Hello this is Michael Choi from area specialists thank you for tuning in to
our vlog regarding crypto currencies and real estate. We've got a special guest
Kevin Te thank you Kevin for joining us he is a cryptocurrency evangelist
he's been in the game for a little while so thank you so much. Today we'll cover
how cryptocurrency transactions will be done with real estate, how we see it to be
done, what is cryptocurrencies, what is Bitcoin, what are the advantages of
cryptocurrencies and why there is so much hype.
Kevin t good friend of mine, welcome to the show and the vlog.
Kevin Te. He is a cryptocurrency
evangelist thank you Kevin thank you for having me Michael so firstly to start
off we want to break it down and can explain it from the start without
getting too technical bitcoin is the most well known cryptocurrency but can
you explain a little bit what cryptocurrency user first before we talk
about Bitcoin yeah so crypto currencies is is basically an online or digital
only currency. Bitcoin is the largest cryptocurrency and the most well known
cryptocurrency I almost feel sometimes that calling it
a currency sort of, old school? Not so much old school. But I think it we try and sort of categorise
things and pigeonhole things into sort of things that we know in our daily
lives but I'd like to think of cryptocurrencies is more of a sort of a
Bitcoin in particular as a digital store of value rather than a currency. I view
it more of as like a commodity like gold or silver then an actual like fiat
currency like the AUD or USD but it's it's been around since 2009
the founder or founders went by the pseudonym of Satoshi Nakamoto yes that's
right for Bitcoin so um so we don't know if it was an individual or a group of
people who started off but the pseudonym Satoshi Nakamoto is linked with with the
creation of the Bitcoin the Bitcoin network. And so what what Niche, what gap
in the marketplace did cryptocurrencies and Bitcoin fill like why why didn't
it exist and why does it exist now what's its purpose what has it helped in
so so the it came at a sort of a very poignant time in history you know we'll
we were coming off the back of the GFC and you know there were a lot of people
who were sort of disenfranchised with the system disenfranchised with with
Wall Street in the bankers and and the establishment and so this satoshi
nakamoto released his white paper it was you know referring to this this new
model of a digital cash that removes the need for a middleman a bank you know
that allows people to transfer value directly to each other without having to
go through any intermediary any middleman and so it cuts out delays it
cuts out fees that it also empowers people to have control of their own
assets their own money and and privacy exactly so you know I think when when
the G.F.C happened you know it was really the cypher punks and the
libertarians you know the guys that sort of wanted to take back that control and
really sort of helped foster the community and drive the adoption of
Bitcoin and and other cryptocurrencies you know
it's I think the simplest sort of use case to explain explain bitcoin is a a
store of value that is censorship resistant that is seizure resistant so
what does that mean that means that here is a store value that can be transferred
to anyone anywhere in the world and it is permissionless which is to say that i
don't have to ask permission from anyone to send it right so I can send it to
someone in the US in Zimbabwe in in Africa or in in China and I don't need
to ask permission from a bank and intermediary a government to do that and
it's immediate and it's immediate so I'm so a censorship resistant store or
values is I think is the primary use case for for for Bitcoin you know I
think I think a lot of people sort of grapple with the idea of a censorship
resistance or a value like like why do I need a censorship resistance or a value
and I think for for you know for everyone in Australia we don't need it
no you don't need I don't need it but you know my background is Cambodian, my
my family and I think you're half a Cambodian so my family you know came
here in in the in the early 80s fleeing the sort of Khmer Rouge regime and you
know my father and our parents that would have worked their entire lives and
accumulated wealth to have it disappear at the drop of a hat
yeah right and there was nothing they could do about it. A censorship
resistance or value would mean that there is no government
no militia no nefarious character who could have taken that money away he
would have been able to flee Cambodia, come here and maintain his wealth.
And still store his wealth. Exactly store where where no one can touch it
now I think so the problem we see is that in some countries especially the
third-world countries that the dollar just drops or evaporates and is no worth
is a billion dollars of their currency doesn't even buy an apple yeah and so
people work so hard they have their superannuation and and I have all these
savings and then inflation kicks in the government does something the government
keeps on printing money and because they keep printing money there's more of it
there's more supply there's more supply that demands lower than money drops and
then people that have worked so hard to have a million dollars in the bank that
million dollars now doesn't buy anything if they stored it in cryptocurrency that
would protect that yeah so and I think the the supply was a very good point
that you brought up you know with Bitcoin there's there's a there's a
maximum supply of 21 million Bitcoin there's never gonna be any any more than
that the current circulating supply which is
to say the current amount of Bitcoin in the mark of the moment is around the 16
million mark so that's sort of having having a ceiling or having a
fixed number that that can't be exceeded is helping with the the fact that it's
an appreciating asset or deflationary so it's not inflationary like like a fiat
currency which you know as you lose who gets you know will print off more and
more of it all the time. So Kevin I'll ask some questions that people at home
might be again who owns Bitcoin what company owns Bitcoin who is in control of
Bitcoin. So now that that's a really good question
and it's a good question for new people sort of entering the entering the market
no one owns Bitcoin which is which is why
bitcoin is so important there isn't any central governing body
there isn't a company a person a group who owns Bitcoin. Bitcoin is a network of
computers a global network of computers that anyone can contribute to can
participate in and helping to to add to that network and and that's the that's
the beauty of a Bitcoin you know. There are computers all around the world, how does that work
We'll it's basically, all these
tens of thousands of computers all over the world that are that run a version of
software the Bitcoin software and they all have the same version of the
software and they all maintain or should be maintaining the same version of the
ledger so you know. What is a ledger? All it really is all it really is is a record of transactions
right so these tens of thousands of computers all over the world maintain a
record of transactions you can't edit transactions you can only add to
transactions so you can't go back and retrospectively change a transaction
that you didn't like and because it's a network of computers if one computer
were to try and be a bad actor and maliciously change a record. This is the key to it.
This is exactly the key to it, every other computer would know
and will be able to reject that transaction and that is why we can move
away from having a central governing body like when we talk about banks we we
talk about trust and having a central body that you can trust maintain a
record of transactions is important with with Bitcoin and this technology we
don't need a central person because we have a network of computers that
that all run same software that all help to verify each other's transactions so
the trust is is built into the network is built into the software. So Kevin, how
many other crypto currencies is a so there's Bitcoin and there's others how
many others is there? Gosh there's yeah there's there's thousands of other other
crypto currencies and there's new currencies so now yeah possibly yeah
there's the new currencies every day. So why is Bitcoin so well-known even
to someone that's not in into trading bit cryptocurrencies what is the general
population know about Bitcoin and not the others? I think um the the primary
reason that is bitcoin has been around the longest it's the largest and it's it's
had the most media coverage for that very reason it's really being around
since 2009 a lot of the other newer cryptocurrencies have only been around for you
know one or two years or even a few months and so you know over time there
is there is almost a brand recognition side of it that that the brand the
Bitcoin brand itself has become potentially more valuable than the
underpinning technology you know everyone knows Bitcoin and so that's why
when we see new entrants in the market we're now seeing sort of Forks of
Bitcoin where people are trying to use the Bitcoin name and you know Bitcoin
Cash or bcash or Bitcoin Gold and it's just got such a strong brand they
want to piggyback off and that's exactly right use the name and then hopefully
that they ask them create their own crypto that's right get some leverage
that's right so um so yeah and and the Bitcoin is the is the one that's been
around the longest it's the largest it's the most secure
I mean it's the most valuable of them and
do you feel with covered security enough after I feel is there anything more you
wanted to add to security in terms of someone's thinking about investing into
cryptocurrencies what can you tell them about the security I think there's two
points that I'd like to make about security I think I think some you know
we often read articles in the paper and in the in the media about about hacks
and having and having Bitcoin or a few more other cryptocurrencies stolen and
this point I'd like to make is that when these hacks occur they actually aren't
occurring on the Bitcoin network, the hacks are occurring via phishing scams
via you know other third party software that that people are using by other
wallet providers by other sort of you know peripheral software and
applications that hang off the Bitcoin network so a Bitcoin it network yourself
is is very secure it's not being hacked which is to say that it's he's being
hacked but no one's I was actually compromising the network in stealing
money off the network there are the compromising individuals and stealing
their private keys via phishing scams or compromising other software that is used
to store people's currencies on the network. Which happens with cash, which
happens with cash which happens with with internet banking which happens with
anything like if if I was to get your internet banking ID you know it seemed
good yeah I packed it exactly you packed me but he's saying Michael your
passwords changing and putting your ID yeah yeah I go oh oh I need to put in my
password my bank just told me i have to. right, I send you my password and then, same
thing can happen with cryptocurrencies so like anything you have to be careful
that's right so um the the second point that I'll
make it around security and so when when you remove a middleman
you remove a bank or an intermediary what you are doing is you're removing
some of the responsibilities that middleman provided as securities one of
them so some of those responsibilities are
covered off by the Bitcoin network itself right through software other
parts of the responsibility will fall on the individual so now if you're not
using a bank to manage your assets to manage your finances to manage your
money you need to act like a bank and be responsible for that
and so there are multiple ways to secure your your cryptocurrency there's a
software walls which is basically an application that you run on your laptop
or people laptop a Mac there are Hardware wallets which is like a USB
dongle that you use to to to secure your your password
and then there are there are offline wallets or paper wallets which is a
piece of paper that you write your private key on and you store that
somewhere very very very very safe. You hide that, you make multiple versions of that but no one knows where that is.
right so um so it's important you know when I talk to people about about crypto
currencies and people who participate in this market the number one thing that I
do emphasize is your security if if you're going to remove in this
intermediary you're gonna remove the middleman you need to be responsible for
that and I think it's it's really something that a lot of people just sort
of take for granted with the banks that their money is protected that we've got
legislation and laws around and what happens if you were to lose your money
and insurance did happen in in this space there isn't such laws and
regulations and controls you really do need to secure your your money. So
at the moment in the last say especially in the last 12 months in Australia
there's been a huge there's a lot of conversation around Bitcoin and just
recently property there hasn't been any transactions of property yet of someone
using Bitcoin to actually buy property however you actually can do it there's a
few properties on the market around Australia at the moment where the owners
are accepting Bitcoin why wouldn't I not want to accept
Bitcoin why would someone want to pay a house with Bitcoin or a cryptocurrency? I
think you know people value Bitcoin because it is a scarce resource and they
view it as an appreciating asset and so that that answers the the why would
someone want to as a seller as you may want to accept Bitcoin because you
believe that is more valuable than AUD. Yes that's right and and as a as a
someone who wants to use it to make a purchase
it's just like any other form of currency or store value like you you
want to be able to spend it on things and so it might just be easier for you
if you've got a lot of Bitcoin to be able to use it as he's rather than
having to transfer from Bitcoin to an exchange your in wallet to and then
selling it off and transferring to to a bank you might if you can make it a
transaction directly with someone who wants to accept it as payment then
that's probably the easiest service time it saves time it cuts it cuts out
multiple layers of middlemen and and that's what it's what's what it's all
about really. So when an owner, an owner that is likely to accept Bitcoin or
cryptocurrency as a payment they're actually more than likely
going to accept a price that is actually lower than AUD so just for example say a
house is worth $800,000 and owner wants $800,000 to sell to sell their property
they might accept seven hundred and fifty thousand dollars worth in
cryptocurrency and the reason for this is because they believe that
cryptocurrency has more potential so that's probably another advantage for a
buyer that's using crypto currency to buy a property they might go while I'm
saving money I'm saving money because I'm not having to buy in Australian
dollars and if it's in Australian dollars I have to pay a little bit more so the
things we need to consider is is tax. The ATO has said that yes, it's
okay to use crypto currencies or any form of asset to trade asset for asset
that's not a problem, but there's things like capital gains tax which is when a
landlord or an investor has made a gain in the property that again in wealth and
property they now have to pay tax on that gain like it's an income that
that's one one hurdle that people using crypto currencies in property have to
overcome the other one is stamp duty. When a buyer buys a property they pay
stamp duty are buy property for X I have to pay
stamp duty based on the value that I bought a property for so if we're using
cryptocurrency to say Kevin you're buying I'm buying a property off you
yeah I'm using crypto currency to buy property of you you're accepting the
crypto currency we can literally, I can I can go hey here's my Bitcoin yeah and
you go well he's the keys to my house and it's a done deal
yep okay that the title has to be changed by a solicitor but it's a done
deal but they're the the hurdle there is that the the State Revenue Office will
want stamp duty payable so how I see that probably working is when when a
action is done when the title is changed either some real estate agents will
value the property for the owner a licensed valuer or may value the property
for an owner or the legislation there is no legislation around this year but
legislation might be something on the lines of how much was the Bitcoin worth
in Australian dollars at that time of sale okay then well then you'll
pay the stamp duty on that amount the legislation hasn't been made on that yet
yeah but it's more than likely like when you transfer a property from brother to
brother yeah simply the sibling or something you don't always sell it at
market value, you don't sell property at market value
I might be you're a good mate of mine you so you might say hey Michael you can
buy my house it's worth 800 but you can buy for six hundred thousand yeah in
that moment in time he's allowed to sell his property for under market value say
to a safe to a sibling for example but you still have to pay the appropriate
stamp duty as a buyer because it gets valued by a licensed valuer or real
estate agent. In terms of the the tax implications if you're an investor
so there's no tax if you're you're selling a property Kevin or you're
selling the property and it's your principal place of residence so you
live it in the actual property and it's your it's your primary residence then
when you sell it you don't have to pay capital gains tax okay but if you have
another house for example and this you've got another house here that's
you've had for quite a few years and it's raised up in value and you're
selling it then you have to pay capital gains so say you've made $200,000 in
that then you have to have to pay the capital gains regardless of selling it
in a AUD Australian Dollars selling it with gold or selling it in
cryptocurrency so that's just something that you need to be aware of we strongly
advise that you seek legal advice regarding trading with crytocurrencies
I think it's really a very immature space in terms of our
legal and tax obligations and cryptocurrencies I mean you know I think
we're all trying to work through and understand what this all means and this
this is the government as well and the ATO we're all trying to understand what
the broader implications are because it's a very very complex issue when you
when you make a transaction you may pay a tax or stamp duty on on that on the
value of that transaction what happens if you don't cash out immediately then
and you cash you out six months from from when that transaction took place
and the value of your Bitcoin has increased and then you need to take the
capital gains on that into account like if you if you spent a million dollars
and bought a house with million dollars worth of Bitcoin and you do nothing and
you sit on that Bitcoin for six months and then the person who received the
Bitcoin and then and then they decide to cash out after six months but that
million dollars what bitcoin is worth 1.5 million dollars now like what are
the implications there you know so there's there's a lot of detail that
needs to be worked through needs to be sort of better understood and and we're
all we're all sort of you know working through this together. Like any emerging
technology laws will never be up to date they're also out of date the moment
they're printed yeah there'll be a new technology created in the next few years
that the government won't have been able to create a law for because it didn't
exist. So right now the they're amongst, in the midst of making legislation
around this and it won't be perfect there'll be there'll be gaps in and
because there's so many situations that can happen that they need
taking considerations are so many precedents that need to occur for them
to take into consideration. There's something that we haven't covered yet is
how do we do the transaction for property to cryptocurrency so I
said before oh here's my Bitcoin their thing can I have your house and you said
yeah Michael he's the key yeah how do you see that working? I think as
far as transacting with cryptocurrencies is concerned is there's a number of
different ways that that can take place. There are providers or services out
there that help businesses get set up to enable them to take payments in the form
of cryptocurrencies so there's there's many of them out there online in
Australia and internationally the the easiest way for people to make
transactions is sending from your wallet to my wallet so if you've got a
cryptocurrency wallet you just punch in my public address and you can send funds
from me to you. The public address is just like a bank account number yes,
exactly it's like it's like a bank CRN number so
that's a way to do it as well. Another way you can potentially do it is
if you had a physical Hardware wallet which is like a USB dongle and you
wanted to have a third party sort of manage that or hold on to that wallet
you could physically you could transfer funds into the hardware wallet right
into that USB dongle and have so it looks like a USB see it looks like a USB
stick and you can have someone help facilitate that transaction in terms of
giving the keys in trust otherwise, it'll be a bit of a like a swapsie, Kev's
got the key I've got I've got my USB dongle USB and were like okay yeah yeah
but what you what you actually could do is
at the moment how it's done with Australian dollars
it's a solicitor takes the money and holds it in trust so a buyer puts the buyer
the buyers bank and sends the money to the solicitors and the solicitors meet
and they go okay yep we will pay you the bills this this bills the rates has been
paid off this is all done the mortgage, the banks get paid the
mortgage out, this is the excess money left over their excess money that's left
over once all the everything has been paid for then goes to the owner of the
property the owner property now is no longer the owner of the property title
to change and it goes to the purchaser who gets the keys. The same thing will
happen we've cryptocurrencies someone could have a wallet and just
hold the wallet in trust and yeah and transfer it at that time. it's it's pretty cool because it'll be
like a physical representation you carrying this little you know tiny USB
key with it up potentially millions of dollars on it and and you know you're
giving it to someone so yeah with the with the credentials to be able to log
onto it yeah yeah and so what would happen is you can prove that just by
typing in the the serial number of of your ledger or your USB stick for example
and your wallet you cryptocurrency wallet and that can prove on the
computer how much money is actually in that wallet. I think the beauty of
Bitcoin and all of them cryptocurrencies they're they're public
all right so anyone can if you have the the address and you know the address you
can get the address information put into a blockchain Explorer and you can verify
any transaction that's going that's in that address in that
wallet in that account anyone can do that it's public it's it's open so it's
it's auditable so there's no way to sort of fudge that
well in closing we do want to say that it's advised to still get professional
advice conversations and legislation on this will change ongoingly there could
be legislation being created right now while we read in the video so it's
strongly advised to still seek professional advice. As we're
recording the video the ATO and Consumer Affairs have said it's okay to
use cryptocurrencies and Bitcoin to buy property whether it be for a deposit or
for the full purchase price. If you do have any questions though we'd love to
chat to you about the possibilities or even if you just want to talk crypto-
currencies or if you want to talk property, this is Michael Choi, Area
Specialist. Thank you very much Kevin. Thanks Michael.
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