The Truth About Crypto: A Practical, Easy-to-Understand Guide to Bitcoin, Blockchain, NFTs, and Other Digital Assets

A practical and easy-to-understand guide to Bitcoin, Blockchain, NFTs, and other digital assets

Rick Edelman has been rated three times as the number one financial advisor in the United States by Barrons. He is the founder of Edelman Financial, and #1 The New York Times Author of a bestselling book on personal finance.

Below, Rick shares 5 key insights from his new book, The Truth About Cryptography: A Practical, Easy-to-Understand Guide to Bitcoin, Blockchain, NFT, and Other Digital Assets. Listen to the audio version – read by Rick himself – on the Next Big Idea app.

1. Blockchain is the biggest innovation of global commerce since the Internet.

If we look at transformative discoveries or inventions throughout human history, we realize that only a few innovations Is that true Important. Fire, wheel, internet, and now, blockchain. Yes, blockchain is on the same level as fire and wheel – it’s a big deal.

Blockchain technology has revolutionized how businesses are run on a global scale. In our current way of doing business (as we have done for centuries) we depend on trust. When you buy a home, you trust that the seller owns that deed, and will pass it on to you. But you don’t actually trust them, so you pay to search for title and buy title insurance. You spend thousands of dollars and months of effort to buy a home – time and money that do not add to the value of the home.

Blockchain cancels this out because the transactions are fixed with cryptography. Trust is not necessary. With blockchain technology, every industry in the world can do business faster, safer, cheaper, and more transparent than ever before. This is revolutionary. JP Morgan says banks will save $120 billion annually thanks to blockchain. Norway uses the blockchain to track salmon shipments: when you buy fish from the grocer, you can see when the fish was caught and track its journey to the store. You’ll know you’re really buying Norwegian salmon, not a cheaper imitation. If there is a salmonella outbreak, government health officials can trace it back to individual fish — saving lives and avoiding being pulled. The luxury watch industry and the wine industry are using blockchain to track their products and thwart counterfeiters. The music industry uses the blockchain to monitor song ownership and concert ticket distribution. And the list goes on and on.

Blockchain will change everything.

2. Digital assets are the first new asset class in 150 years.

Blockchain was created to allow the invention of Bitcoin, the world’s first form of digital money that was not created by a government. Bitcoin is inflation-proof, and you can use it to send money to anyone, anywhere in the world, almost instantaneously and for free. New asset classes don’t appear often, and when they do, they change everything.

“Digital assets are the biggest investment opportunity you will ever see in your life.”

The last new asset class was 150 years ago, with the discovery of oil in the 1850s. Before oil, we used whale oil to light candles. Look at the amazing impact that oil has had on our planet – both economic growth and environmental impact. Digital assets will have an impact on our world as huge as oil. This is why there is so much excitement around Bitcoin and other digital assets. Bitcoin is owned by more than 300 million people worldwide, and in the past year institutional investors participated: pension funds, endowments, hedge funds, insurance companies and billionaire investors. Governments are racing to create their own official digital currencies — including the United States. President Biden issued an executive order bringing the full power of the federal government to develop and promote innovation in digital assets, including central bank digital currency. The Federal Reserve has the first-ever innovation officer to deal with this new technology. The digital asset market is now $3 trillion, with annual Bitcoin transaction volumes three times that of American Express. Coinbase is the #1 free app to download, and Coinbase now has more accounts than Charles Schwab, TD Ameritrade, Interactive Brokers, and e-trade combined. You can buy Bitcoin with PayPal. Walmart is installing Bitcoin ATMs in its stores. Bitcoin is so popular that the first question on your tax return, IRS Form 1040, is “Do you own crypto?”

Digital assets represent the biggest investment opportunity you will ever see in your life. Bitcoin is the best performing asset class in history, and it is still very early in its development. 24 percent of all Americans own it, out of the 300 million bitcoin owners globally. There are 7 billion on this planet, which means there is plenty of room to grow. The more people involved, the higher the price because the number of bitcoins is fixed. Increased demand with limited supply means that the price of Bitcoin will rise Many.

3. Ten million workers may lose their jobs in the next fifteen years.

Blockchain technology and digital assets are not just about investment opportunities, but about job disruption. Ten million people work for broker companies. Every person between the seller and the buyer is an intermediary. Real estate agents, stockbrokers, attorneys and mortgage brokers. We are talking about ten million jobs, 21% of the gross domestic product of the United States, that is, 21% of our total economy. Blockchain technology can digitize and automate all these functions. This has huge implications for financial planning.

“It is important to examine your career: will your job last after ten years? Is your company?”

Blockchain is an exponential technology (innovations that are reshaping our world), such as artificial intelligence, robotics, big data, 3D printing, nanotechnology, biotechnology, bioinformatics, financial technology, education technology, and agricultural technology. Half of the professions will disappear over the next 15 years, and new ones will appear in industries that did not exist before. It is important to examine your career: will your job last ten years? Is your company? Do you need to earn a degree or certificate in a new field? Perhaps you develop new skills to remain competitive in the workplace, so you can keep your job or find a new job – a job that pays better, is more interesting and is physically safer because robots do all the heavy lifting. Jobs are all about money, so you need to learn about the money of the future: digital assets brought to us via blockchain technology.

Even if you are not interested in investing in digital assets, your life will be inextricably linked with it in the same way that you have online bank accounts and pay bills with PayPal, Venmo or Zelle. You will use digital money in the future, through a digital wallet on your phone. You can’t escape it, and that means you need to know and master it for your investments, your business, your family, and your financial security.

4. Your financial plan – and your financial advisor – must be up-to-date.

Two-thirds of all investors in the United States rely on a financial advisor. As the man who created the largest financial planning and investment management company in the country, I am definitely in favor of using a financial advisor. I only left this company in 2021 because I wanted to focus on cryptocurrency. As you speak with your financial advisor, ask about blockchain and digital assets to see if you should add it to your portfolio. But be careful because I’ve been training financial advisors on this topic for the past 10 years, and I’ve found that the vast majority of advisors don’t know much about this topic. There are very few resources for training, which is why we created the Digital Asset Council for Financial Professionals, and why we created a Certificate in Blockchain and Digital Assets for Financial Advisors.

But most advisors still lack this knowledge. Honestly, they often know a little more than you do. So, when you ask questions about cryptography – what is a blockchain, what is Bitcoin, and how it all works – make sure your advisor can explain them clearly and concisely. Watch out for advisors who dismiss or claim that Bitcoin is a heresy or fraud, as it shows they don’t know what they are talking about. But, there is another aspect: Nearly half of financial advisors own bitcoin personally, but only 16 percent recommend it to their clients. How would you feel if your advisor was personally investing but refused to tell you? Frankly, I will look for another consultant.

“Watch out for advisors who dismiss or claim that Bitcoin is a heresy or fraud, as it shows they don’t know what they are talking about.”

Digital assets represent a legitimate asset class in a portfolio as diverse as any other asset class: stocks, bonds, real estate, gold, government securities, commodities, emerging markets, etc. If your advisor can’t answer questions, or is investing in person without telling you, then you should consider finding a financial advisor to help you with 21st century investment strategies.

5. Blockchain and digital assets can (realistically) Poverty eradication.

It is fair to ask whether we need a new financial system. We love to hate banks, we definitely hate credit card companies, and we don’t like stockbrokers. But we have to admit that our country’s financial system is doing well. When you put money in your account, don’t worry that the bank may collapse, or that our government may take over your assets. This is not true for billions of people around the world.

There are countries with shaky economies, where the inflation rate is a thousand percent, ruled by dictators who seize assets at will. These billions of people need a safe place to store unrestricted funds in government-controlled banks. And there are about a billion people who don’t have a bank account at all because they don’t make enough money, or they live too far from a bank to have access to one. The United Nations says nearly a billion people live in extreme poverty, subsisting on less than $1.20 a day. These people without bank accounts are in the United States as well, totaling 7 percent of households. Without access to a bank account, you are in danger of being robbed and physically harmed in the process. Without a bank account, you cannot earn interest, get a loan, buy a car, rent an apartment, buy a house, and in many cases, even get a job or education.

These 1 billion people may not have a bank account, but the UN says 700 million of them own a cell phone, and that’s all you need to create a digital wallet to buy and store Bitcoin securely. The United Nations says that blockchain and digital assets will be instrumental in eradicating poverty globally. By helping people out of poverty, they can go to school and get jobs, which helps them rise into the middle class. This means that they become consumers, and more consumers means more productivity and economic rewards for the entire planet. Stock prices will rise and everyone, everywhere will have the opportunity to gain wealth and achieve greater financial security. Blockchain and digital assets will help improve the lives of billions of people.

To listen to the audio version read by author Ric Edelman, download the Next Big Idea app today:

Hear the main ideas in the Next Big Idea app

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