The Decrypt Daily: Bitcoin & Cryptocurrency News Podcast - Jan 27: Shorting 101, DeFi & Supply Chain, Chamath 4 Cali

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From the Crypt media. This is beautiful. My name is Matthew Aaron practical uses for blockchain now switching to D5 chamath palihapitiya runs for governor and short-selling. What is it coming up today on the decrypt daily?

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Good morning, everyone. Welcome to the show. Today is Wednesday, January 27th, 2021. If everybody's been paying attention GameStop is in the news. Yes the game place where you can borrow and trade and buy video games actual physical video games, you know, the place has been around for three maybe four decades weather stock price is skyrocketing before the opening bell. It's already pre trading price is around $240, which is up from $147. Yesterday's closing price in the past 2 weeks. The price has risen like 800% and this is fueled in organized by individual trailers that are organizing on the Reddit wallstreetbets and bass. We going to Robinhood stocks to understand what's happening in Short Selling. So this is a 101 and Switzerland really quick Short Selling is Boeing stocks selling stocks at a lower price and profiting the difference. So let's run example the say we have a company trade.

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At $10 per share. We went a hundred thousand dollars of those stocks what we get those $100,000 of those stocks. We borrow 10000 shares of stocks and we sell it immediately. We have a hundred thousand thousand cash in hand. Now, what we need to do is what we got to get those to give those docs back eventually, but we are betting that the price is going to go down and I can give you that 10,000 shares back at a lower price pocketing the difference. So I did those 10,000 shares I sell for $100,000. I see the price go down to $8 I buy 10,000 shares at $80,000. But you have your 10,000 shares back. There. You are. Thank you. I have $20,000 in my pocket. I swear to the market. I'm betting that is going to go down see the problem with short song is is that if the price goes up it's almost infinite you if you can do is a crap ton of money. So let's just say I buy that 10,000 shares or $100,000 and the price doubles it goes to $20, but I got to get those 10,000 shares back.

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But now it's going to cost me $200,000 not $100,000. I will lose $100,000 on this short. Well, you know what? I'm going to wait. There's no way I can go higher than $20. So I'm going to wait for you come back down and go back to where I originally was going to buy the shares back $8, right? Well, it goes up again $30. I'm still waiting. I'm handling $40 or $50 what $100 will you know, what now if I want to buy and get out of this short, I have $900,000 in the whole infinite the stock price can keep going up. You never know when it's going to stop and that's what's happening with GameStop right now. Is there about two or more billion dollars in shorts on GameStop and the individual investors the people on Wall Street bets put out the car and now they are making companies liquidate.

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Patchouli and get out of their shorts GameStop was trading at $3 Plus in April. Like I said, it's an open around $200 today. So imagine you were trying to short the market had to say you saw GameStop go up to like $8 you like this do they just announced they're going to close 450 stores. They're going down. I'm going to head get rich off of this and then you see that you're short of maybe a hundred million dollars is now going to lose you billions. So anyway, that's what's happening with GameStop. You can look at the details. I'm some of the link that are in the show notes or just Google this but I just need to explain to you what a short is really quick and why are short is so dangerous. It's infinite up if you put ashore in that a certain price and it goes to the moon you're you're done and researching this I read stories about this. I've read stories people not knowing about mergers and Acquisitions our new products coming out they try to short the market and they get rekt. I saw somebody that has a GoFundMe trying to raise money.

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What is short so it doesn't have to cash out his 401k. This is serious now real quick. What's a long position being long that something is just like buying a howling you buy at the market price and then you just hodl the good thing about a long tradition is that you can never lose an infinite amount of money. You can only lose the amount of money you put in for example this to use that same hundred thousand dollars you buy $100,000 at $10 this year and it actually does drop it goes to eight equal to 65 will be close to 5. And you said you like you're like this is it I don't wanna lose any more money you lost $50,000 and $0. So the maximum amount you can lose $100,000 if it goes up you make money with a short. It's opposite. You can make up to $100,000 if it goes down because you're buying the Searchers back at the lowest bottom price, but on the way up if you can really really get rekt. Anyway, that's what's happened with GameStop. That's what's happening with all these investment firms capitulating and losing lots of money on them like Melvin capital.

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That's the risk of shorting the market now deals crypto prices.

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Are we do money talk at 11:20 Eastern Standard Time Bitcoin is sitting at $30,690.63 down 3.5% from yesterday and is its lowest price since New Year's Eve at $1,286.17 up 44% from yesterday Litecoin 12639 down 4.5% 2171 down 3% and xrp 25.5 sent down 3.7% of 7.2 billion dollars down 3% from yesterday lowest price since January 11th with a BTC dominance of 62.6% top 10 coins is BTC ethereum tether polka-dotted number for SRP and number five card on chain link number 7 Litecoin Bitcoin cash and B&B at number 10.

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In the first conversation today and only conversation by the way, we have yonathan lab check the CEO of so cool and he's going to tell us about how he's pivoting or adding a product to his blanching. He did some of his pretty normal supply chain on the blockchain, but now he's adding a defy element to it. Very smart very interesting listen and find out for yourself. How are you have an interesting background now a Duke University MBA graduate and now CEO of suku I want to know what suku is it says suku is a supply chain blockchain, but also now getting it to be kidding me a favor. It was talk about 101. What is sugu? How was it with Supply Chain Bridge over defy awesome. So we have two balls one is help France and retailers killed more transparent products that will connect them better to a conscious consumer and that leaves them to Marseilles, right? So through trace of ATP through transparency Solutions. Do we have

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Call them build more transparent bras while we were building that solution. We identify that we have a challenge on how to incentivize the smaller part. This most participants into a chain on how the progress made to give us a date at that we need to get our secretary by so you have a coffee farmer in Columbia. You need to trace a baby information. So you can build the transparent Perler. So you helped the Browns have more and connect with humor. But every time that we get data, we give them Super Soakers month. They basically right now don't have access to banking. They know how it is at the end of month. Maybe they're committed $20 to work. And we danced with one text. They send us the word loan and they get a Michael loan through the defy protocol that we created enabling the connectivity the connecting the sender's with the real people that really need defy today.

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Supply chain on the blockchain and every time they're using this blockchain to verify the supply chain of the project space coffee beans coming from Colombia. Whoever's going that whole process there any suku tokens and then they are collecting of sugu tokens. And then I like what what am I going to do with them? You know what maybe use a collateralized going on deep space and do make my business grow up and be a man song. They don't know what's crypto. They don't know what's a crypt alone. Basically, they just send loan and everything happens in the background and the beauty is that we really are bringing the borrowers that the real demand that defy needs to sustain in the future right to due to Cavazos a note to self versity education right here. Probably ask from yesterday one of my professors. Yes. That's correct.

00:09:19
Trying to work this out an indoor mini companies was the defy solution or the defy addition to this a way to Hyundai of differentiate your product or is it a way to maybe even two I give extra incentive for consumers or your customers to attend using the product everything? Why did you add this? That's who manufactures the first one is that everyone has been focusing on the cost perspective of Supply chains. How do I create more transparency? So I benefit retailers and Brands 25mm cost the more we already helped. Name one of the clients we help increase sales by 17% using our solution, right? So the revenue focus is much more important. Now in order to get that done you need the small farmer to participate that will create the story. We are storytellers and Ethan Sunday Morrow. If you don't if you don't have any incentives to actually give them something so you can actually get the date on that do we need?

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So I think I think that's how we found a way to get the traction to scale number of brands are broke and this network Farmers that we're dealing with the average male left sucio. Thank you for coming onto the curb daily so much and finally investor entrepreneur Advocate chamath. Palihapitiya is running for governor of California. He was interesting about this is like a lot of people who run for office has an overly complicated website donation pages and links and videos and tweets about why he has a one pager and it is this California is a mess is too expensive are teachers are underpaid in our schools aren't good enough. Let's move California Ford. So what do you want to do 0% state tax using to cut taxes from 60% to 0 and he said that this is going to increase tax revenue from 150 billion to 300 billion.

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He wants teachers make a minimum salary of $70,000 to educate our future he wants California to be a global Center for Tech and climate jobs you with every new child born in California to receive $2,000. Basically, he wants California to invest in the children's future. So more people can settle there and have security. He wants no student loans is 1.6 trillion dollars in student debt. He wants to realign incentives of the universities and the students. So that students never have to take out a loan again and he wants free school vouchers. He wants to make sure that any student and any parent can pick any school that they wanted 10 basically just making schools more competitive so that they can raise the bar so they fight for students not as soon as she has to have to go to school because they're in a certain area. Well, this sounds pretty bullish to me in California. I like it. I work as healthcare for all on that platform. The vote for California Governor is November of 2022. So it took me a long time campaigning for him. We're going to see this develop and I'll be bringing it.

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Please listen to this episode of the crypt daily like always go to Apple podcasts like subscribe share and leave a comment that helps us stay visible and it gives me good feedback so I can continue to make the show even better. I'll see you tomorrow and it's all that. Happy Halloween everyone.
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