Intro Vocals 00:01
You’re watching the blockchain interviews hosted by Dan Weiskopf. Each episode features interviews with leading industry experts so that viewers can have a deeper understanding of today’s quickly evolving blockchain marketplace.
Dan Weiskopf 00:20
Ric I’m so thrilled to have you on the blockchain CEO series. You know, we talk to a lot of CEOs on these interviews, but frankly, few are as well known as you in the financial advisor community.
Ric Edelman 00:36
I appreciate that, Dan, it’s great to be with you. I’m a big fan of the work you do.
Dan Weiskopf 00:41
Well, thank you. I appreciate that coming from you. Now you’ve written, you know, 11 books. I just ordered it by the way. And I think it may 10. It just came out, right?
Ric Edelman 00:52
Yes, The Truth About Crypto, brand new.
Dan Weiskopf 00:55
Congratulations, you know, I personally find writing to be very painful, I guess you get enjoyment out of it.
Ric Edelman 01:03
Yeah, I’m a writer by training, you know, my degree’s in journalism. And so it’s kind of natural for me, but I’m not all that fast. When I read a book, I’m good for about 500 words an hour. And this book is about 100,000 words. But it’s a long, slow process. But I’m really excited about The Truth About Crypto, debuted on May 10. At number one on Amazon’s bestseller list for digital assets. So very excited to have the book has received lots of rave reviews. I’m really excited so far.
Dan Weiskopf 01:33
Can’t say I’m surprised. So, you know, I tend to focus in on corporate cultures, and you’ve built a very successful one. And now you’re building two more. Can you talk to us a little bit about the secret behind inspiring people and, and keeping it growing? Is it about empowerment?How do you do it?
Ric Edelman 01:57
Yeah, it really is, you know, at Edelman Financial, my wife and I founded the company back in 1986. And we were really focused on wanting to create a safe place, not just for our clients, but a safe, respectful workplace for our employees. We personally both had some pretty bad experiences working for other people, Gene was actually assaulted by a co-worker at a prior job. And we’ve had our share of really astonishing experiences. And we wanted to create an environment that was safe, and welcoming, nurturing, respectful. And so that was as big an important element for us as the business building and revenue production that most entrepreneurs focus on. And I like to think we did a pretty good job at it. Our voluntary turnover rate in the 37 years we were running our company was under 5%. People continue to come and never leave my entire executive team in my C suite, no one ever left. And people were with me 25-30 years routinely. And we were named several times by a number of publications as one of the best places to work, both in our industry and just generally broadly in the marketplace. And we think it’s just really all about hiring the right people, giving them an understanding of the mission, providing them the tools to be able to accomplish that mission, and then getting the hell out of their way. And you hire bright, smart people who are committed, they’ll take ownership of this, they’ll build it, they’ll do it right. And the nice thing about it is that because we’re not in the healthcare field, we’re in the financial field, there’s nothing anybody can do that we can’t fix. You know, I marvel at doctors and nurses, because people’s lives are literally in their hands, you do something wrong, someone dies. But in our business, it’s just money. There’s no mistake somebody can make but I can’t fix, you know, just by writing a check, you know. And so that takes the pressure off. And it allows people to experiment and allows people to take chances and allows people to use their own good judgment. And we simply had a rule in our firm that you’re allowed to make mistakes. You’re just not supposed to make the same mistake twice. There are lots of mistakes out there, go make other ones, go make new mistakes, we reward failure, because failing means you’re trying. And if you’re failing repeatedly at the same thing, well then you’re not really trying very hard. You’re being lazy and sloppy, but that doesn’t happen very often. So it’s pretty easy, I found, to build an effective culture that empowers people, respects them and allows them to grow and develop and part of the reason we kept growing Edelman Financial was to continue to provide opportunity for our employees so they can grow in their own careers. And that was without a doubt the most rewarding fun element of our entire 37 year history at Edelman Financial. And a key thing that we look back on with fondness and we’re doing the very same thing with our new companies, the DACFP, the Digital Assets Council of Financial Professionals, and The Truth About Your Future LLC, my media company, where I focus on my radio show, TV shows, video casts podcast, my new book, The Truth About Crypto, our monthly newsletter, which is a 20 page subscription newsletter, all of our webinars and seminars around the country. All of this is the same thing. The only difference is we’re virtual, you know. My 25 staffers scattered all over the country, we’re not working in a common single location and physical office. So we’re adapting to technology, doing zoom events. And we bring everybody together for retreats, to be able to spend time together physically and get to know each other on a more personal basis. But we can apply the same culture the same principles virtually, remotely that we have done in an office environment. And that’s what really matters. And so we’re really excited about our growth, and we’re having trouble keeping up with demand. And we’re still adding to our staff. So we’ll add another five or 10 people before the end of the year. And it’s really exciting to be back in startup mode as an entrepreneur, because that’s the real fun. Yeah, I’ve been working virtual for a decade. And now funnily enough, I find people are accepting of it. So that’s good. None of us ever heard of zoom before. And now it is incredibly second nature and those who are working remotely in the past, you are an outlier. You’re like, huh, what? You know, how can anybody trust you or believe you’re going to be productive and, you know, work and truly do the job people are paying you for but nowadays today, the question is, why didn’t we do this before? So you were an early adopter, Dan and helped lead the way for everybody else.
Dan Weiskopf 06:44
I tend to be an early adopter, I think certain people have in their DNA. And you’re clearly one of those people who are visionary and love innovation. So along those lines, tell us a little bit about your aha moment in crypto.
Ric Edelman 07:02
Ah, it was, you know, my journey down the rabbit hole was probably similar to everybody else. It was little earlier than most. I was first introduced to Bitcoin in 2012. And this was very early, and my reaction was the same as everybody’s when you first heard about Bitcoin. Hmm, what?Digital money not issued by government. It made no sense. Like everybody reacts. But unlike most who tended to just dismiss it at a hand as a fad or a fraud, or irrelevant, I was intrigued. And I realized the people who were explaining this to me were smart people and deserve to be listened to. So I jumped down the rabbit hole to learn more, is this real? What is it? How does it work? Why, what’s the point? And it didn’t take long for me to realize in conversation with a lot of very smart people in the tech space, people who are engaged in the crypto community early on and 2012, that blockchain technology is the most revolutionary innovation for global commerce, since the invention of the internet. And we all lament missing out on the early days of the internet, you know, Boy, I wish I bought Apple and Google and Microsoft and Amazon. And I didn’t and I regret it, we all do. Well, this is that. This is the next opportunity for that. And they only come along once in a generation. The last one was, you know, 30 years ago. Here, we have another opportunity today. And I’m determined not to miss this one, nor to allow my audience to miss this one. And so I realized first, this is a big deal. Second, my realization was the overwhelming majority of people in the financial services industry don’t realize how big a deal this is. The incredible investment opportunities that this represents. And the reason that the financial services industry didn’t get it early on, two reasons. Number one, crypto was invented outside Wall Street. Most innovations in the world of money come from within the financial services sector. But this did not. And therefore, they weren’t part of the party. In the early days. This party was started and run by techno geeks. You know, just though the most of them were anarchists. They were building Bitcoin because they hated Wall Street. They wanted this to be a replacement for money around the world, which was silly and stupid and never going to happen. So Wall Street wasn’t engaged wasn’t involved. And when you look at Bitcoins, price volatility, it’s easy to say that’s a fad or a fraud. It’s a pump and dump scheme. It’s a Ponzi scheme. It’s nothing but a bunch of crooks. It’s never going to survive, and therefore let’s ignore it and stay away to protect our clients. Well, we fast forward 12 years and we realize the financial services industry was dead wrong. They’re late to the party and because we, meaning us financial advisors, you know, I built the largest raa firm in the nation. Edelman Financial’s managing $300 billion. Well, it was until this week in assets, serving 1.3 million households around the country. I realized that financial advisors, RAs, independent RAs alone, control $8 trillion of investor assets. Two thirds of all American investors work with a financial advisor, stockbroker, insurance agent, banker, independent advisor, what have you. We are the gatekeepers to investments. And if the advisor isn’t telling the client to buy bitcoin, the client is not going to buy bitcoin. And that means investors are missing out on this opportunity. Bitcoin has risen 40,000,000% since its inception, the best performing asset class in history. It’s 135 and 10 year track records are far better than any other asset class, stocks, bonds, gold, real estate, oil, commodities, you name it, and the average investor has not been engaged because the average investment advisor has not been engaged because the average investment firm hasn’t allowed the advisor to recommend it to the client. And everybody’s been missing out on this incredible wealth creation. So I created five years ago DACFP to solve that problem. And we are the only crypto education company that exists in the financial services sector. There is no research, no advice, no education being provided to financial advisors within the financial community. The CFP Board doesn’t have any courses on this. And as a result, we are now the official education partner for the CFP Board for the Financial Planning Association, for the Investment Advisors Association, the Money Management Institute, XY Planning Network, NAPFA. Everybody’s turning to us because we have the expertise in this category of blockchain digital assets to teach advisors about it, not because I’m an acolyte, not because I’m endorsing that you buy bitcoin, I don’t care whether you buy it or not. My goal is to get you educated, because you’re a pretty smart person, so that you can decide for yourself, your practice and your clients, whether you should engage and if so, how and how much, I put this in the category Dan, of annuities. Every advisor has a strong opinion about annuities, we love them, or we hate them, I’m in the “hate them”. Or whether we love them or hate them, we’re all articulate. I can explain in great detail why I hate annuities, I can tell you how annuities work, I can explain for you the taxation of annuities, the liquidity issues, the fees and expenses, the construction, how the products are built, the fee schedules, the product providers, I can talk to you at length about annuities. Has nothing to do with whether or not I like annuities. Annuities are an integral part of the financial planning world. And it is my obligation to be knowledgeable about this to evaluate them for the benefit of my clients. So when my client comes calling and says, Rick, should I buy an annuity? I’m able to talk with them intelligently about it. That’s my challenge for advisors about Bitcoin, I don’t care whether you like it or not, you need to be able to talk intelligently about it. Can you explain to somebody what Bitcoin is? That’s your job as a fiduciary to be able to do that. That’s all.
Dan Weiskopf 13:13
And the impacts that it’s going to have across industries and life. You know, I go back to the movie, You’ve Got Mail. You know, it’s a fun movie. And it was really, you know, all about the internet, in my judgment, right and, and how it was going to be changing people’s lives on a social bases, right? This is even bigger. In my judgment.
Ric Edelman 13:42
There’s no question that it’s bigger, because the original Internet that you’re referring to, You’ve Got Mail was all about AOL and dial up, emailing, that was all about internet 1.0, which was the connection of people. That’s what that was. We use emails and texting and Facebook, connecting people together in astonishing new ways. Then we have the Internet of Things, which is where our phone talks to our car. Now we have the internet of money, and money makes the world go round, and being able to receive, store and send money instantly, securely, safely free. 24/7 is revolutionary, and it’s changing global commerce. McKenzie says by the end of the decade, the global GDP will be 70% Digital, governments are racing to create CBDCs central bank digital currencies. And we’re expected to have a US dollar that’s a digital dollar by 2025. This is undeniable and its impact on the investment opportunities are huge. And this is why we can’t sit on the sidelines about it any longer. And in fact, investors aren’t waiting. As you know, Dan, about 20% of US adults own crypto. They haven’t bought it from their financial advisors, because their advisors aren’t allowed or don’t want to sell it to them. So they’re going elsewhere on their own. Sometimes getting caught up in fat and fads and frauds, buying the wrong thing at the wrong time for the wrong reason getting themselves in trouble. That is a failure of our industry to protect those consumers. Because that’s predominantly what we do is protect our clients from those scams and our being silent is a denial of that service to those clients. But in the meantime, the clients are moving on without us. And as a result, we’re losing AUM, we’re losing revenue, and we’re losing credibility, and ultimately, we’re going to lose the client. The advisors who understand that this is a huge new independent asset class that has tremendous wealth, building opportunities, along with some pitfalls to avoid, means that advisors can use this to build their practice bigger and better than ever, and help their clients achieve their financial goals in ways that were unimaginable five years ago.
Dan Weiskopf 15:52
So break down for everybody the difference between the technology and how it’s also an asset class, because they’re different. I think a lot of financial advisors get that confused.
Ric Edelman 16:07
Yeah, and it’s easy to get confused. And it’s all Satoshi’s fault. Satoshi Nakamoto, who invented blockchain technology and Bitcoin, blew it in the original white paper that referred to cryptocurrency, huge mistake, that was a very poor choice of words, that has set everybody down the wrong path. And there’s a resulting huge confusion as a result of all of it. There are two different elements to this as you sit down. The first is the tech blockchain technology. This is massive. Every bank in the world is racing to develop blockchain technology. Last year alone, all by itself, Bank of America, just one of the major banks in the world, filed 161 patent applications for digital payments technology, just 161. In one year, all by itself. Imagine what all the other banks did as well, this ain’t going away. A third of all the VC money that’s being invested these days is going into this tech, you can’t spend $100 billion on r&d and end up with nothing to show for it. This is going to be transformative. It’s clear everybody’s in agreement. Blockchain technology is huge. Janet Yellen, the Secretary of the Treasury said just like three weeks ago, Blockchain is transformative. Everybody everywhere gets it. But what about Bitcoin? What does that have to do with Bitcoin? Why don’t we need Bitcoin just because blockchain is cool. Why don’t we need Bitcoin and all the other digital assets? Well, for the same reason that you’ve got cars, and you have highways, blockchain’s the highway, it’s the basis on which the cars operate. Think back to the Model T. When the Model T was first introduced, it was a disaster for the simple reason that it was being driven on roads built for horses, dirt roads filled with ruts. It didn’t take long for everybody to realize we need to pave the streets, so that these cars with their thin rubber tires can move smoothly without blowing out the air out of the tires. And so that’s where we are with Blockchain. The blockchain is the superhighway and the tech that is being built on it to operate with it. Bitcoin is just getting started. And people ask, Well, why do you need it? Well, here’s the simple analogy. A casino. You want to play blackjack, you can’t play with dollars, you’ve got to convert your dollars into casino chips so that you can play blackjack and poker and craps and whatever you want to do in a casino and when you’re done playing, you convert your chips back into dollars. Same thing with Blockchain. Do you want to put data on the blockchain where it is immutable, it is permanent, where it can never be copied or deleted, or it can never be altered? Then you need to use Bitcoin to get your data onto the Bitcoin Blockchain. You want to use Ethereum to be able to develop a smart contract that allows you to send money to somebody else with conditions attached. You’ll get my money if you send me the concert tickets, or the deed to your house or only if Biden wins the next election or Kansas loses the next game. That’s a smart contract programmable money. You can’t do it with dollars, you need to do it on the blockchain. And in order to use the blockchain you have to use the assets that are native to the blockchain. That’s why Bitcoin and Ethereum and all the other digital assets are a big deal. They’re the roads. They’re the cars that travel on the road of blockchain. It’s as simple as that. And most people don’t realize this. So you can’t have blockchain without Bitcoin, or some other digital asset. And we’re seeing a lot of development of many more blockchains and many more digital assets as everybody comes up with a new book. under a better mousetrap. And that’s why we have all of this. That’s why there’s so much excitement about all of it.
Dan Weiskopf 20:05
Yeah, with good reason. I totally agree with you, but, so would you agree that Bitcoin is more of the currency? And Ethereum as a smart contract is more than technology? Or do you put the two together?
Ric Edelman 20:23
No. So we talked about the fact that there’s the blockchain and then there are digital assets. Let me break down the digital assets because there are two kinds of digital currency and digital asset. This is another error that Satoshi made in the nomenclature in the beginning that resulted in confusion that persists today. Bitcoin was intended to be a digital currency, a replacement for fiat currencies around the world, the elimination of the dollar, the euro, the yen. That experiment failed, that ain’t gonna happen. But what Bitcoin has become, and the reason it failed, by the way is because Bitcoin fails to provide the one thing we insist on in a currency, you know what that is? Price stability, I want my dollar to be worth $1. I don’t want fluctuation in the value of my dollars. And we’ve seen what happens when governments have massive fluctuation in the price of their currency hyperinflation, you know, Zimbabwe having a trillion dollar, currency, you know, they print money with with a trillion dollars, because the currency is worthless, you know, hyperinflation of 1,000% a month it current governments collapse all that nonsense, like, look at the uproar here in the US with a lousy 8% inflation. Imagine if it was 100%. So, Bitcoin failed as a currency because of its price volatility. It’s not a currency, it’s an asset, that price volatility creates a store of value. The reason people buy gold is that they think gold has value and the value will rise, people buy Apple stock, because it has value, and they think the value will rise. Bitcoin is a store of value, it went from nothing to $40,000 a coin in 12 years, nothing has ever risen that fast that high ever. And so it is a store of value. And you can put it alongside other stores of value, stocks, bonds, real estate, gold, oil, and so on. But it’s not a currency. And because of that the industry created stable coins. digital currencies, a stable coin is meant to track the dollar or the yen or the euro, without any fluctuation. This is an experiment underway right now, this past week, we have seen that experiment being severely challenged. I’m a little skeptical and always had been about stable coins. And this week is kind of demonstrating why. But it is an effort to create an opportunity for you to have digital money that doesn’t fluctuate in price. We’re gonna have to see if that experiment fails or not. I’m not terribly bullish, but I’m very bullish about governments creating digital currencies. That’s what a central bank digital currency is a cbdc. Governments will do it, there’s no reason for us not to have a digital dollar. I mean, if you think about it, Dan, it’s crazy. Why don’t we every industry in the world has gone digital, when’s the last time you use cash to buy something? Or hey, check our Social Security check Pension check to get direct deposit into our bank, we auto bill, pay our mortgage and car payment and utility bills, we use PayPal Venmo Zelle. We don’t use credit cards and debit cards. We don’t use cash to buy anything. Why is the government still printing money, the cost of printing, transporting, storing and distributing that money is hugely expensive, which is why the government is going to go to digital dollars. It’s a safer, cheaper, faster, easier way to get money into the economy. And everybody’s falling all over themselves. So in the race to develop CBDCs by the end of the decade, every government in the world will have digital currencies. So you’ve got those two, digital currency for the payments, moving money and digital assets, which are just the newest version of wealth creation.
Dan Weiskopf 24:31
Okay, and you brought up the government. There’s always a lot of talk these days. And I think it’s a very big step forward about regulation. I’ve got two parts to this question. One, now that you’re not regulated yourself. Is it liberating? I have been regulated for so many years. I don’t know what it would feel like.
Ric Edelman 24:52
I’m thrilled and you know, one of the most fun elements of my decision to leave Edelman Financial last year you know, this has been in the works for six years. We brought in a private equity partner in 2015. And we laid out the plan back then of my ultimate departure from the firm, which we put into motion a year ago. And we announced it last June, and swell 31, I left. And one of the most exciting elements of the whole thing was the fact that I got to dump my securities licenses, which I’ve had for 37 years. So Iam no longer under the jurisdiction of the SEC, and I can say whatever the hell I want. It’s wonderful. So I don’t the biggest, of course, you know, I’ve always been a bomb thrower. I’ve always been somebody who is controversial and forward thinking and such. And now I get to be the Jim Cramer of the world, I get to say whatever I want without being licensed, protected by the First Amendment. And so I’m thrilled, it’s great. The biggest issue is I just don’t have to go through the paperwork exercise. You know, in the past, when you got your license, you have to document everything you say, to prove that what you said has a basis in resource material, etc. I don’t have to bother with the paperwork, because nobody’s going to come and check my files anymore.
Dan Weiskopf 26:08
You can’t, I like the saying you can’t regulate integrity, you either have integrity, or you don’t. Right. So continuing with the discussion around regulation, though, we need regulation around, you know. Is this, do you think, something that actually might come to pass in 2022, 23?
Ric Edelman 26:33
We already have a lot of regs on the bookstand. There’s a big misnomer. People think there’s no regulation, it’s the Wild West, that’s not true. There’s a ton of regulation in place from the Fed from the IRS from Treasury from FinCEN. The SEC from CFTC from FTC CFPB. I mean, everybody’s regulating the hell out of crypto, there’s a ton of regs in place. But there’s also a lot lacking. We need a lot more Reg, because so much of this is brand new. For example, we know that if you sell Bitcoin, that’s a capital transaction, and you have to report it on your schedule D just like your stocks and bonds, right? It’s you have to record the cost basis, and you have to report the capital gain or loss under capital gains rules, those rules are well in place. But what about airdrops? What about forks? What about mining? What about staking?All of those are brand new features unique to crypto, there’s no such thing as staking stocks, there’s no such thing as an airdrop of bonds. So the IRS doesn’t have tax rules on this, because it’s also new. And we’re anxiously awaiting, in fact, working very hard with regulators. I’m involved with the digital chamber of commerce with the Association for digital assets, management and many other groups in working with regulators and legislators on Capitol Hill to develop the laws and the rules we need. So that we can operate effectively, efficiently with a focus of consumer protection, because that comes first. And bottom line is we don’t care what the rules are very much. We just want to know what the rules are. So that we can operate within the rules just tell us the swim lanes, we’re happy to stay within them. So a lot of rules are in place a lot more coming. And there’s a lot of movement on the road. Just a month ago, President Biden issued the first ever White House executive order on crypto, Obama never did it. Trump never did it. Biden is the first. And he’s calling on the full force of the federal government to work together in the development and support and the innovation of crypto and digital assets, including research into a cbdc. So we’re going to see the regs. And the SEC and the CFTC are jousting to see who gets jurisdiction. Part of it needs Congress’s clarity. So it’s coming and it’s coming fast. Because everybody realizes the important need for this when you’ve got 20% of US adults already own the stuff. And we aren’t sure if they are aware of the rules. We’re not even sure what the rules are. We’ve got the development of crypto exchanges, digital asset banks, we’ve got defy organizations and platforms that are making this stuff available to investors and the rules are unclear when you’ve got a lot of offshore companies engaging who frankly consider themselves impervious to us regs. We need to work fast for the protection of consumers. And everybody’s all over this. All the government agencies, Congress, international organizations, I’m involved with a global blockchain convergence, a group of 200 lawyers around the world, helping governments develop the regs needed to protect consumers and foster the innovation. It’s common. It’s coming fast. It’s not going to be a light switch down. It’s going to be a dimmer switch. We’re not going to suddenly have all of a sudden the rules FASB just announced this week, they’re about to release their recommendations for the accounting rules pertaining to crypto. We don’t even have those, how can a corporation buy Bitcoin for its corporate treasury, if they don’t know what the accounting rules are? So the FASB has realized we gotta write the rules, because all this is brand new and doesn’t exist yet. So it’s common, it’s going to come fast, but it’s going to be thoughtful, it’s going to be measured, and it’s going to be effective. So it’ll take time until we get there. Remember, this is all brand new, we’re in a Model T era, everybody’s expecting a jet engine, we’ll get there. It’s coming. You know, to your point, innovation isn’t necessarily smooth. Right?And when we look at the ETF industry, right, it’s evolved as well, with regulations. Right. So this is going to be, I think, in stages. I was thrilled to see the headline around the FASB, because, you know, candidly, I do often talk to companies about their holdings in Bitcoin. And, and they’re trying to figure it out. And, and the irony of it is, is in certain cases, there’s their accounting firm. And then there’s a consulting part of their accounting firm that setting the rules, and they don’t talk, right, because they’re afraid to. So it’s fascinating.
The analogy, and you said it best innovation always precedes regulation. It was only after the Model T was on the road, that we started to have car accidents. And the car accidents caused everybody to say we need rules of the road, you drive on the right, we got to build stop signs, we got to draw white lines down the center of the road. We need traffic lights, and speed limits. All the rules come later. And then more rules, you got to build headlights, and taillights, we need side mirrors and rearview mirrors. You know, we need good brakes and the cars, the regulations always come later. And that’s where we are with crypto. So for people to say, why isn’t it better regulated? It’s brand new, a little time. Let’s work with all due speed and due diligence. But let’s get it done. But don’t be shocked that the regs aren’t in place yet. This is all still new.
Dan Weiskopf 32:17
12 years old, right? I mean, it’s a big-
Ric Edelman 32:20
And that’s frustrating. I mean, you know, 12 years, we still don’t have a Bitcoin ETF. 12 years and we still don’t have the rules in place. That’s a little frustrating. You know, the SEC can say yes to a 3x inverse stock fund, but it won’t say yes to a Bitcoin ETF. I mean, give me a break. So yeah, we need to get on with it.
Dan Weiskopf 32:40
So in our industry, we have a nomenclature. That’s the way we explain things. Some of its good some of its bad in my opinion, you know, I go back to the difference between high yield and junk bonds. It always sounds better when it’s high yield. Smart beta versus well, dumb beta, as we know, is it a mistake that we’re talking about smart contracts in the context of digital assets?
Ric Edelman 33:09
No, no, it’s not because it is. It’s an accurate description. If you’re gonna call Ethereum a smart contract, there is an inherent assumption that something else must be done. If this is smart, something else is done. And what’s dumb, is Bitcoin. So let’s understand this. We came up with Bitcoin first. Why did we need anything else? Well, for the same reason, you have a lot of pair of shoes in your closet. Some are you when you’re working out at the gym. When you go to the opera, we have different shoes for different purposes. And we need different digital assets to accomplish different goals. For example, Bitcoin was the first digital asset and it works flawlessly. It has never been hacked. No other computer network can make that claim in that way for that length of time. It is safe. Through cryptography, it is. relatively fast. I mean, a lot of speed is an issue I’ll get to it takes about 10 minutes to do a transaction. It’s very low cost virtually free. But Bitcoin is dumb, meaning if I send you my bitcoin, you receive it. I might not want you to, I might want you to get my bitcoin only if you do something for me. Like you send me concert tickets or only if the weather changes and it rains. I can’t do that with Bitcoin. And that’s why in 2015 Ethereum was invented by the Ethereum Alliance.org, a nonprofit organization of dozens of some of the biggest corporations in America and around the world. And the reason they created Ethereum and as they realized we need smart digital money, not dumb money. I need to be able to send you my money only when a certain occurrence or event occurs and if then scenario meaning a contract. Businesses deal with contracts all the time, you’ll get my money when you deliver the goods. That’s what contracts are. Lawyers spent a lot of money, a lot of time writing contracts and ensuring that they get fulfilled. This is why we have escrow agents. I’ll put my deposit for the new house in escrow. And when you deliver the keys to the house, the deed, you’ll get my money out of escrow. So we protect each other in these transactions with contracts, those are smart contracts. Well, Ethereum does this digitally. It’s a smart contract, we can program the contract. That’s why it’s also called programmable money to determine the terms under which you receive my money. This is brilliant. And this is why I’m more enthused, most are, about Ethereum than Bitcoin, because Ethereum has more practical application in business than Bitcoin does. Bitcoin, I’ll send you the money, you’ll get it safely, securely, quickly. But Ethereum, let’s determine the terms on which you get my money. And this has huge business benefit in every industry around the world. And that’s why you’ve got Bitcoin and Ethereum. And the list goes on and on as to why some of these other contracts and these other digital assets, I should say, are being built to solve problems. Bitcoin, for example, is slow, takes 10 minutes to do a transaction. Visa does hundreds of 1000s of transactions and a fraction of the time they do over 1000 transactions a second. Bitcoin is way too slow to be used for business. Ethereum is pretty slow as well. And that’s why Solana was invented. Solana does transactions as fast as Visa. And this is why different coins get built. There are 10,000 of these coins, most of them are silly frauds, some of them, gimmicks, many of them, most are going to go away, it’s going to shake out kinda like the automobile industry in 100 years ago. 1920 there were 200 automobile manufacturers in the US today there are three same thing will happen in crypto, there are 10,000 of them, let it shake out, let it evolve and mature. And you’ll end up with 10 or 20. Bitcoin and Ethereum. Together they’re 80% of the market, They’re Coke and Pepsi of crypto. Sure you could buy other coins to invest in. Or other soft drinks, you can buy, too, but why bother?
Dan Weiskopf 37:24
Yeah, so you mentioned the mortgage industry and I happen to have–I don’t even think you know what, do you know what these things are? So Countrywide Credit is the company that my father in law was the banker on when it was first created back in 69.
Ric Edelman 37:47
Prior to ’08, for sure. Countrywide was a huge mortgage lender
Dan Weiskopf 37:51
Changed the world, right.
Ric Edelman 37:53
Dan Weiskopf 37:55
And I think we live in a world where things need to evolve. When I was at UBS when I was looking at the computer, I realized it was on DOS, right? You know, it’s crazy. People don’t even appreciate that. Technology needs to innovate. When I’m thinking about mortgages, I see massive opportunity for the blockchain to really create innovation, right? Do you think I’m getting ahead of myself on that?
Ric Edelman 38:28
No, you’re not. I mean, it’s not in place as broadly as it will be. You’re not getting ahead of yourself, you’re seeing the future. And that gives you the opportunity to capitalize on this from an investment perspective, because you always want to invest before a thing becomes a thing. That’s where the profits are. I mean, you know, everybody’s happy to buy Apple stock today. It would’ve taken a lot more guts to do this 25 years ago, and you could have lost an awful lot of money. Here’s a fun thing for you to do. This is terrific. We all know the incredible price volatility of Bitcoin. Seven times it’s fallen 50% or more in its history. Go take a look at the first 12 years of Amazon, Apple, Google. And you’ll see the same exact price volatility. Many times this company has almost went broke. Many times people lost 50, 60, 70% of their money. If you hung in there, you are incredibly wealthy today. And that’s where we are today. It’s easy to buy it after it’s proven. The key is to buy beforehand and if you bought a tiny little bit, you got wealthy anyway. So your comment about mortgages and where blockchain is going to be solving this problem in the future. What blockchain essentially is is a disintermediated you don’t need the middleman. We don’t need the title settlement attorney. We don’t need to do a title search. We don’t need to buy title insurance, because blockchain allows us to execute that mortgage. The home buying itself without an intermediary, direct between buyer and seller, anybody who’s in between the buyer and the seller, the mortgage broker, the, in your example with Countrywide, the real estate agent, the title settlement attorney, the escrow agent, the title insurance, all of them are obsolete, antiquated and will disappear, saving investors and homeowners and mortgage borrowers massive amounts of money, radically accelerating the speed with which we can buy that house and get that loan. Right now it takes months right? To go through the closing process 1000s of dollars in fees that don’t add to the value of the house, we can skip all of it, because blockchain technology eliminates it because it’s an authenticated technology doesn’t rely on trust, which is what we rely on now. I don’t trust you, which is why I do a title search. And then I buy title insurance because I don’t trust you that you really have a deed, that’s pretty clear. Well, Blockchain makes all that unnecessary and goes away. So we’re gonna make huge amounts of money by saving people huge amounts of time and money.
Dan Weiskopf 41:06
And I see the future that way as well. And I did one of these interviews with Mike Cagney at Figure and you know, they are doing it, it’s not conceptual, they’re absolutely doing it. And when I started thinking about title insurance, like quite honestly, I get angry, because I’ve fortunately I refinanced my mortgage three times with the same bank, and every time I’ve had to do title insurance, right. But wait, if I’m paying, paying you, Mr. Banker, every month, you’re accepting my money? Why do you have to verify that the title is still in my name? I mean, if it was on the blockchain, you know, it would be authenticated automatically. So I totally agree with you on that. So we’ve been talking a little bit about Apple. And I wrote an article about how Apple and Cisco, frankly, should be buyers of Bitcoin. And Tim Cook, I think, came out and said, you know, people don’t buy Apple stock, because they want Bitcoin at access. And candidly, I respect that, you know, and that’s fine. But on the same token, a company like Cisco, and I want to stay high level, I don’t care specifically about Cisco, but just generally, you know, we’ve got a situation where corporate balance sheets, fortunately, are very rich. And we have inflation, you know, in the case of, of Bitcoin, and, you know, I see an opportunity to inspire some employees, right, you’re stepping out on the ledge, right? And you’re saying, We’re forward thinking, Where do you think corporate America is on that?
Ric Edelman 42:49
They’re reluctant, partly because of absence of regulation. For example, if you’re a corporate treasurer of a publicly traded company, and you don’t even have SFSP clarity on how you account for your holdings of Bitcoin as corporate treasury stock, how do you go forward?Second, look at it from just a personal perspective, if you buy bitcoin and add it to your corporate treasure, you use some of the business’s cash reserves to do this. And Bitcoin falls 20%. If you get fired, why is it beneficial for your own career risk? Very often many compliance officers, corporate lawyers, General Counsel, they make decisions not for what’s best for the business, not what’s best for the shareholder, what’s best for their own personal career. Many of them suddenly want to take the personal risk, because they’re fearful that if this goes well, okay, great, that’s my job. But if it goes badly, I’m fired and blackballed out of the industry. And there isn’t enough reason for them to take that risk to be first, everybody’s always happy to be second in corporate America, but not too many motivators willing to be first, you know, this is why Michael Saylor is getting such prominence at MicroStrategy because Michael has such a controlling interest in MicroStrategy stock and he is such a believer in Bitcoin, and he has made the strong commitment of adding Bitcoin to corporate treasury, to the tune of $6 billion. And he is very actively talking with corporate treasurers, CEOs as well as CFOs, why they need to be doing the same. He makes an extremely compelling argument for why you should do this. Ultimately, he will be proven correct, and everyone else will follow and in the future, it’ll be routine. You can already argue the two sided the two faced attitudes, these corporate CEOs who are refusing to buy bitcoin, I have no problem buying their own corporate stock. Their stock buybacks are artificial and frankly, in my view, manipulative efforts to increase and support their own stock price, because that’s what their bonuses are based on. Their bonuses are not based on corporate profit. They’re not based on product development, they are not based on consumer satisfaction, or employee retention, their bonuses are based on getting the stock price higher. And what better way to do that than to manipulate the supply demand equation of the shares, the more stock you buy back, the fewer shares are available in the open market, and therefore, the higher the price goes, without doing anything to effectively run your business. You want to talk about manipulation and wrong set of metrics to govern a business. How this has evolved at the corporate board level, and with the corporate packages you use to recruit CEOs is obscene and unconscionable And shame on the SEC for permitting this behavior. And so when a CEO says, Buy Bitcoin, are you crazy? I’m gonna load up on my company stare shares and set instead. Shame on you shame on all of them.
Dan Weiskopf 46:03
Yeah, no, I clearly agree with you on that. So we’re winding down now, unfortunately. This has been so much fun. Always appreciate learning from you, and having an engaging conversation. Looking forward. Now, my wildcard questions are always about where you see different industries getting impacted, which ones do you think in putting financial services aside? Because A, that’s your expertise. So it’s more fun to look elsewhere? And B, it’s what everybody always talks about? It’s too obvious. Which industries do you think will be the most impacted by the blockchain?
Ric Edelman 46:47
Those which are intermediaries. This has nothing to do with Wall Street or the financial services sector. Every industry has the ability to benefit from blockchain technology. The Norwegian Salmon Association is using Blockchain tech to track salmon that are pulled from the ocean and delivered to the store through the entire supply chain on a global basis. You get a QR code on your salmon in the grocer. And you can see exactly when it was pulled from the ocean, which ocean it was pulled from which company did it. Which fisher outfit and how it has transported along the way. Major watch luxury watchmakers VASHAUN Constantine and Breitling have both placed all of their watches onto the blockchain. So you know, when you buy a watch that it’s legitimate watch, it’s not a fake, it’s not a counterfeit, you’re also able to track the provenance, you know, all the prior owners of that watch, you know, the repair and maintenance history of that watch, because this will improve the watches value, and for counterfeiting. And Billboard magazine says that blockchain tech is going to facilitate the distribution of concert tickets and song royalty payments, every industry is able to benefit from this tech, who’s going to be harmed who’s gonna go away the intermediaries, everybody who’s in between the buyer and the seller, the manufacturer, and the purchaser, the user, everyone is in between stockbrokers, real estate agents, mortgage brokers, lawyers, everyone who’s in between will disappear over the next 10 to 15 years. They are among the 175 occupations that are going to vanish. I wrote about them in my last book, The truth about your future, I listed all 175 that are going to vanish over the next decade, and another 150 that are going to emerge. We never had a blockchain engineer 10 years ago, it’s now the highest paid software engineer occupation in the world, making $200,000 a year. So we need to recognize that blockchain technology is not only an incredibly exciting investment opportunity, it is highly disruptive to the way business gets conducted. And many occupations, many entire companies, many whole industries are going to disappear. Due to this innovation. Just like we no longer have elevator operators.
Dan Weiskopf 49:28
I’m really curious to see what happens in the healthcare industry. You know, the that is so bloated, right? In the payments. When you go into a hospital, they mean it’s-
Ric Edelman 49:43
Question for you. Why is it I don’t have access to my own personal medical records? Why are they only available at my doctor and my insurance company? Why don’t I have them and why is it such a burden to send my medical records from one doctor to another doctor and when one doctor, because I go to a specialist, enters data into his database of my physical situation, how come that info isn’t easily quickly immediately shared with my other physicians, Blockchain solves all of that medical records will be NFTs. Our driver’s license and passport will be online as NFTs, and the ability to update, track, maintain and secure this information will be incredibly wonderful going forward. And it’ll be massively disruptive to the healthcare industry, resulting in better patient care, better outcomes, lower costs, but very disruptive for a lot of those players who are making a ton of money, moving that information around securing that information, protecting it and shielding it from broader distribution for the benefit of the patient. So yeah, those are going to get disintermediated as well.
Dan Weiskopf 50:56
So the second wildcard question that I always ask is, you know, looking at 2025 or 2030, you know, what is it that people are going to look back in those years? And say, darn, it was so obvious this thing was so obvious to me today in 2025, and 2030, I should have I should have gotten more involved, you know, what are the signals?
Ric Edelman 51:23
We’re already beginning to see them. You know, a lot of people remain in denial about how big this industry is. The you’ve already got 300 million people around the world who own Bitcoin, you already have a $3 trillion market cap bitcoin does more transaction volume annually than three times more than American Express. You’ve already got Coinbase, a publicly traded digital assets exchange that doesn’t have more accountholders than Charles Schwab, TD Ameritrade Interactive Brokers and E trade combined. You’ve already got decentralized platforms like uniswap, with only 39 employees, that does as much volume as the entire New York stock exchange with 3500 employees. So this is already here. It is already huge, and it’s already global. 365 24/7 and many are still saying, I don’t know, if it’s real, I still think it’s a fad. I think it’s going to go away. I think governments are going to ban it. People are coming up with these wacky assertions without having taken the time to learn about what it is they’re talking about. That’s why I wrote my book, The Truth About crypto to give you the knowledge, the information you need, so that you can grab onto this in a way that makes sense for you. So that you don’t turn around and 2025 or 2030, saying, gee, I wish I’d invested sooner, because the world is filled with the coulda, woulda, shoulders and regret is one of the most common emotions that investors feel the regret of having missed opportunities when it was presented clearly and cleanly in front of them. And that’s the mistake people are making. That’s my mission is to teach you about this to help you understand what’s going on. And to show you how to reasonably efficiently and safely participate without taking risks that might damage your future financial security. You can engage without those fears. You just need to learn how to do it and that’s what my book The Truth About crypto does. It’s what our work at DECFP is all focused on and we’re really excited about helping people understand what’s common so they can benefit from it right now.
Dan Weiskopf 53:41
Ric this has been great. Thanks for your time. Thanks for your participation in the ETF think tank as well. And of course, be well and be healthy and keep blocking and tackling for so many people.
Ric Edelman 53:55
Day. I appreciate the time we spent here today. Let me know how I can be helpful.
Dan Weiskopf 53:59
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