Making Money Through Trading NFTs
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Christopher H. Loo, MD-PhD: So welcome, everybody to this week’s podcast episode for the financial freedom for physicians podcast. And I’m your host, Dr. Christopher loo. And as you know, we talk about four different types of freedom. First is financial, emotional location and time freedom. And initially, our cohort was physicians, but now our brand has grown so much that it encompasses physicians as well as other investors, entrepreneurs, and people doing very fascinating things.
So today, we have a very interesting guest, Michael Quan. And I’ll let him introduce himself. But we met at FinCon, he was a speaker there. And what’s interesting is he is a financial coach, financial educator, and he’s an NFT Expert. And he ditched the nine to five career at 36. And he’s also the author of The Financial Independence Retire Early Planner. So if you haven’t checked it out, you can go on Amazon, check it out. It’s really cool. I’ve seen it as well. So Michael, welcome.
Michael Quan: Thank you so much for having me, Chris. It’s great to be here.
Christopher H. Loo, MD-PhD: Yeah. It’s great to reconnect after almost a year now close to a year. And we met at fin con. And I’ve seen what you’ve been up to on Instagram and it looks like you’ve been on a lot of podcasts. And, you know, initially when we talked at FinCon, we talked about NFT’s. And at that point, I was like, Oh, this is interesting. So I bought a couple of NFT’s this year. And I’m like, wow, this is very fascinating. So I really wanted to get you on the show. So tell everybody about your story, your background, your journey, and then we’ll get started.
Michael Quan: Absolutely. Well, my story actually doesn’t start with NFT’s. As you know, these are very recent things. So I’ll take you back a little bit. So just out of college, I didn’t really know what I wanted to do in terms of my career and whatnot. So I stayed undeclared as long as I could. So I went to UC San Diego in California. And finally, I ended up getting an economics degree because that was the degree that I could get with the fewest number of credits. So I was like, I need to get out. [laughs] So I ended up getting out.
And then I realized, I’m like, you know, what I don’t really want to do is what a lot of my friends are doing, which is just going to work and getting a corporate job, nine to five. And so I was like, where’s the money flowing? Right. And at the time, and I’m gonna date myself a little bit was back in the mid to late 90s. And so during this time, was the dotcom boom, the really exciting time, the internet era where things were just really taking off. And so I was like, you know, what, I’m gonna go over into this area, even though I didn’t know anything about Tech, I was actually a gamer in college. So I was like, Well, I can take apart a computer. And lo and behold, I was able to get a job in the tech sector, just because of that skill set. And so that’s what really kind of got me into the tech industry.
Now, shortly thereafter, maybe like a year and a half after having my first job, 9/11 happened. And so you know, unfortunately, all the tech sector basically started imploding, my company was affected really badly. I think half of the company got laid off. And so we were on the seventh round of layoffs, six or seven. And I was like, you know, what, do I really want to stick around and see if my name’s on that next round? And so I got a couple of my friends and said, you know what, I think we can actually do something on our own. Because we were the team that was handling all of the IT supporting infrastructure. And so, being that we were more of a support mechanism. It’s a very critical functioning part of the company. So it’s not like, you know, we’re going out and consulting with other clients. So we were the only profitable division in our company at the time.
So what happened was, we decided to take off and do our own company. And that’s what really started the journey for financial independence and financial freedom. We ended up running this company for over 10 years. And just slowly growing. I mean, we literally started out with no office and slowly started growing. We started hiring people. And had to fire a couple people, because we didn’t know what we were doing [laughs]. And over time, we were able to build a decent sized team. And then we ended up having an office in Chicago, as well as San Diego. And by the time that 10 years was over, we ended up selling it to a private equity company in New York City.
And so that really gave me the option to work or not. And I will say that, you know, cashing out obviously, was a nice help. But it wasn’t just that it was that I was saving about 30 to 40% of my income over those last 10 years, right. And I was just pushing it into stocks and investments and different, you know, types of index funds and whatever else and just forgetting about it. And then at the tail end as well, I started to get into real estate, so I started buying some cash flowing real estate. And so by the time I exited, I was like, you know, What a very interesting time, I can actually not work if I don’t have to. And so my daughter was one at the time. And I said, You know what, I’ve got a really unique opportunity here to focus on family. And I can always go back to work if I want to. And that’s what I decided to do, I decided to kind of focus on the family first. And in the process of doing that, it was just super rewarding. But then I also got a little stir crazy, because you know, being home with like, my daughter and whatnot, you know, she’s a little infant and whatnot, it’s, you know, you want to do something else, you still want to be an adult, right?
So, I started my blog, which is called financially alert.com. And I started talking about financial freedom, financial independence, and how to retire early if that’s the path that you want to choose. And so that’s what really got me kicked off into the FIRE space. And now it’s been about nine years since I exited from a traditional nine to five career. And the great thing about that, Chris, is that I get to touch a lot of different things, I get to try a lot of different side hustles. And then more recently, to take us up to the present time, I started trading NFT’s.
And the really cool story about that was I never intended on doing NFT’s because NFT’s are highly speculative. I’m like, you know, I’m a very conservative traditional type of investor. I’m just index funds, like, I’m not touching anything that’s going to be really, too crazy. And what happened though, was my cousin got me into this, because he had purchased an NFT. That was this picture of an ape. And back then I was like, why would you buy this thing? He was like, Well, you know, I bought this for like, $2,000. I’m like, Are you kidding me? What are you doing? And you’re wasting your money on a stupid picture. I can just copy it to my desktop. He’s like, no, no, you don’t get it. He’s like, this is tied to the blockchain. I’m like, What’s the blockchain?
So lo and behold, you know, he had purchased what many people now know is called a Bored Ape. And so his $2,000 is literally returned to him, you know, seven figures or more. So it’s ridiculous. I’m like, okay, along the way, you know, before he had the full seven figures, I was starting to catch on, I was like, okay, well, maybe there’s somebody to this. And so I started to start dabbling it. And then I started to have a couple successes here and there. And then I was like, you know, this is kind of fun, too. And I also realized, and just really quickly, you know, for everyone listening, this is not financial advice, and you have to figure out for yourself what’s right for you. But for me, because I had some freedom, because I had some extra spare money that I could play with. I was like, well, then let me play with this, right. And this is a really fun place to plan. And at the time, it’s a little bit different. Now we can talk about that later. At the time, the risk to reward was really out of whack, meaning that you could put in very little money and get a huge return. And so that’s how I got into NFT’s, Chris. And ever since for the last like year or so. I’ve been in this space. And then people started realizing what I was doing. They said, Hey, can you teach me as well? And so I said, Sure. And then pretty soon, I started a group called NFT’s Unlocked. And then I created a course on how to understand what NFT’s are, and then the best way he can go about trading it and get educated and stay safe. That’s one of the biggest things is to stay safe. Yeah. And so yeah, that’s what I pretty much do now is trade NFT’s myself, but then also help other people do as well. And so we’ve got a group of, you know, 40 some people that we get together every week, and we talked about NFT’s and strategies.
Christopher H. Loo, MD-PhD: Oh, that’s so awesome. Yeah, I know, because, before I met you, FinCon was back, last summer, you introduced me and I was like, and I actually wrote a piece on, you know, NFT’s, and you know, you know, making six figures. And you know, a lot of my colleagues were incredulous. So, and then it’s fascinating, because when you actually buy an NFT, you’re it’s so cool. You have this feeling that you’re part of a brand and a community. And it’s like it’s really fun. And you know, you’re trading it. But I know a lot of listeners that don’t know what an NFT is. So just, you know, just basic, you know, what is an NFT? And we’ll go from there.
Michael Quan: Absolutely. Yeah. And, as we talk about this, the great thing is that, even if you guys are listening to this, for the first time, NFT’s are still really early, there’s actually not that many people that trade in the space. And what I mean by that is there’s not mass adoption yet. So again, I think there’s a really great potential upside for people that are early adopters of technology. And I’ll rewind you back to my early tech days, when we had the dotcom boom, things are going really well for tech companies. But then we had 9/11, right, and the whole economy crashed back down.
Guess what? I picked up Amazon at $10 a share when it crashed because I was in the tech sector I kind of knew was going to happen. I was like they’re not going anywhere. They’re starting to build out cloud infrastructure. Now my only mistake was, I only bought like 30 shares just only showed about like a whole bunch more. But whatever the point is, is that when you’re in early, sometimes you have the opportunity to ride a wave up. And with NFT’s as well, we’re going to potentially see a correction come back down, but the technology is not going away. So let me quickly explain what NFT’s are. The technology behind it and why potentially, you want to at least know what it is even if you don’t invest in it, you want to know what it is.
So an NFT just stands for non fungible token. And I think at some point people are not going to use the word NFT. Because it sounds so, you know, cryptic, right. Non fungible what does that mean? Well, something that’s fungible means that it has some sort of a value that’s interchangeable. So think of it like a normal US dollar, right? You can take a $1 bill for another dollar bill and exchange them and they have the same exact value. Bitcoin is fungible, because you get one Bitcoin, you can exchange it for another Bitcoin, and it’s fungible. But what a non fungible token is, is a token that has some unique properties. And you can define some very specific characteristics to it. That makes it not swappable.
Meaning that, like, I can create something on the Ethereum blockchain, called an NFT. And it can have specific digital rights that says, Hey, Chris owns this specific NFT. And there’s some very specific traits that go along with his NFT. And so if he tried to trade it with me, even though it’s from the same brand, they’re a little bit different, they’re unique, so you can have different assignments of value to each of those. And of course, ultimately, the market is going to value what these NFT’s are worth. Now, what we’re seeing typically, in the marketplace right now is being represented by art. So a lot of times we’ll see these things we call PFPs, or profile pictures. And so people want to rock their little profile picture. Like I was just mentioning, the Bored Apes is the biggest NFT brand out there. And so celebrities like Jimmy Fallon, Justin Bieber, Jay Z, like they have pictures of their apes on Twitter, because it’s like a status symbol.
So the reason why you know it’s real is because everything is logged onto the blockchain. So you might be asking, well, what’s the blockchain? Right? So if we think about the blockchain, all we’re talking about is technology that we use to create cryptocurrency. And so when we talk about Bitcoin, this is something that’s a digital asset, kind of like digital gold, is what we like to call it. And you can assign ownership, you can say, okay, Chris owns this one Bitcoin or fraction thereof. And everyone can see that information. It’s basically an online database that everyone has access to. But not everyone can write to.
So think of it almost like a big giant Google spreadsheet that everyone has read only access. And then you can see, hey, this person owns this, this person owns that. And then when it comes time to write something, or buy something, then there’s very special mechanisms that have to occur. We have to get these people or entities called miners involved to basically write the information to the blockchain. And the reason why it’s called blockchain is because every time you write something, it’s a new block of information. And the old information stays intact. So it’s a chain, it keeps building and building.
So with NFT’s, again, NFT’s are built on the blockchain, and where we’re seeing this most commonly is on the Ethereum blockchain. So remember, I just said that Bitcoin is fungible, meaning that you can try to interchange it, but Bitcoin doesn’t have any ability to create unique traits. And so with Ethereum, which is the second largest cryptocurrency out there, what you can do is you can take the Ethereum and you can write an NFT. And the NFT can say, Okay, this is assigning ownership to this image, plus these specific traits.
Plus, you can put in these things called smart contracts, although they’re technically not very smart, but you can put in some business logic and say, Okay, well, if Chris trades this, then it’s going to trigger this event next. And so what we’re seeing with this technology is that people are getting very creative on what you can do with NFT’s, and it’s going to go well beyond art, it’s going to be coming into — and it’s already starting, you know, people can use NFT’s for tickets, people can use NFT’s for rights, digital rights to something, it can be, you know, access to a club, it can be a club membership, where you get specific what we’d like to call utility. Utility in economics terms is like the value that someone gets out of a specific good or service.
And so there’s people right now that are just creating all these different NFT’s trying to create different ideas. And so this is why it’s so exciting is, because people are constantly, I would say they’re chasing utility, but most people to be honest, they’re chasing the money, right.
Gaming is really big right now and people are creating games and so for example, if you guys have any kids that are playing Fortnite or Minecraft, or Roblox and they’re out there buying digital goods, like a skin or a weapon, or even just putting their money into Roblox or whatever it is. These kids don’t have to be trained in what NFT’s are. They already were And then except they don’t actually own them. But at some point, they’re going to be able to own them. And they’re going to trade them for cryptocurrency and whatnot. So this is kind of where it’s going. And this is why I’m so excited. I love the technology portion. I don’t know where the markets are going to go long term, like short term, but long term, they’re here to stay. And so I think if you at least educate yourself, then you can put yourself in a position to act quickly when these opportunities arise.
Christopher H. Loo, MD-PhD: Yeah, that was a wonderful synopsis. And so one thing is, you mentioned one thing that was really interesting was, even though like, let’s say the listeners, they’re skeptic or they don’t want to invest in an NFT or buy one, but it’s good to know about it and learn about it. And you mentioned a lot of good use cases. What are some of the, because I know, you know, there’s a lot of bad actors, what are some of the pitfalls to watch out for to look for when getting into this space?
Michael Quan: Absolutely. So with fast money comes a lot of scammers, right? So what happens is, anytime that you’re buying and selling things on the blockchain, what happens is, once you pull that trigger, it’s — I wouldn’t say necessarily instant, but once it goes through, it’s pretty much permanent. There’s no way to reverse it. It’s literally locked into that blockchain that we were talking about, right. And there’s no refunds, right?
So you have to make sure that what you’re doing is what you intended on doing. And sometimes these bad actors are going in and writing bad code. So like, maybe you click on a bad link, and all of a sudden, it drains your wallet. So we use these things on the blockchain called wallets that basically say, Hey, I’m the owner of this little segment of the blockchain. And this is how you know that it’s assigned. So for example, wallets will have a really long string. It’s like a really long number. You know, different numbers and symbols and then letters. And so we’re like, Okay, well, I know, Chris, he’s the owner of this one, right? So you can assign the NFT to that. Now, if someone nefariously goes in, and tricks Chris to like, click on a link, they can transfer that out of his wallet and assign it to someone else. But there’s nothing you can really do. So there’s a lot of things that you have to do to stay up to speed to ensure that you’re not getting scammed. I mean, literally, I get messages every single day from scammers trying to trick me and click on their links.
And so part of the reason why I actually created my investment group, NFTs Unlocked, was to help people to stay safe. Because especially in the beginning, that’s when you’re most vulnerable, because you don’t really know. And there’s been times to be honest, I mean, I used to work in IT security, right? So there were times I got super, super close to almost getting scammed and I’m not gonna say I may get scammed at some point. It’s almost like a rite of passage at this point. But there’s things that you can do to mitigate those risks. You can spread your assets across multiple wallets, you can protect yourself with what’s called a hardware wallet, so that you have to approve a transaction physically instead of just on your computer. And so there’s a number of different things that you can do to mitigate those risks at this point. But again, it comes back to being knowledgeable and educating yourself first.
Christopher H. Loo, MD-PhD: Yeah, especially on Discord. Like some of the things they say, turn off your DMs, because 99% of direct messages on Discord are scammers. I know a lot of people go on to Twitter, and they put really bad links. So watch out for that. Really never like it, you know, goes without saying don’t reveal your private key, your secret and all of that stuff. So, but definitely, number one thing is safety, and security.
So what are now that someone knows kind of the you know, this to sort of the pitfalls, how would someone start? I know, you have a group as well, and it sounds quite interesting. How do people go about learning about this technology, just to understand the process and what goes on behind the scenes?
Michael Quan: Absolutely. You know, for me, of course, my cousin was kind of walking me through hand in hand in the beginning, so he kind of gave me a lot of the good fundamentals and some of the strategies up front. But then I did a deep dive right. I went to YouTube, I watch like, probably like hundreds of hours of different videos on cryptocurrency, understanding the blockchain and then starting to understand NFT’s as you know, laid onto that. So I went deep into that. And then I realized, you know, this process takes forever, and not everyone has the luxury that I do to just sit around during the day. These YouTube videos are like, well, what can I do to help people and so that’s why I created a course that kind of takes people through understanding what it is in a very easy to understand way. And there’s other courses out there as well.
Again I was a little hesitant to create this group because again, this is a very highly speculative type of investment. But at the same time, there’s some significant returns that you can have. And I also realized that people are going to do this anyway, because people like to chase money. So even though my heart and passion is to help people to find financial freedom and financial independence, you know, if I can help them to get a win with NFT’s, and then say, Hey, by the way, maybe you should diversify, you should exit some of that profit, put it into cash flow in real estate, or index funds over the long term, then, you know, I put that in there as well, during my weekly calls. But you know, I just want to make sure that people are protected as best as they can when it comes into space because again, it’s the people that, you know, unfortunately, don’t pay attention or, not necessarily don’t pay attention, but they’re just naive, right? They don’t know what can happen. And even the people that are educated, you can still get scanned.
Sadly enough, we had a member in our group that was pretty involved, and he is still involved. And he, unfortunately, didn’t put his NFT’s on a hardware wallet. So he had it on what we call a hot wallet, meaning that it’s directly on your computer, and you can approve things directly on your computer. And he had some NFT’s that were worth, you know, tens of thousands of dollars. And unfortunately, we still don’t know to this day how he got compromised, but he got compromised on his computer, on his phone, he must’ve potentially clicked something. He lost, basically $100,000 worth of NFT’s, like it was gone. Yeah. And, you know, he had built this up. And, you know, he was devastated, right. I mean, this was like real life money that, you know, his family, you know, could have used right? And the only silver lining to this story is that he realized that, you know what, I did exit some of this profit, he was able to pay off all of his debt. And, you know, so he still came out ahead of NFT’s overall.
But I mean, of course, you get wiped out most of your profits like after that, it still doesn’t feel good. And now he tells me though, he’s like, I want you to share this story with anyone and everyone that will listen, because I don’t want anyone to ever go through that feeling ever again. And so, you know, I created a separate tutorial on how to, you know, do things on a hardware wallet, and then connect it back and buy a chair, your empties through there. So, you know, he’s gonna take that experience. And, you know, one of the other good things is that he just, you just appreciate it. He’s like, you know, what, in the grand scheme of things, yes, there’s $100,000 worth of NFT’s, but I still have my family and my health. I’m okay. So again, whenever you’re investing in NFT’s, what I really like to tell people, and what my cousin told me is, you know, all the money that you’re putting into this should be fun money, meaning that it’s money that you can afford to lose. And if it’s gone, so be it. But then you know the reason why it’s called fun money is because it can get really fun when you get like a 10x or 20x return.
Christopher H. Loo, MD-PhD: Yeah. Well, this has been a great discussion, really, especially in terms of safety and security. And I know a lot of people may be interested in you know, either finding out more about you contacting you maybe even joining your clubs. So how can people contact you?
Michael Quan: Absolutely. So if you want to find out more information, my site, my investment group, is called NFTsunlocked.com. So you can go there, and we’ll do a special discount code for you guys. So if you want to use the code, DRCHRIS, we’ll give you guys $200 off the joint fee to start.
Christopher H. Loo, MD-PhD: Thanks so much. This was a fascinating conversation. I look forward to FinCon this year, you know, catching up. And I think FinCon just is a great community of just creatives and people who are very financially, you know, business savvy, so I’m glad I was able to meet you. So, thanks so much, and we look forward to hearing more about your successes.
Michael Quan: Thank you so much, Chris. It was my pleasure. Thanks for having me.
Editor’s note: This transcript has been edited for brevity and clarity.