Greg Johnson of Rubicon Crypto on The 5 Things You Need To Understand In Order To Successfully Invest In Cryptocurrency

Go Long or Go Home — The final thing that we encourage at Rubicon Crypto to both our clients and everyone in the community is to have the longest time horizon in mind for the crypto portion of their portfolios. This industry, despite all the recent attention and headlines is only in its infancy. In order to have the best opportunity to realize the outsized gains that many experts believe are possible from investing in crypto and digital assets, you must, must be prepared to “go long”. For every short term, overnight crypto success story there are countless others who lose in a big way trying to time this market. Go long or go home.

Over the past few years, the Cryptocurrency industry has been making headlines nearly every week. Many people have gotten very wealthy investing or leading the cryptocurrency industry. At the same time, many people have lost a lot investing in the industry. In addition, more people have been scrutinizing the ecological impact of crypto mining, as well as its potential facilitation of illegal activity. What is being done and what can be done to address these concerns?

In this interview series called “5 Things You Need To Understand In Order To Successfully Invest In Cryptocurrency” we are talking to leaders in the cryptocurrency industry, as well as successful investors, who share insights from their experience about how to successfully invest in Cryptocurrency.

As a part of this series, I had the pleasure of interviewing Greg Johnson, CEO and Co-Founder of Rubicon Crypto.

Prior to co-founding Rubicon Crypto, Greg was a CEO and senior executive at Fortune 500 and start-up enterprises in the financial services, insurance and wellness industries including at American Express, Ameriprise Financial and Pulse Centers. After becoming one of the youngest CFPs in the nation, he would then go on to assume a progression of financial planning, wealth management and insurance leadership roles that included serving on the board at RiverSource Life of New York. Greg has earned degrees from The American University and Emory University Goizueta Business School, is a serial mentor and advises multiple startup ventures, and was recently appointed to the prestigious Atlantic Council GeoTech Center in Washington, D.C.

Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit. Can you tell us a little about your backstory and how you grew up?

Sure. For the balance of my early life until college, I grew up and lived in Danvers, Massachusetts, a small town about 15 miles north of Boston that personified what most people think about and envision for what would be a stereotypical Northeastern suburban town. For those familiar with the movie the “Sandlot”, my early childhood seems in so many ways the New England clone of the California setting in which the film takes place. Baseball was king, and the Boston Red Sox ruled the sporting universe of my childhood. My parents, who adopted both my sister and I as infants, were selfless and sacrificed a great deal to give us every advantage one could hope for. Not the least of which, were the examples they set for us with respect to work ethic and the entrepreneurial spirit.

Is there a particular book, film, or podcast that made a significant impact on you? Can you share a story or explain why it resonated with you so much?

This is a really tough question because my life has been greatly influenced by film and literature. But, as a predominantly visual learner, I am going pick a relatively recent film, Michael Clayton, starring George Clooney. To me the film falls into the same hallow ground as The Shawshank Redemption, films that had only average box office returns in their theatrical release due in no small part to their sub-par trailers, but have proven more than worthy of watching repeatedly over and over again. Clooney is superb as the title character, and the film itself is full of stellar, Oscar worthy performances by Tilda Swinton, Tom Wilkerson and the final performance of the great Sidney Pollack. Not only does the film build the suspense in masterful fashion by weaving in just the right dose of backstory, it has one of the best choreographed endings of all time. Yet, what has so intrigued and captivated me about this film is that it contains what seems like an endless number of ethical dilemmas layered throughout the plot, dilemmas that range from the simple white lie variety to those that are quite literally life and death in their scope. So many in fact, that I have used the movie on multiple occasions as the inspiration for a leadership development class I have led, not surprisingly, on the subject of ethics. Oh, and the film also provides perhaps the best roll to credits sequence at the very end of the movie where Clooney doesn’t even utter a word for several minutes. Simply, brilliant!

Is there a particular story that inspired you to pursue your particular career path? We’d love to hear it.

Let’s take a trip in the time machine to 1989 to my final semester as an undergrad at American University and a course that I took almost by accident on personal finance. At that time, I remember thinking that I wanted to eventually become an attorney and thought if I were to ever make some money, I ought to know a bit about what to do with it. Its funny, although I cannot remember the name of the professor who ended up having such a profound impact on my decision to enter the financial planning industry, I can clearly recall how he resembled the actor Bill Bixby from the 80s TV show “The Hulk” fame. Anyway, what also resonates with me about that professor was the uncanny way in which he foreshadowed virtually every major evolution that would unfold in the retail financial services industry over the next three decades…the importance of the CFP designation, the migration away from transaction models to assets under management, the future of comprehensive financial planning and the role of fiduciaries.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

Actually, it’s hard to pick just one, but a fateful decision I made early in my career with American Express Financial Advisors to visit my parents’ home prior to going to a meeting with a nearby client stands out as both the most embarrassing, and in retrospect, the funniest. This story takes place circa 1992 in a world that was largely devoid of mobile phones. While at my parents, I decided to use their phone to follow up with a lead that I had been pursuing. In the middle of a phone conversation where I stood in my boyhood bedroom using a rotary phone with what was probably a 30-foot cord, my mom proceeds to pick up a phone from another room and unceremoniously announce, “honey, dinner is ready” in the middle of my pitch. At the time I was mortified and awkwardly stammered though the rest of the call to the very obvious amusement of the Amex cardmember I was speaking to! As I look back at that memory so many years later, I view it as a reminder of one of the most important lessons in business: do your best to always maintain a sense of humor, and of course when appropriate, not take yourself too seriously.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

For me, it is easily my wife of almost 30 years, Caroline, who will probably not be my wife of 31 years if she were to see this in print! At the very beginning of my career, she afforded me the crucial help I needed in my preparations for the rigorous securities examinations, replete with customized handmade flashcards. She had endless patience during all the early years of 80-hour weeks which left us only enough room for the fine network TV programming options for our weekend entertainment. And, perhaps most of all, I was the recipient of her unwavering confidence in the CFP practice I was building, despite the numerous setbacks and disappointments that were inherent to the business. All I know is that without her consistent encouragement and support over the years, there is no way I would have survived, let alone excelled in the industry.

Are you working on any exciting new projects now? How do you think that will help people?

Actually, I have never been more excited about a professional project than what my co-founders and I have built and launched earlier this year with Rubicon Crypto. We created a crypto asset management model that is all about delivering a heaping dose of common sense into the crypto world that has been largely devoid of it. Our portfolios bring the old fashioned, yet still not out of fashion notions of active professional management, diversification and suitability to the crypto conversation. And, while we certainly do not have the market cornered on all the good ideas, we do believe that we have a very unique ability to connect the dots between the traditional and crypto investment worlds for both clients and financial advisors alike. If anything, what we have learned this year is that we have vastly underestimated the demand for common sense crypto!

Ok super. Thank you for all that. Let’s now shift to the main focus of our interview. The cryptocurrency industry seems extremely dynamic right now. What are the 3 things in particular that most excite you about the industry? If you can, please share a story or example for each.

Perhaps more than anything, what excites me about the crypto industry is the notion that despite all the relative hype over the past couple of years, the industry is in my view barely into its infancy! I believe that the world in which we live will only accelerate its migration to the digital realm, and my sense is that the present and future generation of gifted coders, computer engineers and cryptographers are only just beginning to reinvent the world. Second, and rather selfishly, I derive a tremendous amount of personal satisfaction and intellectual stimulation that comes from working directly in the blockchain, crypto and digital asset space. Although I am grounded by a professional foundation that comes from a couple of decades in the TradFi or traditional financial world, the creativity and vision for the future that is being orchestrated in front of our eyes is breathtaking. Third, as a lifelong fan of business non-fiction, tales of business disruption and the companies and leaders that have engineered such tales, have always intrigued me. Given the disruptive power that blockchain and crypto technologies could potentially have to the banking and financial world, industries where just their transaction and administrative fees alone accounted for over 2% of the world’s GDP at last measure, I am more than just intrigued. The decentralized finance industry or DeFi, is at this very moment, challenging the primacy of some of the most established industries and business models in the world. No matter where you fall on crypto and digital adoption spectrum, the next few years are going to be some of the most interesting and potentially disruptive in the history of modern banking and finance.

What are the 3 things that concern you about the industry? Can you explain? What can be done to address those concerns?

What, only 3? In all seriousness, I have a number of concerns but allow me to highlight the following: investor suitability, gamification and social media influencers. Let me begin with social media and its influencers. Admittedly, social media has become an easy target for just about anything that is wrong with world, but in this case, if the crypto shoe fits! No one really needs another person to be preach to them about the perils of social media, but the social media platforms and those countless influencers that monetize on these ecosystems have been steadily treading into the world of investing. The blurred lines that are created via social media and the celebrity culture that now has an outsized effect on American consumer behavior, is having a more than concerning impact on the investing decisions of millions. Nowhere is this truer than with respect to the crypto industry. Second, in recent years, there has been an explosion of popular mobile and on-line trading platforms and exchanges that are largely built with “gamification” at their core, technology that uses precise algorithms to increase the likelihood of platform engagement and ultimately trading behavior. And when combined with social media influence and sophisticated algorithmic gamification, traditionally accepted norms about suitability and risk tolerance are cast aside and leave many investors far more exposed to portfolio risk than they realize.

What are the “myths” that you would like to dispel about cryptocurrency? Can you explain what you mean?

One of the bigger myths about the cryptocurrencies that needs to be dispelled is the notion that you cannot have a currency of any value unless it is backed by a sovereign nation and its government. Well, I am fairly confident that if you ask residents of Venezuela or Argentina, or dozens of other nations that have experienced periods of hyperinflation, about whether or not they think it’s a good thing that their national money is backed by the government, the answer may not be fit for print. The properties of money: unit of account, store of value, medium of exchange, and lest we forget, the all-important social contract, have often existed outside of the narrow definition of national currencies. Some might argue, including yours truly, that modern corporate rewards platforms such airline frequent flyer programs can and do serve as de facto currencies.

How do you think cryptocurrency has the potential to help society in the future?

While not a new notion, the global population of the “unbanked” stands to be one of the first long-term winners in society from the advancements being made in the industry. In the developed world, we often take for granted the simplest notions of having a banking relationship, and yet, you would be surprised to learn just how many in United States would qualify as unbanked. And actually, there have already been some early signs of this positive impact coming to fruition. In Africa, a region with some of the highest population rates of unbanked persons, there has been a level of crypto adoption and utilization that ranks as some of the best in world.

Recently, more people have been scrutinizing the ecological impact of crypto mining. From your perspective, can you explain to our readers why the cryptocurrency industry is creating an environmental challenge?

This is an important and timely question. The roots of these environmental concerns are largely because the two largest cryptos in the world, Bitcoin and Ethereum, rely almost entirely on the consumption of electrical power for both the “mining” and the operation of their respective networks. More specifically, they use what is called a Proof of Work consensus protocol that is particularly energy intensive. Yet, just as the subject of blockchains and crypto is complex and nuanced, the subject of their environmental impact is also just as nuanced.

From your perspective what can be done to address or correct these concerns?

Simply put, more education is needed that focusses on the totality of this topic. Again, there is no getting around the fact that the industry consumes power (ah, so does virtually every industry), but arguably, it does so with one of the best consumption rates of renewable electricity of any sector. Not to mention, aside from the use of renewables, a growing number of responsible crypto miners use electricity from the world’s grids that is off peak, essentially electrical power that has already been generated and is often otherwise wasted when not consumed. While it makes for easy headlines given the challenges our planet is facing, when you dig deeper into this important subject, things quickly become less black and white, and a far deeper shade of grey appears. It’s also important to note, that many of the new entrants and incumbents in the crypto world, including Ethereum itself, are actively operating or developing their models to utilize Proof of Stake, consensus protocols that require only a fraction of the energy that is now being consumed. Stay tuned.

Recently, more people have been scrutinizing cryptocurrency’s impact on illegal activity. From your perspective, can you explain to our readers why cryptocurrency, more than fiat currency, is seen as an attractive choice for criminals?

Well to begin, I am not sure that I fully agree with the premise of the question as most law enforcement experts would argue that cash is still king in the land of criminal activity. However, there is no question that the use of crypto for illicit criminal activity is on the rise, both in terms of size and scale, and has understandably dominated the news as of late. By default, advancements in technology have historically, and will always advance at faster rates than the regulatory and law enforcement bodies. Obviously, the fast-growing worlds of blockchains and crypto are no different, and the criminal element within the tech community has certainly taken full advantage of their head start.

From your perspective what can be done to address or correct these concerns?

Fortunately, a number of things. First of all, it would be important to recognize that law enforcement and private ransomware hunters are not only catching up to the criminals, but some would argue they are laying the foundation for wide scale crypto sting operations and already employing the blockchain equivalent of the exploding dye canisters used to destroy the bounty taken by traditional bank robbers with increasing effectiveness. Of course, there will always be criminals that look to exploit the weak and vulnerable individuals and businesses in our society, but it’s not as if we cannot do more to protect ourselves. I think what frustrates many on this subject, is that much of the criminal activity that we see in the headlines could be mitigated, or outright avoided, if we only practiced the well documented safe guards with our connected tech devices, both at work and at home. Nothing glamorous or new here, in fact it’s a bloody broken record you have probably heard many times before: employ best practices in password strength, multi factor authentication whenever possible, and have better vigilance for malware in arrives the form of emails, texts and downloads. To be fair though, there is another major wild card on this topic, one that has to do with the countries that allow cyber criminals to operate openly and freely within their borders. While the Russians deservedly get a great deal of attention, they are certainly not alone in the league of nations willing to turn a blind eye or outright encourage illicit cyber activity within their borders. As with many things having to do with statecraft and diplomacy, much of the work here has to take place behind the scenes to influence these nations to engage in policing these matters. Not to sound cynical, but I think we all must accept that given the world of geopolitics, there will always be nation states that view the facilitation, support and harboring of cyber criminals to be in their best interests. Bottomline, crime has and always will exist in our society, but we have the ability to protect ourselves to a far greater degree from cyber criminals than we currently are.

Ok, fantastic. Here is the main question of our interview. What are “The 5 Things You Need To Understand In Order To Successfully Invest In Cryptocurrency?” (Please share a story or example for each.)

1. So, let me begin with a foundational observation about the state of the crypto industry. In 2021, questions about the long-term legitimacy of the crypto currency and digital asset space should no longer exist. In fact, the signs of crypto legitimacy have been hiding in plain sight if you know just where to look. When you see trillions of dollars pouring in from private, institutional and sovereign sources over the past few years, that should have ended the questions. When you see companies with household names make significant purchases of crypto for their corporate treasuries, that probably should have ended the questions. When you witness high profile CEOs and executives at global banks simultaneously criticize the industry and then make billion-dollar direct investments into the industry, capture blockchain patents, and scoop up the best crypto talent…the hypocrisy aside…that should have ended the questions about legitimacy. Yet, in 2021, perhaps more than any other development, the inclusion of only a few paragraphs out of the over 2,700 pages of the 1 trillion-dollar US Infrastructure Investment and Jobs Act, may have done more to legitimize the crypto industry that all the other observations I have just made. Essentially, the inclusion of crypto language within the infrastructure bill was to ensure that the industry pay its fair share…$28B to be exact…to offset the cost of the Bill. Bottomline, you do not include ill-legitimate businesses in your bipartisan legislation, and, you especially do NOT tax an industry that lacks legitimacy. Investors should understand that this does nothing to change the inherent risks of investing in the broader crypto industry, but any questions about the legitimacy of these crypto currency and digital asset classes should have died once and for all in 2021.
2. Common Sense and Rational Exuberance are still your BFFs when it comes to Crypto Investing. Common sense should always matter with any investment related decisions, but having common sense and rational exuberance about the worlds of blockchains, cryptocurrencies and digital assets is exponentially more important. Even though common sense today is rarely common, nor sensical for that matter, most know what it is. Rational exuberance is the lens we look through at my firm Rubicon Crypto that borrows from the first celebrity FED Chairman, Alan Greenspan, when he commented about the “irrational exuberance” that had taken over investors and the stock market all the way back in 1996. When we talk to investors, we try to remind folks not to focus on the shiny objects like sensationalized news and social media, cool and flashy looking crypto token graphics, and perhaps most of all, the paid…directly or indirectly…influencers. Instead, we try to remind everyone that while it’s okay to be excited about the industry, that excitement should be grounded with “rational exuberance”. Investing in crypto, at its core, is still all about the “use case” of any potential crypto or blockchain technology. In other words, what does this blockchain based project do for the world? For the crypto ecosystem? Who are the founders and key members of the leadership team? What are the tokenomics? The rationally exuberant “pro tip” that we always advocate for at Rubicon Crypto is that for the vast majority of investors, only 3–5% of one’s total investment portfolio should be allocated to crypto. Obviously, factors such as age and time horizon can impact that ratio, but better to enter an industry that we believe is still at its infancy with a healthy dose of common sense and rational exuberance.
3. Know Thy Self: Do you Suffer from Risk Tolerance Split Personality Disorder? Well, now that I have made the case that the industry is legitimate and not going anywhere, it is absolutely critical to remember that the risk and potential for extreme volatility that is associated with crypto is also not going anywhere. Let me then make mention of a rarely diagnosed syndrome, RTSPD or Risk Tolerance Split Personality Disorder, that is wreaking havoc on investors in general, but especially in the crypto space. So, to be clear, that was a modest attempt at levity. There is no actual RTSPD syndrome identified by the American Medical Association, but in practical application, I have witnessed first-hand that this is a condition that millions of investors suffer from. Simply put, it is when otherwise conservative risk tolerance investors get lured into a more aggressive portfolio composition when the market is on a bull run. They tell themselves all along that they can handle the risk and understand the potential for volatility, only to be the first to overly panic when the bears come to town. Almost inevitably, they jump out of an investment at the first signs of negative returns, the same investment strategy they insisted they were comfortable and happy with only a few weeks earlier. And in doing so, they have only served to guarantee their losses. Again, know thy self. This is why we firmly believe that the overwhelming majority of investors should only have 3–5% max of their overall portfolio allocated to the crypto space.
4. Avoiding The Hidden Influence of Gamification & The Not So Hidden Influence of Influencers. Perhaps nothing has impacted the investment world more than the growing presence of gamification embedded within popular trading platforms and the exponential presence of social media and its influencers. These dual threats are engineering exponential profits at the institutional level by driving exponential trading behavior at the individual level. Not surprisingly then, gamification along with establishing clearer regulatory guardrails for the crypto industry, are arguably two of the highest stated priorities of the US Securities and Exchange Commission. Gamification combines the human behavioral science long perfected by the legalized gaming industry with what the tech industry has lovingly self-described as their elegant algorithms, to drive consumer trading behavior. Remember, exchanges and on-line trading platforms make money regardless of whether consumers do, and, because of the inherent volatility that will be a part of the crypto space for the foreseeable future, unknowing investors can be even more vulnerable. And while this should be obvious, never forget that influencers on social media get paid directly or indirectly for their influence. We encourage everyone to please keep that in mind before following “influencer” advice for anything, let alone your investment decisions.
5. Go Long or Go Home. The final thing that we encourage at Rubicon Crypto to both our clients and everyone in the community is to have the longest time horizon in mind for the crypto portion of their portfolios. This industry, despite all the recent attention and headlines is only in its infancy. In order to have the best opportunity to realize the outsized gains that many experts believe are possible from investing in crypto and digital assets, you must, must be prepared to “go long”. For every short term, overnight crypto success story there are countless others who lose in a big way trying to time this market. Go long or go home.

What are the most common mistakes you have seen people make when they enter the industry? What can be done to avoid that?

Two words: irrational exuberance. Far too many people have crossed this new digital divide and invested into the crypto space with wildly unrealistic expectations for overnight success, as well as, the true risks they were taking with their investments. This has often been compounded by inexperienced investors who leveraged their crypto positions on many well-known exchanges without bothering to read the fine print. Perhaps not too surprisingly, they end up finding out that the wrong swing in price of a crypto they have leveraged could just as easily lead to forfeiting the leveraged tokens as earning the alluring high yields that had attracted them in the first place. These are just a couple examples that fuel the chorus of voices that are clamoring for greater regulation in the industry. While enhanced and clear regulatory guardrails are inevitable and warranted, in the interim, the industry must do a better job working to educate investors, and frankly, all stakeholders that are now getting involved in the community.

Do you have a particular type of cryptocurrency that you are excited about? We’d love to hear why.

Given my role as CEO of Rubicon Crypto, I must refrain from mentioning any specific token or project, but on the whole, I am personally very excited about the nexus of blockchains and the gaming community. There are already a number of thriving gaming projects on the blockchain that have been the birthplace of innovation, innovation not just in terms of technology, but also with respect to the evolution of new commercial models and the potential appreciation of their respective tokens.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. :-)

Now more than ever, let us try our best each day “to seek first to understand, then to be understood”.

We are very blessed that very prominent leaders read this column. Is there a person in the world, or in the US with whom you would like to have a private breakfast or lunch, and why? He or she might just see this if we tag them :-)

Its funny, because until very recently I would have definitely given a different answer to this question…but, for me, it would be former president Barack Obama. While I did not vote for him in either presidential election and our politics do not align on several fronts, but after watching the recent HBO documentary series on his life, I have a far deeper appreciation for both the unprecedented leadership challenges he faced that were unique to his presidency, but also his gifts for communication and seemingly limitless supply of emotional intelligence.

Thank you so much for these excellent stories and insights. We wish you continued success and good health!