What is cryptocurrency? What is blockchain? What are NFTs? Should Christians invest? - Podcast #65

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Welcome to the Got Questions podcast. So we're getting a lot of questions about something recently, probably in just the last couple of years, about cryptocurrency, about blockchain, about NFTs and so forth.

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And I am not even 100 % sure what some of these things are. So I wanted to dedicate this episode to kind of discussing what these things are.

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And also, is this something Christians should be involved in? So today's guest is Chuck Bentley.

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He's the CEO of Crown Financial Ministries. So, Chuck, welcome to the show. Well, thank you,

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Shea. I said earlier before we got on the podcast that I am a client of Got Questions, and I really appreciate what you do.

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And congratulations on the success of your ministry. Well, thank you. That's always encouraging to hear.

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Chuck, for listeners who may not be familiar with Crown, tell me a little about Crown Financial Ministries.

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What do you guys do? It was started in 1976 by the late Larry Burkett. Larry was a pioneer in helping to produce content of what the

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Bible said about personal finance and stewardship. He wrote more than 70 books on that topic.

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They sold 12 million copies. We have partnerships around the world today. We teach what

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God's word says about money to the body of Christ in more than 100 countries.

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We have two daily radio programs in the United States. We produce a lot of content to try to help believers know what

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God says about their finances, how to manage their money wisely, and how to be prepared for the eternal consequences of those decisions.

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Fantastic. To the questions we have specifically today, it's been quite the learning experience for me as well.

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So, Chuck, what is cryptocurrency? Well, I'm going to give you the simple technical definition, then

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I'll expand on that a little bit. Technically, a cryptocurrency is a form of digital asset based on a network that's distributed across a large number of computers.

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So a cryptocurrency is actually essentially an algorithm that represents an asset.

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And it's important to use that word correctly. The name of the asset implies that it's money.

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But the IRS actually considers it an asset. So it's easier to think about it like digital gold.

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That maybe will help people understand a little bit better what it is. It's an asset that's bought and sold online only.

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It's not a tangible asset. Okay. It was really interesting.

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A few months ago, someone asked if they could donate Bitcoin to GotQuestions for the first time.

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And I didn't even know that was a thing. And evidently, it has been for a while. So I'm definitely behind the times on this.

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So we went through the process, set up an account with an exchange where we could actually receive a

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Bitcoin donation. So it's just fascinating that this has become so commonplace so quickly.

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So another thing associated with cryptocurrency, it's really a blockchain.

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So what is blockchain? Well, blockchain is a shared database that's distributed across a large number of computers.

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So blockchain is simply a methodology to store information. I like to think of it, if I break down the word, there's a digital block that you can put any form of data in that block until it's full.

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And then it sequentially links to the next block of data. So it's a chain of blocks of information.

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And it is the underlying technology on which the cryptocurrency ledger is stored.

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So a lot of people get them confused. They're interrelated, but totally distinct.

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So a cryptocurrency is the information chain, the assets of a crypto coin are stored in the blockchain technology.

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Another question, probably the third item on the list that I want to ask you about today. NFT, standing for non -fungible tokens.

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I've actually read a few articles on these, and I'm still pretty confused about what exactly they are.

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So what are NFTs, non -fungible tokens, and how, if at all, are they related to cryptocurrency?

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Well, Shay, it's very confusing, even for me, and I know people who are experts in this field. But the simplest way to define it is an

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NFT is a unique cryptographic token that exists on the blockchain and cannot be replicated.

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And those tokens can represent many, many different forms of assets other than a currency.

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So it can be artwork. It can be legal documents. It can be real estate.

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All types of things are now created as NFTs. And the idea is that they have more value in the digital world because they're more easily transferable and you disrupt the intermediary who normally would broker that artwork or an account that would offer it for sale.

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You can buy and exchange these between buyers and sellers very easily online.

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So NFTs are a very hot thing right now. The example that helped me to understand it a little bit better is an

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NFT that started in 2017 called CryptoKitties. And each one of these kitties had certain properties, certain looks, certain uniqueness about them.

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And people bought them as pets. Now, they could never take them home with them, but they owned them in the metaverse.

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And the metaverse is an alternate reality that exists only online. And that's where there's a high demand for these non -fungible tokens.

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So you can create a home. You can buy real estate and create a home. You can create an identity and put kitties in your house.

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Once you put the kitties in your house, you also have to feed them, get them health care, and all those things are available for sale online.

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So this ecosystem is developing in the metaverse. And that's why we see

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Mark Zuckerberg moving the entire future of his company that direction.

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So many follow -up questions I would love to ask you. But one thing that I find a lot of people who are really interested in cryptocurrency or some people who,

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I don't know, for lack of a better term, maybe on the anti -government side of the equation, they don't trust government control over currency and so forth.

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So what, in your experience, drives people to be so interested in these new types of currency or assets or whatever is the best term to refer to them as?

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Well, Shane, the only thing that gives them value is the fact that people consider them an asset. Anytime there's fear or panic around a crypto and people start to move away from them, they drop very, very rapidly.

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And so they don't have what I would consider intrinsic value. So the price of gold may drop, but I have something in my hand that's useful for other things.

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Gold is used in computers. Gold is used for jewelry. There's a lot of value for gold apart from just an asset of stored value.

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Cryptocurrency doesn't have that. But here's what drives the demand for it.

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People are very concerned about inflation or hyperinflation. And so they're using it as a hedge against inflation because it's decentralized.

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There is no government control currently over cryptocurrency. It's a more desirable asset in those things which are devalued by oversupply.

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So governments all over the world are printing more money. They're going into greater debt than they should be.

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And people are fearful that their currency is going to devalue. So they're looking for something that's not devaluable by central banks or by government policy.

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So for my related question, and typically when people ask us about one of these things, their core question is, is this something a

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Christian can consider investing in? And so how do you and how does Crown Financial Ministries answer that question?

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Should I invest in cryptocurrency? Well, I think there's multiple ways to look at it.

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From a biblical perspective, we should never invest in anything we don't understand. There's a lot of FOMO right now around cryptocurrency, the fear of missing out.

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People, even my father, who's 88 years old, hears so many people talking about investing in cryptocurrency.

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He's trying to learn more and more about it and considering making investments in it because it's a very hot thing right now in the market.

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I would say that it's one of the top things on people's mind. You see many young investors moving that direction.

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But the first biblical principle is be sure you understand it. It's by wisdom that the house is built, according to the

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Proverbs. It's not by luck or by chance or by guessing or just doing what somebody told you to do.

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Secondly, if you do decide to invest in a cryptocurrency, you need to be diversified.

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Solomon said in Ecclesiastes 11 -2 that we should never put all of our assets into one investment category.

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And he recommended seven to eight different asset classes, which would be 12 to 15 percent of your investable funds.

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I think for a cryptocurrency, because it's so volatile, I would not recommend more than five percent of your investable assets in a cryptocurrency.

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There's nothing wrong with it, Shay. It's not immoral to buy a cryptocurrency.

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It is volatile. You have to be prepared to lose everything if it loses all of its value.

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And another issue with cryptos that I have is that there's not a redeemable function behind the cryptocurrencies.

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In other words, if I invest in a business that's growing and paying me dividends and increasing in value, the customers are benefiting from that investment.

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There's a redemptive purpose to that company. It's solving a problem. It's providing a good product.

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None of that exists when you purchase cryptocurrency. So I don't get overly excited about them.

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I do think it's permissible. But as with any investment, we need to be very wise.

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Of course, especially in the early days of cryptocurrency, you'd hear people investing a hundred dollars and being millionaires within a week.

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And you hear stories like that. And I'm instantly reminded of all the warnings in scripture about the desire to get rich quick.

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The Bible warns us against that, Shay. And I wouldn't recommend that anybody jump into cryptocurrency just because they're hearing that people are getting rich from it.

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There's a lot of stories of people who've lost a tremendous amount of money in the crypto markets. There are people who have their key stolen and they can't find, you know, to get back into their wallet.

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They can't find access to it. And so there are some real horror stories out there that we tend to overlook when we get excited about an investment.

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Yeah, of course, to me, it's I see people getting equally excited about the lottery or even maybe another question.

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If we have some time, I'd like to ask you about something else not related, but it's similar mindset. So in your experience with people investing in cryptocurrency, how many success stories have you heard versus stories of people losing everything or almost everything?

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Well, right now, I would say it's about 50 -50. I have friends who tell me they've done very well.

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But as in any good investment, you have to buy at the right time.

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And investments are driven by our emotions. Unfortunately, most people buy high and sell low, meaning they buy when everybody else is buying and they sell when everybody else is selling.

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The wise investor buy on, they buy on the dips, meaning when stocks or assets go on sale is when they make their move.

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They run contrary to their emotions. And those are the ones who've done the best. They're able to buy when other people are getting out and they're able to sell when things are going up.

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And I can tell you, Shay, that that is not a common practice for most investors. They tend to run with the crowd and the crowd is often wrong.

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And people who've lost money in those markets have been whipsawed by their emotions.

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I had a young investor friend who he took twenty thousand dollars and bought a cryptocurrency and it just skyrocketed.

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And he called me when his net worth and when the value of those that crypto had gone to six hundred thousand dollars.

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And he wanted advice about, you know, how to manage his newfound wealth.

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And he was being smart about it. But suddenly it turned for the worse and it dipped down to about forty thousand value, just as fast as it had gone up to six hundred.

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And he sold at forty thousand value and he doubled his money.

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But he's lamenting what he lost out because that same crypto today would be worth two or three million dollars.

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But he got whipsawed by his emotions. And that's the most difficult part of investing, is to be able to separate yourself and make those kind of decisions that are based on knowledge and the data and wise objectiveness as opposed to the emotions that come with it.

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Absolutely. So this is the Got Questions podcast with Chuck Bentley, the CEO of Crown Financial Ministries.

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And we're discussing investing in cryptocurrency because it's a question they're receiving a lot at GotQuestions .org

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and Chuck and his team definitely have the financial expertise to give us some wise counsel. So, Chuck, thank you for that.

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If you've got time, I'd love to ask you a unrelated question, but also something that's up your alley,

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I'm sure. We're receiving a lot of questions about sports betting with all these sports gambling apps out there.

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And similarly to cryptocurrency, you keep hearing people making a killing, making so much money on betting on their football game or betting on almost every single play in an

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NFL game. And I'm just like, can I just sit and enjoy watching the game? But so we're receiving questions.

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We have articles on what the Bible says about gambling, about the desire to get rich quick, about risk and those sorts of things.

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But what advice would you give someone who's considering getting involved in sports betting, sports gambling?

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Well, young people often ask me a similar question, Shay. And yes, I'd love to talk to you about this as long as you would like to.

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I want to make a distinction between investing and gambling. Most young people think they're the same thing.

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And they're not even remotely close to the same thing. The only common denominator the two activities have is they both involve trying to manage risk.

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So that's a given. But by nature of investing, every single person in the process has to win for me to win.

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So the customer has to have a product or service that they approve of, that they want.

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The company has to manage their cost and their profits well to provide a return to their business to recapitalize the growth of the company.

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And then the surplus is shared with the investors. So everybody wins along the continuum.

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The opposite of that is true in gambling. Everybody else must lose for me to win.

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In other words, if I buy a lottery ticket,

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I'm hoping that nobody else wins those lucky numbers. I'm hoping that nobody else has the winning ticket or the winning position so that a lot of people must lose so that I benefit.

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And all people that set up gambling houses are counting on the vast majority of people losing their money.

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And so I think it's a fool's paradise, Shay, to think that God wants to provide for us through gambling.

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He wants us to use our minds. He doesn't want us to just make these wild guesses.

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And look, nobody knows the future. I don't know if somebody is going to win the coin toss.

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I realize you can calculate your risk. But at the same time, it's just guessing. You're just playing a game like throwing darts at a balloon on a board.

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You're not using proper analysis. And so I would advise people to stay out of sports betting.

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I think that I've known far more people who've lost money doing that than they've won.

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And of course, we hear the success stories. We think it sounds like easy money. But God, I like this saying,

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Shay, and I told you I had a lot to say about this topic. I'll trim it down here. Don't get too worried that I'm going to run off the end of the runway here.

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But the saying I grew up with is that the man builds the house, but the house also builds the man.

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And I think when we work and we produce a product or service and we do something that we build that blesses the world, that's the way

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God wants to provide for us. And he doesn't want us to get into a get rich quick mentality.

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It says it ruins your faith and it will usually wreck your family. Absolutely.

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I mean, every time I see one of those commercials for the newest, hottest sports book, I'm like, there's far more people losing money on this than gaining it.

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And it's not what to call it tempting for me, but as fascinating as I find the concept,

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I have no interest in getting involved because I do not have the time to invest in doing the research that could maybe possibly turn it a little more in my favor.

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It's just not worth the risk. So for my closing question, before I'd like you to share a little bit more about Crown, you mentioned in your answer to one of the first questions is a lot of people are viewing cryptocurrency as sort of a hedge against inflation.

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So just briefly, I'm sure this could be an entire episode, but what is causing inflation, at least here in the

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United States, and what is the best way for us as Christians to continue to invest wisely in a inflationary economy?

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Well, it's really an interesting phenomenon right now. Part of the difficulty is the supply chain disruption.

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So limited supply of the materials we need driving up the cost. The second is the limited supply of laborers.

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We've had so many people exit the labor force that companies are trying to raise the amount of pay that they're offering to get people to come back to work.

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I had a son that worked at Chick -fil -A at $8 .25 an hour. I just drove by a sign recently that they were willing to pay $14 an hour to staff their restaurant.

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Well, when that happens, the cost of their products will have to increase. So you have a labor, you have a supply chain disruption, you have a labor shortage.

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And then thirdly, you have excessive money printing. The federal government is printing more and more money, putting it into the system, and that creates inflationary pressure.

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All three of those things need to reverse course at some point before inflation will reverse course.

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And the only way to protect yourself against inflation is to invest in those assets which go up in inflationary times.

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And those are typically commodities and hard assets. Real estate has gone up more than 30 percent nationwide in the last several years alone.

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So if you buy a home, if you have rental properties, if you're investing in commodities like oil and gas, the current policies of restricting the amount of fossil fuel exploration is driving the price of those things up.

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So anything that is a tangible commodity is going to go up and you'll benefit and you'll ride out the pain of inflation.

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If you just set on your money in a savings account, you're going to go backwards financially. So again,

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Chuck, I truly appreciate your financial expertise. I've found Crown Financial Ministries very helpful numerous times in my life when

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I had financial questions. Chuck, just for your last question, I truly want you to promote

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Crown a little bit here. So tell our listeners, who is

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Crown for? What sort of people do you think would find the ministries that you offer helpful?

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Oh, thank you so much. We're for believers who want to experience what we consider true freedom, the freedom that Christ offers not only from the financial pain you may be in.

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And a lot of people come to us with excessive debt, with financial worries, the disruption in their income.

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Maybe they've been laid off and they just need some immediate help. We have coaches available that interact one on one.

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We have free online tools and assessments. We have a crisis budget program. We have a money dates program for couples who are experiencing financial pain in their marriage.

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We also have courses and help for those who are struggling with managing abundance.

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And so that financial pain may come in a burden. It may come with stress. It may come with just a sense that you need to become a better steward.

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But we've been helping people along the spectrum to grow and increase in God's wisdom with the resources he's entrusted to them.

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And I think, Shay, far more importantly than just solving a temporary financial problem is thinking about our finances eternally.

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God said that he owns everything. And what was transformative in my own life was learning that I don't keep score by how much

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I have because God owns everything. I will leave here with nothing. And I just want to be a faithful steward.

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And so we help people understand God's principles. And what we find is the end product is a sense of true freedom.

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You're no longer mastered by money, whether you're mastered by surplus or shortage.

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You experience the freedom God intended, and you can flourish and thrive and enjoy your life as God's faithful steward.

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Absolutely. So I strongly recommend you checking out Crown Financial Ministries. Again, they've been a blessing to me.

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This has been the Got Questions Podcast with Chuck Bentley, the CEO of Crown. And we've discussed some interesting things, whether it's cryptocurrency, blockchain,

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NFTs, a little bit on sports gambling, and even inflation. So it's been an interesting financial -focused episode.

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So again, Chuck, thank you for being on the show. This is the Got Questions Podcast. Got questions?