WEBVTT 1 00:00:00.080 --> 00:00:04.200 Blockchain technology is here to stay. It offers too many business benefits, but 2 00:00:04.240 --> 00:00:09.759 it is also an existential threat to the existing banking industry because it disintermediates them. 3 00:00:10.119 --> 00:00:13.279 I don't need a bank to hold my money. I don't need a 4 00:00:13.320 --> 00:00:16.640 bank to approve me for a loan. I don't need a bank to facilitate 5 00:00:16.679 --> 00:00:20.600 the settlement of my trade. I just simply don't need a bank. And 6 00:00:20.800 --> 00:00:25.120 this is an existential threat. And that is my opinion why Jamie Diamond runs 7 00:00:25.160 --> 00:00:28.879 around the country saying I hate bitcoin and if I were the government, I 8 00:00:28.879 --> 00:00:39.719 would ban it. This content is brought to you by Bitco, which is 9 00:00:39.759 --> 00:00:44.640 one of the top crypto custodians in the crypto industry. Bitco works with many 10 00:00:44.679 --> 00:00:49.399 big companies and brands such as Pantera Capital, Bitstamp, and bitcoin Ira. 11 00:00:50.200 --> 00:00:56.200 Nike also selected Bitco to power its wallets for its NFTs and Bitco has many 12 00:00:56.200 --> 00:01:00.799 great services such as hot wallets, custodial wallets, self managed cold wallets, 13 00:01:00.079 --> 00:01:07.560 and NFT wallets. Many institutions trust bitco with its top level security and incredible 14 00:01:07.599 --> 00:01:11.920 services such as being able to deploy your capital while it's in custody, which 15 00:01:11.959 --> 00:01:15.959 includes lending, borrowing, trading, staking, DeFi access and more. If 16 00:01:15.000 --> 00:01:19.840 you'd like to learn more about bitco, please visit bitgo dot com link in 17 00:01:19.879 --> 00:01:23.959 the description. Welcome to the Thinking Crypto Podcasts. You're home for cryptocurrency news 18 00:01:25.000 --> 00:01:29.319 and interviews with me. Today's Rick Edelman, who's the founder of Edelman Financial 19 00:01:29.359 --> 00:01:34.640 Services, also the founder of the Digital Assets Council of Financial Professionals, as 20 00:01:34.640 --> 00:01:38.719 well as the author of over ten books on personal finance, and the host 21 00:01:40.120 --> 00:01:45.000 of the Truth About Your Future podcasts. Rick, Welcome back. Always great 22 00:01:45.000 --> 00:01:48.439 to be with you, Tony. Thanks Rick. We've spoken over the years, 23 00:01:48.480 --> 00:01:52.120 we've talked about the adoption of crypto and you know, over the years 24 00:01:52.159 --> 00:01:56.680 we've talked about the upcoming bitcoin e t apps. Well, they are here 25 00:01:57.159 --> 00:02:00.200 and I would love to get your thoughts on these ETFs going live. The 26 00:02:00.280 --> 00:02:05.280 performance we've been seeing with the inflows. Yeah, it's been a long struggle. 27 00:02:06.239 --> 00:02:10.120 It's been ten years since the first application was submitted to the SEC by 28 00:02:10.159 --> 00:02:16.439 the Lincoboss Twins back in twenty thirteen. Every application, as we know, 29 00:02:16.639 --> 00:02:21.400 has always been rejected by the SEC over the past decade, and finally, 30 00:02:22.280 --> 00:02:25.479 as a result of the Gray Scale lawsuit last summer, the SEC was forced. 31 00:02:25.560 --> 00:02:30.840 They didn't want to, but the court forced them to approve not just 32 00:02:30.879 --> 00:02:35.199 the grayscale application, but the SEC agreed to approve all of the applications that 33 00:02:35.240 --> 00:02:37.840 it had in front of it. So there are now ten, as of 34 00:02:37.919 --> 00:02:44.400 January tenth, ten ETFs now trading on a daily basis, and it is 35 00:02:44.479 --> 00:02:47.840 an exciting time for bitcoin as a result of this. This has been widely 36 00:02:47.879 --> 00:02:53.759 regarded for years as the holy Grail of crypto. We knew that this was 37 00:02:53.840 --> 00:03:00.120 the key lynchpin that would push crypto and particularly bitcoin into the mainstream for investment 38 00:03:00.159 --> 00:03:06.199 management. Now, Rick, would the launch and how things have been going 39 00:03:06.240 --> 00:03:10.599 so far? Has it blown past your expectations or were you anticipating this type 40 00:03:10.599 --> 00:03:15.439 of demand. We were widely expecting this based on all the research we'd done, 41 00:03:15.479 --> 00:03:21.479 all the surveys of advisors over the past several years. We knew that 42 00:03:21.520 --> 00:03:29.039 there was an extraordinary level of demand for this product and advisors were just clamoring 43 00:03:29.120 --> 00:03:35.280 for it. Without the ETFs, the vast majority of financial advisors have not 44 00:03:35.360 --> 00:03:38.680 been able to recommend bitcoin to clients because there was no vehicle available for them 45 00:03:38.719 --> 00:03:44.639 to do so. Their compliance departments did not allow them to recommend Bitcoin in 46 00:03:44.759 --> 00:03:50.280 any other format or methodology. They couldn't open an account with an exchange like 47 00:03:50.520 --> 00:03:57.400 coinbase or Kraken. They couldn't provide clients with a hot or cold wallet in 48 00:03:57.479 --> 00:04:06.240 a DeFi platform like MetaMask. The esoteric, cumbersome products private placements and hedge 49 00:04:06.280 --> 00:04:13.360 funds are generally available only to accredited investors. They have significant issues lack of 50 00:04:13.400 --> 00:04:17.040 liquidity, high minimums, high fees. Firms were not making those products available 51 00:04:17.040 --> 00:04:20.639 to their advisors, and so for all these reasons, advisors were shut out 52 00:04:20.680 --> 00:04:28.399 effectively from the crypto marketplace from an investment recommendation perspective, and everybody knew that 53 00:04:28.519 --> 00:04:32.240 ETFs solve all of those problems. Investment firms would be able to recommend them, 54 00:04:32.279 --> 00:04:36.920 Compliance departments would approve them, investment management teams would okay them, and 55 00:04:38.240 --> 00:04:44.839 everybody Investors and advisors alike are highly familiar with these ETFs because ETFs the most 56 00:04:44.839 --> 00:04:49.319 popular investment vehicle in the country with trillions and trillions. I think it's thirteen 57 00:04:49.399 --> 00:04:56.160 trillion dollars now in assets, and so it's a no brainer. So we 58 00:04:56.319 --> 00:05:02.560 knew that once these ETFs became available, financial advisors and investment management firms would 59 00:05:03.000 --> 00:05:06.279 jump at the opportunity, and we're already seeing that. Having settle that, 60 00:05:06.399 --> 00:05:10.600 Tony, I do have to say that the speed of adoption is exceeding my 61 00:05:10.680 --> 00:05:15.480 expectations. I thought it would take a year before we'd see massive inflows, 62 00:05:15.800 --> 00:05:19.759 but we're seeing them already. You know, we've had twenty billion dollars of 63 00:05:19.800 --> 00:05:25.399 inflows already. We're seeing a billion dollars a day at this point, and 64 00:05:25.480 --> 00:05:30.639 so the rate of adoption is even faster than I thought. But we're just 65 00:05:30.680 --> 00:05:33.800 still at the beginning. I'm expecting one hundred and fifty billion dollars of flows 66 00:05:34.600 --> 00:05:40.560 over the next year and a half from independent advisors alone. That doesn't count 67 00:05:40.560 --> 00:05:46.279 the wirehouses or regional broker dealers, or family offices, or institutional investors or 68 00:05:46.319 --> 00:05:53.480 retail investors. Just independent advisors alone. We're looking at hundreds of millions of 69 00:05:53.600 --> 00:05:58.560 dollars, hundreds of billions potentially flowing into bitcoin over the next several years. 70 00:05:59.160 --> 00:06:01.800 Now, why do you think there is such a demand for bitcoin? I 71 00:06:01.920 --> 00:06:04.399 partially notice answer, but I want to make sure that folks who are new 72 00:06:04.439 --> 00:06:10.120 to the asset class hear from someone like you in a sense that is their 73 00:06:10.199 --> 00:06:13.000 pent up demand. Like you were saying people couldn't touch it because of the 74 00:06:13.079 --> 00:06:16.800 regulatory aspects, but also maybe rising debt and they're looking for harder assets. 75 00:06:17.199 --> 00:06:20.800 What do you think are the catalysts. Well, you have two separate issues 76 00:06:20.839 --> 00:06:25.120 here going on. Number one is what's the bitcoin premise? Why are people 77 00:06:25.160 --> 00:06:29.920 interested in bitcoin as an investment or asset class? And there are lots of 78 00:06:29.959 --> 00:06:33.600 reasons that people cite. Some of it is store of value. They like 79 00:06:33.680 --> 00:06:38.920 the idea that bitcoin is an asset, that it retains its value compared to 80 00:06:38.959 --> 00:06:45.160 the dollar, which diminishes in value over time. Some people view it as 81 00:06:45.439 --> 00:06:49.920 an alternative investment opportunity compared to stocks and bonds in real estate, where bitcoin 82 00:06:50.000 --> 00:06:59.120 is a wonderful additive for diversified portfolio because it's price movements are non correlated to 83 00:06:59.199 --> 00:07:02.879 those other assets classes. So Bitcoin's price moves independently of stocks, bonds, 84 00:07:02.879 --> 00:07:06.160 real estate, gold, oil, commodities, you name it, and that 85 00:07:06.199 --> 00:07:11.040 makes it a wonderful addition under a modern portfolio theory to add to the portfolio. 86 00:07:12.000 --> 00:07:15.600 So some people, a lot of people, hundreds of millions around the 87 00:07:15.639 --> 00:07:19.120 world, argue that bitcoin is an outstanding investment opportunity. Some also argue that 88 00:07:19.160 --> 00:07:27.240 it is an outstanding technological innovation for commerce. They note that blockchain technology allows 89 00:07:27.319 --> 00:07:31.839 businesses to operate faster, cheaper, safer, with greater transparency and inclusion than 90 00:07:31.879 --> 00:07:36.759 you can with existing business methodologies. Bitcoin, at the end of the day, 91 00:07:36.959 --> 00:07:42.040 is just software, and this software code is better than the existing software 92 00:07:42.040 --> 00:07:46.079 code that businesses are currently using. And this is why we're saying mass adoption 93 00:07:46.160 --> 00:07:49.439 of this by banks all around the world. Nike generated two hundred million dollars 94 00:07:49.480 --> 00:07:56.040 in sales last year of its NFTs, dropping right to the bottom line because 95 00:07:56.079 --> 00:08:00.800 the NFTs are virtually no cost to Nike to create. Starbucks been doing its 96 00:08:01.160 --> 00:08:09.160 loyalty rewards program with NFTs. We have companies from Parmejana Reggiano to the Norwegian 97 00:08:09.279 --> 00:08:16.240 Seafood Association all using blockchain technology for anti counterfeiting purposes. So there are tremendous 98 00:08:16.319 --> 00:08:20.959 commercial use cases which is growing exponentially. So a lot of people cite the 99 00:08:20.040 --> 00:08:24.399 value of bitcoin and other digital assets for those reasons, but at the end 100 00:08:24.439 --> 00:08:28.240 of the day, you have the investment management piece. Even though you might 101 00:08:28.439 --> 00:08:31.759 like the idea of bitcoin, even though you might be favorable to it, 102 00:08:33.240 --> 00:08:39.600 if it's not available to you in a format that is conducive for you to 103 00:08:39.639 --> 00:08:43.840 do business as an advisor, then you're not going to be able to allocate 104 00:08:43.879 --> 00:08:48.120 to the client. This is a big reason why financial advisors don't recommend artwork 105 00:08:48.200 --> 00:08:50.720 to their clients, or comic books or rare coins. There's simply no effective 106 00:08:50.799 --> 00:08:56.240 vehicle for an advisor in their practice management to do this. The ETF solves 107 00:08:56.240 --> 00:09:01.799 all those problems. So people who like the idea of bitcoin for whatever reason, 108 00:09:01.919 --> 00:09:05.360 store value, investment benefit, commercial benefit, whatever the purposes you like 109 00:09:05.440 --> 00:09:11.720 bitcoin, now you finally have a way to exercise that, like to activate 110 00:09:11.039 --> 00:09:16.120 your interest and allocate to bitcoin via these ETFs. And that's why we're seeing 111 00:09:16.200 --> 00:09:22.240 firms falling over themselves getting involved at this point, Rick, could you take 112 00:09:22.320 --> 00:09:26.440 us behind a curtain a bit. I'm very curious about this process. So 113 00:09:26.600 --> 00:09:30.799 let's say black Rock, right, They're out there educating different folks about their 114 00:09:30.840 --> 00:09:33.399 ETF. Here are their fees, here's the custody, so on and so 115 00:09:33.480 --> 00:09:39.799 forth. As an RIA and investment advisor, and I'm hearing this, what 116 00:09:39.879 --> 00:09:43.919 are my next steps that I will be able to access that and then start 117 00:09:45.000 --> 00:09:48.840 talking to my clients about it. Yeah, the real key, Tony is 118 00:09:48.879 --> 00:09:52.840 to recognize that at the end of the day, we're talking about practice management. 119 00:09:54.279 --> 00:09:56.639 You know, the real issue is, you know, great, I 120 00:09:56.720 --> 00:10:03.480 like the asset, but how do I do it? So it's a daunting 121 00:10:03.519 --> 00:10:07.440 issue because a lot of advisors don't know a whole lot about bitcoin, Their 122 00:10:07.440 --> 00:10:11.039 staffs don't know a whole lot about it. They don't understand the underlying technology 123 00:10:11.120 --> 00:10:15.600 necessarily, and they've never had experience explaining this to their clients, who know 124 00:10:15.679 --> 00:10:18.120 even less than they do. So how do you begin? It's really quite 125 00:10:18.159 --> 00:10:22.960 simple. First of all, simply recognize these are exchange traded funds, and 126 00:10:24.039 --> 00:10:26.919 you, as an advisor, know all about ETFs. You use them in 127 00:10:26.960 --> 00:10:30.080 your practice. Your clients are familiar with them, your staff are familiar with 128 00:10:30.120 --> 00:10:33.039 them. They're not complicated at all. They're just ETFs that are investing in 129 00:10:33.080 --> 00:10:37.639 a particular sleeve of the investment world. And you already have gold ETFs. 130 00:10:37.679 --> 00:10:41.360 You have oil atfs and energy ETFs. You have commodity ETFs, you have 131 00:10:41.440 --> 00:10:46.879 foreign ETFs, you have emerging markets ETFs, you have small cap stock ETFs, 132 00:10:46.039 --> 00:10:50.279 you have bond ETFs. Well, now there's a bitcoin ETF. So 133 00:10:50.440 --> 00:10:54.159 you don't have to do a whole lot of due diligence on these different ETFs 134 00:10:54.200 --> 00:10:58.360 to evaluate them for their investment purposes. Because all of them own the same 135 00:10:58.399 --> 00:11:03.080 thing, bitcoin, This is a single asset ETF. There's nothing easier than 136 00:11:03.120 --> 00:11:07.000 that. You don't need to become an expert in bitcoin or blockchain technology because 137 00:11:07.039 --> 00:11:13.039 all of these are identical. They're all only buying bitcoin. So the analysis, 138 00:11:13.080 --> 00:11:16.960 the due diligence you want to engage in is which of these ETFs do 139 00:11:16.960 --> 00:11:20.440 you want to buy? Recognizing they're all buying the same thing. So what 140 00:11:20.559 --> 00:11:26.360 therefore are their differences? Number one is their fee. The fees range from 141 00:11:26.960 --> 00:11:33.639 nineteen basis points to one and a half percent, which is eighty percent more 142 00:11:33.679 --> 00:11:41.559 expensive, so they range all over the board. Franklin Templeton is the cheapest 143 00:11:41.600 --> 00:11:46.200 at nineteen BIPs. Bit Wise is the second cheapest at twenty BIPs. Many 144 00:11:46.200 --> 00:11:48.799 would argue there's really not much of a difference between those two. Several others 145 00:11:48.799 --> 00:11:52.799 are at twenty five BIPs. A few others are in the thirties. The 146 00:11:52.799 --> 00:11:58.759 outlier is Grayscale Bitcoin Trust, which is one hundred and fifty basis points. 147 00:11:58.480 --> 00:12:03.759 So very simple and easy. Look at their prices. Second, look at 148 00:12:03.759 --> 00:12:11.879 their custodian who is the company that is custodying their assets, and what are 149 00:12:11.879 --> 00:12:16.399 the safety mechanisms, the security protocols that they have in place. How confident 150 00:12:16.600 --> 00:12:20.200 comfortable are you that the bitcoins are safe that you're buying on behalf of your 151 00:12:20.200 --> 00:12:26.799 clients. Third, who's the surveillance partner. This is something that is unique 152 00:12:26.799 --> 00:12:31.840 to these ETFs. You don't have that in a normal stock fund. The 153 00:12:31.879 --> 00:12:35.799 surveillance partner is very simple. This is a company that each of these ETFs 154 00:12:35.799 --> 00:12:41.919 are hiring to determine what is the current price a bitcoin. They surveil the 155 00:12:41.960 --> 00:12:46.440 marketplace on a global basis to identify the actual, one and true current price 156 00:12:46.559 --> 00:12:52.639 of bitcoin. So you want to know who is their surveillance partner and what 157 00:12:52.720 --> 00:13:00.480 is their trading methodology. Are they going to trading desks like Jane Street or 158 00:13:00.559 --> 00:13:05.519 are they going to public exchanges like Coinbase. This will determine how tight the 159 00:13:05.559 --> 00:13:11.080 spreads are. It'll determine how low they can keep the trading expenses. So 160 00:13:11.120 --> 00:13:15.799 you want to look at different features like those, and we've produced at DAKFP 161 00:13:16.159 --> 00:13:22.399 a really nifty grid. We have an advisor toolkit that's free that has a 162 00:13:22.440 --> 00:13:26.879 lot of content educational material on these ETFs. But there's a one page grid, 163 00:13:26.240 --> 00:13:33.759 a comparison chart that compares all these ten ETFs across sixteen different categories, 164 00:13:35.000 --> 00:13:39.600 so you can very easily compare one to another to help you make the decision. 165 00:13:39.200 --> 00:13:43.000 So that's your first step. Choose the ETF that you like. We 166 00:13:43.080 --> 00:13:50.120 find a lot of advisors are choosing two rather than just one, because this 167 00:13:50.240 --> 00:13:54.279 way you can have two different ETFs that have two different custodians, for example, 168 00:13:54.399 --> 00:14:00.360 to reduce your hacker risk. So choose one or two ETFs. Second, 169 00:14:00.559 --> 00:14:05.879 decide which of your clients you want to recommend these two. Some advisors 170 00:14:05.919 --> 00:14:11.399 will give them to every client, but many advisors recognize that not all clients 171 00:14:11.440 --> 00:14:15.000 will want it, or maybe it's not in the best interest of every client. 172 00:14:15.399 --> 00:14:20.519 So decide which of your clients you feel should have an allocation. Third, 173 00:14:20.240 --> 00:14:24.639 contact those clients, tell them what you're planning to do, what your 174 00:14:24.679 --> 00:14:30.919 recommendation is, and why. The bitcoin is an excellent diversification tool for long 175 00:14:31.000 --> 00:14:37.879 term diversified portfolios that it can be additive to the portfolio. It actually improves 176 00:14:37.039 --> 00:14:46.759 all of the smart all the modern portfolio theory statistics. You improve the Sortino 177 00:14:46.879 --> 00:14:50.799 ratio, the sharp ratio, max draw down standard deviation. All of these 178 00:14:50.799 --> 00:14:56.080 statistics get better by the addition of bitcoin to the portfolio, which is kind 179 00:14:56.080 --> 00:15:01.200 of counterintuitive because everybody thinks bitcoin is so volatile, why would I want to 180 00:15:01.240 --> 00:15:05.080 put such a risky asset into the portfolio. Actually, history tells us that 181 00:15:05.159 --> 00:15:11.240 adding bitcoin to the portfolio lowers the overall risk, so it's really good for 182 00:15:11.279 --> 00:15:16.200 an awful lot of clients. Once you do those three things, choose the 183 00:15:16.399 --> 00:15:20.519 bitcoin, decide which of your clients to recommend it to, and talk to 184 00:15:20.559 --> 00:15:26.480 them. The final question is the allocation. What percentage of the portfolio will 185 00:15:26.519 --> 00:15:31.159 you allocate? Most advisors, according to our research, are doing two to 186 00:15:31.240 --> 00:15:39.320 three percent and simple and easy. Now, on that note, we've heard 187 00:15:39.320 --> 00:15:43.480 the eighty twenty investment rule, then I think some folks have changed is sixty 188 00:15:43.559 --> 00:15:46.320 forty. But as this asset class grows and you have other ETFs that are 189 00:15:46.320 --> 00:15:54.399 issued aside from bitcoin, do you see the portfolio split evolving to maybe sixty 190 00:15:54.200 --> 00:16:00.720 thirty ten ten being to digital assets. I think different advisors will make that 191 00:16:00.799 --> 00:16:07.000 decision on their own. I think that over time, as two things happen, 192 00:16:07.240 --> 00:16:11.919 you will see higher and higher allocations. The two things that have to 193 00:16:11.960 --> 00:16:18.919 happen. Number one is a broader array of crypto products. Right now, 194 00:16:18.080 --> 00:16:23.360 we have Bitcoin futures ETFs, we have spot bitcoin ETFs, we have two 195 00:16:23.519 --> 00:16:30.200 X and three X funds, we have inverse funds. That's about it. 196 00:16:30.320 --> 00:16:34.519 They're all on the bitcoin frame. There are applications pending before the SEC now 197 00:16:34.559 --> 00:16:42.399 for ethereum ETFs that will bring about ethereum futures and two X and three X 198 00:16:42.440 --> 00:16:47.720 inverse and inverse funds. And then you'll have since you'll have ETFs of bitcoin 199 00:16:47.759 --> 00:16:52.440 and ETFs of ethereum, you're going to get combination funds that will own both 200 00:16:52.440 --> 00:16:56.480 bitcoin and ethereum in a single fund. Some of those will be actively managed, 201 00:16:56.480 --> 00:16:57.759 some of them will be passively managed. Some of them will be fifty 202 00:16:57.799 --> 00:17:03.879 to fifty, others will be seven five. So the ETF industry is really 203 00:17:03.919 --> 00:17:08.000 good at inventing products. So you can expect a huge array of product availability, 204 00:17:08.720 --> 00:17:15.440 and that product availability will create opportunity for the advisor to increase the allocation. 205 00:17:15.559 --> 00:17:18.039 You know, if I'm doing two percent to bitcoin, maybe i'll do 206 00:17:18.079 --> 00:17:22.440 two percent to ethereum. That's a total of four percent. While all that 207 00:17:22.640 --> 00:17:26.519 is happening, one other thing has to happen. In addition to product availability 208 00:17:27.079 --> 00:17:34.039 has to be tolerance, meaning as more and more investors own bitcoin through the 209 00:17:34.039 --> 00:17:38.240 Bitcoin ETF and they become more and more comfortable with it over time, and 210 00:17:38.279 --> 00:17:42.920 they begin to see bitcoin's price performance, which we think is going to be 211 00:17:44.000 --> 00:17:47.839 very strong over the next several years, people will become more and more comfortable 212 00:17:47.839 --> 00:17:52.759 with allocating more and more money to it. So between availability of product and 213 00:17:52.799 --> 00:17:56.720 a willingness to invest in those products, you might well be right Tony that 214 00:17:57.279 --> 00:18:02.599 the two to three percent allocation as I'm referring to today are going to become 215 00:18:02.799 --> 00:18:07.599 five, and then seven and perhaps even higher. It's interesting that when I 216 00:18:07.680 --> 00:18:12.160 first wrote my book The Truth about Crypto, I recommended a one percent allocation, 217 00:18:14.000 --> 00:18:18.160 and now everybody is pretty much talking about two to three percent. The 218 00:18:18.480 --> 00:18:23.319 CFA Institute talks about as much as five percent. So people are becoming already 219 00:18:23.359 --> 00:18:27.200 far more comfortable than they were just a few short years ago. Yeah, 220 00:18:27.319 --> 00:18:30.839 it's fascinating, and we're seeing because the US approved the big pin ets. 221 00:18:30.839 --> 00:18:33.960 We're hearing out of London. They want to explore and eat what they would 222 00:18:33.960 --> 00:18:37.880 call an ETP. Hong Kong is also talking about this, so it seems 223 00:18:37.920 --> 00:18:42.039 like there's going to be grown demand for bitcoin since the US has made its 224 00:18:42.039 --> 00:18:45.680 move, and game theory is going to play out. It's fascinating to watch 225 00:18:45.720 --> 00:18:49.920 this unfold before us. It really is. And these ETFs are available all 226 00:18:49.920 --> 00:18:55.240 around the world already. They're in Canada there, as you said, in 227 00:18:55.279 --> 00:18:57.759 Europe, London's looking at them, so are many countries in the Far East. 228 00:18:59.119 --> 00:19:03.519 They're going to be everywhere simply because of investor demand. Larry Fink was 229 00:19:03.599 --> 00:19:07.400 very blunt about this. The main reason black Rock launched its ETF was because 230 00:19:07.480 --> 00:19:11.400 they were getting demand from their clients. And let's face it, they're in 231 00:19:11.400 --> 00:19:15.440 the ETF business. If there's a product you want to buy, they're going 232 00:19:15.480 --> 00:19:18.400 to make it available to you. You know, they're they're not taking an 233 00:19:18.440 --> 00:19:22.279 attitude other than that it's smart business and so everybody's going to get involved. 234 00:19:22.480 --> 00:19:26.960 You made an interesting comment I want to highlight on, Tony. You mentioned 235 00:19:26.960 --> 00:19:32.279 that in London they're looking at an ETP, not an ETF. What most 236 00:19:32.279 --> 00:19:37.720 people don't know is that the ten ETFs here in the US, the spot 237 00:19:37.759 --> 00:19:45.039 bitcoin ETFs, are in fact not ETFs, they are ETPs. This is 238 00:19:45.079 --> 00:19:52.839 a distinction that nobody other than finance. Nerds care about an ETP in exchange 239 00:19:52.880 --> 00:19:56.759 traded product is brought to the market under the Securities Act of nineteen thirty three. 240 00:19:57.359 --> 00:20:02.640 ETFs are brought to the MA market under the Investment Company Active nineteen forty. 241 00:20:03.519 --> 00:20:07.039 I don't think anybody other than nerds like me are going to care about 242 00:20:07.039 --> 00:20:11.640 that. And people will sometimes ask what's the difference between an ETF and an 243 00:20:11.640 --> 00:20:15.640 ETP. It's kind of like the old dogs and animals riff. You know, 244 00:20:15.720 --> 00:20:19.640 all dogs are animals, but not all animals are dogs. So all 245 00:20:19.720 --> 00:20:23.839 ETFs are ETPs, but not all ETPs or ETFs. You also have etcs 246 00:20:25.319 --> 00:20:30.920 and etns. You have exchange traded commodities and exchange traded notes and exchange traded 247 00:20:30.000 --> 00:20:34.519 funds. I don't think anybody really cares, but nerds like me. Oh 248 00:20:34.599 --> 00:20:37.240 yeah, so that's you know, it's funny. I was reading up about 249 00:20:37.240 --> 00:20:41.640 it just the other day because someone in my live chat doing a livestream asked 250 00:20:41.640 --> 00:20:44.079 about it. I was like, let me google it right away, and 251 00:20:44.119 --> 00:20:48.200 I saw that ETPs already banner overarching banner, and you have underneath these different 252 00:20:48.200 --> 00:20:52.960 products ETF, etns, etcs, And what is so fascinating is that seven 253 00:20:53.200 --> 00:21:00.799 of these new funds call themselves ETFs, even though they technically are not read 254 00:21:00.880 --> 00:21:03.640 the S one. Every one of them acknowledges they're organized under the Securities Act 255 00:21:03.680 --> 00:21:08.640 to thirty three as an ETP, but they call themselves an ETF. But 256 00:21:08.720 --> 00:21:12.640 I guess it doesn't really affect the performance or anything. It's just naming. 257 00:21:12.680 --> 00:21:19.119 Convince. There are some investor protections that exist under ETFs that don't exist under 258 00:21:19.160 --> 00:21:25.599 ETPs, but those investor protections are really not terribly material in my view. 259 00:21:26.039 --> 00:21:30.559 The protections that do exist under ETPs are the protections that investors really do care 260 00:21:30.559 --> 00:21:37.279 about. Disclosure, transparency, equal pricing, fair trading, all that kind 261 00:21:37.319 --> 00:21:41.079 of good stuff. What really matters does exist. Otherwise the sec wouldn't allow 262 00:21:41.160 --> 00:21:44.359 ETPs to be on the market. So I don't think people need to worry 263 00:21:44.359 --> 00:21:47.519 about it very much. So Rick, hard question for you, and this 264 00:21:47.599 --> 00:21:51.960 is something I'm personally curious about as well. We are a bit in uncharted 265 00:21:52.039 --> 00:21:56.960 territory because this is a first time we have these ETPs in the United States. 266 00:21:56.839 --> 00:22:00.599 Will there be a sell off some to sell off at the peak of 267 00:22:00.640 --> 00:22:06.079 this bull market As we've seen Bitcoin follows a four year cycle it'll go from 268 00:22:06.079 --> 00:22:08.839 the bear market low to a euphoric blow off top. So will these etf 269 00:22:08.920 --> 00:22:14.000 sell off or you think maybe fifty percent will be long term holders who don't 270 00:22:14.000 --> 00:22:17.440 care, I'm waiting till twenty forty or something like that. Oh, I 271 00:22:17.440 --> 00:22:19.160 think there's clearly going to be lots of sell offs. This is the inherent 272 00:22:19.240 --> 00:22:22.799 nature of bitcoin. It's a very volatile speculative asset. In fact, as 273 00:22:22.799 --> 00:22:30.160 we're doing this recording, bitcoin is down ten or fifteen percent, So we're 274 00:22:30.160 --> 00:22:33.880 going to see this kind of thing. That's the way it's been for fifteen 275 00:22:33.960 --> 00:22:37.799 years, ever since bitcoin was invented. There's nothing new there. People who 276 00:22:38.480 --> 00:22:44.000 use these bitcoin ETFs as part of a diversified portfolio will take advantage of this 277 00:22:44.079 --> 00:22:49.480 through rebalancing. This is a wonderful strategy that we routinely use for our client 278 00:22:49.519 --> 00:22:55.119 portfolios, and the fact that we're adding bitcoin to it just simply helps, 279 00:22:56.240 --> 00:23:00.160 you know. So it's a wonderful opportunity. So yes, I think we 280 00:23:00.200 --> 00:23:03.359 will continue to see volatility. And no, I don't think that should upset 281 00:23:03.440 --> 00:23:06.960 or worry you or shock you, because it's just an inherent nature of the 282 00:23:07.039 --> 00:23:10.839 asset class. Absolutely, No, not everyone is a fan. There's still 283 00:23:10.839 --> 00:23:14.880 some blaggards on Wall Street. You got Vanguard and some of these other folks 284 00:23:15.079 --> 00:23:18.119 coming out and saying we're not going to list this, although I'm starting to 285 00:23:18.119 --> 00:23:21.359 see some of them change their tune. What do you think that Vanguard and 286 00:23:21.400 --> 00:23:26.160 these folks will eventually capitulate. Well, we saw two things happen at Vanguard 287 00:23:26.680 --> 00:23:29.480 recently. Number one, they made the announcement that they are not going to 288 00:23:29.480 --> 00:23:32.960 make available any of these bitcoin ETFs to their customers, nor are they going 289 00:23:33.000 --> 00:23:37.920 to launch their own bitcoin etf. They do not believe bitcoin ETF is appropriate 290 00:23:37.920 --> 00:23:41.720 for their client base. That's their first announcement. The second announcement a few 291 00:23:41.720 --> 00:23:45.440 weeks later was that they are CEO is leaving the firm. So I'm saying 292 00:23:47.119 --> 00:23:52.880 Vanguard realized they made such a big mistake in making this announcement about no bitcoin 293 00:23:52.279 --> 00:23:56.680 that they fired Tim. Of course I'm making that up. That's not true, 294 00:23:56.680 --> 00:24:00.079 but it's a funny story. Yeah. I think in the future of 295 00:24:00.079 --> 00:24:03.400 Guard will change their mind. They are going to recognize that bitcoin is not 296 00:24:03.440 --> 00:24:07.440 as scary and risky and inappropriate the way they're claiming it that it is, 297 00:24:07.279 --> 00:24:12.279 and they will instead ultimately realize they are annoying their investors and they're missing out 298 00:24:12.359 --> 00:24:18.160 on a big investment and market opportunity. And it's also I think hypocritical of 299 00:24:18.200 --> 00:24:22.359 them. I mean, they offer gold ETFs, they offer emerging market ETFs, 300 00:24:22.400 --> 00:24:26.920 they offer foreign ETFs. I don't understand Vanguard's position at all. But 301 00:24:26.960 --> 00:24:30.599 other than Vanguard, I have not seen any firm draw a line in the 302 00:24:30.640 --> 00:24:37.200 sand saying hell no. Instead, the opposite is happening. Every wirehouse in 303 00:24:37.240 --> 00:24:42.519 the country is very busy evaluating these ETFs to determine which of them they want 304 00:24:42.559 --> 00:24:45.799 to make available to their clients, which of their clients they want to recommend 305 00:24:45.799 --> 00:24:48.960 it too, and what the allocation ought to be. Those three questions I 306 00:24:49.079 --> 00:24:56.119 mentioned earlier. Wirehouses are moving at a much faster pace than we expected. 307 00:24:56.160 --> 00:24:59.799 We thought it would be a year or more before they would engage, but 308 00:25:00.039 --> 00:25:03.440 any of them are already beginning to engage. Morgan Stanley, JP, Morgan 309 00:25:03.480 --> 00:25:07.759 Wells, Fargo UBS, they're all, according to media reports, very active 310 00:25:07.799 --> 00:25:14.480 in this. And independent regional broker dealers are also moving very quickly. LPL 311 00:25:14.559 --> 00:25:18.519 has already added to their platform, has has Commonwealth. Many others are doing 312 00:25:18.559 --> 00:25:23.400 the same. Some of the biggest investment management firms and independent rias are also 313 00:25:23.519 --> 00:25:27.039 very busy with their due diligence. So there's a lot of activity going on 314 00:25:27.119 --> 00:25:33.160 really really quickly. Yeah, there are naysayers on Wall Street, but at 315 00:25:33.160 --> 00:25:34.960 the end of the day, Wall Street will sell the product you want to 316 00:25:34.960 --> 00:25:40.880 buy and that's going to win the day. So Rick, not to get 317 00:25:40.920 --> 00:25:45.559 too conspiratorial or too philosophical here, but do you think the likes of Vanguard 318 00:25:45.599 --> 00:25:52.440 and to Jamie Diamonds they hate the disruption that's happening. Maybe there's a bit 319 00:25:52.480 --> 00:25:56.240 of that where capital is flowing out of the traditional investment products, not all 320 00:25:56.279 --> 00:26:00.200 of it obviously, but a good amount and going to crypto, whether it's 321 00:26:00.240 --> 00:26:04.960 people investing directly or going through ETPs that they don't like that. It's a 322 00:26:06.000 --> 00:26:08.720 disruption, right, It changes things, It changes the stronghold maybe they've had 323 00:26:10.039 --> 00:26:12.559 on the markets for a long time. Hi, everyone part in the interruption. 324 00:26:12.640 --> 00:26:15.680 I'm Tony Edward, the founder and host of the Thinking Crypto podcast. 325 00:26:17.079 --> 00:26:19.079 I have a you favor to ask you. If you haven't subscribed as yet 326 00:26:19.079 --> 00:26:23.160 on YouTube or the podcast platforms, hit that subscribe button, hit the thumbs 327 00:26:23.240 --> 00:26:27.599 up button, hit the notification bell on the YouTube platform and on Spotify or 328 00:26:27.640 --> 00:26:32.240 Apple or wherever you get your podcasts, please leave a five style rating and 329 00:26:32.279 --> 00:26:36.480 review. It supports the podcast. It allows me to bring great quality content 330 00:26:36.559 --> 00:26:38.160 to you. Thank you for your support, and I'll let you get back 331 00:26:38.200 --> 00:26:41.480 to the content. Yeah, there's no question about that, Tony. This 332 00:26:41.599 --> 00:26:52.720 disruptive technology. Let's remember Satoshi's goal when inventing bitcoin was to replace fiat currencies 333 00:26:52.000 --> 00:26:56.960 around the world. Satoshi was fed up with the global financial system, which 334 00:26:56.000 --> 00:27:00.400 brought us the two thousand and eight credit crisis, and Satoshi on it a 335 00:27:00.440 --> 00:27:03.960 better way. And although that experiment failed, Bitcoin is not a currency he 336 00:27:04.039 --> 00:27:07.519 never will be. You know, it's too volatile. This is why stable 337 00:27:07.559 --> 00:27:12.720 coins were invented to solve that problem. Blockchain technology is here to stay. 338 00:27:12.839 --> 00:27:18.079 It offers too many business benefits, but it is also an existential threat to 339 00:27:18.119 --> 00:27:22.599 the existing banking industry because it disintermediates them. I don't need a bank to 340 00:27:22.640 --> 00:27:26.680 hold my money. I don't need a bank to approve me for a loan. 341 00:27:26.880 --> 00:27:30.359 I don't need a bank to facilitate the settlement of my trade. I 342 00:27:30.519 --> 00:27:33.319 just simply don't need a bank. And this is an existential threat, and 343 00:27:33.480 --> 00:27:37.640 that is my opinion. Why Jamie Diamond runs around the country saying I hate 344 00:27:37.640 --> 00:27:42.519 bitcoin and if I were the government, I would ban it because he hits 345 00:27:42.519 --> 00:27:48.440 a competitive threat. Jamie has now fully recognized that he's looking really silly when 346 00:27:48.480 --> 00:27:52.160 he makes statements like that, and in fact, his bank JP Morgan, 347 00:27:52.440 --> 00:27:56.880 is one of the leading users and developers of blockchain technology. The Onyx blockchain, 348 00:27:57.000 --> 00:28:02.200 built by JP Morgan, settles to two billion dollars a day in transactions. 349 00:28:02.519 --> 00:28:07.680 His traders are among the most active in bitcoin activities around the world, 350 00:28:07.720 --> 00:28:11.000 and it's now gotten to the point where Jamie Diamond just a couple of weeks 351 00:28:11.039 --> 00:28:15.920 after he said in a Senate hearing, I would ban bitcoin if I were 352 00:28:15.920 --> 00:28:19.440 the government, two weeks later he said, I will defend your right to 353 00:28:19.480 --> 00:28:25.240 own bitcoin, because he recognizes there's too much money to be made, and 354 00:28:25.319 --> 00:28:30.480 banks around the world who are recognizing that blockchain technology is an existential threat. 355 00:28:32.359 --> 00:28:37.319 Rather than trying to ban it, which they've failed to do, they're now 356 00:28:37.359 --> 00:28:40.000 embracing it. You know the old adage, if can't beat them, join 357 00:28:40.039 --> 00:28:44.079 them. So banks around the world are all developing blockchain technology. They are 358 00:28:44.119 --> 00:28:48.519 all embracing this. They recognize the incredible business benefits, and this I think 359 00:28:48.599 --> 00:28:56.400 will prove to be the ultimate realization of Satoshi's original goal. Now on that 360 00:28:56.519 --> 00:28:59.599 note, to your point, right, they're trying to stop this, and 361 00:28:59.680 --> 00:29:03.559 we see within the government, specifically the SEC, look the EI A and 362 00:29:03.759 --> 00:29:07.400 the Elizabeth Warrens of the world and so forth are trying to put up as 363 00:29:07.440 --> 00:29:11.000 many roadblocks as possible. The SEC only approved the Bigcoins body tess because the 364 00:29:11.160 --> 00:29:15.640 courts made them do it right. They took a massive loss, got called 365 00:29:15.799 --> 00:29:19.359 arbitrary and capricious. What are your thoughts on that? Is it just an 366 00:29:19.400 --> 00:29:25.200 administrative thing, but also or maybe going back to these folks are getting disrupted. 367 00:29:25.279 --> 00:29:27.079 They don't understand it fully, they're trying to catch up, and they're 368 00:29:27.160 --> 00:29:32.720 just having knee jerk reactions. Yeah, there's speculation that Gary Gensler is in 369 00:29:32.720 --> 00:29:34.480 the pocket of Elizabeth Warren. You know, how does a guy who taught 370 00:29:34.480 --> 00:29:40.160 blockchain at m I T become so anti crypto when he gets to the SEC. 371 00:29:40.920 --> 00:29:42.640 It doesn't make any sense. He's never been able to offer a rational 372 00:29:42.680 --> 00:29:48.000 explanation for his opposition. Congress is furious at him. He just got nailed 373 00:29:48.000 --> 00:29:52.720 again yesterday a court ruled that the SEC acted with severe overreach far beyond their 374 00:29:53.039 --> 00:29:57.599 regulatory authority. In a lawsuit had taken out against it. Yet another crypto 375 00:29:57.680 --> 00:30:03.000 company runs around the country bragging about all the enforcement actions he's taking against the 376 00:30:03.039 --> 00:30:07.920 crypto community in the absence of regulation, and nobody's in favor of it. 377 00:30:07.960 --> 00:30:11.440 There was a meeting last summer, and part of an annual meeting they do, 378 00:30:11.519 --> 00:30:18.759 of all the former SEC commissioners, and unanimously they all opposed Gensler's handling 379 00:30:18.759 --> 00:30:22.200 of crypto. So Gensler's on an island all by himself, and he's out 380 00:30:22.240 --> 00:30:25.319 of office at twenty twenty six. We have to tolerate him between here and 381 00:30:25.359 --> 00:30:30.720 there. Bottom line is, there are politicians who don't like crypto for the 382 00:30:30.720 --> 00:30:34.759 same reason bank executives don't like crypto. It eliminates government control the way it 383 00:30:34.880 --> 00:30:41.400 eliminates bank control, and people like Elizabeth Warren, who love to control the 384 00:30:41.440 --> 00:30:48.160 American consumer don't want to lose that control. This is why so many who 385 00:30:48.200 --> 00:30:52.240 believe in free markets, who believe in capitalism, this tends to be a 386 00:30:52.279 --> 00:30:56.680 Republican platform. They love crypto. Even Donald Trump has said that he likes 387 00:30:56.680 --> 00:31:02.480 bitcoin. It is routine to see Republican members of the House and Senate. 388 00:31:02.839 --> 00:31:07.720 Indorset, there are dozens and dozens of members of Congress on both parties who 389 00:31:07.759 --> 00:31:12.200 are members of the Senate Blockchain Caucus. So there's a lot of support on 390 00:31:12.240 --> 00:31:17.880 Capitol Hill, but there still remains some opposition, but their numbers are getting 391 00:31:17.920 --> 00:31:22.240 fewer as their arguments are getting weaker as Bitcoin continues to get stronger. So 392 00:31:23.519 --> 00:31:26.880 we've seen this in every new innovative technology. You know, when you go 393 00:31:27.000 --> 00:31:32.079 back to the automobile, people hated those things. They were noisy, they 394 00:31:32.119 --> 00:31:37.000 were loud, they were dirty, they were dangerous, and everybody who sold 395 00:31:37.079 --> 00:31:42.759 horses for a living considered cars an existential threat, and buggy Witt manufacturers wanted 396 00:31:42.799 --> 00:31:48.960 nothing to do with automobiles. They ended up losing the argument, and the 397 00:31:49.000 --> 00:31:52.559 crypto haters today will end up losing the argument as well. Yeah, it's 398 00:31:52.559 --> 00:31:57.039 funny. I've seen some of the political cartoons and the things that were in 399 00:31:57.480 --> 00:32:02.359 media back in the early nonineteen hundreds about electricity and there's like demons coming through 400 00:32:02.359 --> 00:32:07.839 the electricity lines and then assuming they did the same thing for the automobile. 401 00:32:07.920 --> 00:32:10.920 So every new technology does disruptive you have people. Look, in general, 402 00:32:12.039 --> 00:32:14.920 humans hate change, right, change is hard. But then you have this 403 00:32:15.119 --> 00:32:20.319 very disruptive technology, you're going to have the incumbents and people will make crazy 404 00:32:20.440 --> 00:32:27.880 arguments to oppose a new technology. One of the arguments used against railroads when 405 00:32:28.000 --> 00:32:32.920 that technology came out is that if people ride in a railroad in a railroad 406 00:32:32.960 --> 00:32:37.119 car, they'll suffocate. They'll be moving so fast they won't be able to 407 00:32:37.160 --> 00:32:43.799 breathe. That's incredible, but I guess it's just human nature playing out. 408 00:32:44.039 --> 00:32:50.359 Rick. Well, you know, those in power, those who are successful, 409 00:32:52.039 --> 00:32:54.359 don't want to give up their position. They don't want to be at 410 00:32:54.519 --> 00:33:00.680 risk, and they don't want to go through the disruption, and they're not 411 00:33:00.680 --> 00:33:04.880 always looking at it selfishly. They're often looking at it for the benefit of 412 00:33:04.880 --> 00:33:09.480 their employees. I mean, let's pretend to world where instantly blockchain technology rendered 413 00:33:09.519 --> 00:33:15.720 banks obsolete. How many tens of millions of people would be suddenly out of 414 00:33:15.720 --> 00:33:22.599 work. That disruption is very, very scary, and we need to recognize 415 00:33:22.599 --> 00:33:27.480 that fact. We can't be so cavalier that this new technology is the greatest 416 00:33:27.480 --> 00:33:30.799 thing since sliced bread that we don't care about the implication that the disruption is 417 00:33:30.839 --> 00:33:37.960 causing. We need to help people adapt and it takes people a while to 418 00:33:37.000 --> 00:33:42.079 do this. Historically, as we've gone through changes, we went from the 419 00:33:42.119 --> 00:33:47.519 agricultural economy to the industrial economy, that change occurred over a generation. The 420 00:33:47.559 --> 00:33:54.200 farmer didn't have to adopt, their children were able to move into the industry, 421 00:33:54.240 --> 00:33:58.200 and then the industry was able to move into the offices. When we 422 00:33:58.240 --> 00:34:01.519 went from the industrial age to the information age, these changes occurred over a 423 00:34:01.640 --> 00:34:08.320 generation. Now, due to computer advances, we're engaged engaging in these changes 424 00:34:08.360 --> 00:34:13.760 not over a generation, but over a decade. Yeah, and that is 425 00:34:13.880 --> 00:34:20.360 creating massive disruption and real challenges for policy makers as we keep everybody employed, 426 00:34:20.480 --> 00:34:25.920 maintain the economy while fostering the innovations so that we end up winning as opposed 427 00:34:25.960 --> 00:34:31.000 to creating a lot of damage in our effort to achieve the nirvana we're trying 428 00:34:31.039 --> 00:34:37.199 to get to. So it's complicated. So, Rick, tough question to 429 00:34:37.199 --> 00:34:39.559 follow upon what you just said, because I've been thinking about these things. 430 00:34:39.559 --> 00:34:43.079 I have a six year old daughter, and I'm thinking what does her future 431 00:34:43.119 --> 00:34:46.440 look like. You have, like you said, these technologies very disruptive, 432 00:34:46.519 --> 00:34:51.119 moving at a rapid place, changing the economy, changing the way we do 433 00:34:51.199 --> 00:34:54.360 commerce. You have AI, you got blockchain and crypto, and you have 434 00:34:54.639 --> 00:35:01.119 all these other technologies, evs and all kinds of things. There's talks of 435 00:35:01.159 --> 00:35:07.280 AI taking jobs away. I think that will happen. How do we run 436 00:35:07.320 --> 00:35:13.840 the economy moving forward? Is it UBI universal basic income? And maybe blockchain 437 00:35:13.880 --> 00:35:16.920 is a part of it, and maybe cbdc's unfortunately, which have benefits, 438 00:35:16.920 --> 00:35:21.639 but people are concerned about the privacy rights. Where they pull these levers, 439 00:35:21.800 --> 00:35:24.519 they give you money and it's verified on the blockchain. It's settled instantly. 440 00:35:24.559 --> 00:35:29.079 You can pay with it, and that's the way part of the economy is 441 00:35:29.159 --> 00:35:34.159 runing. Because there's nine h jobs. There's no question that technological innovation is 442 00:35:34.440 --> 00:35:37.800 massively disruptive. In my book The Truth About Your Future, which was a 443 00:35:37.840 --> 00:35:42.800 New York Times bestseller, I talked about all of this, that AI and 444 00:35:42.920 --> 00:35:49.800 robotics are very big deals. Blockchain technology is a very big deal, nanotechnology, 445 00:35:49.920 --> 00:35:55.320 big data, three D printing, bioinformatics, fintech, ed tech, 446 00:35:55.440 --> 00:36:02.320 ag tech. All of these innovations are disruptive. And the scientists are telling 447 00:36:02.400 --> 00:36:07.199 us that they are anticipating that over the next decade, half of all the 448 00:36:07.239 --> 00:36:12.719 occupations in America will disappear. They'll be replaced by automation in some way or 449 00:36:12.760 --> 00:36:16.360 other. We're already beginning to see this. Amazon has two hundred thousand robots 450 00:36:16.440 --> 00:36:22.079 running around its warehouses. Cars are being made by robots. We drone technology 451 00:36:22.159 --> 00:36:28.039 is rapidly being developed. So we see this happening in real time, and 452 00:36:28.119 --> 00:36:31.280 it means that a great many occupations are going to disappear. Brick layers will 453 00:36:31.280 --> 00:36:36.440 be gone because robots are already being able to make bricks and lay them and 454 00:36:36.440 --> 00:36:39.519 build a building with it. Three D printing or making three D printed homes 455 00:36:39.519 --> 00:36:45.039 at a concrete in a day, So we're already beginning to see this technology. 456 00:36:45.880 --> 00:36:50.480 While millions of people will discover that their jobs are gone, we will 457 00:36:50.519 --> 00:36:55.519 also see an incredible development of brand new occupations that never before existed. I 458 00:36:55.599 --> 00:37:00.840 mean, let's face it, blockchain developer didn't exist fifteen years ago, and 459 00:37:00.880 --> 00:37:06.599 today it's one of the highest paid software engineering degrees and occupations that there is. 460 00:37:07.280 --> 00:37:10.800 So we are going to enjoy a renaissance. We're going to get rid 461 00:37:10.840 --> 00:37:16.159 of the jobs of the past that were boring, that were dangerous, that 462 00:37:16.239 --> 00:37:22.440 were low paying, and we're going to create jobs of the future that are 463 00:37:22.480 --> 00:37:25.920 more interesting, more exciting, of more value, that are of higher pay, 464 00:37:27.280 --> 00:37:31.480 that are easier to do, that provide a better lifestyle and advance society. 465 00:37:32.440 --> 00:37:39.599 We have to retrain people who were bricklayers how to become workers in the 466 00:37:39.599 --> 00:37:45.360 twenty first century, and business has a huge incentive for doing this. PwC 467 00:37:45.639 --> 00:37:52.960 just released a survey two weeks ago of the CEOs of the largest companies around 468 00:37:52.000 --> 00:37:59.679 the world. These are companies with one hundred million or more in annual revenue. 469 00:38:00.119 --> 00:38:04.119 Twenty five percent of them said that they are firing five percent of their 470 00:38:04.159 --> 00:38:10.280 staff this year because of AI. They also said they are simultaneously adding jobs 471 00:38:12.079 --> 00:38:17.599 because they need better skilled jobs. So they're getting rid of the people that 472 00:38:17.679 --> 00:38:22.880 AI can do the job for and they're replacing them with people that know how 473 00:38:22.880 --> 00:38:25.880 to use AI. Is what it really comes down to. And at the 474 00:38:25.880 --> 00:38:30.320 same time, the most fascinating statistic out of that survey, forty percent of 475 00:38:30.360 --> 00:38:37.079 these global CEOs said that if they don't change the way they do business, 476 00:38:37.719 --> 00:38:45.039 they will not be viable in ten years. Wow. So we have to 477 00:38:45.119 --> 00:38:52.480 recognize we are under going right now a massive evolution as we move from the 478 00:38:52.519 --> 00:38:58.079 information age. Remember we were agriculture age to the industrial age to the information 479 00:38:58.199 --> 00:39:02.880 age now to the digital age, and the speed at which things move in 480 00:39:02.920 --> 00:39:08.360 the digital age is unprecedented in human history, and it's affecting every aspect of 481 00:39:08.400 --> 00:39:13.800 life on the planet. A lot of it, most of it is extraordinarily 482 00:39:13.840 --> 00:39:17.920 good and exciting. Some of it is a little scary, not just job 483 00:39:17.960 --> 00:39:23.599 loss, but everybody's fears of AI taking over the world. Or we can 484 00:39:23.639 --> 00:39:29.199 now three D print guns at a plastic that an X ray machine at the 485 00:39:29.199 --> 00:39:35.840 airport doesn't detect, the ability for people to make dangerous weapons and move them 486 00:39:35.880 --> 00:39:42.760 around through rogue nations or drug cartels or bad players. So the world has 487 00:39:42.760 --> 00:39:46.639 gotten scary, you could argue, scarier, while it has also gotten more 488 00:39:46.679 --> 00:39:51.639 exciting than ever. There's nothing new here. We've been in this kind of 489 00:39:51.639 --> 00:39:58.639 turmoil for millennia, and we need to recognize that what we've been doing for 490 00:39:58.679 --> 00:40:02.119 the last fifty years is not what we're going to be doing over the next 491 00:40:02.159 --> 00:40:06.599 fifty years. We need to learn, we need to adapt, we need 492 00:40:06.639 --> 00:40:10.320 to embrace, and we need to engage and protect. And some of us 493 00:40:10.360 --> 00:40:14.280 are going to do a better job at that than others. Sure, it's 494 00:40:14.320 --> 00:40:16.400 the same, like you said, same story playing out right. Adapt or 495 00:40:16.440 --> 00:40:22.320 die. Always be learning and update your skills, right, because it's moving 496 00:40:22.360 --> 00:40:25.440 faster now. Right. There was a one point somebody made the comment of 497 00:40:25.440 --> 00:40:34.559 an innovative invention and warfare that was described as the most devastating weapon ever devised 498 00:40:34.559 --> 00:40:44.280 that would fundamentally alter mankind's future. They were talking about the crossbow. Wow, 499 00:40:45.400 --> 00:40:50.079 are you going to say, like the nuclear weapon or something? Now, 500 00:40:50.760 --> 00:40:52.119 crypto is on the rise. You know, we talked a lot about 501 00:40:52.239 --> 00:40:57.079 adoption and so forth, and you know, we talked about the regulators not 502 00:40:57.079 --> 00:41:00.320 getting it right, the SEC. But Congress has to act. There's a 503 00:41:00.320 --> 00:41:04.840 couple bills and house couple in the Senate. Are you optimistic we might see 504 00:41:04.840 --> 00:41:07.239 something within this year or next year? I know elections make things a lot 505 00:41:07.440 --> 00:41:09.840 really messy, but what are your thoughts on that. We're not going to 506 00:41:09.840 --> 00:41:15.320 see any legislation this year because of the election. We have to wait till 507 00:41:15.360 --> 00:41:21.039 next year. Depending who is elected will determine what we see. I am 508 00:41:21.159 --> 00:41:24.760 confident we will see legislation, but I'm not confident as to what it'll say. 509 00:41:25.360 --> 00:41:30.199 Depends on who wins control of the House and the Senate and the White 510 00:41:30.199 --> 00:41:39.039 House. Speaking strictly on a crypto perspective, ignoring all the other issues of 511 00:41:39.079 --> 00:41:45.719 the day, immigration, right to life, environment, education, healthcare, 512 00:41:45.920 --> 00:41:50.920 national debt, ignoring all the other really important things. So I don't want 513 00:41:50.960 --> 00:41:53.679 to be taken out of context here. If your lens is strictly focused on 514 00:41:54.239 --> 00:42:00.840 crypto, you must vote Republican. Because the Democrats have it clear. Joe 515 00:42:00.840 --> 00:42:05.519 Biden personally has made it clear that they hate crypto and want to eliminate it, 516 00:42:05.559 --> 00:42:09.039 want to control it restricted, and some like Elizabeth Warren and Bernie Sanders 517 00:42:09.039 --> 00:42:14.719 want to outright ban it. So if you believe in if you want to 518 00:42:14.800 --> 00:42:22.920 focus on the fostering an environment for the innovation and further development and broader ownership, 519 00:42:22.960 --> 00:42:28.960 distribution, access, use of blockchain and digital asset technology, you must 520 00:42:29.039 --> 00:42:32.280 vote Republican. Now, I will say what I just said, you have 521 00:42:32.400 --> 00:42:37.159 to put that into context. That's only that single issue. And I'm not 522 00:42:37.159 --> 00:42:42.239 suggesting that the crypto issue is as important as any of those other issues or 523 00:42:42.280 --> 00:42:45.960 should trump all of those other issues. But you need to simply not a 524 00:42:45.440 --> 00:42:51.480 bit of bad use of word, but we need to just recognize the attitude 525 00:42:51.679 --> 00:42:55.519 of the two political parties when it comes to the context conversation of blockchain and 526 00:42:55.519 --> 00:43:00.599 digital assets technology. Yeah, you're absolutely right. And you know, we 527 00:43:00.639 --> 00:43:05.199 saw in Super Tuesday many of the candidates who align themselves to Elizabeth Warren they 528 00:43:05.199 --> 00:43:07.679 started losing and the pro crypto candidates were winning. So this is a ballot 529 00:43:07.719 --> 00:43:10.039 issue. But like you said, it may not be number one, but 530 00:43:10.400 --> 00:43:15.800 many crypto investors are single issue voters. I've noticed a lot of folks saying 531 00:43:15.800 --> 00:43:21.920 that, and I think most Americans are single issue voters, and partly because 532 00:43:21.920 --> 00:43:25.679 of the incredible complexity of being a multi issue voter, because you might love 533 00:43:25.760 --> 00:43:30.159 your candidate's views on immigration but hate their views on right to life. You 534 00:43:30.239 --> 00:43:35.119 might love their views on capitalism but hate their views on the environment. So 535 00:43:35.360 --> 00:43:38.960 ultimately you're going to have to pick, and who knows the basis of which 536 00:43:38.960 --> 00:43:43.400 people pick. It might be because I like how they talk or I don't 537 00:43:43.480 --> 00:43:45.239 like how they talk. And how many of us are going to be making 538 00:43:45.239 --> 00:43:50.280 a negative vote where I'm not voting for anybody, I'm voting against the other 539 00:43:50.320 --> 00:43:53.519 guy. So at the end of the day, I think that it all 540 00:43:53.559 --> 00:43:57.880 comes down to a single issue, and you've got to decide what is the 541 00:43:57.960 --> 00:44:00.079 single issue that matters most to you and the rest of it. You just 542 00:44:00.119 --> 00:44:06.519 told your nose. Rick another question and it was related to the disruption of 543 00:44:06.599 --> 00:44:08.280 technology, and I just want to make sure I ask you about this, 544 00:44:09.079 --> 00:44:13.559 the growing debt problem, right, and I'm thinking about the future. How 545 00:44:13.599 --> 00:44:16.320 long can they keep printing and printing and printing? Are we going to end? 546 00:44:16.400 --> 00:44:19.559 Is the United States? At least I can talk for the United States 547 00:44:19.599 --> 00:44:23.480 because I live here, end up like Argentina, right? Or is there 548 00:44:23.519 --> 00:44:29.880 some sort of debt jubilee or can they use bitcoin blockchain? How do you 549 00:44:29.920 --> 00:44:34.480 think they solve this? So the debt has been an issue for a long 550 00:44:34.519 --> 00:44:42.159 time and it is now at blinking red zone light status. We are now 551 00:44:43.360 --> 00:44:45.599 at a point not only in the massive size of the debt, but what 552 00:44:45.760 --> 00:44:51.159 really matters more is the deficit. It's not just how much how much do 553 00:44:51.239 --> 00:44:52.880 I owe? But how much do I have to pay this month? On 554 00:44:52.960 --> 00:44:58.119 what I owe? And Joe Biden's budget that he just submitted to Congress for 555 00:44:58.159 --> 00:45:02.800 the first time ever, has the government spending more money than the country produces 556 00:45:02.840 --> 00:45:09.519 in GDP. That is a very scary turn of events. And what we 557 00:45:09.639 --> 00:45:17.440 have to recognize is that the vast majority of the budget is obligatory, meaning 558 00:45:17.800 --> 00:45:25.440 entitlements, medicare, Medicaid, social Security, and similar federal programs that are 559 00:45:25.960 --> 00:45:35.280 mandated by law to pay certain amounts of money to certain individuals. And there's 560 00:45:35.400 --> 00:45:39.519 no debate, there's no option, there's no conversation. This is what is 561 00:45:39.599 --> 00:45:47.679 required. Total discretionary spending is only about twelve to fifteen percent of the total 562 00:45:47.800 --> 00:45:57.440 federal budget. Defense spending is largely not optional. They can only choose a 563 00:45:57.480 --> 00:46:00.960 little bit at the margin how much to fay on the Defense department. But 564 00:46:01.119 --> 00:46:09.360 most of defense spending is equally mandatory. So you add the final element to 565 00:46:09.400 --> 00:46:14.960 this, and that is interest on the debt. We had a wonderful renaissance 566 00:46:14.960 --> 00:46:19.400 at the beginning of this decade because interest rates were at zero, treasuries were 567 00:46:19.760 --> 00:46:24.360 near zero, so we were spending very little to pay off our debts. 568 00:46:24.880 --> 00:46:29.920 But now that interest rates are at five percent, treasuries are paying four and 569 00:46:29.920 --> 00:46:34.199 a half or better. The federal government is paying a massive amount of interest 570 00:46:34.239 --> 00:46:37.880 on the debt, and that is an expense it didn't have five or eight 571 00:46:37.920 --> 00:46:43.000 years ago, and this is making the problem a lot worse. So the 572 00:46:43.119 --> 00:46:46.760 question becomes how long can the government keep this up? How long can it 573 00:46:46.800 --> 00:46:52.559 sustain it? The answer comes down to economic growth. In other words, 574 00:46:53.239 --> 00:47:05.159 as long as our revenues and GDP, government spending and government cost of the 575 00:47:05.239 --> 00:47:08.760 debt, then you can have as much debt as you want, as long 576 00:47:08.800 --> 00:47:13.800 as those other numbers are bigger. The problem is those other numbers aren't getting 577 00:47:13.840 --> 00:47:17.679 bigger, and we are, like I said, now seeing that the total 578 00:47:17.880 --> 00:47:23.760 expense for the government is exceeding our GDP. So we don't know what's going 579 00:47:23.800 --> 00:47:28.280 to happen yet. This is one argument people have for buying assets like bitcoin 580 00:47:28.840 --> 00:47:32.400 or gold or artwork, you know, assets that are inflation proof, so 581 00:47:32.440 --> 00:47:36.800 to speak. We're going to have to wait and see how it plays out, 582 00:47:36.920 --> 00:47:42.320 but inevitably there's going to become a reckoning. The issue is whether the 583 00:47:42.360 --> 00:47:49.079 reckoning is an Argentina style or a Zimbabwe style reckoning where in Zababwe they're printing 584 00:47:49.440 --> 00:47:55.079 five trillion dollar bills, or whether it is more manageable the way the government 585 00:47:55.079 --> 00:48:00.440 has managed it so far. We'll have to wait se but I think you 586 00:48:00.480 --> 00:48:05.559 make an argument Tony for owning a lease a little bit of bitcoin. Yeah, 587 00:48:06.000 --> 00:48:08.719 that's why I own bigcoin. I have some. I am not selling 588 00:48:08.719 --> 00:48:12.159 them. It's going to go to my daughter because I don't know what they're 589 00:48:12.159 --> 00:48:15.880 going to do right, and there's no solution being brought for that. Hey, 590 00:48:15.960 --> 00:48:20.800 look this fiat currency system. Fiat currencies fail every I don't know at 591 00:48:20.840 --> 00:48:23.840 what the timeline is they updated, but what is the future going to look 592 00:48:23.880 --> 00:48:28.000 like? So well, our currency is the oldest currency in the world and 593 00:48:28.039 --> 00:48:30.360 it's only a couple hundred years old. That tells you something because humans have 594 00:48:30.440 --> 00:48:37.400 been around for many, many thousands of years. Governments also don't last very 595 00:48:37.400 --> 00:48:40.639 long. Our government is the oldest in the world and that doesn't bode well 596 00:48:40.719 --> 00:48:45.480 either. In Italy, their government since World War Two has lasted on average 597 00:48:45.559 --> 00:48:52.199 eleven months. So we have to recognize that turmoil is routine, and along 598 00:48:52.239 --> 00:48:55.800 with political turmoil is economic turmoil, and the two tend to go hand in 599 00:48:55.840 --> 00:49:00.760 hand. This is why revolutions occur, and kup's occur, and assassinations occur 600 00:49:01.239 --> 00:49:05.800 and so on. So it does get a little bit dicey, a little 601 00:49:05.840 --> 00:49:08.920 bit scary. We do need to recognize the macro environment that we're in, 602 00:49:09.320 --> 00:49:16.400 which is why I believe diversification is the right approach. Don't make a big 603 00:49:16.440 --> 00:49:20.159 bet with any bit of your money. You should make a series of small 604 00:49:20.199 --> 00:49:24.679 bets, and I think that's a safer, more prudent approach. We have 605 00:49:24.760 --> 00:49:30.880 to recognize at the same time that we've been through this generally generationally in the 606 00:49:30.920 --> 00:49:36.360 past. Sometimes it takes a long time to work through crises. Look at 607 00:49:36.400 --> 00:49:39.639 the crash at twenty nine, which took fifteen years. Look at worlds World 608 00:49:39.679 --> 00:49:44.079 Wars one and two, look at the pandemic. We're still feeling the impact 609 00:49:44.079 --> 00:49:50.440 of that. So people sometimes I feel run out of patients. And when 610 00:49:50.480 --> 00:49:53.719 we complain the Congress that they aren't fixing it, we have to remember that 611 00:49:53.760 --> 00:49:58.679 it's our fault because we say to Congress, do not raise my taxes, 612 00:49:59.320 --> 00:50:02.920 and we also say to Congress, do not cut my benefits. So on 613 00:50:02.960 --> 00:50:07.400 the one hand, you've got people telling Congress, don't raise taxes, and 614 00:50:07.440 --> 00:50:09.079 on the other hand, you have people saying to Congress, I want you 615 00:50:09.119 --> 00:50:14.360 to waive my student loan debt. Joe Biden just put in his budget he 616 00:50:14.440 --> 00:50:19.440 wants to give every American family ten thousand dollars to buy a house. He 617 00:50:19.480 --> 00:50:22.079 didn't say any where that money was going to come from, nor did he 618 00:50:22.360 --> 00:50:24.599 acknowledge what's ten grand going to do for you? When the average house costs 619 00:50:24.639 --> 00:50:29.639 four hundred and twenty thousand dollars. It's just so yet another government giveaway because 620 00:50:29.639 --> 00:50:34.800 people love free money. So Congress isn't fixing it because we're not letting them 621 00:50:34.800 --> 00:50:39.000 fix it. Final question here before I let you go. AI, we 622 00:50:39.000 --> 00:50:43.360 were talking about on the Rise. How do you think that impacts investing? 623 00:50:43.639 --> 00:50:47.599 And maybe fifty years from now, AI is your registered investment advisor, the 624 00:50:47.719 --> 00:50:52.320 humans are not involved anymore. Putting your thoughts on that. AI is going 625 00:50:52.360 --> 00:50:57.239 to change everything as we know, we've all seen Hollywood movies that are an 626 00:50:57.280 --> 00:51:00.679 AI lived world, and a lot of that will come to pass. I 627 00:51:00.719 --> 00:51:02.920 think ultimately in the end, AI is going to make the world a much 628 00:51:02.920 --> 00:51:07.079 better place, a much safer place, a much more affluent place for all 629 00:51:07.119 --> 00:51:12.719 of us. We are already a more peaceful world than we have ever been. 630 00:51:12.880 --> 00:51:15.880 We are more affluent world than we have ever been. We are a 631 00:51:15.960 --> 00:51:20.079 safer world than we have ever been, despite the fact that we hear all 632 00:51:20.079 --> 00:51:24.960 the stories every day of robbing, robberies and shootings and mass mayhem, and 633 00:51:25.039 --> 00:51:32.639 we're all horrified by what's happening with Ukraine and against Israel, and we're fearful 634 00:51:32.639 --> 00:51:37.880 of what's going to happen next in Taiwan. I mean, we've always bounced 635 00:51:37.920 --> 00:51:43.000 from crisis to crisis. But the fact is technology makes the world a better 636 00:51:43.039 --> 00:51:46.280 place. It doesn't come without disruption, it doesn't come without turmoil. But 637 00:51:46.400 --> 00:51:49.840 in the end, I think we can all agree the world is a better 638 00:51:49.880 --> 00:51:54.280 place because we're driving cars instead of riding horses, and so we just have 639 00:51:54.360 --> 00:51:59.079 to figure out how to get from here to there with minimizing disruption and pain 640 00:51:59.599 --> 00:52:05.280 for those those whose lives will ultimately be disrupted. Rick always great stuff, 641 00:52:05.559 --> 00:52:08.760 Always learn something new when I listen to you. So I appreciate you joining 642 00:52:08.760 --> 00:52:12.440 me. Thank you so much. It's been a pleasure. Tony, thank you.