#673 – The Expat Files: Cryptocurrencies, Colombia, and Cybersecurity

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border down Mexico way That's where I fell in love when the stars above came up to play and now as I wander Hello there all you expat wannabes. I'm Johnny Mueller and you're listening to the expat files living in Latin America The show that tells you just what it's like to live work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great and it's all right here. So let's get started Here now this will make you laugh You know governments hate Bitcoin or any kind of cryptocurrency So to banks of course and over the past few years They've done everything they can to poo-poo and try to discredit them And of course they can't because Bitcoin really doesn't exist in any physical sphere or any continent country or state

[00:51] So it really can't be controlled by one country However, they can't outlaw it that is make it illegal. Yep, they can try they have but it really doesn't work though Every time a government releases a so-called damaging bit of news against the cryptocurrencies Their value in the marketplace takes a dive for a day or two Then as we've seen over and over again, they bounced right back now One of the countries that's outlawed Bitcoin for use in normal daily transactions is Colombia It's one of those Latin countries that's on the leading edge of trying to establish a big brother state Yep, they're copying every first world government trick in the book that tax the hell out of their people You long time listeners have heard me mention many examples of that Anyway, since governments are gonna have a very hard time taxing Bitcoin

[01:37] Some of them like Colombia just prefer to make them illegal, but the horse already left the barn on that one So on that note, here's a Colombian government press release I'll translate that it says according to a statement by Colombia's financial superintendencia Bitcoin is considered a high-risk currency Therefore in Colombia the Colombian peso will be the only legal tender by which a person or business Can perform financial transactions or sell or purchase goods or services? Consequently the statement says bitcoin is not an asset that is equivalent to legal tender in Colombia because it has not been recognized As currency in our country now see if you can understand this it also says quote behind Bitcoin There is a range of products associated with the production of that currency called virtual mining

[02:25] Generating revenue that can be valued and generating income for those who earn it as part of their assets therefore Say officials at the tax and customs offices in Colombia Bitcoin shall be taxed then it says tax issues are yet to be decided on bitcoin Why am I laughing? Well, it's funny, you know, you make something illegal and you tax it Well, I guess that's how they got al capone right on tax charges or tax fraud, whatever Ah, but there's more on bitcoin in Colombia Not to mention the government statement at first says it's not a currency and then later in the article calls it a currency Can't you see the irony here? Anyway, Colombian tax attorney Juan Sebastian Perido says Taxes are yet to be decided with bitcoin And we should think that people will have to report their bitcoins as part of their assets and their income tax returns

[03:15] Yeah, right Then it says and to the extent that bitcoin is part of people's assets. They will have to follow the corresponding tax rules ultimately this currency Hmm there they go calling it a currency again after they said it wasn't Then it says bitcoin raises concerns from several countries tax authorities Not just Colombia because of the difficulty of tracing those transactions No, kidding and therefore the possibility that bitcoin will be used to evade taxes No, you think I like how this government spokesman says it's not legal tender and that it's not currency Yet he says in his statement more than once that it's a currency. Don't those government slugs have anyone proofreading their press releases?

[04:02] All right. So we all know this cryptocurrency thing like bitcoin is a very new game And throughout latin america people are not required to report their investments or transactions in bitcoins or any other cryptocurrency However, as of now columbia has made bitcoin transactions illegal So for all you columbian expat file listeners, I didn't know you're out there You can get your bitcoins and cryptocurrencies like litecoin and ethereum if you're wondering You know how to get into the act through platforms such as kraken bit stamp local bitcoins and pollenix A lot of other places too like coinbase and info.blockchain Just do a search quite an easy thing to do actually a lot easier than it was a year or so ago Back then there was a steep learning curve and only the nerds and the gamers were in it

[04:51] By the way at the moment the countries that actually allow cryptocurrencies of all kinds to be used as legal tender are the us Canada brazil australia and japan With quite a few other countries discussing it right now and many of them to come online shortly By the way, the australian tax authorities have come up with a way to tax cryptocurrencies like bitcoin at the vat tax rate Same thing if you're living in spain the spanish government says you have to pay vat on your bitcoin transactions, too So they're putting people on their honor to report their bitcoin transactions on their tax forms Because you see unless you open up your mouth yourself governments cannot find out who's moving bitcoin around So even though all the transactions are on the blockchain and that's very transparent

[05:37] Right now the only way governments can track that stuff is if you have a bank in that country And you use that bank to convert your bitcoin into local currency like for example converting bitcoins to euros at your bank in spain So remember for now there's no way a bank or a government can ever know if the bitcoins in your bank account are Simply a movement of funds or an actual payment for some kind of goods or services Another great advantage to using bitcoin or other cryptocurrencies So in the end, we have another great reason why columbia is not in my opinion A good place to vote with your feet or set up your plan B And you know, I have discussions with people about that all the time In fact just the other day I was talking to a somewhat idiot pussbag flag waving gringo suit

[06:23] He's a low level u.s Diplomat assigned to various u.s embassies in latin america his last posting Bogota columbia and when the subject of cryptocurrencies in columbia came up He proved he was an idiot right off because he knew nothing about bitcoin except to say that he would never buy any of this stuff The guy was full of negative opinions, but had no real knowledge He said bitcoin that's just ones and zeros backed by nothing I said yeah, like the u.s treasury and the federal reserve when they need money They just add ones and zeros or print up some more He said yeah, and you'd rather have bitcoin than dollars something You can't even touch or put in your wallet for that matter Then I said by the way bitcoin can't add ones and zeros They can't create any more than the maximum limit which is about 22 million bitcoins

[07:09] That's how the algorithm is written and it's cast in stone But you knew that already right, but he didn't though. He did say something very interesting about columbia He said that the u.s government has had very good working relationships with the columbian government for over 50 years now He said by funding the drug war to the tune of billions a year. We own all the politicians down there He said sending helicopters equipment personnel and advisors in by the thousands He said the war on drugs will never end every year. We write basically a blank check Then he used a bunch of four-letter words to describe columbia's bureaucrats and politicians He said the cabinet members and deputados that would be congressmen have their island retreats and private chests because they're

[07:55] Indirectly on our prey role and I said don't you think that's kind of screwed up and he said If we don't offer it the drug lords will and they'll take it wherever they can get it So in the end the u.s embassy guy did have half a brain after all calling a spade a spade But he said I couldn't quote him on that so I won't but come on like I said somewhere along that conversation Why don't you tell me something that I don't know? So remember columbia is loaded with us contractors Nice, huh fighting a war that was lost a long time ago. So columbia i've scratched it off my list Just my opinion and I could be wrong So now this week i'm sure you've heard the news that the u.s government's talking about taxing bitcoin and cryptocurrencies, too Now you remember that u.s tax and customs rule that if you leave the u.s

[08:41] Yeah, fill out a form that asks you if you're carrying more than ten thousand dollars in cash or negotiable instruments Less than ten grand you check no and walk on through more than ten grand Then more than likely a couple of tough guys and uniforms and bulletproof vests and sidearms will pull you into a room That looks like an interrogation cell Then it's hundred questions time Which is why almost no one I know ever carries more than ten cheese out of the country Now that doesn't mean if you have more than 10 g's they're going to confiscate it But I wouldn't take chance because they can you know Even if you came by that dough totally above board and you paid taxes on it's 100 legal and you can prove it You ought to know by now if you listen to this show and the alternative media that your rights don't matter Nowadays the u.s government can make up the rules as they go along and confiscate anything they want from you

[09:31] So even if you're carrying just a few grand, they could give you the third degree And soon it looks like the forum's gonna say if you're carrying over ten thousand bucks in cash Negotiable instruments or bitcoin they'll pull you in a room and here comes the hundred questions again Insert laugh track here bitcoin exists nowhere and everywhere. It's in the ether It's not something you can hold or carry around like dollars or gold Oh, but people say it comes in a bitcoin wallet, right? Well, that's in the ether too. Now some people have a hard copy of their bitcoin wallet. That's a good thing You should do that in case your computer craps out or the internet goes down. Whatever That's one way to recover your cryptocurrency if all else fails Not that you're going to carry a hard copy of your bitcoin wallet around with you

[10:17] But it's just the same as carrying your bank passbook around with you You could have a million bucks in the bank and it shows that on your passbook And if you carry it across a u.s border, you don't have to report that You're in no way bringing or transferring that money out of the country just because you've got the passbook on you So it's obvious to me and people who know a little bit about bitcoin and the block chain That the people who are getting worried or upset about that kind of legislation They're thinking about bitcoin and cryptocurrencies in old school waves and they're not old school. It's a whole new paradigm People have to get it into their heads that it's not sitting in a physical location So bottom line governments can pass all the laws they want Try to regulate confiscate and tax them out of existence But what those pus-brained bureaucrats don't understand is that a tipping point has been reached with the cryptocurrencies

[11:06] We're on the cutting edge of universal acceptance. So they're not going away But you see now that the acceptance of the cryptocurrency mechanism has almost gone mainstream That means it's almost prime time if one jurisdiction even a big one like china or the us or the uk Man's cryptocurrencies that opens up a really great niche opportunity for another country to Deregulate cryptocurrencies completely by the way talking about borders and flying in and out of the states If you remember in last week's show I was talking about the tiny percentage of muslims here in central and south america compared to most first world countries And how you can easily calculate that by the number of mosques in the region Which is why this recent report from u.s homeland security says

[11:52] Aviation in south america and central america face the lowest risk of terrorism of any regions in the world Which is why if you travel through any airport hobbed through latin america with the exception of maybe panama and costa rica You experience practically none of the nasty touchy feely stuff or the shakedowns you get in the states in europe In fact at airports down here, you might call it tsa light or extra light Hey, I travel through latin american airports all the time and i've never yet seen an airport employee put on a pair of latex gloves And give you that evil spread them open wide or bend over look, you know In fact most screen goes tourists and expats coming down for the first time Say the airports down here are like traveling back in time to the 80s and 90s That's if you're old enough to remember the joy of traveling internationally way back then hard to believe

[12:42] But there was a time when it was actually a lot of fun Ah for the good old days eight tracks 10 cent comic books bucket gallon gas muscle cars without airbags and seatbelts Well, maybe that was a good idea. The dashboards were metal Now i've been getting a lot of emails about bitcoin and cryptocurrencies Of course the runner-up to bitcoin right now is ethereum Everybody's hot on it with news articles popping up by the hour not to mention There's all kinds of nerdy new business consortiums jumping on the blockchain bandwagon that most people don't understand So even as the average person perks up his interest in cryptocurrencies Well, I shouldn't say average person because I still don't think any average persons have invested in any kind of cryptocurrencies Not yet. It's still just a tiny sliver of the population that have taken the plunge

[13:30] So even as parts of the cryptocurrency phenomenon become less confusing day by day other parts become even more confusing Because so many competing types of cryptocurrency coins are popping up every day What to do what to do? Of course now that bitcoin's in the two thousand dollar range Almost all newcomers are drawn to the cheaper coins like ethereum litecoin, etc Just like newcomers took precious metals often buy silver instead of gold Now cryptocurrency gains in the last year or so have been spectacular Making newcomer interest phenomenal too and everyone I mean everyone wants to know what's the upside? What's the upside? Well, we all know the downside is zero, right? Now you long-time listeners know i've been in bitcoin more than a couple of years now

[14:17] I'll be the first one to admit that doesn't make me an expert. But man, I know some people who are Don't laugh, but every time I go into my bitcoin wallet for a split second while it's loading I'm thinking it's not going to be there some russian hacker got it all I think after the silk road in the motcocks problems people who got into cryptocurrencies early have those occasional moments But not to worry if you're halfway smart about it. The security problems have really been taken care of Aside from that newbies ask me these two questions all the time. They say johnny Which cryptocurrency has the most upside and ethereum? What do you think about it? Well, you better believe i've had some ongoing discussions with my expert cryptocurrency buddies Who by the way are very modest and don't claim to be experts at all though. They really are Well, we know about bitcoin and some people don't want to get in because they don't think there's much of an upside

[15:06] I'm not giving any investment advice, but i'll tell you what my expert cryptocurrency buddies are saying and believe me These are the kind of guys who you sit down with and you have to pay extremely close attention Or they'll lose you in the first two minutes And even if you're getting part of it after five minutes, you'll certainly have brain fatigue So distilling all of that down to the essence. Here's what I think you have to know bitcoin Of course is the mothership and all those other coins that I mean all of those other coins Use the basic bitcoin software code and tack a few extra lines of code to it making it another kind of coin In other words, if you're a software geek dissecting any of the other coins, they look so much like the bitcoin codes You'll be astonished so as for all the other coins They're just piggybacking onto the mothership nothing wrong with that, you know

[15:53] And they all say they can do a few things that bitcoin can't and truly bitcoin does have its limitations And one of them is that the blockchain is so freaking long now It takes a couple hours to a day to do a transaction So bitcoin transactions are not instant though a year or so ago when there was much less volume It only took a couple of minutes And by the way until just recently to get in and out of any of the other coins like litecoin For example, you had to go through a bitcoin account or a bitcoin exchange You couldn't convert dollars yen or euros Whatever directly into the other coins like litecoin you had to get bitcoin first and then convert So what does that tell you? And you'll also see all kinds of articles and blogs with so-called experts telling you how this particular coin is better than the other

[16:41] That's part of the thing that's driving all the cryptocurrencies now Now as far as people actually using cryptocurrencies to buy goods and services in mom and pop stores or online Well, the problem is that 95 percent of the places that take cryptocurrencies will only take one that would be bitcoin So you could have lots of the other types of cryptocurrency coins But you won't be able to spend them anywhere unless you convert them to dollars or bitcoins What people don't realize is that the major move in cryptocurrencies has been fueled by speculation Not using cryptocurrencies to actually buy and sell things but just to hold and hope they go way up And even with all that speculation there is a huge upside and there's a big downside too I mean these things swing all over the place, right? Sometimes 10 in one day

[17:26] However, the real brainiacs in this business are saying this is just the beginning still the ground floor if there is such a thing But also they say be prepared to get beaten down and beaten down hard every time a government like I said before Talks about taxing cryptocurrencies or making them illegal So there's lots of emotion and irrationality in this market And of course, you've seen some of those traditionalist idiot wall street types. The one that's truly responsible for pumping up this ridiculously huge stock bubble we're in right now Of course, they hate cryptocurrencies in bitcoin too because you see Cryptocurrencies are a new kind of escape valve when people realize that the stock market is way overheated So where do you think a lot of that cash is going to go when the pin finally pricks that stock market bubble?

[18:12] In fact every day when I flick on my computer and check the news I'm half expecting that overnight when all were sleeping a pinhead seared that bubble. All right, then So what's the difference between the mothership bitcoin and its offshoots number one being ethereum? Now, you know, they're all based on blockchain technology That means every single transaction since day one exists on that chain and it can be checked and verified But that doesn't mean your transactions can't be anonymous or nearly anonymous if you do it Right, they can and most people just buy and hold and others buy and sell and they don't really care if it's anonymous or not They just want to buy that new iphone on amazon So again bitcoin the mothership is very good for buying and selling services and products settling debts Transferring money around anonymously and the cool thing is you pay less than a buck per transaction

[19:02] Unlike paypal which so many people hate because they charge more than four percent Then there's credit cards with their high service fees and bank wire transfers that cost anywhere from 30 to 75 bucks So cryptocurrencies are completely out of the banking system Unless you want to convert to dollars or other currency then you have to use a bank by the way They even have bitcoin visa cards now and all charges are credited directly from your bitcoin account By the way, just as a little teaser here people come down to my expat insider seminar And I will meet one of these so-called bitcoin gurus. Oh and listen to this He started an internet business from scratch some years ago And now he's got 1.5 million customers and he's only got one employee

[19:49] Now what about customer service for 1.5 million customers? Well, that's the story in itself We'll have to ask him when you meet him and yes, he does take bitcoin Now this show goes out on july 2nd, which means my insider seminar is about a week away Oh, and if you want to jump in at the very last minute Some people do go to www.thenewexpat.com click on johnny's 2017 seminar link for all the info and sign-up details Like I always say there's no telling if i'll do another seminar When the next shoe falls up there in moaggy cleveland and the rest of the first world it's gonna happen fast Those tipping points are gonna fall like dominoes and what do you think the first thing big brother's gonna do? Well, let's travel in currency controls. Of course, try to take your guns away, too Oh, and by the way, I gotta digress a little bit here get some emails here and there saying johnny

[20:38] Do you own any firearms? Are you a gunned up gringo? Well, I like to use the line expat eddy uses when people ask them that question I say try to jimmy my front door and find out. There's a non-answer for you, huh? Anyway, you know with home and self-defense. It's all about the art of surprise, right? Where were we? Oh, yeah bitcoin ethereum and the blockchain three words that weren't even in the dictionary just a couple years ago Now everyone's saying ethereum is better or more flexible than bitcoin The number one reason is that with the blockchain technology and ethereum you can make airtight deals and contracts right online Using digital signatures and such that way you can bypass notaries lawyers government bureaucrats and departments That is create a 100 binding legal contract without the parties even having to meet each other face to face in the same room

[21:30] You don't even have to be in the same country. Oh, no, that's a great and revolutionary thing And since you know, if you make a contract that way it's on the blockchain forever and can't be altered or manipulated in any way Except with an addendum or a newer contract to replace the older one. Nope There's no way to redate it loot it change it or destroy it For example when it's on the blockchain it eliminates the possibility of dirty deeds like you see When people have money and the last will and testament or wills that exist are contested by various parties. Wow sounds great, right? Well, it is and right now bitcoin can't quite be used that way However, ethereum can at least they claim it can but there's two big problems with the actual application bitcoin is an extremely Decentralized platform. That's what you want a system. That's as

[22:19] Decentralized as possible that way no one or group could take control of the software and make changes in it Or corrupt it in any way. It's too worldwide Running on a vast number of servers and it's been said Someone would have to own 51 percent of all the bitcoin in existence to change the software Now that's not to say hackers can't get into your personal account and steal your bitcoin, but they can't screw with the system In fact hackers love bitcoin. That's how they started this ransomware thing. It didn't have bitcoin They couldn't send those extortion messages to computers running older windows software. All right as an aside How do you protect yourself from bitcoin wallet hackers? You go in and make yourself a bitcoin wallet at one of the exchanges and you use that double password protection feature

[23:07] They're all offering and or two-party verification That means the hacker would have to know your bitcoin address steal your first password steal your second password And that's pretty much impossible unless you have a stupid password like 12345 or admin Or even worse password and for example with two-party verification using a telephone as the second party A hacker would have to steal your first password Then intercept the phone call where the second password or code comes through and that's changed all the time For example, if you use the two password system You can go to your wallet put in the first password and see what kind of transactions have gone down in your wallet But you won't be able to make any transactions without that second password All right, so bitcoin isn't perfect takes a long time to make transaction these days

[23:55] But here's the problems with ethereum number one and i'm sure you didn't know this it's not nearly as decentralized as bitcoin There are a few people that can actually manipulate the software and the program and they've actually done so Last time that happened was about a year ago. You've heard about forks, right? There's the hard fork and the soft fork. Well, you ought to check it out Generally, those are decisions to change the software just a little bit to speed up transactions or make the system more efficient Generally, you need a consensus from a big group of software engineers who were assigned elected or nominated to be part of the process Kind of like a massive board of directors. They're not altering or manipulating the blockchain That's set in stone. They're changing the way certain transaction decisions are made

[24:43] So within bitcoin, there's a very large number of people involved in that and they have to agree to make any of those Changes called forks. Whereas with ethereum, there's a very small group of people that can make those decisions It's smaller the group the more centralized it is right? And one of the key points to having a blockchain is having it as decentralized as possible Number two the great claim ethereum has over bitcoin is again The ability to make contracts online without the middleman. It opens up a world of possibilities, right? Well, guess what? My crypto insider buddies have told me they have tried to make such a contract Sounds simple, but it's not in fact with all their brain power They reported there are so many ways to screw it up

[25:31] That the average even above average person just won't be able to do it So it's not just plug in abc and follow the bouncing ball. It's a very exacting non-intuitive process That's just a pain in the ass I believe he said there are a dozen different steps and a dozen different ways to screw it up So making a contract with ethereum possible, but very difficult and no one's reporting on that and that's really ethereum's claim to fame So why is ethereum blowing out like it is now it's over 300 up percentage-wise even a lot more than bitcoin well Some of its hype but wait till people find out how tough it is to make a contract on the blockchain So there you have it probably overly simplified bitcoin versus ethereum So does that mean if you own some you should sell or maybe dump your bitcoin and buy ethereum or a tesla

[26:23] There's no way to tell it's on a wild ride. Just like bitcoin What with all the speculators diving in all the cryptocurrencies are bound to rise now I personally believe that with the top few cryptocurrencies the sky's the limit if you're in now You know about roller coaster rides. So if you have a weak heart, hmm, I don't know However, I could be wrong All right We're getting to the end of this show and I'd like to remind you you can do a one-on-one phone caller skype with me To discuss any and all points in your own plan b everyone's situation is quite different, you know So go ahead and download my phone consultation slash questionnaire at the new expat.com website It's free and it'll give you some great ideas as you're working things out And finally if you find it just impossible to get boots on the ground in latin america, at least not yet

[27:09] You really need my expat essentials course. Just go to www.expatplanb.com Go there and download my three free introductory videos You know, everyone needs a plan b if not just for an insurance policy against the next big calamity Whatever it is that hits up in the states. I know you'll find there's really nothing out there like my expat essentials course This is the expat files living in latin america If you want me to help you out with your own plan b just schedule a one-on-one consult Send me an email the expat files at gmail.com And if you want to learn how to move forward with your own plan b from right up there in the states go to www.expatplanb.com and check out my three videos. See ya nos vemos