Editor's note: After a series of scandals, many investors were spooked out of cryptocurrencies... But that's beginning to change. Right now, just as investors are searching for alternatives to traditional banking, Crypto Capital analyst Andrew McGuirk says one major blockchain is likely on the verge of a major shift. And it means the upside potential is bigger than most folks realize. Today and tomorrow, we're sharing this story, originally from the April 12 Stansberry Digest. In it, Andrew explains why clearing one hurdle could soon trigger a watershed moment...
Solving the 'Blockchain Trilemma' Could Lead to Huge Upside By Andrew McGuirk, analyst, Crypto Capital
Cryptocurrency markets have had a brutal year... First, a stablecoin once valued at more than $18 billion evaporated almost overnight, ultimately leading to the arrest of Terraform Labs founder Do Kwon in Montenegro on March 23 on multiple charges of fraud and market manipulation. Then, multibillion-dollar hedge funds and custodians went belly-up, resulting in billions of dollars of losses, namely to retail investors. Worst of all, fraudulent activity from Sam Bankman-Fried's FTX crypto exchange led to his arrest and the untimely demise of his former crypto empire. The fiasco destroyed investors' hopes and damaged the crypto industry's image in the eyes of many – including regulators. Yet despite all of that, a sense of cautious optimism has returned to the market. And as I will detail today, it's not without reason... You see, bitcoin (BTC) was originally created in the depths of the 2008 financial crisis as a response to bank bailouts and the need for a decentralized peer-to-peer payments system. Now, recent bank failures have many investors looking for a monetary regime that's out of the hands of central bankers. Many new investors are flocking to cryptocurrencies like bitcoin and Ethereum (ETH)... Even though the headline cryptos are far from the all-time highs they hit during the easy-money days of yesteryear, bitcoin and Ethereum are still up more than 80% and nearly 60% year to date, respectively. This uptrend has left investors pondering whether the worst is over. The shift in sentiment happens to follow some big upgrades with the Ethereum blockchain, which is the system that records a cryptocurrency's transactions. We'll get into the details of that shift tomorrow. First, though, here's a primer on Ethereum – and on the turning point that's creating this setup... Put simply, the Ethereum network is essentially a global supercomputer on which anybody can create applications. It can't be censored, and no one single entity controls it. It's like a decentralized Amazon Web Services. The applications are self-executing, and the terms are written into lines of computer code. They can be used to automate complex business logic and execute transactions in a trustless and decentralized manner. Ether is the token that powers this supercomputer. In order to interact with and change the state of the computer, one must spend ether. This wasn't a problem in the early days of the blockchain, when demand for network space and the price of ether were low. But nowadays, it can be very costly to use the Ethereum network. For most, it's too expensive. So its actual users tend to be either digital nomads who choose to reject the current financial system or folks who are too wealthy to care. But there's a strong chance that real commercial activity could come to the chain, and soon... clearing Ethereum's main hurdle to mass adoption. There's a well-known "Catch 22" with blockchains called the "blockchain trilemma"... In essence, blockchains must have three traits: security, scalability, and decentralization. But the catch is, a blockchain usually must sacrifice one factor to satisfy the other two. Bitcoin and Ethereum, for instance, are both very decentralized, and the networks are secure – meaning it's difficult to change the consensus of the blockchain about which transactions have occurred. But they both have very limited transaction throughput – the "scalability" piece. That makes them less than ideal for any sort of major transactional volume in their current states. Bitcoin currently clocks in around five transactions per second ("TPS"), and Ethereum can handle up to 27 TPS. For comparison, payment processor Visa (V) can process around 1,700 TPS. So something needs to change with these two major blockchains if they are to ever evolve into the global financial settlement layer that many crypto evangelists believe they are destined to be. Tomorrow, I'll explain why that change could be coming soon. After a brutal year for cryptos, as advances keep happening, the potential upside right now is significant and overlooked... Good investing, Andrew McGuirk
Editor's note: The story that's coming for Ethereum is just the beginning. That's because the U.S. government is about to take the first step toward creating its own form of cryptocurrency... a "Federal bitcoin." The U.S. Treasury and 120 banks have already signed up for it. And if you make one move now to get positioned before the rollout – potentially within weeks – you could have a shot at 3,050% gains... Click here to learn more. Further Reading "Blockchain users and cryptocurrency investors have had a lot to worry about," Eric Wade writes. But right now, he says those fears pale in comparison to a bigger risk. Poor monetary policy has threatened the U.S. dollar. And as folks realize it, investors may need to act fast... Read more here. Cryptocurrencies can be intimidating for new investors. While they can be a great step toward financial freedom, the responsibility for securing your funds is up to you. Once you learn a few tips, though, you can make sure that your crypto is protected... Learn more here. |
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