My new views on blockchain and digital assets
Ric Edelman: Well a very Happy New Year to you. Welcome to my new podcast. I'm really excited about this. After 32 years on a weekly radio and many of them simultaneously podcasting, I’ll now be podcasting every Monday through Friday. So I'm really excited that you're here with me and this is going to be an awful lot of fun. These are going to be pretty short. You know, my radio show used to be one hour long, once a week. These daily podcasts are going to be Monday through Friday, but pretty quick, anywhere from 3 to 5 minutes, maybe 10, except for Fridays. That'll be long form with a lot of interviews and guests and such. But I'm really excited about it. And these are going to be single subject for the most part. I might occasionally have two or three topics to share with you, but since you're really busy and this is going to be a single subject thing and there are five major themes that we're going to be covering here on this podcast throughout 2023, beginning with longevity, followed by retirement security, exponential technologies, blockchain and digital assets and health and wellness. These are the five personal finance topics that matter most. If you're an investor, you need to pay attention to these topics because they represent the investment opportunities of the future.
And if you're an investment advisor, you need to be focusing on these subjects for your clients. If you're helping them build and manage wealth and of all of these five subjects, the one that I'm going to start off with that you may not be at all surprised to hear is crypto. Why? Because we just ended 2022, one of the worst years ever. Not the worst, which is shocking enough in of itself, but one of the worst years ever for crypto. And it has been so much in the news that a lot of folks have been asking me, Ric, how do you still feel about crypto these days?
Well, I'll tell you how I'm feeling. Yeah, I'm a little shook up like everybody in the world of crypto. But I need to tell you I'm optimistic for the future of crypto, despite everything that happened in '22. And yeah, despite the FTX debacle, which is ongoing. In fact, saying you're not bullish on crypto because of FTX is like saying you're not bullish on stocks because of Bernie Madoff, you see, what you really need to understand is that FTX has nothing to do with blockchain or digital assets any more than Bernie Madoff had anything to do with the stock market. Madoff was just another con artist who led a massive fraud. And it certainly appears that Sam Bankman-Fried is also a con artist who led a massive fraud. Madoff used the stock market to perpetrate his con; SBF used crypto.
Innovations in Blockchain – From Brazil to JPMorgan and Goldman Sachs
So let me share with you why I'm still steadfast in my future expectations of blockchain and digital assets. The underlying benefits are unaffected by the scandals of 2022. Blockchain technology is simply software, and it's superior to the software that businesses are currently using. Blockchain software lets businesses operate faster, safer and cheaper with greater transparency and inclusion. And that's why 90% of all the banks worldwide are developing the technology. With more than 70,000 software engineers engaged, more than $35 billion was invested in this technology in the past two years alone. PwC says it's going to add nearly $2 trillion to the global economy by 2030. McKinsey says 70% of global GDP will be digital by the end of the decade. And the Bank for International Settlements says every government is going to deploy a CBDC, a central bank digital currency, by the end of the decade. China and the Bahamas already have, and there's broad bipartisan support in almost every country.
Now, just to put all of this in context, because all the headlines about crypto over the past couple of months have been nothing about the decline in the price of Bitcoin and the scandal involving FTX, let me tell you what else has been happening in the world of crypto since the blowup of Sam Bankman-Fried.
Brazil has passed a law allowing Bitcoin to be used as a means of payment and as an investment asset. Japan's central bank is testing a CBDC with three megabanks with the goal of launching their CBDC in 2026. Japan's version of the FCC has proposed regulations that would allow stablecoins issued outside the country to be listed on local Japanese exchanges. We're talking about USDC and tether. The new rule is going to take effect this year, and in Singapore, the largest bank there used JPMorgan's blockchain to settle trades. Yeah. Did you know JPMorgan has its own blockchain? And they did this settling trades in hours instead of days. Vladimir Putin called for a new system of international settlements based on blockchain and digital currencies. (Like, why is he talking about blockchain when he's in the middle of all this debacle in Europe?) OpenSea announced that it has paid NFT creators over $1 billion in royalties in 2022. Warner Music says that their fans are going to be able to buy and listen to music NFTs through the polygon blockchain. Fidelity announced its retail customers can now trade Bitcoin and Ethereum on their brokerage accounts.
Goldman Sachs announced it plans to spend tens of millions of dollars to buy or invest in crypto companies. Matthew McDermott, the head of digital assets at Goldman, said, "We see some really interesting opportunities, priced much more sensibly." And David Solomon, Goldman's CEO, said, "I still see blockchain as a promising technology with far reaching implications for the global economy." And Ajit Singh, the CIO of the Houston Firefighters Pension Fund with $5 billion in assets, said, "In our view, the biggest mistake we could make is not having any exposure to crypto." He added, "Given its potential, having some exposure to the foundational blockchain protocols is warranted by patient, institutional long-term investors. The failure to invest in this innovative new approach is more questionable than investing. We will look back on this forecast in 20 years and marvel at how quaint it seems." That was Ajit Singh, the CIO of Houston's Firefighter Pension Fund. Yeah, there's no doubt about it, FTX and SBF is a horrific fraud that caused massive losses. But it's not the first fraud. It won't be the last. Let's not get overly distracted by what's going on there and let’s not use it to reach incorrect conclusions.
Well, that's it for today. Tomorrow, I'm going to totally change the subject and I'm going to tell you what you need to do to strengthen your brain. And you're not going to believe what I have to tell you, but I'm not going to tell you today what that is. You're going to have to join me tomorrow for my podcast on Wednesday, January 4th. So I'll see you tomorrow.