In this episode I had the pleasure of sitting down with Keith D, also known as Keith Smith. Our conversation was a deep dive into the misconceptions holding people back from financial confidence, the transformative potential of decentralized finance, and the lessons Keith has learned from his own financial journey.

Keith’s story began with a summer class that introduced him to the stock market through an Investopedia simulator. Fast forward to 2017, and he stumbled into the world of blockchain and cryptocurrencies like Bitcoin and Ethereum. This discovery sent him down a rabbit hole of monetary history, exploring why inflation erodes purchasing power and how systems like the Bretton Woods agreement shaped our modern fiat currency landscape.

Keith pointed out how Wall Street thrives on making you feel like you can’t manage your own money. “They want you to think only they have the expertise,” (courtesy of The Big Short). Keith stressed that understanding basics like bonds or asset classes can go a long way.

In his early 20s Keith turned a $15,000 crypto investment into over $500,000 during a bull market. Caught up in the euphoria, he didn’t take profits, believing the cycle would never end. When the market crashed, his portfolio plummeted, and real-life financial pressures forced him to sell at the bottom. “The big lesson was the difference between investments and income”.

and his belief in creating a lasting legacy through philanthropy. “Surplus wealth is a sacred trust,” he quoted, advocating for systems that distribute wealth effectively during one’s lifetime. Wealth isn’t just about accumulation but solving problems for others.

by Morgan Housel for its insights into the behavioral side of finance.

TRANSCRIPT FOLLOWS AFTER THIS BRIEF MESSAGE

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EPISODE TRANSCRIPT

Phil: Keith is a passionate financial literacy educator, investor and public speaker whose mission is to demystify the world of finance and empower individuals to build wealth with confidence through his platform. Um, Keith D Media. Keith combines his experience as a former investment broker and real estate advisor with a commitment to helping people understanding the financial system, creating sustainable habits, and unlocking their potentials. So let's hear a little bit more about your background, how you got to this point in your life.

Keith Smith: Yeah, sure. Essentially was just always fascinated with finance. I, as a young man, was lucky enough to take a summer class about stocks going into high school, actually. And at that time, I didn't think too much of it. I thought it was cool. I got to play around with the Investopedia simulator. But that ended up being the very beginning of my introduction to financial markets in general. And Fast forward to 2017. I was finishing high school and I ran into this concept of blockchain and, uh, bitcoin and Ethereum. And once I discovered that there was this entire technological revolution taking place there, and not just bitcoin itself used as Internet money for sketchy uses, I realized that there was something bigger happening. And from starting to dig deeper into blockchain and cryptocurrency, I actually worked backwards and figured out, okay, if this is going on, then how did we get here? Why does this stuff actually exist? Which sent Me down the rabbit hole of trying to study a little bit of monetary history, looking at the economics of why inflation is such a big problem, and looking at the different ways that people have tried to address this in the past. So took, uh, it from there, I actually went literally backwards where I was working in blockchain and crypto with a defi project. I then started working with a security token group where people were tokenizing registered securities and bringing them to the blockchain. And then came all the way to being an investment broker where I was completely on the regulated side of the game in the United States, learning about the back end of how private equity capital gets raised and real estate deals get done and things of that nature.

Phil: It's interesting that you went backwards to have a look at the history of it, to actually see where you are now. What are some of the things that you discovered? I mean, you mentioned inflation and um, the causes of inflation. Tell us a bit about that.

Keith Smith: Yeah, well, I think essentially one of the first things that any bitcoiner or crypto person ends up learning about when they take it seriously, is about the Bretton woods agreements that uh, were taking place in the 70s and the ending of the Bretton woods system. So without being able to go too deep into all of that, essentially the United States depegged their pegged to gold. And because of that, fiat currency became the standard, meaning that there was nothing that was actually backing the money in the system. That not only was that happening in the United States, but that happened essentially globally once that occurred. Now we have central banks and governments around the world that can print money that has nothing physical or anything of any value that backs it. And with that, the ability to, uh, erode purchasing power from its citizens and around the world without any real checks and balances in place around how that process may take place.

Phil: Yeah, I think myself personally, I've come around a little bit more to bitcoin these days, actually understanding what you're saying there is that everyone says, well, what's bitcoin? What's its backed by? And you can say, well, what's fiat, uh, currency backed by? It's backed by nothing. Is it?

Keith Smith: That's what it all comes down to. At the end of the day. It's fun to have that conversation when that light bulb might go off for someone, because we can argue about the intrinsic value of bitcoin all day long, but at the end of the day, what is the intrinsic value of

00:05:00

Keith Smith: a United States dollar other than you can use it to pay for taxes? And to pay off, uh, the United States can use dollars to try to pay off its debts, but as soon as you have governments around the world that accept cryptocurrencies or bitcoin as legal tender, then you start to change the narrative around, well, what is the difference anymore? What is real money? Which one is actually harder, more sound money?

Phil: So what inspired you to take this to the world via your, uh, YouTube channel? Which is great. I mean, it's really great financial education. I mean, I know you cover a lot of crypto as well, but you also, you like to talk to people. It's a little bit like me. And what I'm trying to do is where we talk about bonds or we talk about financial markets and how they work. What was the first thing that inspired you about that?

Keith Smith: Yes, so a lot of this started with me going to high schools a few years ago. I was going to high schools when I was in Miami trying to teach about monetary history in order to be able to deliver education around cryptocurrency and blockchain. And so as I was going through that process, uh, it wasn't super scalable. I was just kind of running around going to high schools, doing what I could, and eventually I couldn't sustain that. And so I got to the point to where I got lucky enough to have a mentor of mine and a life coach of mine who was telling me about the things that helping coach me through some of the mistakes that I've made in my life. And he was like, you should share this stuff with people, and you should champion the fact that you've made these mistakes. And when day had hit me a couple of months ago now, it was that I started the YouTube channel to start to talk about some of the things that I've learned, some of the mistakes that I've made, and also some of the basics of the financial system. As I do think it's important to have that background in order for anyone to actually understand crypto and blockchain. And lastly, the reason I find it so important for people to understand cryptocurrency and blockchain is because there is a limited supply. And so for the people who are not participating in this space, there will be less and less available for them as time continues to go on. And so with that, a lot of people are being left behind and what they could otherwise be ahead of and take advantage of and create a whole different trajectory for their life. And so just I feel a need to do my best to kind of get the information about this Technology out.

Phil: With the interaction with your audience. What are some of the questions that people come to you with?

Keith Smith: I think one of the biggest things that I see is in general, people feeling like they need a certain amount of capital or something like that to take advantage of some of the concepts that I'm talking about. And another thing that happens, honestly, is also people assuming that there's some endorsement of an investment in anything that I'm talking about. Like in the bond market video that I did, there's a lot of talk about, oh, well, is this even a good investment? Or I would never buy bonds and this and that. I think what it all really comes down to, as I've noticed from just being, uh, in a media perspective of I'm just trying to teach the lessons of what's happening, is everyone's situation is very different. So there is no one right way to go about your financial journey. And with that, I think there can be a misconception of, listen to this guy and just do whatever he tells you to do. But in reality, it really, really matters what your goals are. It matters who is in your life that you're taking care of and what other emergencies may come about and things like that. So I think that might be the big thing, is that everything in finance is very, very personal.

Phil: And it's so important to understand even the basics of most of the concepts. Uh, like I said in the introduction, Wall street and financial services all around the world, they want to make you feel. I'm going. I watched the big short again the other night and there was that great line where they said that they want to make you feel that they're the ones that have only got the expertise to be able to handle your money. But even just some basic information about what a bond is or what an asset class is, and the different asset classes really go a long way towards helping you, doesn't it?

Keith Smith: Absolutely. Absolutely. Great movie, by the way. And you know, after being inside of some of that, with the investment broker that I worked for for a little bit of time, I totally realized that there's a lot of these different concepts. You've got the internal rate of return, your multiple on invested capital, and so m. Uh, these many different ways to try and measure your returns in the market and whatnot. And in reality, it always comes back down to, for the individual, what does this mean? And when I'm looking at the terms that are used, it's often, uh, not necessary to use these different terms. You've got different ways of looking at how to Value the future values of money and how you can get returns from your capital. But for the individual, usually it just comes down to the return on investment. Now the time is important, and having

00:10:00

Keith Smith: that aspect understood is also very important. And I think that is where there's also just a major gap, is understanding that the whole point of using money is to get time back. And so all of these terms that you hear in Wall street are usually about adding that time aspect into the money. And as long as we can start to understand a little bit better of how to actually use money in our lives, I think that's something that's really important and that helps us to realize that we don't need Wall street in order to do what we need to do with our money.

Phil: You mentioned before that you'd made mistakes that your life coach picked you up on. Can you share some of those mistakes? Were they financial mistakes? We love a financial mistake on this podcast.

Keith Smith: Yes, I made a fantastically horrific financial mistake in my early 20s where I got lucky enough to make a good investment. For about 18 to 22, I was investing in something in particular. It was a cryptocurrency project. And what I didn't understand at that time was how the market in crypto tends to move in these four year cycles. It's not that I didn't know that, but what happens when you're in the middle of the euphoric phase of these cycles is that you get caught up in watching the numbers go up. So I had a $15,000 total investment that I had made. I worked all summers. I even took a semester off of university to invest during the bear market because I knew that was the best time to invest. And by the time we were at the peak of the bull market, that $15,000 investment had turned into over half a million dollars. Now, to me, in my head, this was obviously a significant amount of money and I was very happy about it, but it was nowhere near where I saw myself going. Now. The issue with even thinking in that way was that first off, you have a four year cycle, so things are going to turn around at some point. And in my head I'm like, oh no, this is it. We're never going to go through these four year cycles again. And you know, we're in a new world and it just wasn't the case. And so I had a golden opportunity to actually take profits right at the top. Even if I had just pulled out 20%, 25% of what I had at the time, it would have been fine. I would have still had 75%, right, still there if I needed it or if I wanted to hold on to it. But instead I took no profits at all and I come back down through that four year cycle. That $500,000 had turned into pretty much not much. Imagine it goes down to 10% of that level. And so here I am. Now. The worst part about this is that not only did I not take profits, and I've not the opportunity to do that anymore, but also I'm running into financial issues in my real life outside of that investment. Now what's happening now I'm having to sell these assets at the very bottom of the market, which is the worst possible case scenario. The real big lesson that I, uh, really took away from this was the difference between having investments and having income. Oay, because there's a very, very big difference there where having income, uh, allows you to make sure that you never have to touch your investments. But I had very little income, so my investments were the only thing that I had. So when the investments come back down then, now I have no way to protect myself other than to sell these investments. And that's what I was living off of, was my investments. And so, um, big, big financial mistake there that I continued to learn from today. And looking at how can I navigate this a little bit differently moving forward.

Phil: And hopefully in the future you want to be able to be making an income from your investments and still be able to keep your investments going, which is uh, I guess a golden goal for all of us investors.

Keith Smith: And that's the big thing too is that especially in the crypto world, there are fantastic ways actually that don't exist in the real world where you can take some of your assets and actually earn in those assets. So if I had understood the value of just, even to just stake my assets essentially and earn on them, that would have been a powerful way to go about it. There are ways that you can leverage your assets and borrow off of them in crypto, specifically without any banks involved. I could have been doing that. So yes, there's so many ways and just trying to create cash flow out of your assets instead of just buying and holding. And I think that's a lot of the mistakes. One really big mistake that people make in crypto is they just buy it and hold it, not understanding that there are actually ways to leverage these assets to create cash flow.

Phil: Ditch the Spreadsheets share site is Investoredia's top tracker for DIY investors. Invest smarter, not harder. Grab four months free on an annual premium plan at sharesight.com sharesforbeginners. We were just talking a little bit before we started this interview and, and I mentioned that on YouTube and I, when I was doing a bit of research on different kinds of financial YouTube videos, how successful some of these AI generated YouTube channels are, uh, with millions and millions of subscribers watching these

00:15:00

Phil: things which are just basically, you know, AI generated images of people sitting in front of screens with people saying, oh, you can do this with stocks and you can do that with stocks and you can buy and sell and you can learn all about it, but with, with no solid information whatsoever. You know, and here is us, uh, you know, really trying to do, to do something here. And I think this may be, speaks a little bit to that urge amongst people to want to have an answer given to them on a plate rather than starting to think about actually what they're doing and how to make it happen for themselves and to learn for themselves. Anyway, that's a misconception that I've been finding. What are some of the misconceptions you've been finding? And also if you do have any comment on that kind of video, have you seen anything like that?

Keith Smith: Uh, you know, I haven't seen too much like it, but what I can say, and this has been super fascinating, Quick side note, I've seen people take my Bond video and completely replicate it without any sort of alterations whatsoever, and people from different countries and so on. But I think we're in an interesting place here with online media in general where there's this entertainment aspect of what people want, but then there's also this informational aspect as well. And as creators, our job really has to be to try and mix those things the best that we can with the AI content and seeing that it's doing well, I would love to look at that because I haven't been seeing it that much and understand what it is exactly that people are getting from the video. Because one thing about the YouTube algorithm in particular is that it serves content based upon viewer satisfaction. They have their own metrics of how they're looking at that and so on. What is it exactly that people are taking away from a video that just has a bunch of general information? And why is that something that they're liking and coming back for and that YouTube continues to feed to the algorithm? Because in that there might be some lessons around how we can continue to give that kind of information while also giving some good principles and some good hard data and facts to supplement that. Because I think it's easy to sit back and watch stuff that's not super actionable or that's not super concrete. But if we can add that stuff in, I don't think people are going to drop off just because you give them some hard data. Just thinking out loud about that, I.

Phil: Guess here we like to think out loud. What are some of the misconceptions that you've come across and the barriers for creating wealth amongst people that you chat with?

Keith Smith: Yeah, I mean, I would go back to that thing about you need a lot of money to start investing or to do it right. And I just think that that's false, especially when you have assets like cryptocurrency, where you can buy fractions of anything. When it comes to bitcoin, people are like, oh, Bitcoin's $120,000. Uh, why would I buy it? I can't buy it, or whatever. And that's not how it works. And this is part of the education that's necessary is you can just buy a fraction, you can buy a little piece of it. And there are a lot of ETFs in the stock market that allow you to get smaller fractions or put smaller amounts of money and have it working for you. But when you wait until you have money, then you never invest, uh, potentially. And so it's so much more of a mental game than I think that we're taught. And I recommend a book called the Psychology of Money by Morgan Houseell. And it talks a lot about that, about how this is a game of psychology and history more than it is math and science. And I think that's one of the biggest misconceptions.

Phil: It's interesting these days because you can actually start investing with dollar with micro investing apps as well. If you want to get it in the stock market, I would highly recommend it because it's also a bit of an education process because you do have to make decisions on what asset classes. And you can, you know, have some stocks and bonds in your portfolio and Bitcoin as well. And it's a great way to start with dollars and roundups. Um, yeah. Do you recommend this kind of approach as well?

Keith Smith: Absolutely. One of my good friends, he used this app called Acorns, where it just rounds up your purchases and puts that money towards different ETFs and stuff like that without you even having to think about it. And I think that's the other side of the beauty of today is we have technology that can automate these processes for us. So even if it's Just dollar cost averaging, meaning you're just putting a specific amount into the market every month. There are apps that will do that for you nowadays, and most brokerages offer that at this point. And so I highly recommend using apps like Acorns or Betterment and at least understanding the fee structures and understanding what the trade offs are as you're using these apps. But as a way to get started, it's a great, great way to do it for sure.

Phil: So what would you say to someone who is approaching things with one of these apps? They've got no, uh, financial background or education whatsoever, but you want to tell them that why they should also be investing in Bitcoin or crypto of some fashion.

Keith Smith: Yes. So the biggest thing. This is funny because it leads right back to my friend's conversation that we had about this Acorns app. He

00:20:00

Keith Smith: was saying, oh, I have more money in here than I had ever put in here before. And he read off the returns to me. And the returns were something in the low teens. And he had been putting money into this for years. And I was like, well, I'm not sure if that's actually all that good of a return, uh, based upon the inflation that has happened over the past five, ten years as well. And so one of the first things to understand is the real rate of return on your money, which is just taking your nominal return. Let's say the s and P500 goes up 8%. But inflation is usually on average anywhere from 2 to 3% in the United States. So let's say it's 3%. Your 8% return is actually, you need to subtract the 3% because the cost of goods in society has gone up by 3%. So you take your 8%, you subtract the 3%, and the real return that you've gotten is 5%. And now that's one way of looking at your real rate of return. But there's another kind of way that you can look at it from a more macroeconomic perspective, which is to look at the increase in the supply of money in the entire economy. When you look at the increase in the supply of money in the economy versus the returns that you're seeing in indexes like the S&P 500 in the United States, you can see that there actually has been not as much of a gain in the S&P 500 versus the supply of money in the economy. And you're looking at the supply of money as the potential for inflation. Essentially look at it as potential energy or potential inflation and eventually that increase in the money supply will turn into inflation in the economy. At what timef frame, it's not clear. But when you measure M, M3 or M2 versus the S&P 500, specifically the M3 versus the S&P 500, the S&P 500 has never caught up to the levels that it had in the 2000s.com bubble. To this day, every dollar that you put into the S&P 500 has not necessarily gotten you past the point that we were'in 2000, when it looks like you're making money nominally because your numbers are going up. When you really measure your gains versus the increase in the money supplier of prices, even in the economy, you might not actually be getting ahead. And that is where crypto, uh, can come in and help to actually address that. And Bitcoin is the only asset so far that has actually continuously outpaced the increase in the supply of money in terms of M, M3 over the past decade and a half.

Phil: Yeah, I think people don't understand the dynamics. I mean, this is something I'm actually going to do a video about this as well is about the supply of money and how governments do just keep on printing money and all that does is inflate asset prices, you know, real estate and the stock market. And people who have ve already got money in those assets just get wealthier and wealthier. And so we see this incredible wealth divide, but then suddenly becomes the response is, oh well, socialism must be the answer. And people are completely missing the point, aren't they?

Keith Smith: You know, it's tough, it's a tough conversation to have because I 100% agree with everything that you just said there. As far as the wealth gap is exacerbated when the government is printing money and the people who own assets are just going to benefit from that. And whatever the response is to that, as far as how people look at the political side of it and so on, I understand the frustrations at the very minimum. Right. And like in the eyes of someone who cares about humanity, like, yes, something needs to change. And that is a big part of what Bitcoin was created to try to do. It was a humanitarian effort, at least that is the ethos and the philosophy of it. Where the real origins of bitcoin are, we don't actually know. But it's interesting because humanity tends to get creative and socialism or reforming capitalism, whatever it may take, I think we'll find a way. Because if we don't, the only thing that we've seen in history is that that increasing wealth gap usually leads to conflict. And no one wants conflict. That slows everything down for the most part. I mean, there are ways in which conflict does feed other people. But when you have an all out know, pandemonium of some sort, which you would eventually get to, then that would not be a very good thing.

Phil: So on your website you highlight the importance about leaving a lasting legacy. Can you elaborate on what that means and how people can align their financial goals with the legacy that they want to leave?

Keith Smith: You know, I actually, I read a book or it's actually a collection of essays from Andrew Carnegie. And the collection of essays is called the Gospel of Wealth. And Andrew Carngy is, uh, one of the original capitalists in America in the 1800s and he was responsible for developing a lot of the steel and so on in that time was huge. Right next to John D. Rockefeller at the time. He wrote these essays about the gospel of wealth. And the idea was that no one

00:25:00

Keith Smith: should die with a surplus of wealth. He said that the surplus wealth is a sacred trust upon which it is bestowed upon the holder to distribute throughout their lifetime. The point was that when you have an excess or surplus of wealth for you to leave, that in the hands of the state or even to your children potentially is not necessarily going to give you the best use of that capital beyond your lifetime. Because if you were to be philanthropic at all, if that is your goal, then trying to leave and delegate the abilities that you've had in accumulating that wealth to someone else is not very likely to work out the same skills that it takes for you to build a business or to build real wealth and distribute. Because you can't just hoard wealth to get super wealthy. You can, but it's going to be difficult. Usually you're going to have to spend it in the economy, hire people and grow things. His idea was, well, that same skill set is what's necessary to do philanthropy in an efficient manner. Leaving a legacy that lasts to me is all about finding ways to create systems around giving that actually benefit the people that you're giving to. I think that that can be one of the most powerful uses of money. I talk a lot on my channel about how billionaires think or whatever, how the 1% think. And the idea is that when you get to a certain level of wealth, there's only so much that you can really do for yourself. The goal should be, what can I do for my neighbor? What can I do for society? And when you start from that place as well Then you can definitely get a lot further. Because building wealth and building large businesses at the very minimum is all about solving problems. So how can you solve problems for other people? And especially at scale? And when you can do that, you can create an abundance that you can then use to continue to make other people's lives better. So that's a part of what that means to me.

Phil: Do you think that many billionaires do have that urge?

Keith Smith: You know, I think also. So this billionaire term is very interesting to me because when we hear billionaire, we think of Jeff Bezos and Elon Musk. But that's a very small sliver of billionaires. There's the 1%, there's the 0.01%, and then there's these people that only exist in that category that are worth hundreds of billions of dollars. That's not just a billionaire. These are centibillionaires. It's a different class when you're 100 times a billion. So I just wanted to say that. And when you look at the people who are just at that billion dollar level, I do think so. I do think so. I think a lot of the times those are honest people who do hard work and that aren't willing to go and cutthrooats the way that some of those other larger billionaires might be. And these are people that are stewards of their communities. These are people that build schools. These are people that do things that the rest of society is super grateful for. So I just wanted to say I do think there's a big distinction in those two levels of wealth. For sure.

Phil: It's, uh, good to hear there are some good billionaires. They're not all evil.

Keith Smith: Yeah, I think it's a scary rabbit hole to go down to do that because at the end of the day, in the society that we live in today, in this capitalist society, we are trying to solve people's problems. And the scale at which we do that is going to be the scale at which you're paid for doing it. And so without going too deep into the politics, this is just the structure that we're living in. So to demonize going out and trying to create something for yourself or your communities, I think it's very dangerous.

Phil Musatello: For sure, super is one of the most important investments you'll ever make. But how do you know if you're in the best fund for your situation? Head to lifeshherrpa.com.au to find out more. Life Sherpa, uh, Australia's most affordable online financial advice.

Phil: Okay, so presumably, listeners to this interview are not billionaires, and they're most, well, never going to be billionaires. But you talk about actionable steps, but I guess these actionable steps that you talk about in terms of creating wealth also have to be done in the context of your own. You mentioned earlier interview that everyone's got their own journey in finance. Where do you start advising about what steps to take to create and build wealth?

Keith Smith: Yeah, I think the first thing is to start what your goals are. Right. Because not everyone wants to be a billionaire either. And that's totally fine. I think that's the first thing is really looking at your life and saying, hey, what is the reason that what use do I have for money in my life? Is it that I want to retire one day? Is it that I want to leave something behind for my children? Is it that I want a nice car? Totally fine. If that's what it is. Just have that very clearly defined. And then I think from there you can start to work backwards and to figure out what your actual actionable steps are. So what are my goals? Okay, I want to retire by 65. Okay, at 65.

00:30:00

Keith Smith: How much money do you need to be earning on a monthly basis to be able to retire at 65 and be comfortable? Okay, great. Now I know how much money that is. So at that point, I can figure out how much money do I need to have in my account so that, let's say If I'm taking 4% out every year, that I can live comfortably on that money. Okay, now I know I need 10 million or $1 million, and I need to have. Great, where am I today? I'm at 200,000 do. So I'm going to have to accumulate another $800,000 to reach that million by the time I'm 65, whatever age I am now. Now I can do the math, right, on figuring out what are the steps that I need to take. How much money every month do I need to save in order for that to actually be a reality? So I think it all starts with that goal.

Phil: What's the goal you mentioned earlier in the interview about tokenization of existing stocks? And this is something that's come up on the podcast recently as well. Tell us about that. Is that actually occurring right now where you can be trading stocks outside of market hours via tokens?

Keith Smith: It is a real thing now. And these are called security tokens, and they are traded through what are called ATS'Now. The 247 aspect of it is not necessarily fully in place yet as far as the 247 aspect of it. But being able to trade tokenized securities on a blockchain is a real thing. In the United States we have a system called the ATS Alternative Trading System regulations that allow this to be possible. So it is a real industry and that's continuing to become more and more real every day. There are also projects like Ono Finance where they have tokenized Treasuries. And I do believe that Those are trading 247 where you can actually buy Treasuries on chain and earn a yield from those Treasuries on chain, which means that the yield is actually being paid out automatically through smart contracts. And that right there is very fascinating that that is actually live today.

Phil: Are there any other things in the crypto space that you'd like to share with us that, uh, you find surprises people when they hear about it?

Keith Smith: I think the biggest thing is decentralized finance in general. There are opportunities right now outside of the regulated industry, just in the defi side itself, or anyone in the world who has access to their computer or even a cell phone can actually go and lend their assets or stake their assets and earn natively in the asset that they are staking or lending out. Let's say I own Bitcoin or Ethereum, I want to lend that out to someone. I can use a decentralized finance protocol that will earn me, let's say, 3% on my Bitcoin or 3% on my Ethereum. Not in the nominal terms. If I have $100,000 of Bitcoin, I get 3,000. No, if I have 100 Bitcoin, I'm going to get three Bitcoin at the end of the year. And that is extremely powerful and it is not talked about enough is the power of decentralized financing. You can do some really incredible stuff where you can earn very high apy'with very low levels of risk when you understand what you're doing. And I think that's the thing that, that people would be surprised by.

Phil: And who are you lending your Bitcoin to and what is the risk?

Keith Smith: Yes. So the biggest risk when you're lending, and we'll talk more about Ethereum because Bitcoin is technically on its own blockchain and you have to. There's another layer of risk of trying to use Bitcoin in decentralized finance. But let's say we're working with Ethereum. Ethereum has smart contracts that are responsible for facilitating all of these transactions. One of the biggest risks is that you have, uh, an issue with a smart contract. And if someone were to be able to hack this smart contract, then that could be a vulnerability that would expose your assets to just being completely stolen. Essentially the beauty of blockchain is that all of this stuff is auditable and it's all in the public. So if there were any vulnerabilities, oftentimes people will find them and they will usually have bounties in place. So that the incentive is that you actually tell someone that there's a vulnerability before someone actually takes advantage of it. Now that's why it's really important also to work with projects that have a long standing reputation in the space. Because at this point these smart contracts have been around for years and years and years. And if there were any vulnerabilities, there would certainly be people that would take advantage of them. As far as who you're actually lending money to, it's other people who uh, would have other uses for your crypto. So because there's this entire world of decentralized finance where there' are hundreds of different protocols and different ways to earn yield, there's someone who might be willing to borrow your Ethereum from you at one rate and then they'll take that Ethereum and actually go and lend it to someone else at a higher rate. And now that's one side. This is just a decentralized lending side of the game. But there's also the liquidity providing side of the game. So in defi you have what are called automated market makers. And so basically there are smart contracts that are there that help to facilitate trades without an intermediary involved other than the smart contracts themselves. So because of that, what is necessary to make this happen is for people to provide liquidity. And these are called liquidity pools. And so let's say you have Ethereum and you have USDC being a stablecoin. If someone wants to trade between these two tokens, then there needs to be

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Keith Smith: liquidity there to make that exchange happen without an intermediary. And so as someone who owns Ethereum, I can provide liquidity to that liquidity pool and I will actually earn on the fees that are generated as someone is trading on those two pairs on that protocol. And so that's some of the power of decentralized finance. It might sound like, oh, uh, where's all this yield coming from? But it's actually coming from real services that you're providing to people at other parts of the world you mentioned.

Phil: Ok, there's Bitcoin, there's Ethereum, there's many coins. You also mentioned usdc. Is that similar to usdt? That's the, uh, what I've come across.

Keith Smith: Exactly Right. So stable coins are that class. USDC and USDT are the largest stable coins.

Phil: Yep. So those are stablecoins because they are actually backed by fiat, uh, currency, aren't they?

Keith Smith: Correct, correct. And in the United States, the President and Congress just passed the Genius act which made stablecoins officially a part of law saying that any issuers of stablecoins must hold the equivalent of what they're issuing in the form of stablecoins one to one backed with either dollars themselves or with short term US Treasuries. So now, now officially, anyone in the world can get access to these stable coins which are essentially backed with US Treasuries. And that changes the game.

Phil: What is the difference between Bitcoin and Ethereum? It's a different kind of blockchain.

Keith Smith: It's a great question. Bitcoin was the original blockchain concept and its entire ethos is that it is digital gold. It is essentially an escape hatch from the traditional fiat monetary system where you have a fixed supply of a currency that is math mathematically proven to be fixed. You can't change the supply of Bitcoin no matter what happens, unless everyone in the world essentially, or everyone using the network agrees to change it. And so on top of that there's a fixed inflationary schedule. So we know exactly how much of it is going to come into circulation over time and there's a slow issuance of it. And so that's Bitcoin, it's digital gold. It's meant to be a protection from fiat currency. And then you have projects like Ethereum where Ethereum is more of a decentralized computer, where you have these smart contracts that are built into the actual blockchain itself. You can use these smart contracts to do a lot of the complex things that we were just talking about, where you can lend your money to someone with just a smart contract as the intermediary. Because of that, the use cases for these two different blockchains is totally different and the use case for owning the token is very, very different. And so those are two of the major differences between Bitcoin and Ethereum is Ethereum has smart contracts and it's more of used as a computer, as a decentralized computer. Whereas uh, Bitcoin people refer to it as a monetary battery. If nothing else, it's just a, uh, place to store wealth.

Phil: Are, uh, you still getting out in the real world and Seeing kids at school.

Keith Smith: Honestly, it's been a while. I can't lie.

Phil: Okay, well, there's a couple of my questions gone. That's okay, because you are actually using the YouTube channel to replace that, aren't you? Where you're building a community, I believe. Is that the case?

Keith Smith: Yes, that's correct. So far, I've built a small community of people that are coming in and learning more about how the system works. And I'm just continuing to basically keep up with everything that's happening in the markets and bringing people into that. And yeah, the YouTube channel is just me trying to point out the things that I'm seeing as they come about and do my best to be of a resource to people.

Phil: What are some of the videos that you, uh, got thinking about in your mind at the M moment? What are you going to be covering next?

Keith Smith: Yes, something that just happened, I think it was a couple of days ago, was how the United States just invested in Intel. I wanted to talk about some of the implications that that may have on the market in general, but also from a political perspective of we have the United States government deciding to purchase equity in a private organization, which usually only happens in times of war, essentially, or any other sort of crisis. And so that's one idea that I have that I'm excited to talk about. The other one is going to be about how to take profits in crypto. I think right now people are starting to think about that. You've got a lot of hype around crypto'potentially going into the second leg of this bull run where things are about to get really euphoric. And people who have been through this before are concerned about whether or not they're going to round trip, meaning that they see all these gains and then lose them all the way that I did that I explained earlier. And so just trying to keep people prepared and in the right mindset for things like that moving forward.

Phil: So what's next for Keith J. Media? What's the future hold?

Keith Smith: Yes, so I'm actually really excited about this because I've realized that there's a huge opportunity to teach people more about decent, centralized finance and how you can use that to create what I've called a sovereign wealth system. And so this is a way to create wealth and build wealth for the long term outside of the traditional system. And not only that, but a way to actually utilize a lot of the tricks and

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Keith Smith: tools that Wall street uses without offering it to us. We now have access to this type of technology that allows us to earn yield in the ways that they do. Re hypothecating securities, lending securities to one another overnight, and things of that nature. So this is what decentralized finance allows us to do. And because of that, and because it's so early, there are amazing opportunities to build real wealth in very short periods of time when you really understand it. And so that's what I'm going to be doing moving forward, is teaching people how to actually do this for themselves.

Phil: And how can viewers and listeners find out more about Keith D. Media?

Keith Smith: Yes, so keitheemedia.com. you can also find me on Twitter. My name on there is Keith D. I think it'seroperator. And yeah, you can just look up the inner operator pretty much anywhere. And what I'm building out that I just talked about is actually going to be called the Quantum wealth society. So quantumwealthsociety.com if you're seeing this when it's live, then that's where you can find more about what I was just talking about.

Phil: Kith J. Smith, thank you very much for joining me today. It's been a real pleasure chatting with you.

Keith Smith: Thanks for having me on, Phil. This was awesome.

Phil Musatello: Thanks for listening to Shares for Beginners. You can find more at sharesfforbeginners.com. if you enjoy listening, please take a moment to rate or review in your podcast player or tell a friend who might want to learn more about investing for their future.

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