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Ric Edelman has authored many personal finance books over the years, but none have captured the financial zeitgeist as much as The Truth About Crypto: A Practical, Easy-to-Understand Guide to Bitcoin, Blockchain, NFTs, and Other Digital Assets, which came out this spring. We had the chance to speak with Edelman about his new book below:


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Crypto Investor: Can you give us your perspective on the rise of crypto theft and hacks in the last year?

Ric Edelman: First, there's nothing new about computer hacking. We have all gone digital, and not a day goes by that you don't hear of some company being hacked and consumers losing their personal data, social security numbers, or credit card numbers. Crypto is not immune. Crooks always go where the money is.

There are two ways you can protect yourself. One is by relying only on the most established, reputable organizations, which have a history of doing a good job protecting their data, and which demonstrate their ability to provide financial support should a hack occur. The second is if you are going to buy crypto directly: store your coins and tokens in a cold wallet. A cold wallet is a storage device that is disconnected from the internet. Since it's not connected, hackers can't access it.

The other approach is to invest in companies that do the buying for you, which are investing in crypto funds rather than crypto directly.

Crypto Investor: How do you see the US government's move to regulate and in some ways crack down on crypto?

Edelman: The government isn't cracking down on crypto, they're cracking down on crooks and those who are violating federal securities rules. This is a welcome step.

The problem that always occurs in business is that innovation comes before regulation.

Think back to the Model T. When Henry Ford started rolling cars off the assembly line, you suddenly had lots of cars on the road – but there were no rules of the road yet. We didn't know what side of the road to drive on, or who got to go first at an intersection. What were the speed limits? There were no requirements for seatbelts or even lights or windshields on a vehicle. But after the government recognized that society was in danger, the regulations followed. At the time, nobody was suggesting that we ban the automobile – they were suggesting we make it safer.

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That's where we are with crypto.

Crypto is quite young. The government has only begun to realize we need to increase consumer protection around crypto after it has begun to be widely used. There are lots of rules in place already for the governance, but many of the players in the crypto space are not adhering to those rules, and the government is cracking down on them in the spirit of consumer protection. This is welcome, healthy, and necessary, because without the rules, many of the nation's largest banks and brokerage firms, insurance companies, and credit card companies - they're all hesitant to engage, because they're afraid of getting in trouble with the regulators due to the lack of rules. Once the rules are in place, the major companies will all engage. It's like, I'm happy to drive my car, and I'll follow the speed limit. Just tell me what the speed limit is. Without a speed limit, I'm afraid to go on the highway, because I might get in trouble without knowing I'm doing it. So the rules of the road are coming.

There are dozens of bills in Congress right now. There is a lot of effort underway by the Treasury Department, the SEC, CFTC, the IRS, the Federal Reserve - they are all developing regulations to govern investor and consumer behavior. And this will be very, very healthy.

CI: What trends in the crypto industry excite you right now?

We are seeing further development of the technology, expansion of its application in commerce, and an increase in the number of companies that are engaging with the technology.

Most folks are paying attention to the price. And they're getting discouraged because the price of Bitcoin and other digital assets is still sharply below their all-time highs set last November. But if you set aside the price volatility for the moment, and you focus on the technological innovation and the development of this industry, it's very easy to get excited. Over the next several years, there will be a dramatic increase in the number of people engaged in this space. The number of companies that are providing products and services that make their businesses operate faster, safer, cheaper, with greater inclusion for more people on a worldwide basis will increase. And it's going to transform the global economy over the coming decade.

CI: We’ve also seen a lot of high-profile crypto failures in the past few months, such as the collapse of the Terra stablecoin and the bankruptcy of Celsius and Voyager. How do you look at these events?

This is all part of the shaking out of the bad players in the marketplace. Terra-Luna was a wacky experiment that never should have gotten as widely-used as it did. People were asking me during the collapse if I was surprised that Terra-Luna collapsed – I was surprised it took so long. The notion of creating an algorithm to provide stability in the price of a stablecoin is absurd on its face and was doomed to failure.

For Celsius, lending money and offering 15% and 18% interest rates was unsustainable. The only people who engaged were those doing it out of greed and chasing these incredibly high yields. We had too many people making too many promises they couldn't possibly honor. And part of the collapse of crypto prices over the past couple of months has been the shaking out of this nonsense.

We're not done yet - there are going to be some more disruptive elements that have yet to occur - but we're much closer to elimination than before. It's very similar to the 2008 credit crisis, which resulted in a crash in real estate prices as well as the stock market, and created a massive economic crisis on a global scale. We had to shake ourselves of all the problems that led to that – it took several years. By the time we got to 2010, the economy was in much better shape and we enjoyed a 10-year bull market. We're going through this right now in crypto. It's unfortunate to experience it. It's devastating for those who suffer through it. But in the end, it leaves the crypto community in a much stronger condition for a new round of growth.