Ben Way, the CEO of Digits joined the podcast today to discuss the artificial intelligence future and automation, the thousands of hidden lost jobs that have come along with automation, and how to turn a regular credit card into a crypto card. He explained what benefit this would have for the consumer, as well as how the process works.
Before the interview, Hartman mentioned real estate “alligators” and how to avoid them, as well as the issue of regret that many investors face when they start late in the game. He also played a Voxer message from Naresh on his experience in learning about real estate investing.
Alligators in Real Estate
Tuning in out of Fort Lauderdale, Jason Hartman begins the episode with a piece of trivia that he learned being in the area. Did you know that, when chasing prey, an alligator can run up to 30 mph? They may look like they’re incapable of quick movements, but they can be very fast. He mentions that a myth associated with alligators is that if you’re ever in a situation with them, you should escape in a zigzag pattern.
Speaking of alligators, there is the term “alligator” used in rental properties to describe a property with negative cash flow. Hartman explains that everyone experiences challenges with their portfolios at some time, and he has had his share of portfolio challenges over the years. He advises that if you stay on course, the race is won by the people who persist and keep working through challenges.
It’s always important to ask yourself, “compared to what?” Income property can have its share of challenges, but compared to cryptocurrency and stocks, where you can gain or lose a fortune in a day, it is the most historically-proven asset class in the world.
Hartman states in this episode he is going to discuss robotics and automation with his guest Ben Way. Automation is the big “job killer” that is feared by many people. He wonders whether it is going to be a job killer or perhaps a job and prosperity creator. It is an amazing time to be alive with the innovation of the human mind. Human beings can always find something else to do, and Capitalism allocates resources so efficiently that we can always find new things that people are going to want or need, Hartman says.
Artificial Intelligence Future: Short-Term Trend Hurts People
He mentions that when we are fearful about technology, the challenge a lot of the time is that we are not thinking about the long-term trend in artificial intelligence future. The long-term trend is almost always good, and if we’re talking about technology and the idea that it could be a job-killer, the long-term effect isn’t scary. The short-term transition is what scares people.
He compares this to real estate, and when investors don’t follow Commandment Five, “Thou shalt not gamble,” they get destroyed by the short-term trend.
There will be a transition in the market and it will typically take about two years to transition. When investors buy expensive properties in cynical markets, they undergo a transition when the property is in the trough, it’s extremely difficult.
Hartman explains that properties must make sense the day you buy them, otherwise they are a gamble.
The same is true when it comes to automation. When we have these sort of changes, the transition is what destroys people. Overall, the long-term result cures everything.
Hartman recalls an old saying that he has applied to his life, “Time heals all wounds.” Time has a way of putting things into perspective. He notes that if you have children, you might see how they get so sad and upset over things, and it’s because they’re children and they don’t have the time perspective of an adult. What might be a big deal to a young person might be something easy to handle at fifty because you understand that time heals all wounds.
He mentions that it’s amazing how many children are running around the world in adult bodies. They’ve got an instant gratification mindset, and they’re constantly focused on what’s available right away. That’s all they’re able to handle.
He explains that when he was at the Philadelphia event recently, he went to an art gallery, and looking closely at the paintings allowed him to see the brushstrokes. It looked amazing, but when he stepped back, the painting looked even better. He adds that it’s important for investors to keep their eyes on the prize and play the big game rather than the small one. Don’t win the battle at the cost of the entire war.
Naresh on Realizations in Real Estate
Before getting to the interview, Hartman plays a Voxer message from Naresh, a client of his that started as a contractor with for his company. He has recently closed on another property and is getting married in December. Hartman mentions that he didn’t solicit this message but did ask Naresh to leave the message a second time without some of the unrelated information that wouldn’t be relevant for the listeners.
In his message, Naresh explains that he’s 29 years old and that he has been working with Hartman since he was 24, and knowing him as long as he has, he states that his only regret is not getting started sooner.
Naresh states that earlier in his life, he didn’t know anything about real estate and didn’t learn more about it earlier, assuming that one needed a lot of money in order to get into real estate investing. He knew nothing about loans, mortgages, depreciation, and tax deductions.
He adds that one would think that having a Master’s in Business, going to good schools, and working on Wall Street would have introduced him to this asset class, but that was not the case. He learned when he met Hartman and through speaking, attending events, and being on the podcast.
Naresh explains that he lost a lot of money in stocks and adds that he was young and trying to get rich overnight. The stocks were a gamble, and he learned that this method was a mistake. Investing in real estate was not a gamble when it comes to safe properties with a good rent-to-value ratio and good neighborhoods. Numbers matter, and if you invest in good properties, you can get wealthy down the road, he says.
Hartman states that in that message, listeners heard Naresh explain the concept that we’ve all got regrets and we cannot change the past. We can change our futures by how we act today. It’s very important to invest for the future because there will be a time, maybe many years from now, where we will say that we wish we got started back then.
Prevent the should have, would have, could have and talk to your investment counselor, and if you don’t have one, fill out any form on www.jasonhartman.com and an investment counselor will reach out to you.
Hartman announces that there will be a tropical event taking place in Hawaii during the first week of November. It’s a brand new, two-day conference with new content to cover. This event will be in Waikiki Beach, Hawaii and then after one day off, the Venture Alliance retreat is set to take place in Kauai, Hawaii. This island is supposed to be one of the loveliest places on the planet.
A registration page with early bird pricing will soon be available on the website, so stay tuned for that and keep the dates open.
How Digits Converts Credit Cards to Crypto Cards
Hartman welcomes CEO of Digits, Ben Way, to the podcast. Way was also in the cast of Startup and was featured in the documentary The Startup Kids. He is tuning in out of Miami, Florida.
When asked about Digits, Way explains that three years ago he joined a traditional payments company and knew very little about it. A year in, he realized that there was a big opportunity present in cryptocurrency. He states that Cryptocurrency allows a user to change any credit or debit card into a crypto card. Way came up with the concept of Digits and spanned out the company.
He mentions that his company does not issue any physical cards, but they are converting existing cards into crypto cards. Merchants are still getting the payments they expect at the time expected with this conversion.
Hartman states that if a user is charging something and they think that the cryptocurrency in their account is at a high, it would be wise to pay with the cryptocurrency.
How is a 1-Year Hedge Possible?
Way confirms and adds that they have done something amazing and solved the problem of volatility. This means that a merchant needs to get the payment they want when they want it, and in order to solve that problem, way explains that his company came up with a hedge lending network. Through that, if a user swipes their card to pay $100 for something with their crypto card, they have the option to pay the transaction back a year later in fiat and get the uptake in Cryptocurrency. If Cryptocurrency doubles during that time, a user can pay back the sum, plus a transaction fee and have the uptake.
Hartman reiterates saying that a user could make a payment with fiat or Cryptocurrency but wonders why anyone would allow a 366-day float. He adds that there has to be a decent amount of option consideration for that period.
Way explains that his company created a unique model so that in 366 days, a user could pay back the transaction, but if the market goes down, the Cryptocurrency is liquidated, and the lender is paid back. If a user swipes their card and the Cryptocurrency goes up, it benefits them. If it drops, the user does not get the benefit, but they still spend the money that they’re expected to spend.
He states that the major benefit of this system is that turning a short-term taxable event into a long-term event can save the user up to 30% of the fee. Way explains that this is able to be done because the hedge lending network is a two-sided marketplace that takes all of the risk.
When asked how a regular credit or debit card is changed to a crypto card, Way explains that his company interrupts the payment before it gets to the Visa or Mastercard network. The company still settles transactions across that network and they play nicely with Visa and Mastercard. By settling on the Visa and Mastercard networks, they do not have to deal with single merchants.
He adds that from a merchant’s point-of-view, these are ordinary transactions. The merchants are already a part of the Digits program, and the companies do not have to perform agreements with one another.
For more information about Digits, please visit the website at https://digits.io/.
Every Innovation Comes with Fear
Hartman mentions that in the past he has made predictions on the podcast and was only incredibly wrong about interest rates. He states that one thing he struggles with is the future of robotics and automation.
If you look at innovation throughout history, people have always been afraid of economic collapse, but it has never really happened as a result of innovation. He adds that within the last fifty years, the only job that has gone away because of technology was that of the elevator operators.
He states that transportation is a big industry, but when it comes to self-driving cars, automated vehicles, and other artificial intelligence future, people are not going to learn about robotics in droves. He wonders if they’re going to be displaced.
Way explains that the data Hartman is looking for on who lost their jobs because of technology is available but hidden. He states that if you look at economics from the beginning of the century, each recession has taken twice as long to recover and the reason for it is that when an economy is growing, it becomes inefficient. Organizations don’t want to change or optimize in any way, so when a recession hits, they’re forced to become more efficient and it takes twice as long for jobs to come back to the same level.
Way predicts that the next recession is going to be horrific and recovery might not happen on a job basis.
He states that there are thousands of hidden jobs that are gone, giving the example of how decades ago, flights used to be done with two pilots and an engineer, and now there are just two pilots on the flight without the engineer. Once people get to a point in efficiency where something hasn’t happened in the past does not mean that it won’t occur in the present and future. Innovation has been on a linear curve and eventually it will break the system of labor, Way says.
He mentions that there are two points-of-view on this and he tends to be an optimist, thinking that if we’re lucky we will be treated like pets and life will be good. With innovation, the cost of everything will decrease, especially the cost of medical care. Before getting to the sense of balance, we get the period of social unrest.
Hartman states that there was a prediction of up to 47% unemployment from the technological mega-shift and adds that it feels like we are going to see a huge change in the world and the artificial intelligence future. We have had a networked world for the past twenty-five years and may soon see the hockey stick change in data.
Robots for Companionship in the Artificial Intelligence Future
He references Chapter 3 of Way’s book on the sex industry, and Way explains that he’s talking about adult-oriented robots in artificial intelligence future. He adds that human being can form strong emotional bonds with robots the way that we have with animals, meaning that humans can fall in love with robots.
He states that there are fascinating questions behind this idea and points out ways robots can help put an end to sex-trafficking, as well as freeing people who are lonely. There are psychological aspects to consider as well, and Way poses the example question as to whether using a robot for companionship would be cheating on a spouse. There are many moral dilemmas associated with this concept.