In this episode I get to speak with Eric Ervin, the President and CEO of Reality Shares. Reality Shares is an innovative asset management firm, ETF issuer, and index provider that manages quantitative dividend ETFs that select individual securities using a proprietary system called DIVCON.
Eric is also very knowledgeable about blockchain technology and has led Reality Shares to the launch of an ETF that invests in the leading global companies creating and implementing blockchain solutions.
In this interview, we discuss the factors and strategies that drive Reality Shares' dividend offerings, the motivation behind its new blockchain fund, and why Eric thinks that blockchain has the potential to be as disruptive as the Internet.
Nick: Eric I just wanted to begin by giving you a hugely warm welcome for coming on and being interviewed on the Sure Investing podcast, we're really happy to have you.
Eric: thank you and thanks for having me.
Nick: no it's our pleasure. I thought we could begin by just hearing a little bit about who you are and the work you do at Reality Shares and I guess where you fall in the world of investing.
Eric: we started the firm – myself actually started the firm about five or six years ago. I was a financial advisor for many years about 15 to 20 years at some of the major Wall Street firms, Morgan Stanley being the most prolific out of that category. And my clients, they weren't billionaires but they were certainly very successful in that five to five hundred million dollar net worth and with that they were a bit more conservative but they were a little bit mistrusting of the stock market and the general kind of equity markets and capital markets.
So they always wanted to have some defensive approach with that and that spoke to me as well. So when I launched Reality Shares it was with the idea of bringing good quality hedge fund-style strategies or other strategies that just made sense institutionally to the individual investor that my neighbor could invest in.
And that was really the first fund that we ever launched was focused on a market called the dividend swap market which is a really someone esoteric institutional market kind of an alternative to bond type investments. So a lot more conservative a lot more stable in terms of overall volatility but also a lot less potential for reward.
From that kind of thinking with that quantitative mindset of building institutional quality portfolios, we built out a model to predict which companies had the highest potential for dividend growth. And then built out a couple of funds based on that really you know focusing not just in the rearview mirror and looking at which companies did grow their dividends. But which companies could grow their dividends in the future. Which I think is probably the most important thing that people need to look for.
And so we built out funds across that category and then we also have a thematic approach as well so we built out you know the blockchain technology is really becoming prolific now and could be as big as the internet was to us in the 90s. And so in order to accomplish an investment vehicle for that, we built out an ETF and an index that will track the companies that are investing in blockchain technology and using that blockchain technology and that really kind of brings us to where we are today as a firm.
Nick: okay so it sounds like you just take a very quantitative approach to the dividend growth investing strategies that a lot of investors practice individually.
Eric: yeah if you know if I look back at my investing career from the first days you know anytime that I allowed my emotions to get involved in the process usually was it was a bad decision. And so the more I could take that out I kind of grew up in the computer science world and the more you can take process and build it into a system and then take that system and implement it and trust it and have confidence in the system the better off you are because then you know you're less apt to monkey with the system.
And most you know most of the greatest money managers in history if you ask them do they have a system they would all agree yes I have a system. Maybe they don't articulate it in writing but you can and if you just interview them right down to you know what's your process what's your universe of stocks that you look at what's the factors and the quantitative system that you use to model out those stocks all the way down to you know finally when do you buy and when do you sell.
You can write up that rule set and then fire the money manager and build out an index that's much cheaper and much more cost-effective in order to create that same outcome and potentially even a better outcome. Because again you're taking the human out of the equation, so that's really how we think of things is write down the rules create systems use those systems trust those systems and then offer it in a transparent format so anyone can use our same research to build their own portfolio just out of our best ideas.
Nick: so what are the factors that you incorporate into your systems that your Reality Shares ETFs?
Eric: so in the dividend space looking at dividend growers we boiled it down to, and we analyzed about 40 different factors. What we really wanted to do is solve for that question of what is a dividend grower? Is it just a company that grew its dividends in the past or is it a company that can grow its dividends in the future and has a higher aptitude to grow which is really what matters.
Just because you grew your dividends in the past like the dividend aristocrats or some of those other models we feel like that's leaves you into a brick wall potentially if you're in a crisis situation a lot of those stocks ended up cutting their dividends dramatically.
So 7 factors where we found to be most appropriate our dividend estimates, so analysts Wall Street estimates for dividend growth, the free cash flow to dividend ratio so how much is the company actually earning in real free cash versus how much is it paying out in the form of a dividend. And that would be a similar to like a dividend payout ratio of earnings but earnings are a lot more manipulable so it's easier to fake earnings than it to fake free cash flow and that's nice free cash flow matters a lot more.
The Altman Z-score which is kind of like a credit score for companies it's like a personal FICO or score for people the Altman Z-score is that two companies and so that also factors into the equation. And then how much is the company actually doing in buybacks so if a company is buying back a lot of its stock and paying a dividend and they fall on hard times, they're more apt to cut the buybacks than they are to cut the dividend.
They have kind of an extra bullet the chamber should they fall into two tougher times they can cut their buybacks and continue to increase their dividends. And then a couple other factors in there and then that winds out to what we call the Divcon score and then we have a couple of portfolio's that only select those leading dividend growers. Or vice-versa that also short those dividend cutters those in the bottom tier of that index model.
Nick: that's super interesting. There are a few things that really stand out to me there. The first is your use of share buybacks as a measure of dividend safety and interestingly enough the Sure Dividend investment strategy which is called the eight rules of dividend investing. We use the same criterion, and I've actually never heard of anyone else using it before, so that's super cool.
The second thing that I found surprising was your use of the Altman's Z score which is something that I've only seen in the writings of Tobias Carlisle. For our readers who may or may not be familiar with that score would you be interested in providing some insight into what goes into calculating it?
Eric: yeah and into Ed Altman, he was he's a professor at NYU and is the father are known as the father of distressed investing.
Way back in the in the late 80s and early 90s he was instrumental or his research was instrumental and this idea that you can actually invest in distressed debt or junk bonds and earn a profit.
So investing in these companies that are you know right on the verge of bankruptcy but perhaps their debt is trading at a far lower value than them where it should otherwise be or vice versa. Knowing which bonds to avoid because the company is on the verge of bankruptcy.
And so he like us created a methodology in order to quantify just how distressed a company is and it uses a few things that we use actually. So free cash flow is one of the factors that goes into it the company's debt level, so their debt service to their free cash flows how much are they paying in debt service versus how much free cash flow did they have what's their total debt to equity ratio, and there's a few other factors. And it's it's very transparent, so anyone can go to Google and search Altman z-score in order to understand exactly what goes into it.
But it comes up with an equation and then anything that's less than I think it's 1.3 on the Altman Z-score is considered a high likelihood of default. So if they are ready to default on their debt, they're probably not going to be paying that dividend in the near future, and vice-versa a company that has a really high Altman Z-score is less likely to default and also more to be able to pay their dividends in the future.
Nick: you also mention that you have certain strategies where you'll take long positions in companies that score well using the divcon model and short positions in companies that score poorly using the divcon model. Another investor who famously does that is Joel Greenblatt but at his Gotham asset management.
Would you say that he's been influential in the way that you've built up Reality Shares over time?
Eric: yeah my just DNA as a as an advisor and kind of my overall investment philosophy it's to seek out opportunities both long and short to put yourself in the best position to where you can kind of in my old days to where you could tell a client or an individual investor to hang in there and be confident that you're doing the right thing.
Trusting in systems that's one but also knowing that markets do correct and there's times if you're long only. Then you're missing a great deal of opportunity. But you're also you're putting yourself in a position to where you know really kind of a third of the portfolio could get wiped up just because the market corrects and that has nothing to do with the quality of your portfolio.
Generally this that and forgive this you know this term but being long high-quality and short low-quality or long quality and short crap is a good overall strategy that lasts throughout time. Because as markets go down those lower quality companies are generally the first ones that portfolio managers will start to sell. And the higher quality names will be the last ones that portfolio managers or just the general market will want to sell.
You end up having a better what we call downside capture meaning you go down less with your high quality names then the market does and the low quality names tend to go down more than the market. and so if you allocate it appropriately which in our one fund which is the difficult to find is the ticker it takes a 75% long position in those difficulties and 25% short position and those low quality the divcon laggards.
We call them and so those are the companies most likely to show or cut their dividend so in a bear market those are the companies you want to be short and in the in the correction of 2008-9 that kind of back tested model would have been down only around 3% in that time period versus the market which was down almost 38%.
Nick: wow that is some fantastic downside capture as you call it. Now come I understand you have three or maybe four different ETFs that are based on the DIF consistent are the differences between the ETF's based on their long short allocation or are there other differences as well?
Eric: that's the key difference so these this divcon system is and actually we have we've applied that same difficulty to small mid-cap and later we'll do it towards international companies.
But for these three there's three ETFs that are based on the system for these three ETFs so we have the divcon leaders, LEAD is the ticker and all that does is it owns the leading divcon companies. these are the companies that have kind of overtime and over the history of the model have never had a cut in the in the dividend and they've also had about a 97, 98 percent likelihood of increasing their dividend in the next 12 months.
They I think of them as the highest potential for dividend growth not necessarily on a binary basis I like a yes/no but actually in growth rate which is probably the most important. so these companies on average grow their dividends about 16 percent over time versus the market of 7 to 8% over times. Almost double the sp500 dividend growth and then the other funds of the divcon defender which is a long short takes a long position in those different leaders of 75% and a short position in those difficult one stocks the divcon laggards we go 5 4 3 2 1 is how we rank companies difficult 5 is the healthiest all the way down to difficult 1 and there might only be 10 or 12 stocks that actually fall into that divcon 1 category and so at that point it would just be shorting those 10 or 12 stocks.
And then finally the guard portfolio GARD is dynamic so instead of being long short all the knowing that stocks generally rise what it tries to do is to it has a mechanism that says risks are very high. And so it's time to be long short and it goes to a fifty-fifty long short position or risks or low of a bear market and so it's a long only position and it's again just long those leading companies.
So it's all the same stocks and all three funds it's just a GARD is dynamic it'll be long only at times and long short and other times. And then DEFEND is long short at all times and then LEAD is long only all the time.
Nick: the third fund you mentioned the dividend GARD ETF I guess I have two questions about it the first is I presume that the answer to this is no but would that ETF GARD ever go 100 percent short?
Eric: and you're right the answer is no. so what again kind of based on the system what we figure is we never want to take on too much risk so at that point in time if the GARD indicator signals a bear market is is coming. And it only looks at the market for really kind of prolonged bear markets that's what it's trying to avoid it's not really trying to avoid the next five percent correction or the next ten percent correction. It's really looking for like the 2001 market tech wreck or the 2008 you know market correction just trying to avoid those big mega bears.
So what it will do is it'll drop your long only exposure to 50 percent and then it'll add a short position of fifty percent. So your net position is neutral you know really kind of have 50 percent long 50 percent short. But your overall exposure is 50 percent cash and then 50 long 50 short so that's the general gist of how it would do.
And then it rebalances in order to maintain that that balance until finally the market gets healthy again and starts to go along.
Nick: do you have any funds who use short positions to create leverage say 25 percent short and 125 percent long?
Eric: no but we did and you know when we were developing the divcon system so this is I think again part of our transparency and our belief that you know we just want to be there as a as really a research provider and if someone wants to use our ETFs that's great if they just want to use our research it's there for anyone to see and they can go on and find a lot of this research.
At Reality Shares Advisors. com or at Reality Shares.com but the thought was should we create like a one thirty structure where it's a hundred and thirty percent long and thirty percent short constantly and actually the returns are quite good on that strategy.
So but we didn't want any you have limited bandwidth just the markets ability to understand your products offerings so we wanted to just keep it to the three funds long only long short and then dynamic long short type product.
Nick: now it's very clear just from this discussion that you have a focus on using quantitative screens and quantitative investment strategies to remove a lot of the emotional biases that impair long term investment returns.
Do you think there's any scenarios where human investors will actually outperform a quantitative system?
Eric: yes but maybe not consistently and so there's certain there's certain examples where the human gets involved the human makes a good decision. You know maybe it was perfect maybe it was a perfect decision they got out of the market at the top or they got into the market at the bottom or something they're about you know or they were better in selecting a company and a portfolio and outperforming.
But generally those humans will then make a bad decision at some point in the future which will negate those earlier great decisions or vice versa. And so if they have a system involved and they can implement that system and Trust that system. Then they're essentially doing what we're doing and they're just taking themselves out of the equation.
So I do feel like you know humans can do a great service for themselves the more that they can write down their own investment philosophy into a rule set. And that's essentially what we do.
We do have certain like for example in the blockchain sector so there you need you need humans because that technology is so new you need to be able to understand you can't just do it with the number of patents companies have filed for example. You have to have some humans in the system deciding whether not the economic impact – this company is going to be as great based on their technology solution or not.
You know whether or not this company is just faking it and so you need software engineers you need other people who understand the technology and the business of blockchain to evaluate these companies.
But what we do is then use those humans in order to input a score so that on a zero to ten basis for example what will be the economic impact to IBM if their blockchain initiative is successful. And then so will score that and we'll have multiple people scoring it in order to come up with an ultimate score for the botching economic impact of IBM as just to use that analogy.
So humans can still get involved but the human has to create a system that you can quantify and then replicate on an ongoing basis. And that's the general I guess you know to where you've got a quantitative meets human involvement but they end up with a quantitative solution and an outcome that can be trusted.
Nick: that's a great segue in the blockchain because you're launching a blockchain focused ETF which implies that you think that this technology really has something to it.
For the average Joe listener to this podcast I was wondering if you'd be interested in providing a broad overview of what blockchain technology is and why you think it's important enough to create an ETF to give exposure to self-directed investors?
Eric: yeah and so I I'll do my best at kind of explaining at the surface what blockchain is and then a couple of use cases and then we can we can take it wherever you like.
But think of blockchain as a distributed database where everyone who has access to this this database most of the time these are fully distributed. But there are examples of some private blockchains where everyone has access to this database and therefore there's no need for everyone to keep their own copy of different databases and reconcile those copies.
A good example of this might be in the stock market so right now if I have shares of IBM my broker is telling me or my brokerage firm is telling me or my custodian how many shares I own and I'm trusting that they that data right.
But then if I sell those shears to someone I have to tell my broker to sell the shares my broker then tells the exchange to buy the shares or you know sells them to someone else. Someone else is trusting their custodian or their broker in order to evaluate those shares and then of course the exchange has its own copy of who bought and sold shares and then in the case of the United States.
The DTCC which is the trust company which everyone subscribes to also keeps copies of this and every back office of every one of those organizations has to come together and reconcile their own databases in order to evaluate who now owns the shares and then when IBM goes to send out a vote requests for the share owners does the vote request go to my broker or does it go to the other broker and it costs a significant amount of money time and human resources in order to do this entire process.
If that was done in a blockchain as an example it would be one database of I own the shares if someone else wanted to buy the shares the shares would be instantaneously transferred there wouldn't be any settlement the money would be automatically placed into my account. I wouldn't even need to pay my broker as a custodian of my shares because they'd be held on the blockchain. If the company IBM say wanted to do a shareholder vote they would instantaneously know that I no longer on those shares someone else has them and that other person could vote in order to cast their vote to IBM and it could all be tracked without a whole host of intermediaries and costs associated with that so.
It was really developed you know many people have evaluated as Bitcoin and Bitcoin is watching Bitcoin is really the first killer app that the blockchain technology was developed underneath.
Just like email was kind of the first killer app of the internet but the internet went on to be so much bigger than email same thing is true with blockchain Bitcoin was the first killer app on blockchain technology and blockchain technology is so much bigger and the potential for blockchain technology is so much bigger than Bitcoin even.
Nick: it's clear from that those comments that you think blockchain is going to be tremendously disruptive. How would you say that individual investors can position themselves in a way that they benefit from this trend?
Eric: yes, so if you if you take that analogy of the internet just like the internet became pervasive across every single segment of the economy and every single industry really from hard line manufacturers to railroads to shipping companies.
There's so many different either revenue opportunities or cost reduction opportunities with the advent of the Internet the same thing is going to happen most likely with blockchain. Back office infrastructure can get reduced down to a simple technology click of a button and to use it in the case of the supply chain.
IBM has already worked with Walmart in order to create and not just Walmart but Walmart and Nestle and several other meat food companies in order to build out a solution for the supply chain so when mango is shipped from the farm to the trucking company and the trucking company to customs to the new just you know importer and so on all the way right down to the shelf of Walmart.
They can tell if there's a food poisoning outbreak they know exactly where the mangoes came from they no longer have to take out billions of dollars where the items off the shelf now they can just take off those items that are infected. And so they estimate that it will be billions of dollars in cost savings just because of this supply chain initiative and they can do it in seconds now instead of what would have otherwise either been impossible or taking multiple weeks in order to evaluate where it came from.
So that's kind of one example of that what other companies certainly in the financial system have been looking at it's just cost savings you know from I would say if you take the entire GDP of the financial system. A good you know double-digit percentage of that is easily allocated towards cost and in terms of transactions.
So just moving wire transfers from one place to another to custody assets and you know kind of that overall friction of keeping that database and keeping that ledger and now with blockchain technology a lot of that can be alleviated with these shared databases. Where companies have access to you know the ledger on a shared basis and they no longer need all that back office infrastructure.
So one is cost savings and then the other one is is real revenue growth as IBM works with more and more companies IBM sees it as a huge revenue booster Intel is a good example and Microsoft are actually completely reinventing themselves we're now blockchain is a service.
Just like software as a service with Salesforce all out of those companies blockchain as a service is now going to become a huge percentage of their revenue growth in the future because they can now offer this in the cloud and they're the sole kind of really dominant player in this blockchain as a service arena.
Intel thinks their chip sales could go up almost 20% just from this one thing because of the way that the chip is designed it's fully encrypted. So data comes in on an encrypted basis it gets decrypted calculated and then it goes back out on an encrypted basis.
If anyone you know evil an Amazon for example on their web services wanted to peek in and see what was happening in this blockchain they wouldn't be able to do it because it's more secure but it stays distributed so more and more people have access to that ledger.
There's just a number of different ways in different companies that you can kind of get access to either cost savings or revenue increases and what we decided to do was just score every company just like our divcon system. Score every company based on their blockchain score you know what their impact in the blockchain arena is and then rebalance that portfolio every six months.
So you can constantly see the new portfolio of companies that have the highest blockchain score and in that arena.
Nick: and what factors go into the scores that you assigned to these blockchain opportunistic companies?
Eric: so we did it in a kind of two-factor so there's seven different factors that go into it. But we did it in a like a dual path.
One is a little bit subjective and this is where we wanted to build out a blockchain advisory board that could help us answer some of the tougher questions on which companies are frauds and which companies are legitimately implementing the technology.
We look at the number of patents that the companies have filed we take every company in the globe and analyze these different things so are they publicly traded for one do they have a market cap greater than 200 million is there trading and liquidity you know greater than is the turnover and the stock liquid enough to support investment from individual investors then the 7 factors are how many patents have they filed are they a member of a blockchain Institute there's a number of different organizations or initiatives where people can become members or companies can become members of these Institute's and then what level of membership are they and then what about their role in the blockchain ecosystem. Are they a developer an implementer or an investor in the blockchain space are they kind of providing consulting services like Accenture or are they actually selling technology like Nvidia and Intel.
Those of you suppliers and then what is their blockchain economic impact so are they just playing around with the technology right now and so even if blockchain is wildly successful their stocks not really going to move very much. Or are they all in on blockchain technology and this is really the future source of all of their revenues or cost savings and so it's meaningfully going to impact the stock if blockchain is successful.
So we measure these different things and then we have these blotching advisors such as Jeff Garza who was one of the original Bitcoin core developers he had worked on the software you know with the famous or infamous Satoshi Nakamoto.
The kind of the creation and development and he can actually look at the source code of a lot of these different blockchain related businesses and decide whether or not this company is genuinely actually implementing a solution or whether or not they just copied somebody else's source code and they really have no interest in building out their own block chain solution they're just doing it for pure hype.
And so we'll evaluate these companies based on each one of those scores and then kick out the companies that don't make it the companies that do and then only invest in the companies that have a blockchain score of 50 or higher.
Nick: that's super interesting there's lots of blockchain related financial markets behavior that is almost reminiscent of the stock market bubble of 2000 2002 the Internet bubble.
Do you have any advice for investors who want to gain beneficial exposure to blockchain but are feeling nervous or anxious about potentially investing in the next pets.com?
Eric: yeah and I think that that's probably the biggest problem for a lot of this and unfortunately it puts a little bit of a black eye on the technology. The technology is very sound and really like being used in across almost every different sector of the economy. But there's a lot of fraudsters and there's a lot of companies that are just changing their name and not actually implementing solution like even say the pets.com.
You know creating a business that's purely based on hype and fluff so what I would suggest they do is definitely take a look at our ETF BLCN and look at some of the holdings in there to evaluate which companies are legitimately implementing blockchain solutions.
And then look at some of the holdings that are not in there like for example riot blockchain technology that's just a kind of a scam that was a company that just changed their name to riot blockchain they haven't done anything related to blockchain they've done several secondary offerings they've sold a number of different items of stock and share offerings and the founders or the original kind of core investors have sold a number of their own shares.
So that's another company that you know is doing something more on the height basis and not on the on the real justified blockchain initiative. Kodak is another one that remains to be seen whether or not they're actually implementing a solution they just took over a previously announced ICO and then put it into their own name. And then created this kind of you know anyone who does their research is able to evaluate that and know that that's not a legitimate player in the space.
What their use case is is actually quite interesting so this ability to track photography or digital assets on a blockchain. You know kind of on a blockchain that is very compelling but they're not actually doing it they're just talking about it.
They're the real invention that Bitcoin solved is a way to make sure that if I own something digitally you don't own it and that's really what bitcoin was.
If you take every dollar bill here in the United States if you look at a dollar bill it has a serial number on it imagine if you could put every dollar bill into a digital form and we could ensure that if I gave you my dollar bill you knew I didn't give it to anyone else that's what the blockchain does so now take that same concept and apply its digital images or an article or this podcast for example you know this podcast is going to go out and it's just going to be a series of zeros and ones and so if I pay for this podcast what if there's a smart contract that's embedded into those zeros and ones that knows that there can only be one owner of this podcast and I own it.
And I own it for my own use or I could sell it or potentially anyone can download the podcast but if it's used for commercial purposes that automatically a payment is made back to the owner of the podcast or the creator of the podcast.
That's really where you know you're you start to see the opportunity in blockchain but it also prevents already you know presents another question mark oh how the heck is all this going to happen and it's just going to take years of tech time in order for the technology to evolve into all of these different use cases.
But you know everything else in our lives is now digital it's about time that our money and our assets become digital as well and that's kind of the innovation that blockchain is able to solve for.
Nick: throughout this call you've given some really fascinating examples of the use case of blockchain technology and you haven't not once really mentioned Bitcoin or gone into much detail about it anyway.
I'm curious what your thoughts are on Bitcoin because there's plenty of people who see it as a store of value and you see comparisons between Bitcoin and gold and there's other people like Warren Buffett has said that if he could buy five year puts on crypto currencies than he would.
So I'm curious as someone who knows a lot about blockchain what thoughts are on Bitcoin?
Eric: yeah and I spend a lot of time differentiating the difference between what blockchain as a technology is and what cryptocurrencies are and I think initially in my journey down the rabbit hole of learning about a lot of these things I think I started out as being a bit of a cryptocurrency skeptic.
But over time I've not only come to kind of be really passionate about the technology itself blockchain and all of its different uses. but also actually to be a bit of a believer in the in the cryptocurrencies themselves not necessarily knowing that where it's going but knowing that we're just getting started here and so I do feel like everyone should own a percentage of their net worth in cryptocurrencies as an almost like a call option on the future and I am by a certain portion I'm like talking 1, 2, 3 % it's just for too volatile to own much more than that.
But because it has this asymmetric risk reward profile I mean if you price it right and let's say you allocate 3 percent of your net worth to it the most you can lose is 3% markets do that in a month you know so stock markets and even potentially bond markets can do that and. yet you have this potential payoff that could be 5 10 15 times that original investment.
They don't show any if any correlation to the other asset classes so you can truly treat it like a different asset class but if it's sized appropriately I think it makes a lot of sense for investors. The problem is there's just so many things to watch out for so there's scams there's hacks on different exchanges it's important to know that there's never been a hack on the Bitcoin blockchain.
So the blockchain itself is very secure incredibly secure and many users might ask well how's that possible you know anything with cryptocurrency or anything with technology can be hacked. why is it that a blockchain is so secure and the key thing I think that the analogy that somebody gave to me was imagine because it's so distributed so imagine your dollar bill is held in a thousand different houses and so in order for someone to steal your dollar bill they have to break into every single one of those houses and change the ledger or you know break in and steal a piece of that dollar bill from every single one of those houses to make sure that they own your dollar bill now.
It's just not worth it to them it would cost more in electricity just to hack into all of those different computers and all those systems to steal something and that's why the Bitcoin blockchain or many of these other cryptocurrency block chains are so secure. But by storing your cryptocurrency and a place like Coinbase coin based can be hacked because it's a centralized exchange and custodian just like JPMorgan could be hacked.
That is the kind of the key differentiator is the blockchain itself has never been hacked so if you do own cryptocurrency you have a lot more issues around storing your own assets. But I do feel like it's a potential asset class it's a store of value it's a very volatile asset class and it will be as it continues to go higher and higher and higher.
All of that volatility will keep hopefully a lot of the inappropriate monies from going into it and keep just you know kind of that speculative capital investing in it because that's I think what it needs is it needs this bit of speculation effect in order to grow the network in order to grow the trust. And then as it gets more and more trusted it becomes less volatile over time. But that could take many years' decades if in fact.
Nick: you mentioned you know 1% to 3% allocation to crypto those would be appropriate for many investors. Would you recommend the people just buy Bitcoin should they buy a basket of crypto currencies should they buy only several what are your thoughts on that?
Eric: yes this is actually one of the next businesses that Reality Shares is going to start to build out is a way for people to get access without all the complexity of public and private keys and a lot of the other things so they can invest in a portfolio of the top crypto currencies.
Treated it like an index portfolio of kind of the main cryptocurrency assets. But without that here's a couple of things that you need to know so Bitcoin has is certainly the most dominant it is the most secure of all the block chains. The more it goes up in value the more miners which are really just computers on the on the network or players on the network that are keeping us secure. So the more they come in and keep it even more secure so it has this kind of self-fulfilling benefit to it.
However it has a lot of other issues which are downsides so it's difficult to scale the Bitcoin can only do about seven transactions per second whereas visa can do about seven thousand transactions per second. So without original promise of being you know this internet money where people can buy and sell goods for nearly no cost it's cheaper than a wire transfer. That's no longer necessarily the case the average transaction fee now is it's around thirty to forty dollars for one Bitcoin transaction.
However most of the software developers that are coming into the space are starting there and they're working on Bitcoin because it is the most interesting and it's the longest dated blockchain that we have. And so that's where all the brightest minds are you know tcp/ip wasn't scalable. You couldn't do video you couldn't do audio everyone said that it was a terrible protocol and there were much better internet protocols.
But that's where all of you know the best and brightest minds came and that's where they solved those problems to where now we have you know we're able to make this call together over the Internet and so it's very likely that people will scale and solve those problems of Bitcoin.
So I do think Bitcoin is going to be your core and then Etherium is a completely different asset Eetherium is actually kind of this global computer and Etherium is the currency or the commodity that allows people to use this global computer. You can have things like smart contracts where my you know in the future my autonomous car could be out Ubering people around and it would be getting paid while I'm sitting here at work that can only be done with blockchain related solutions.
You're going to need something like an Etherium or some other corresponding blockchain for things like that where smart contracts can actually take place on a blockchain a smart contract another great example of a smart contract is let's say flight insurance. So many people buy flight insurance and many people miss their flights but it's such a pain to go back and to try to reclaim those dollars from the flight insurance that they never end up getting paid.
If the flight insurance was done with a smart contract it would know that you didn't make your flight and it would automatically pay you and you wouldn't have to do anything beyond that. You if you missed the fight you're automatically paid or compensated for that flight insurance that can only be done with a blockchain related solution and a digital currency in that vein.
Bitcoin in Etherium for sure and then what I would suggest is maybe the top three or four other coins beyond that's a Light coin is like the silver where Bitcoin is gold so you can track process transactions a little bit faster on the network and then just take a look at some of the other ones from there. And again we're not you know trying to make investment recommendations right here but these are just my personal opinions.
Definitely don't overdo it you know for your listeners in your audience like I say one to three percent allocation know that anything you're putting there could very well go to zero. But it could also be kind of the next big thing and that's where again I think if it's sized appropriately and you know what you're getting yourself into then it makes a lot of sense for people.
Nick: do you see any way in the future where blockchain technologies can meaningfully disrupt the investment advisory industry?
Eric: oh yeah just think hum so I think you know first there was the robo-advisor that they came on the scene and I think that there was an awful lot of hype and a lot of interest in that and certainly a lot of venture capital dollars and I think that that's yet to be proven really as it you know there's just several billion dollars in robo advisors it's not even several hundreds of billions of dollars.
The financial advisory world is still you know that human interaction is still really important to the individual client. But the Etrades and the Schwab's and you know a lot of those types of solutions have taken a significant amount of dollars from the old traditional financial advisors.
Advisors have had to innovate they've completely changed their business model from a stock broker style business model to a financial advisor who also manages money for a fee and maybe in the future it might be a financial advisor who advises on clients for a fee. But it doesn't have anything to do with the assets under management it has more to do with the advice given based on those assets. And because everything can be transferred and custody on the blockchain eventually.
The advisor can't necessarily say I'm your custodian you'll pay me a fee or I'm your intermediary between you and the custodian you pay me a fee. The adviser is going to have to think about new ways to create a business model where they can offer the advice without that custody. Because with once you have custody the clients really handcuffed to you as a financial adviser. Once you lose that custody relationship the financial adviser and the client have to have a personal relationship with one another otherwise the clients never going to want to pay the fee and so that's going to be kind of interesting.
But again this is probably five to ten years out you know over the next five to ten years that this takes place.
Nick: so you see this is a win for investors overall?
Eric: yeah just like the ETF industry was a huge I mean it's still continuing to gain massive traction and massive adoption from mutual funds. The fees came down significantly the amount of total fees that are paid to the ETF industry is really around five billion or so.
That's the overall revenues of a three trillion dollar asset management pool that would have been about fifteen billion if it was in mutual funds so huge benefit to the consumer and in a tough battle for money management firms. But that's all good for the consumer so just like any time a new technology comes in. it just eats away at the margin of the incumbents like Amazon when they came at you know Amazon's opportunity is someone else's margin.
The same thing is going to happen when it comes to blockchain JP Morgan the reason that they're so nervous about blockchain is because it could potentially put them out of business. Same thing with you know the post office and email right, so it's just going to be a great thing for the consumer and a really challenging thing for anyone who acted as an intermediary all of financial advisers you know custodians banks really kind of across the board there's so many different intermediary.
Even Uber and Airbnb who came in and completely disrupted to well-established industries in a heartbeat basically could now be completely disintermediated because of blockchain. There's no more need for me to go through Uber to get a driver when that driver posts that he's his a location he's near me and I post on the blockchain that I need a driver instantly the two of us meet up we just cut out 30 percent of the cost of that intermediary which is Uber.
Same thing with Airbnb you know you put your apartment for let on air being on the Airbnb blockchain for example. I say I need it we interact with one another on the blockchain there's no more need for an Airbnb to take that middleman fee.
Anywhere there's a middleman or an intermediary they have to really be thinking about new ways to invent themselves using blockchain technology otherwise they're going to get completely taken out.
Nick: now what are your thoughts just is going to circle back to Bitcoin a little bit but I'm curious as to what your thoughts are on the comparisons between Bitcoin and gold?
Eric: yeah and actually so this is a this is another question of you know gold was always known as a as a store of value for many years and because it's known as that it's become a store of value you know so there's a little bit of that self-fulfilling prophecy of if people believe it then it starts to become it and so on. And I think we've been around for long enough or we've seen Bitcoins day long enough to where people are going to start to treat Bitcoin as a similar store of value.
If you're you know here in in kind of the United States and Canada and kind of the the first world we don't have a lot of the problems that people do that live under oppressive regimes and otherwise but if you needed to get all of your assets out of a country it's not easy to convert them into gold. And then you know flee the country with all these bars of gold. you can do it in a heartbeat with Bitcoin if you store your assets in Bitcoin and you can leave the country you now just left with a hundred percent of your wealth intact in you know milliseconds really as long as it takes to do a transaction on the Bitcoin network you're done and you can transfer anywhere around the world with those assets.
I think that you know for a store of value it becomes even more accommodative for people who live in difficult regimes that have a harder time storing their wealth in a kind of safe format from oppressive dictators and what it also builds out an entire financial system for the unbanked.
You know there's so many people around the world Africa and other third world countries that don't have access to banking they don't have access to lending they don't have access to even their real estate. You know in in South America if a dictator comes in and says you no longer own that real estate my friend does you have no recourse. But if it's all posted to a blockchain then there's an accurate record and no one can tamper with that record because it goes all the way back to the beginning of the blockchain.
That's where you start to see kind of unbanked becoming now part of this financial ecosystem and they can in store assets and therefore they can get loans and they can be more productive in the world where they could otherwise have been just shut out for life so it's really kind of like a big game changer for the way society is going to operate in the future that's the I think the thing is and more and more people will adopt it instead of gold.
And that doesn't mean that gold will lose its value in fact there are certain ways that like the London metal exchange I think is already issuing of gold based cryptocurrency. So you can trade like bits of gold on a digital format and you can transfer them digitally on a blockchain related solution.
They work with the CME in order to do that so you're seeing blockchain done in a lot of different ways but they're still going to be these decentralized systems like Bitcoin Etherium where there's no like if you wanted to shut down Bitcoin you can't do it there's computers too many computers around the world no government can shut down Bitcoin.
Bitcoin can't just decide to stop there's no you know you on your own personal computer could have a node operating the entire Bitcoin blockchain and so you have your money right there. So that's the real kind of benefit of a decentralized system such as Bitcoin.
Nick: my last question for you is this. Do you see any big opportunities for blockchain disruption that aren't really being captured by any companies or individuals right now?
Eric: like any new technology think about this as a you know to use that analogy of Internet this is really early days of the internet and it's pre Netscape so you know the internet was I remember you know in the early days it was just a black screen and I would hit tab to get to the next link there was no mouse there you know so there's really cumbersome for the average person to use and see the value in internet.
I think that's kind of where we are with blockchain and a lot of these cryptocurrencies so we'll have years before they're become these on-ramps to the system where anyone can get access to it and see it and use it and feel it in their lives and their daily operations. But one other outside of Finance is health care.
If you know right now we all store our personal medical records with our different health care providers and those health care providers get hacked into all the time and so you know that's our personal health care records getting out there into the investment we're you know into the public's hands.
From there they can forge documents they can create all sorts of you know fake prescriptions we have a huge opiate crisis here in in the United States and around the globe. If because of this concept on the blockchain no two people can have the same digital record of something. So there's only one prescription that gets issued there's only one human that can take exposure to that.
If all of the pharmacies are on that same blockchain they know if somebody is going into two different pharmacies and trying to fill the same prescription twice. They you know so it prevents so much fraud along with you know kind of bad things getting out onto the streets because there's only one digital record of it and so therefore you know you can't have those duplicates.
I think that's going to be a big one over time and the thought of putting your public profile out on a blockchain your health records your DNA you're your you know all of these different things on a blockchain is frightening to some. But just to put some clarity to that you're not putting your data out there what you're doing is think of it like a Swiss bank account a Swiss numbered account. You're just putting a number out there that's your identity that number represents you. And so that digital record of you can't be duplicated.
That's what is on the blockchain so you can see anyone and their assets you can see anything but all you can see is in numbers you have no idea who that person is behind that number. And that's why it's a lot more secure, but it's also transparent.
Nick: awesome well you've really given our lesson there's a lot to think about.
So I wanted to thank you a bunch for your time today, but it was a real pleasure interviewing you Eric.
Eric: yeah no thank you for having me, and I really look forward to hearing future episodes of the show. I'm really excited for you guys I think you know I've been a longtime reader of the program and I know you guys put out great stuff and I can't wait to hear some of these other interviews that you guys are gonna do.
Nick: thanks so much for listening to today's episode everyone I invite you to check out our website at sureinvesting.co see our premium investment research at suredividend.com and also check us out on YouTube where we publish videos under the name Sure Dividend.


text:
JeremyHoward.net
Thoughts concerning what God has said about people, the church, culture, music, and more.
Good Mythical Morning: Not Christian Programming
Rhett McLaughlin and Link Neal, creators of Good Mythical Morning.
Original photo by King of Mars - Own work. Text added. CC BY-SA 4.0
Listen to this article:
I first heard of Rhett McLaughlin and Link Neal some thirteen years ago. As YouTube launched and revolutionized the way content was presented and consumed online, Rhett and Link emerged as elite crafters of comedy. I have never forgotten their fast food folk song and it still regularly enters my mind when I go to Taco Bell. They're very likable and very funny.
One of the first things I learned about this duo was that they were Christians (as you can see explained here, preserved in the Wayback Machine). Around the time I discovered them, I had just become a Christian myself, so I was quite intrigued. Their videos never really touched on explicitly Christian themes (except for the time they did some work for VeggieTales creator Phil Vischer), but their videos did seem like good, clean fun. I thought it was great that committed Christians had a presence on YouTube.
In the years following, I often wondered why they weren't explicit about their faith in the content they produced. It would be unfair to expect every video that every Christian makes be explicitly evangelistic; however, when a Christian's entire career is built on broadcasting a show (over which he/she has full control), it is reasonable to expect the Christian to talk about Jesus at some point. Yet, Rhett and Link never used their personal YouTube channels to promote Christianity in any way.
As their followers have come to find out in recent days, the duo was never passionate about creating Christian content because they were never regenerate. They were associated with Christianity quite closely for some time, but they never considered God to be the ultimate authority in their lives. They were not motivated by His reality to reach the world for Christ because they did not actually know Christ through the gospel.
My goal in this article is to share some thoughts about what I've heard these two say on their podcast over the last few weeks. I am not writing this to Rhett and Link, but rather to the Christian community that is processing their stories. I've spent much time listening through the series and if you'd like to hear them in their own words, you can do so by checking out the episodes below.
"Our Lost Years" Spotify / YouTube
"Our Years As Missionaries" Spotify / YouTube
"Rhett's Spiritual Deconstruction" Spotify / YouTube
"Link's Spiritual Deconstruction" Spotify / YouTube
Revealing Priorities
Rhett and Link have been very successful as businessmen in the entertainment industry. Their company is Mythical Entertainment, a name derived from their hit daily show, Good Mythical Morning. The "Mythical" part comes from their childhood imaginations, not from adherence to actual systems of mythology. They have multiple streams of content across the internet, and their media is consumed by millions of people worldwide. One of their projects is Ear Biscuits, a podcast. You can listen to it on Spotify or watch the videos of their conversations on YouTube.
On January 20 of this year, an Ear Biscuits episode premiered entitled, "Our Lost Years." This was the first episode of a four-part series that walked through the time in their lives when they became a part of Campus Crusade for Christ (now Cru) in college, eventually becoming supported missionaries with the organization. Though they both earned college degrees in engineering, yet at that time they considered the work with Cru to be more important; so they pursued that ministry full-time instead.
For me, this part of their lives has always been an elephant in the room of sorts. I remembered reading their biographies years ago where they discussed their Christianity and time with Cru, information that had long since been scrubbed from the internet. Thus, I was eager to hear what was going on in their spiritual lives, though my fear was that they had rejected the faith altogether. That, of course, would turn out to be the case, but their story of arriving at that conclusion is one worth examining.
The two explained that while working for Cru, their supreme focus was to be entertainers. They admitted repeatedly in these conversations that their goal was never to provide any real teaching with biblical substance, but rather to facilitate events where others would do that work. They were focused on making people laugh and leading people in song.
It was in the middle of their recounting of these years that it became painfully obvious to me (and surely to any others listening from a Christian perspective) that these two men had never experienced being united to Christ by faith. Consider the conversation they had in the second episode. Speaking to the need to proclaim the gospel so that sinners might be saved from the wrath of God they deserve, Rhett said, "We were embarrassed about it." Link added that "It didn't sit right." Their priority, therefore, became to entertain people in such a way that everyone could laugh without being offended.
What does that story reveal? It makes plain that Rhett and Link were never fully committed to the gospel message. They always remained in a seat of judgment over it, declaring it to be embarrassing and not right.
As they went on in the story to share about their time at Cru, they described their ministry as creating events that Cru students in the South would attend in order to be equipped to talk to others about Jesus.
"We didn't want to go around doing outreaches," Rhett said. Later, describing their work at Cru offices, Link stated that they were developing themselves as "entertainers." And this became the priority: getting Christians and non-Christians together in the same room for the purpose of entertainment.
There was no real ministry, as biblically defined. There was no real conviction, as the Holy Spirit would bring it about. As they discuss their former priorities now, it is quite clear that they never reckoned with the Lordship of Christ and its implications for their lives.
Rhett's "deconstruction" testimony was largely based upon a skeptical worldview. His father is a lawyer in North Carolina, and it's possible that his influence shaped his approach to religion. I do not know what his father believes or teaches, but it's apparent that Rhett takes a lawyer-like approach to evaluating religion. Early on in his story, he makes it clear that demands for evidence and conformity to secular science and reasoning was at the heart of his abandonment of Christianity.
The elements of Rhett's apostasy testimony are not unique to Rhett. His progression of abandoning doctrines is actually quite common among people who turn from God to embrace secularism. Below is a basic sketch of how his not-uncommon deconstruction played out, line upon line.
Creation comes to be considered a myth because we can scientifically know that the earth is incredibly old and evolution happened.
Since creation isn't true, it naturally follows that the rest of the Old Testament is questionable and no set of doctrines should be founded on it.
Since the first two-thirds of the Bible is reckoned as questionable at best, the doctrine of biblical inerrancy must be rejected.
Since the Bible is erroneous, it should no longer be considered an authority concerning morality, meaning that popular forms of immorality (LGBT issues, abortion, etc.) can and should be embraced.
Once the Bible and its morality have been dismissed, it is then time to rethink the person of Jesus altogether and consider what life could be like without any ties to Christ whatsoever.
And that's where both Rhett and Link find themselves today. (Note: I won't go into great detail regarding Link's story, as much of his story is following Rhett's lead, though he tends to be much more abstract in his considerations.)
Of course, this progression doesn't take place all in one day, one week, or one year. For some, these changes occur over the course of decades. Since Rhett and Link were relatively deep into religiosity, having learned "Christianese" and the culture, it took them years to complete their pilgrimage to secularism.
Rhett explains that his first step toward evolution came through Francis Collins' book The Language of God. (Tim Challies reviewed the book once upon a time.) Collins is a geneticist who claims to be a Christian evolutionist. He's not the first to hold to this position and it's a stance that has been popularized through the years. Edgar Andrews has succinctly explained the problem with Collins' Evolutionist Christianity:
"[Collins] implies that even life itself originated by a purely natural 'mechanism' rather than a creative act of God, and he confirms this view elsewhere. I don't think this can be reconciled with the biblical account of creation — it undermines the very basis of the biblical understanding of God's relationship to the created world."
[See also: "Twenty Questions for the Theistic Evolutionist"]
Rhett, who was never regenerate, followed Collins' lead and eventually embraced evolution completely. He had learned many evangelical criticisms of evolution, but decided that those arguments were no longer valid in light of the overwhelming amount of evidence he accepted from secular scientists. Yet, his plan was to continue to hold on to a form of Christianity through it all.
As he entered into the theistic evolutionary world, he began to realize that most of the people in those groups are in faith crises. He saw that their views and opinions were very diverse as they sought to justify foundational Christian doctrines, while regarding secular science as a higher authority than Scripture. This bothered Rhett, and he started to drift away from the faith more quickly.
During this time in his personal philosophical evolution, his grappling with the issues took place privately. He struggled even to talk to his wife about his difficulties. Interestingly, he still led a Bible study for his church and appeared to be in good standing there. He did not talk through these issues with church leaders or those God had given him as counselors. It's important to make a note of that. As their former friend Shelby Abbott has summarized:
They were afraid if they shared their doubts with other Christians, they'd be labeled as "someone's project" or "that person" in church. This makes it clear to me that fear more than intellect got in their way of having a relationship with God.
It wasn't long after giving up on the Old Testament that the rest of the system began to crumble. Rhett even stated that the judgments he was making regarding the Bible's truthfulness were a "linchpin" and he had to decide whether to be all-in or all-out. His intellectual commitments wouldn't allow for a religion that was purely emotional. So, he was all-out.
Slanted Representations
As Rhett and Link started to share their personal stories, they urged the listening audience not to reduce them to theological footnotes, but rather to seek to understand their experiences and reasoning. They understand full well that the Bible teaches the eternal security of the elect, meaning that those whom God has saved will remain saved throughout eternity. So, when guys like me hear of people walking away from the faith, the immediate reaction is, "Those people were never a part of the faith to begin with." Therefore, to get ahead of those retorts, listeners were urged to forsake what the Bible says in order to believe the Rhett and Link story.
This defensive posture led to a very strange and glaring contradiction in the deconstruction narrative, though, when Rhett tried to defend the former reality of his faith. He said Jesus was as real to him as he possibly could be without physically being there and that he had a "very real relationship" with God. To that, of course, I say "Liar, Liar, Pants on fire." This is the reaction they have sought to guard against.
Yet at a different point in the story, Rhett said the most reasonable view of the gospels is that they "appear to be a mix of religious propaganda as well as actual history." Stated plainly: Jesus wasn't and isn't God in Rhett's view.
So could Rhett truly say that he ever had a relationship with Jesus? It's impossible that he could have if the gospels were religious propaganda meant to elevate a person to mythological deity. I'm sure that given a moment to think about it, he'd agree with me. Rhett should be on my side in saying that he never had a relationship with God.
Another point that was brought up by both men in their testimonies was that the Christian worldview is full of unanswerable questions. Their presentation of the secular worldview is one where things make much more sense, that they can now seek honest answers to the world's most difficult questions, and their relationships are stronger than ever. However, they fail to explain to their audience basic truths pertaining to where life comes from, how they are able to trust the logic they use, and why truth matters at all. They exchanged the truth about the most important questions of life for scientific theories that leave them with no actual purpose in life.
In a separate moment, Rhett made a reference to Bart Ehrman and labeled him as "even-handed" regarding his explanations of the New Testament. He also spoke of Christian apologists, claiming that many are smart and earnest, yet blind to truth because of their ideological commitments. This statement is as condescending as anything I could write in response to their stories. But I urge you, reader: Rather than merely taking offense at this gross misrepresentation of competing philosophies, watch Bart Ehrman's debates with James White and Daniel Wallace and see for yourself if Rhett's judgment holds water.
There's a smorgasbord of other contradictory statements that came up in the 5.5+ hours of spiritual conversation these episodes comprised. For the moment, it's sufficient to note that these men did not escape a life of contradiction, as they claim. Instead, they've found themselves in a world of new contradictions that they absolutely will not be able to escape.
In the end, Rhett stated that he is now a hopeful agnostic. Link says he's an agnostic that wants to be hopeful.
Processing and Learning
What is a Christian to think about all of this? I have three takeaways for you to consider.
1. God is the Judge and you are not.
This may seem like a basic truth that shouldn't necessarily be highlighted here. However, this concept was never embraced by Rhett and Link and I'm afraid it's lost on the majority of Evangelicalism. When most people consider God as Judge, it's likely that their minds jump to the throne room of heaven where God alone reigns supreme. That Revelation 4 vision is beautiful and important, but it is not the only concept of God-as-Judge that we have.
In Romans 9, after teaching a very hard doctrine about God's sovereignty in human affairs, the apostle declares, "You will say to me then, 'Why does He (God) still find fault? For who resists His will?' On the contrary, who are you, O man, who answers back to God? The thing molded will not say to the molder, 'Why did you make me like this,' will it?" (vv. 19-20, emphasis added). Rhett wrestled with this concept and ultimately chose to find fault with God.
This led Rhett to believe that faith is something that exists despite reason. In reality, he needs to understand that God exists; therefore, we can reason.
Throughout this life man has no grounds to judge God in any way. God exists, all people know it, and it is to Him that we are all to submit. God, the Author of life and all creation, has given us His inspired revelation that we might know all things pertaining to life and godliness. This means that all men everywhere should repent of their sins and turn to Jesus Christ as Lord, that they might receive knowledge of the truth.
Furthermore, this means that there is no amount of evidence that you deserve. This point is critical. Much of Rhett's story involved evidential apologetics, that is, a mode of defending beliefs based on empirical evidence. He used to be a Christian because he read apologists who provided him with evidence, which, in his estimation, validated Christianity. He is now an agnostic because he read scientists who provided him with evidence that he believes discredits Christianity.
Rhett is not the judge. You are not the judge. God is not on trial. We are not to evaluate the evidence in order to determine whether or not God exists. We are to interpret the physical world in light of the reality of God.
God is, and He is Judge. If we don't start there, we're unable to make sense of anything in this world.
2. The authority of Scripture is foundational to Christian belief and practice.
If you listen through the deconstruction narratives as I have, something you will not hear is an explanation of the role of Scripture in a Christian's life. Sure, the Bible is mentioned several times and judgment against it is certainly expressed; yet, at no point is it explained how it governs the lives of those who believe in Christ. The doctrines of inspiration, inerrancy, and sufficiency of Scripture are never constructed that they might then be deconstructed.
It seems quite reasonable to conclude that these two men never approached holy Scripture with reverence and awe. There's no doubt that they studied it, memorized sections of it, and understood its narrative quite well. But God's truth certainly never took root in their hearts, leading to fruits of righteousness. The authority of the Bible was never a major part of their worldview. They remained in the judgment seat and Scripture was allowed to hang around as long as they permitted it.
Christian: The Bible is your authority. Sola Scriptura. Submit to it!
3. Rhett and Link are blasphemers.
This is a sobering point, but it's one we must reckon with.
God is, and He has revealed Himself. In light of that truth, what Rhett and Link are now doing is blaspheming the name of the one, true and holy God. Consider these examples.
Rhett said that his story ultimately led to the moment when he finally opened himself up to the possibility that he had been wrong about everything in his life. When he arrived at that point, he wrote the following questions in his journal.
"If I don't have to believe that God ordered His chosen people to slaughter men, women, and children by the thousands, then why would I?"
"If I don't want to believe that every religious experience of any person who is not a Christian is ultimately illegitimate, then why would I?"
"If I don't have to believe that anyone who doesn't have a relationship with Jesus (i.e., the majority of people who have ever lived) are going to spend eternity being literally tortured in a fire, experiencing never-ending pain and suffering, then why (no pun intended) in the hell would I believe that?"
In a separate interview about the backlash they have faced since these episodes, the two stated that it's the culture's responsibility to correct God's church about things God's word clearly teaches, particularly on the subject of perverse sexuality. In other words, God is wrong and man is right.
Friends, this is blasphemy. God takes blasphemy very seriously and so should we.
A Brief Final Thought
Our starting points matter. Those points determine where we land. If we believe God is to be judged by our conclusions based on evidence, we will never truly worship Him as Master. We will never reckon ourselves as servants. We will never understand the gospel.
I hope Rhett and Link are broken to the point of repentance. They need God to grant them repentance leading to a knowledge of the truth. They've never known saving faith, and this will need to be God's doing.
But you, Christian, consider this story and my points above as you not only process the Rhett and Link situation, but also the many cases we will hear of Christians "falling away." Many people we know will walk away from the faith. Some of our children will forsake Jesus. We must think biblically about these things.
God is God and we are not. Let us worship Him in spirit and in truth.
Posted by Jeremy Howard
Unknown March 3, 2020 at 12:57 AM
Really enjoyed your application of Romans 9. Good read
Wow - this article really helped me understand how a dear friend of mine "fell away" from the faith. We grew up together, going to the same church and listening to the same sermons. However, as we parted lives in college, he began to question everything he grew up with. He literally hit every step you detailed in numbers 1 through 5 above. He claims he is an atheist, yet he hates God for the pain and suffering in the world. I remember trying to reason with him, but he kept laughing at me and I couldn't help but think, "pearls before swine." I pray for him often, yet have neglected to reach out to him. I care for his soul. It hurts me to see him in that state. I think I should send him a text message...
If you actually cared about your friend, you would still be his friend whether he is "saved" or not. If religion was the only reason you were friends then you were never friends in the first place. Sorry to use your own logic against you. People aren't projects. Listen to people and love people.
"Listen to people and love people."
According to what standard? By God's standard, yes that is true. But what is your objective moral standard?
Rosé December 9, 2020 at 9:13 AM
Agree w/1st Anon. If you can't be friends with someone who doesn't believe in the same ancient text as you, you're a pretty sh*t friend.
To the first Anon - at what point did the original comment poster say that they were not friends anymore? Looks like you made an assumption there.
geoffrobinson March 3, 2020 at 8:28 AM
To be honest, my first thought when I hear a deconversion story is I want to hear more about the person's life. Were they sleeping with someone or wanted to? Do they want to conform to the world?
I think often people latch onto intellectual objections because they want to.
You could just as easily work backwards. I know the Resurrection is true therefore the Old Testament is trustworthy.
I would say as an Old-Earth Creationist who thinks Darwinism is false and Adam and Eve are historical, if you make the age of the Earth the lynch pin on which everything can fall apart if you don't believe in that, you are asking for trouble.
I'm anon. from above.
My friend's deconversion story started when he visited the Creation Museum and could not grapple that God simply created the world in 7 days and then man brought sin to the world. Then, he went off to the Navy and spent time reading Ayn Rand's "Atlas Shrugged," along with Christopher Hitchens, Sam Harris, and Richard Dawkins. He continues to say that "it's not fair to spend eternity in Hell" and that God's judgment is unjust.
geoffrobinson March 3, 2020 at 12:56 PM
Understood. We need a healthy dose of God's Law so we understand what's actually fair and just.
antiemp May 9, 2020 at 3:48 PM
People reject it because it's not real. It's as simple as that. Community and family are valuable, but we don't need mythology to support it. We're growing out of that phase of humanity where we had to lie to ourselves to keep going and face death.
Russ Westbrook February 1, 2022 at 7:44 PM
The authority of Scripture either is- or is not. This applies to all it teaches, including the age and origin of the earth.
Michael Sheard March 3, 2020 at 11:13 AM
It's interesting they came from a CC background which lends itself to producing false converts. The first of the "Spiritual Laws", "God loves you and offers a wonderful plan for your life" simply isn't Biblical. What if my life is already wonderful? What if I try this Christianity and I still suffer? The scriptures are full of true converts who suffered but realized they "were aliens and strangers in this world" not living in a wonderful world.
mary beth shipley March 3, 2020 at 12:46 PM
You're right about that not being biblical however God does have a wonderful plan for our eternal life and it should be re-worded as such!
Michael Sheard March 3, 2020 at 4:41 PM
Yes, Sister, thankfully He does!
Douglas March 3, 2020 at 11:18 AM
Very sobering.
Haha this article did exactly what the GMM thought it would. Instead of truly listening to their stories, the author here jumps out of his boots to assert they were never truly Christians. Do you not think there is a possibility that young children can be led to believe in a false gospel? That's exactly what happened for them. And now they are being vulnerable and open to thinking of the gospel in new ways -- even though it may not fit YOUR systematic theology.
"thinking of the gospel in new ways"
That's certainly a new way to phrase "secular humanism". It seems that you're the one asserting things without backing anything up.
The only thing Rhett & Link realized was that they wanted to both trade God in for secularism, and not have actual Christians wisely discern their fruit. They (and really all people) can't have it both ways.
As a fellow blasphemer, let me introduce you to a concept you've likely never considered: the Christian God, by default, does not exist. It is up to believers to make a claim that demonstrates sufficiently that he indeed does exist. Alvin Plantinga does this philosophically. William Lane Craig attempts to do this cosmologically. You attempted to do this dogmatically. Wildly asserting that God exists and quoting your own supporting Bible to do so is circular, and idiotic. The Quran states Allah exists. The Vega "prove" the existence of Hindu gods. You have to do better than assertions. And you know what's better than faith based assertions? Evidence. And in this article, you present none.
To your second pseudo-point, you may want to read some Biblical scholars who aren't paid to actually believe the stuff they research. I'm sure you'd explain away all of the silly contradictions in the gospels (differing geneologies, birth narratives, death narratives, Jesus's disposition, death narratives, resurrection narratives, etc.) but that really wouldn't even scratch the surface of the problems with the Bible. The only people who can't seem to admit there are problems are people like you who somehow come to the nonsense conclusion that they're inerrant. You're gonna need more than just faith to convince anyone (who is intellectually honest and cares that about being right) of that bold claim.
Third, yes, they're blasphemers. And you, the loving, kind, merciful Christian who claims the authority of the savior Jesus meek and mild, just said they should be stoned for what they say. Nothing makes me less willing to be a Christian or have "faith" like a naive child than quoting violent, unjustifiable Stone Age propaganda.
You may be able to believe things without evidence and you may even consider that a virtue, but I refuse. This article has given me even further reason to doubt; the best thing you could've done would've been to actually refute the arguments and evidence they present with your own. Instead you responded with dogma and judgment. Thank you for once again convincing me that life outside the guilt-ridden, "faith"-based, irrational, and happily violent cult is intellectually, morally, and honestly superior.
Matt March 5, 2020 at 8:05 PM
Why do you hate the God you don't believe in?
And what evidence could anyone give you to believe in the God that says you have enough evidence to believe in Him?
Unless of course, God does exist and has given you sufficient evidence to repent and believe in Him (Romans 1:18-22)
So Ano, I'm not trying to persuade you one way or the other (Sorry, I'm sure you get that alot). But I want to point out a few things. What you are saying is actually very true. There is no way, I repeat, no way for anyone to prove that God exists. Yet, there isn't really any way to prove the evolution theory either. One can say that neither or both exist but no one can prove anything. Yet Christians do tend to try and prove God and faith to other people when in reality it cannot be done. There is always a way to disprove or argue against any earthly or non-earthly (whatever that is) evidence that we humans find. Christians cannot and should not try to prove anything to anyone. It will only frustrate both sides as their forcefullness pushes away people instead of drawing them. More often than not Christians show more pride and arrogance than what one would expect of someone teaching and promoting peace and love. Why wouldn't people shun Christianity and the idea of a God when the people who claim to be his followers are not living out what they teach?
I'm the replyimg annoymous again. Ha. I didnt have enough room.
Furthermore, Christians tend to shove a bible into the face of anyone viewed as needing conversion. Yet a the book itself does not talk, feel, or love. It simply does not have that ability. There were Christians, Paul, Peter and others who were roaming the earth well before the bible as we know it today was created. Even when it was put together, hardly anyone had their own personal bible to read from but that obviously did not put a damper of Christianity. Some were alive during the time before advanced technology and innovations like hearing aids, and braille.Christians cannot say that they were cut off from the kingdom of heaven can they? (Well they can say it but shouldn't).
Ah, Replying Anonymous here again.Sorry. There's a limit on the characters.
You mentioned problems with the bible when really, it's problems with the Christian Community. Christians ought to live out their own faith not force it on others. Even Jesus told his disciples that if people were unwilling to listen that they should spend no more time on them but move on. Yet He didn't say not to love them. He didn't say that they couldn't continue to be a light wihtout succesfully converting the people that they went to preach to. Christians have a hard time with continuing on their way with a cheerful loving heart if they are rejected. Sinful nature at work prompting pride arrogance and so forth. It is not the job os Christians to sufficiently demonstrate that he exists because it is actually impossible. One cannot prove with any of the earthly or nonearthly methods that Jesus Christ existed and stills exists. That is not the job of a Christian. Christians ought to live the life of a Christian by acting as a Godfearing Christian ought. A Christian does not need to do much more than that. You mentioned that a Christian needs more than just faith to convince anyone of God's existence. A Christian's faith will not change someones mind but a Christian's Godly actions might. Note, that it might not that it will. For all Christians who believe in predestination, there is not need to convince a person of God's existence. If a person was predestined then it is God's will for them to become a Christian in His time so other believers need not fret about it. Nothing that a Christian says or does will ever change the mind of a person. Only the Almighty powerful God that all Christians cling to can do that. Christians are to be lights to others at all times and be prayerful while God does the rest.
The person who wrote this article did exactly what Rhett and Link asked him not to do. He jumped to what Christians call a Godly conclusion. In my opinion they were never Christians either but if God has or hasn't called them should be of no importance to a Christian. One should be able to look at a Christian and say..."I see no ill will in them." If a person does think ill of a Christian it ought to be the person's own sin nature not the Christian's inability to be a Godly role model. Christians should be seen as passive and slow to anger but on fire and fervent about their own relationship with the Lord. Yet Christians just like any other person are sinners. Being a sinner causes Christians to present themselves as arrogant, proud, far from loving and terrible advocates of the existing God. Christians hurt their brothers, sisters, and fellow sinners when pride and a lack of understanding are incolved. True Christians are believers from the heart and don't need to prove it. It's when Christians feel threatened and vulneralbe that they start trying to find evidence to back up their beliefs when really, its uncalled for and only gives Christianity (for lack of a better word) a "bad rap." I myself am a Christian, though I know that in many areas I fail to act like one. Yet, I do believe that Christians are called by God himself and are to serve as an encouraging but not forceful light unto our fellow creations made by God.
Replying Anonymous again,
Sorry last one.
As Jesus told doubting Thomas there will be those who believe wothout ever having seen (no evidence) and they will be really happy. Christianity is a heart thing something that no one but you and God has access to in a personal relationship with Jesus Christ. I beg my fellow believers to be just as patient and loving and God has been to us so that those who do not believe will be influenced by our actions and good examples to respect other's views just as we (should) respect theirs. As Christians we're not perfect but ought to strive to be as Christlike as possible until that which is perfect has come.
*Note* Sorry if this was too long and redundant but I find it easier to make your point and reduce misunderstandings by reiterating one's concepts and ideas again and again in a slightly different way.
Ivanion March 4, 2020 at 7:35 PM
Christians are cannibals. They eat their wounded.
BenBRockN March 5, 2020 at 7:51 PM
This was lovingly and wonderfully written, thank you for sharing it.
The only other thing I would add for your readers is this:
"They went out from us, but they were not of us; for if they had been of us, they would have continued with us. But they went out, that it might become plain that they all are not of us."
- 1 John 2:19
It's not loving to call someone who doesn't believe in your fairy tale a "blasphemer." It's negative and is the dark side of mythology.
KP April 22, 2020 at 7:36 PM
Great article...thank you. I'm left wondering how these guys could be on staff with Cru. Has that organization gone so downhill that they have people on staff that really aren't Christians?
Cletus May 2, 2020 at 11:41 PM
I think a lot of times that we Christians can sometimes misinterpret or forget what God truly is to us. God is our Father in Heaven. As any father would to their child, He LOVES us. That is what is most important. No matter what Rhett and Link did, He will still love them. And that also applies to anybody who reads this and everybody who doesn't. We don't have to sit here arguing about what they did wrong. What we can and should discuss is what we can do to prevent such things from ever happening again, and how can we get so many of His lost sheep, His children, our spiritual brothers and sisters, back to His fold.
Nick Swoboda July 10, 2020 at 9:25 AM
Why do people think that preempting a response means defeating the aforementioned response?
If I say, "I bet the police will arrest me if I steal something from that store," and subsequently follow through with the theft, that does not make the police wrong for arresting me. I can't say, "see... I told you they would arrest me," as if that somehow demonizes them for following through with a judgment that is ordered and perpetuated by a particular worldview.
Yet, since Rhett and Link have preempted what the Christian community would say about their eternal salvation, atheists and agnostics find their, (Rhett and Link's), comments to sit in authority over the Christian worldview, as if their prediction of the response somehow makes the response immoral or false.
The logic does not follow.
Additionally, it is hard to claim that you "had a relationship" with a God who you now believe does not exist. We always hear, "Jesus was real to me," from those who apostatize, but their present state clarified that what they have experienced and continue to experience is not the same as what other Christians have.
There is a line in the sand. Rhett even said he had to reconcile that what he believed was wrong, but if that's the case, he also must be honest about the fact that what he thought was a relationship, was never really a relationship.
For instance, my grandmother has passed away, I no longer experience her, but we did have a relationship. My experience proves her existence, it doesn't disprove it.
If I choose to deny that my grandmother has ever existed, I choose to overlook that relationship, yet the relationship, (however deep or shallow), is what proved her existence.
Rhett cannot say he had a relationship with Jesus without proving His, (Jesus's), existence, yet if he now says the relationship was all a figment of his imagination, he proves the author of this blog right. In that case, Rhett never had a relationship with Jesus, he just thought he did.
In the latter case, he has not disproved God by his experience, he has only validated what the Bible says about those among us who leave the faith... they were never really "of" us.
Beachbum1024 November 29, 2020 at 11:07 PM
Well said. I was on staff with Campus Crusade at the time Rhett and Link were and knew them. I can not say that based on that, that these guys had a relationship with Christ or did not have one. You can memorize the bible and know the right things to say and have the "appearance of genuine faith" yet not know Christ personally. With that being said, I am disappointed and sad for them and I still love these guys. However, I am also praying that God brings them to the point of seeing their need for Christ and their need to repent and be saved. Or turn back to Him for a true authentic relationship with Christ.
I think you've missed the mark here quite a bit. As someone who grew up in a religious household, grew up loving and worshipping Christ and then finally, after many years, realized that it was all a lie and a scam, I came to many of the same conclusions that R&L and other people who leave christianity do as well. I begged, I cried. I prayed for weeks and weeks for God to just give me a sign that he was there and that he loved me and that he wanted me in his fold, but I never received anything. And I realize in YOUR blind faith that "there is no amount of evidence that you deserve." But I think that's a commonly used copout in religion and I think we DO deserve to know that God supposedly loves us.
And as far as your narrow-minded, hate-filled views on
"popular forms of immorality (LGBT issues, abortion, etc.)," get a fucking life. Homosexuals are just normal human being like your Nana or your pastor or your children. If your child was born gay, would you stop loving it? Would you kick it out to live on the street? That wouldn't seem very "christian" to me.
The Bible is a thousands year old book that has been re-translated time and time and time and TIME AGAIN. Most of the actual language in there doesn't even exist anymore.
More than anything, the Bible is a book of fables. Precautionary tales that teach you to be a better person on this earth and kind to the people around you. And isn't that what God, if he's actually out there, would want?
Jeremy Howard December 9, 2020 at 10:12 AM
"If your child was born gay, would you stop loving it? Would you kick it out to live on the street?"
Children are people made in the image of God. Please don't refer to a child of mine as an "it"; our preferred pronouns correspond with reality.
August December 24, 2021 at 1:56 AM
Holy sht. That's world-class ignorance on full display. I've heard it's bliss. ;-)
Kenn and I seek to help us all keep doctrine in its place.
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