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What Are Crypto Investors Thinking? Crypto Island’s PJ Vogt Weighs In


PJ Vogt has been following Bitcoin (BTC -6.60%) since it was worth $10. He didn’t buy in then but is more than happy to keep following the story. Vogt is the host of the new limited-series podcast Crypto Island. Before that, you may have heard his voice on Reply All.

Motley Fool producer Ricky Mulvey caught up with him to discuss:

  • The recent crash in crypto.
  • What the “financialized version of the internet” can tell us about people.
  • What happens when internet strangers try to operate a McDonald’s (MCD -1.55%).

To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on June 12, 2022. 

PJ Vogt: But you had all these people who were saying, on some level, don’t trust the existing financial system, don’t invest your money there, put it here. Then, wandering the floor, just talking to conference-goers, it really felt like people were there because of FOMO. People were there because they felt like they’d been dealt a bad hand in the American economy. I think they understand they’re at a casino, but they don’t feel like this casino is rigged, they think they have a chance in that.

Chris Hill: I’m Chris Hill and that was PJ Vogt, describing his time at a bitcoin convention. Vogt is the host of the limited series podcast Crypto Island. Before that, you may have heard him on the podcast Reply All. He’s been someone who can help make sense of things on the Internet that is a little bit outside the mainstream. Ricky Mulvey caught up with him to talk about the recent crash in crypto, understanding Bitcoin’s true believers, and what happened to when Internet strangers tried to operate a McDonald’s.

Ricky Mulvey: Hey, Fools. I’m Ricky Mulvey, a producer for Motley Fool Money. Joining me today is PJ Vogt. He’s a host of Crypto Island, a limited podcast series about crypto. He’s doing shoe-leather reporting on crypto Web3 in for me a way that’s refreshing. Welcome to the show, PJ.

PJ Vogt: Thanks for having me.

Ricky Mulvey: For the uninitiated, what do you think the story of crypto has been for the past six months or so?

PJ Vogt: My limited series has basically started over the last six months which has been a very interesting time in crypto. When I got in as a reporter, it was a bull market. I like to cover both the sceptics of crypto and the evangelist. The evangelist were maintaining huge amounts of money. The sceptics were saying it was going to crash. The place where a lot of the money was coming in was this new stablecoin called Terra, and its twin currency, LUNA, which I can already feel the jargon pile up. But basically, they are a new cryptocurrency. People are making money on it, lots of money. Then, in the last month that cryptocurrency exploded, taking tons of value out of crypto, making a lot of people experience pretty a significant bear market. Now, the story of crypto has been people preparing once again for what they call a crypto winter where prices will be down for a long time, and a lot of people probably leave.

Ricky Mulvey: Let’s talk a little bit about Terra and LUNA, specifically its founder, Do Kwon. The idea was that you had this coin that was going to be easy to transact because it was backed by an algorithm, but it got caught with its pants down because it didn’t have the assets necessary to back it up. If you had more money, you were able to take down the stablecoin if you will.

PJ Vogt: Yeah. Crypto folks are really into this idea of stablecoins, which are basically the price of different cryptocurrencies that seem to be incredibly volatile, which makes it interesting for people to trade, and makes it difficult for people to actually transact with. Rather than holding the money, they want to later trade in dollars, a lot of them want to hold them in cryptocurrencies that are designed to equal usually one US dollar per coin. One way you can do that is by collateralizing it, which they are both coins that do that. They’re coins that claim to do that. People have questions about whether they’re actually collateralized. Algorithmic stable coin, the idea is, it’s supposed to always be worth a dollar, but it doesn’t have traditional assets collateralizing it. In this case, instead, it was like, hey, we have this stable coin, a type of money we’ve invented, and the thing that is going to back its value is another cryptocurrency that we have also invented.

Surprisingly, it did work for a while, and I do want to say, there are lots of things in crypto that sound a little bit ludicrous in function, and so I think for a lot of people, it’s interesting. There are people in the space, legitimate respected people who were pointing it they’re subtly and not so subtly and saying that Jenga tower is very wobbly. But I think that for a lot of people it’s like, well, it’s working, maybe it’ll keep working. It has stopped working. It stopped working very suddenly. The founder of the coin is this guy Do Kwon, who I’ve written this story about, he’s like if Elon Musk was less polite on Twitter, he’s constantly fighting with people. He’s constantly explaining that anyone who doubted his coin was an idiot, that they hadn’t done their research, they should have fun staying poor, and so part of what I find interesting about crypto. What’s interesting about the fall of this currency is that these are real stories about people, and in this case, I think it was a complicated financial instrument. A lot of people who were participating didn’t really understand it. But they think they had faith in this person and his confidence, and it turns out that faith was misplaced.

Ricky Mulvey: That does seem to be one of the driving themes of crypto. It’s just like if I don’t understand this, I’m stupid, and if you’re not investing in it, then you are dumb. But if you are investing in it, then you’re smart and you see the future.

PJ Vogt: My thing is like, I just have a hard time with anyone who comes out too hard on any side, so I would say there’s certainly a large and loud group of people online who are like, this is smart, this is the future, if you don’t understand it, you’re missing out on a chance to be very wealthy. There are also people who are happy to tell you you’re an idiot if you participated in it at all, or if you have any curiosity or you think there’s any value there. What I like about crypto, honestly, as a person who’s spent a lot of time reporting on the Internet is, that this is a place where all these arguments people are making, some of them actually get settled.

For instance, there was this investor analyst guy who went on a podcast and said that he thought that Terra and LUNA were great investments, that they were reasonably risk-free, and that it made sense for people to put a lot of money there. That turned out to be bad advice. Crypto Twitter has been having a field day just like playing those clips with classical music underneath, putting the clips on a chart of the price to show exactly when you said that, exactly when it dips. To me there is actually something refreshing about a world where sometimes, unlike most places on the Internet where people argue but you never really get closure, there’s a bit of closure in crypto, in terms of how these bets get settled.

Ricky Mulvey: That makes sense. I know you’re following this as a reporter, but do you personally invest in any cryptocurrency, NFT, and that sort of thing?

PJ Vogt: I don’t. I’m actually working on an episode about the ethics of it because the ethics are entertainingly complex. There are people in crypto who say, if you’re not even investing a little bit, you won’t understand these products. Because it’s a financialized version of the Internet, not investing or owning crypto is similar to not using Facebook but reporting on Facebook. Similarly, there are people who are like if you own any of it, it’ll corrupt you terribly. I’ve found so far that I think I cannot own it and understand it pretty well. I want to approach it with an open mind, and I feel like if I own it, I need to disclose it. If I tell people I own this stuff, and I’m open-minded about it, they could see it as that I’d be compromised, and so I feel like for me the best choice has been not investing.

Ricky Mulvey: Makes it easier as a reporter.

PJ Vogt: Yeah.

Ricky Mulvey: When you started your journey, you began with more of an idea than a place of the actual idea of Crypto Island. You can probably set this up better than me, but essentially it was this 10-minute or so animated video that was about building a private island retreat for cryptocurrency investors. It was an investment group that maybe had run some scams in the past and that had planned on buying a private island. We have a little bit of a clip describing it.

MALE_1: We organize a number of different crypto conferences and meet-ups year-round. Lots of crypto VIP is coming tomorrow. You can feel the entrepreneurial spirit here. You can work, get coffee, and when you get stressed you can hit up the de-stress room.

MALE_2: The…

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