It’s time to talk about Ethereum (Cryptocurrency).
Listen to the podcast here
The Next Trillion Dollar Coin?
I’m excited to be with you guys. I realized getting back from this little family vacation that I have not yet talked to you guys about an important topic. I’m 27 or 28 episodes in, and I haven’t talked to you guys about the next trillion-dollar coin, probably one of the most valuable financial assets that you can own next to Bitcoin, the next trillion-dollar crypto coin. For those of you that are familiar with the cryptocurrency space, you know what I’m talking about. Let’s cover that in a second.
Our Michigan Adventure
I’ve got to give you a little recap of the family vacation that got back from last night. Normally, we ran a lake house for a week in the summer and go out pontooning. This time, we elected for the road trip, hotel hopping. We went up to Northern Michigan, and it was awesome. I enjoyed it. We went to an amusement park called Michigan’s Adventure. It’s got water parks/regular land rides. It’s got this super cool ride called the Thunderhawk. It’s over in Muskegon, Michigan. It’s on the West side of Michigan. That is way up there with Cedar Point, even better than the Raptor.
If you’ve ever been to Cedar Point, you’ve got to ride the Raptor. It’s probably the smoothest best ride at the park. Thunderhawk, that’s serious. It’s similar to that. Anyways, we did that and hit the Sleeping Bear Dunes. You could go for miles up these dunes, incredible view, and then onto Boyne Mountain, our favorite winter spot where we do skiing. The first time we hit in the summer, we did mountain biking and hiking. I’ve got to stare at the golf course and not play because I’m with my kids.
From there, we went on to Mackinac Island, took the ferry, and did the touristy thing. Kids went around on the island on their bikes and then bought some fudge and then got bored and came back home. That was our trip and it was incredible. If you guys ever want to take the fam up on a cool experience, Northern Michigan has a lot to offer and beautiful so many things to do. It is an awesome adventure during the summer with your fam.
Kara and I were driving home. All the parents that had kids that were little like 2, 3, 4, 5-ish were like, “They all look miserable. They did not look like they were enjoying themselves.” It’s maybe something when your kids get a little bit older, but they’re not too old to where they don’t want to hang out with you yet. Overall, I would say great experience in terms of with the fam, long lines, super short staffed everywhere we went.
That part sucked because people can’t find staff because everybody is getting unemployed from what I heard. I don’t know. That doesn’t make sense to me that people don’t want to go back to work. If they’re getting paid to not work, I don’t know. I can’t fault them too much. It’s a system problem right there. Anyways, overall, 28 times that my family annoyed me. I counted them. I lost track. It’s probably much higher than that, but I do always tell them, “Someday, I am going to be sitting here bored, wishing and reminiscing about how much you kids annoyed me.”
The Next Trillion Dollar Coin
With that, let’s get into one of my favorite investments. I can’t believe again that I’m this far deep in the show and I haven’t hit on it, but I realize, as the price is going up, I better start talking. I better hit on this in a show before the price goes beyond the buy-up to range. That’s Ethereum. I love Ethereum. The highest allocation of my funds in the cryptocurrency space is in Ethereum by far. I don’t know, maybe 50% and probably because I have a lot of mining equipment, which I don’t even know how it works, to be honest with you.
I have a smart guy named Adam whom I’ve partnered on various tech projects over the last few years that knows what he’s doing. I put up the cash, he put up the knowledge, and then he gets a little percent off the top, and then I get the Ethereum that’s mined out of that. Somehow the computers solve some type of complex puzzle, or I don’t know how it works honestly. I put up the money and I trust him. He knows what he is doing. About 1.5 Ethereum comes out of there into my account per month. I would like it to be more, but it’s not bad.
Over 50% of my total crypto portfolio I believe is in Ethereum. Maybe not that high, but pretty darn close when you count the crypto mining. I want to talk to you guys about this. It did pull back quite a bit off its all-time high. It got up to 4,300, went down to 1,700, and then it’s climbing back up. As I record, I’m right around 2,700. The guy that I subscribe to and value his research, Teeka Tiwari of the Palm Beach Group, believes Ethereum will count itself among the world’s most valuable financial assets.
Here’s what he said. Let me make that more concrete. “Ethereum will likely be more valuable than shares in Facebook, Amazon, Apple, Google, and Microsoft.” That’s a bold projection. That’s why he predicts Eth will be the next crypto to reach 1 trillion. That is probable that it will be the next trillion-dollar coin. Anybody who’s on the Dogecoin train to a trillion, you need to reexamine the crack that you are on because that is not happening.Ethereum will likely be more valuable than shares in Facebook, Amazon, Apple, Google, and Microsoft. Click To Tweet
The Go-To Platform
Ethereum is going to, over the long haul, crush Dogecoin and that stupid meme coin joke of a cryptocurrency that it is. I don’t mean to offend anybody. It doesn’t have the long-term value and usage that Ethereum has. Let’s talk a little bit about it. The next stage of software development that’s happening or will happen but it is already happening on the blockchain, not the traditional internet.
Ethereum is the world’s most widely used blockchain development platform. Think about it this way. Microsoft was the world’s most popular PC development platform in the ‘90s, and then Google’s Android and Apple’s iOS are the most popular mobile app development platforms now. They use those platforms to build their apps on top of them.
Ethereum is and will continue to be the go-to platform for blockchain development projects. It sits around a $316 billion market cap. I, Teeka, and lots of people believe that Ethereum will more than double over the coming year. The buy-up recommended price on Eth is up to $5,000. Once it hits over $5,000, it’s probably not safe to buy it because you are buying it at too high of a price.Ethereum will more than double over the coming year. Click To Tweet
Although we do believe it’s going over to 10,000 probably within the next several months, crazy market volatility could happen. That could certainly not happen and then you bought in too high. I do believe that we could see e reaching $40,000 per token but that’s probably several years away. Let’s be aggressively getting as much as we can up to that $5,000 buying price.
I’ll be honest, when it started hitting over $4,000, I stopped buying, I’ve been buying up to about $3,000, consistently adding on. It dropped from $4,300. When it dropped back to $2,700, I started buying and then it drops down to $1,700. I’m like, “Shit.” I wish I would’ve waited, but we don’t know. We don’t have any crystal ball.
I wasn’t upset. I knew that it was going to climb back up past my buy-in price. I know this coin and its value is long-term. I wasn’t all that upset. the only part of me was like, “I could have bought more Eth per my money.” I wasn’t worried about it long term in terms of my losing money. It was only a short-term loss that I took. Overall, I’m way up on Eth because I started buying it back when it was $500 per coin. Hindsight 2020, why didn’t I buy way more coins back then? I have a lot of hindsight 2020 past investments that I wish I would’ve gone a little bit more aggressively on.
The Network Effect
Think about this. At the time of this recording, Ethereum hosts over 2,500 applications on it, the most of any blockchain. There are 2,300 active developers currently working on the Ethereum network. The closest competitor has 400. This is what creates what’s called a network effect that attracts even more projects to Ethereum. Think of the network effect like this. For those of you that remember the fax machine, anytime anybody asks me to fax them something, I can’t help it. I’ll too sarcastic. I say, “Yeah, let me fire up my flex capacitor and I’ll be happy to fax you over something.” Who’s faxing nowadays? You scan and email things.
Anyways, when there was one fax machine, there was no value to the fax machine because you couldn’t fax anybody. When there were two, the value went up. As it hit three, the value went up even more. As soon as everybody had a fax machine, that was the network effect. Fax machines became that much more valuable. Once everybody got a scanner and they could scan an email and realized that was more convenient and easier to use, then as scans started to grow in popularity, that created a network effect for scanning.
This is why Ethereum’s network effect is so strong and that’s why we’re seeing demand for the underlying Ethereum crypto. There are two things that are about to happen that are going to skyrocket the price of Ethereum. We’re seeing some major demand as more users compete to use the network. The number of daily transactions on the network reach to record. I have 1.7 million last month. As more users compete to use the network fees spent on these transactions all reached also reached a record high of 70 million per day.
Although it’s pulled back a little bit but still not too far off that, all of this demand is coming at a time when we’re about to see a major reduction in the incoming supply of Ethereum. This is basic economics that I learned in high school that was valuable. When demand increases while supply decreases, prices have no option. They will have to go up.
Drastic Reduction On Ethereum
In the coming months, the two changes to Ethereum’s code that are going to drastically reduce the amount of new Ethereum coming out of the market are happening as we speak. That’s when EIP-1559 upgrade. Currently, Ethereum fees are based on the amount of traffic on the network. When traffic is high, the miners like Adam and me can charge more to process each transaction.
The EIP-1559 upgrade is going to burn those transaction fees paid by network users instead of sending them to miners’ payment. This new base fee model will lower fees and speed up transaction times for network users, which is a big complaint that people have about Ethereum. It’s too slow and the fees are too high. In 2020, there were 8.4 billion in fees over a year. What happens when over 8 billion worth of ETH disappears from circulation each year? Prices are going to go parabolic. That means explode.
We’ve seen similar gains during Bitcoin halvings. That’s not the only supply shock coming to Ethereum. It’s also transitioning from a proof-of-work protocol to a proof-of-stake protocol. In the proof-of-work protocol model, miners use powerful computers to secure the network. It sounds like I know what I’m talking about when I mine crypto.
They solve complex math problems to validate transactions on a block. The first miner who solves the problem earns the block reward. Bitcoin is an example of this model. Proof-of-stake miners validate transactions by staking tokens on a block. The network chooses the miner who earns the root based on the number of coins they own and some other factors.
Since the proof of state networks don’t rely on warehouses full of mining equipment, they’re less expensive to run. These networks can issue far fewer tokens to reward miners for securing the network. This is the critical part. You guys got to stay with me right here. Under its current proof of work system, Ethereum’s inflation rate is currently 4% per year. That’s the amount of new ETH that it’s creating each year to compensate miners. When it switches to the proof-of-stake model, likely by 2022, it will drop to less than 1% per year.
The Time To Buy Is Now
Think about this. Reduction in the amount of new Ethereum is going to be coming onto the market. When you combine the EIP-5059 upgrade with the switch to proof-of-state consensus, you get a halving-like event that could be life-changing for ETH holders. That’s why Teeka feels comfortable increasing the bio price of ETH in his Palm Beach letter portfolio to $5,000 despite its recent pullback all the way down to $1,700 from $4,300 high. I’ll like to call you friends because you are my friends. You guys send me great messages on Instagram that warm my heart.
Friends, you still get a chance to get on the ground floor of what will become the most valuable financial asset in the whole world. Seize this opportunity. You guys cannot wait. You guys got to get some ETH exposure if you don’t have any. If you buy it at $2,700 or $3,000 or wherever it’s at, when you listen to this, don’t sweat it. If it drops down to $2,000, $1500, or $1,000, if something crazy happens, do not sweat that. Don’t stare at it. Don’t worry about it.Ethereum is the most valuable financial asset in the whole world. Seize this opportunity right now! Click To Tweet
This is a 5-year to 10-year play to where you can potentially move the needle on your net worth. You got an asset that’s going to be valuable. There are lots of volatility in crypto. Volatility is the price you pay for outsize gains in this space. You don’t need to risk your current lifestyle or a better one by doing this. Don’t do anything that’s not comfortable for you but take a small allocation and pop it in here.
You guys can go to Coinbase. Open up an account right there. You can purchase Ethereum. That’s an easy way to do it. It doesn’t take long. It’s user-friendly. If you want to though, you can stake it, which is essentially, you’re locking up your Ethereum. If you’re going to hold it for a long time, which is what I’m doing, then you can stake it and then you can earn more interest payment on it.
I like Nexo. Nexo.io is where I set up an account. I transferred all my Ethereum into that account so I can earn additional interest on it. That’s working out well. It’s an easy way to generate an additional stream of passive income while you’re holding it. I like that play. I’m going to dive more onto a future show shortly on how to stake your crypto and earn interest in passive income on it because this is a pretty important subject. While you’re holding it long-term, you can continue to generate additional income streams off of that asset class.
You guys want to follow me on Instagram. I wanted to tell you I’ve got on that particular platform. If you go to Instagram, Indestructible Wealth is my username. Check my Story if you want to get the behind-the-scenes, me with my fam, being super goofy, immature, lots of, “That’s what she said,” with my wife, all kinds of colorful language probably even more so than what I do on this show. That’s a great way to follow me.
It’s A Long-Term Commitment
I do Q&As on there as well. If you’ve got questions, you can ask them right through the Story. Any questions too, you can ask me in a direct message on Instagram. Usually, I can answer them there, or sometimes I take them and answer them so everybody can benefit. Post a lot of indestructible wealth in your life. You probably don’t get enough on this particular show.
Hopefully, this helps clear up a little bit more about Ethereum. If you still don’t understand it, you’re still confused, don’t buy something because I tell you to. That’s never good. You want to understand what it is you’re getting into. You want to understand any type of asset that you’re buying and don’t buy anything though that you’re not prepared to hold for at least five years.
My hold period is always a decade, and that’s whether I’m starting a new business like this. This is a ten-year commitment. If I’m going to buy crypto, I’m holding it for ten years. That’s my plan anyways unless something becomes self-evident or changes that I need to pivot. I’m holding stocks for at least ten years. That’s always the plan. Short-term volatility can shake you off of a great asset that you’re going to regret later that you sold it off because maybe the price dropped suddenly or whatnot.
You don’t want to be that type of investor. You want to be a long-term thinker, a long-term holder. You do your research. You understand what you’re buying. You put your money in, and then you’re prepared to hold it for a decade. That’s the way that you’re going to make long-term great returns. Go do your research. Do some additional digging. There are lots of experts on YouTube that you can follow. Here we go. Have a great day.