubble's importance. There were three interest groups in the Bitcoin space. There were node operators, there were miners, and there were developers. What do I think when I hear those three things? It puts me to sleep. What did 2017 do? It brought in the investors and the entrepreneurs who then started building on top of the Bitcoin protocol, the Ethereum protocol. It started building up within the space. So that's one point.
The second point is yes, investors are looking at this. Yes, the infrastructure is being built. But it's important to remember that this is still an emerging and useful asset. There are still only 50 to a hundred million users and holders of Bitcoin, which is 1 to 2% of the global population. The development in the space is very, very deliberate. Very careful. Why? Because we're not building a consumer app here. We're building potentially the future of money. The governance is hard to organize, consensus as hard to obtain. But look, the internet wasn't built in a day and neither will the protocols for transmitting values in a [inaudible 00:27:04] manner. So yeah, we're patient. But I think going back to your original question, there is a lot of interest.
Thomas Young: So we've talked a little bit about the 50-year-old fund manager, but let's talk about individuals that are looking to get into space. You know you said roughly 1 to 2% of the world population even holds Bitcoin right now. I think that's going to grow as we move forward. But what should people be mindful of, or what tips would you have for someone that's starting to get interested in the space, maybe looking to make their first investment? And then after that, let's touch on the self-directed space, but I want to get your thoughts on someone that's just thinking about starting today, as an individual.
Jason Yanowitz: Yeah, I mean I think one thing to just note is diving into... I think we were talking about a younger population here of folks, rather than your 60-year-old portfolio manager. What's happening right now is there's a ton of interest. So just taking it back to the interest for a second. There was a really interesting report, maybe we can link to it in the show notes or something like that. Charles Schwab, which is one of the biggest brokerages in the world, put out a report showcasing the top 10 equity holdings across different generations. So he looked at three generations: baby boomers, gen X, and millennials. Baby boomers, the top five holdings, it was no surprise, Apple, Amazon, Berkshire Hathaway, Microsoft, and Facebook. Gen X, again, no surprise here, same companies: Apple, Amazon, Berkshire Hathaway, Facebook, and Microsoft. Millennials. Here's where it gets interesting. Amazon, Apple, Tesla, Facebook, the Grayscale Bitcoin Trust.
More millennials hold more Grayscale Bitcoin Trust, GBTC, which is just a way to buy Bitcoin through their TD Ameritrade account or Charles Schwab accounts. They hold more Bitcoin than they hold Walt Disney than they hold Netflix than they hold Microsoft. So the interest of young people is there.
Now to your question, how do you access it? How do you buy it? Should you be buying it? Yes, it's become easy. Coinbase just got named the app of the decade, ahead of Uber, ahead of Lyft, ahead of the Gmail app. Whatever you use, Coinbase just got named the app of the decade. And so it's become easy to just buy and hold and sell these different cryptocurrencies, and specifically Bitcoin, then it has ever before then it was ever before. And we can get into if you want, why I think that every... I don't know if you can get into investment advice here, but I mean I think everyone has a fiduciary responsibility to allocate at least 1% to Bitcoin. I'm happy to get into that more but I don't know if you can give investment advice on this show.
Thomas Young: Well we try a little bit clear, but I'm curious as to why you think that everybody should hold at least some of their portfolio in cryptocurrency specifically. And obviously, you're bullish on it, so why?
Jason Yanowitz: Yeah, so it's simple. So if you believe in modern portfolio theory then you have a fiduciary... So I'm talking about a portfolio manager here, but there's no difference in how portfolio managers should be allocating their capital than how an individual through self-directed investing, through something like Rocket Dollar... You have a fiduciary responsibility to your shareholders or your LPs, or yourself, if you're investing your money, to hold Bitcoin. And I'm talking about Bitcoin here, not just all cryptocurrencies. Your job is to find a risk-adjusted return. So if you take Bitcoin, you put it in your portfolio, you're both reducing the risk and you have a material impact on the upside. So there's a bunch of qualitative arguments, these are endless, we can go back and forth forever. But the data is facts.
Over the last five years, if you had a 60-40 global portfolio, you would have returned 7.2% right? So 60-40 global portfolio, you returned 7.2%. If you moved just half a percent from stocks and half a percent from bonds and you put it into Bitcoin, you would've gone from 7.2% return to a 9.2% return. So that's a 200 basis point upside. Now if you put 1% in Bitcoin and it went to zero, you would've gone from 7.2% to 7%. That's a 20 basis point downside. So what you're looking at here is a 200 basis point upside, 20 basis point downside. That's a 10 to one upside to downside, plus it's non-correlated, so the risk of your entire portfolio's gone down. So that's a really simple way that we talk about why you should... We call it to get off zero... Why you should allocate at least just 1% to Bitcoin. Now, this is not financial advice. This not Rocket Dollar giving financial advice, so.
Thomas Young: Right, but no, but when you talk about it in terms of basis points, upside, and downside, it starts making sense why not only the 60-40 split is kind of the norm, but then there are other non-correlated asset classes like you just said, that should be looked at.
Especially, we can talk a little bit about self-directed and not specifically self-directed, but the power to invest in sort of any asset that you want is that as this sort of historic bull run gets tired, which everybody is sort of estimating that it will in the next one or two years, it's going to be important to have different assets, and real estate, and cryptocurrencies, and private businesses, and debt, and all these different things because at least you have a little bit of control over some of those asset classes, right? This is a whole other conversation, but at the same time, you don't want to be at the whims of the market, and you want to be in things that... If the market goes down significantly, I would bet that Bitcoin will rise. So you want to make sure that you've got a broad mix of investments, and then you look at performance, and you look at things like the Yale endowment fund that we talked about, and it starts making sense why stocks and bonds just aren't enough. It's important, but it's not enough.
Jason Yanowitz: Exactly. I mean, let me... I know this is... You're supposed to be interviewing me here, but can you use Rocket Dollar, like the self-directed IRA or something like that on Rocket Dollar, to invest in Bitcoin?
Thomas Young: Yeah. And a lot of our customers are actually, they use Coinbase. You go in and you set up an institutional account at Coinbase or an entity account with your Rocker Dollar account, and you can transact on Coinbase just as easily as you would with cash. I mean, what we're trying to do is to make it easy to get into these different asset classes. We don't necessarily claim that one is better than the other, but we want to make sure that the access is there, and then leave it to folks like you to educate on the specific asset classes and make it easy for our customers to sort of decide what's right for them. So we're about access and you're about education. So it's a good [crosstalk 00:33:55].
Jason Yanowitz: Awesome. I love it. I love it. So I hope your listeners take something away from this.
Thomas Young: Yeah, no, no, this has been great and I've learned a lot just sitting here. But Jason, before we wrap up, is there anything that you want to leave our listeners with? What's the best way to get in touch with your team at BlockWorks or with you, or if anybody wants to learn more, where should they go?
Jason Yanowitz: It depends if you want to get educated in a good way or if you want to just hear me ramble on Twitter, right. So if you want to find me on Twitter, I'm just @JasonYanowitz. It's my first name, last name, J-A-S-O-N Y-A-N-O-W-I-T-Z. I tweet a bunch of nonsense about Bitcoin. If you want to hear some more professional education, come to one of our conferences, listen to... We have 20 different podcasts. Some are for developers, some of the traders. Some are for really inexperienced investors. Some are for more traditional portfolio managers. So check out our website. It's Block Works Group, BlockWorks Group. Just type it on Google and it will be the first thing that comes up. So yeah, I hope some of the listeners follow me, DM me, we'll start the conversation. I'm happy to help anyone in the space.
Thomas Young: Well, Jason, thank you so much for coming on the show and sharing some of your expertise with us. I'm sure as this space advances and as we learn more and more comes to light, we'll have you back on the show. So really appreciate it and thank you again.
Jason Yanowitz: Thank you, Thomas. Appreciate it.
Thomas Young: Thank you for listening to this episode of Rocket Your Dollar. If you enjoyed this episode, please subscribe and share the podcast with your friends. To learn more about self-directed investing or to get started with your account, please visit us at rocketdollar.com. See you next week.
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