Demystifying the blockchain/altcoin value proposition … a paradigm shift for big tech … the biggest wealth creation opportunity most of us will ever see
This morning, we learned “transitory” (eye roll) inflation in October soared to levels not seen since 1990.
The consumer price index jumped 6.2% year-over-year, blowing away the prior month’s number of 5.4%.
Interestingly, the announcement came at 8:30 AM ET. And guess what happened to the price of bitcoin at about, oh, 8:31 AM ET?
Yes, investors are flocking to bitcoin as an inflation hedge. But the value proposition here is infinitely greater than just “bitcoin as a wealth preserver.”
Most investors don’t fully understand how big the crypto/NFT/blockchain/Metaverse world is going to be – or why. That’s for good reason. It’s hard to envision something that doesn’t yet exist.
Movies like Ready Player One have provided us a broad vision of what the Metaverse will be, but it’s difficult to imagine the impact of cryptocurrencies, or blockchain smart contracts, or robust NFT functionality (yes, an NFT won’t simply be a static piece of “digital art”).
Please take this to heart…
***Even if you can’t envision it, now is the time to act because this entire ecosystem is going to change everything
Why do you think Facebook is pivoting its entire company focus toward the Metaverse?
It’s not just because it sees dollar signs. It’s terrified of how a decentralized blockchain could upend its entire business model.
You see, right now, Facebook operates like a tyrant. Your profile exists on its network, according to its rules. If you post something it doesn’t like, your profile can be shut down.
And say you want to change the functionality. Too bad. You’re limited to what Facebook allows.
If you’re an advertiser, you’re subject to Facebook’s advertising rules and rates. You abide, or else.
Of course, all of Facebook’s rules and functionality are created behind closed doors. You don’t get a say.
This is classic centralization of power.
But the days of this being the prevailing business model are numbered.
***We’re moving into a world of decentralization, and it’s going to transform everything
Thanks to blockchain, rather than decisions for a social network happening in, say, Facebook’s board room, those decisions will take place in more of a broad network “town hall.”
If anyone in the network has a good idea, it doesn’t matter who they are, that idea can be embraced by the entire town hall and implemented into the social network as functionality.
Maybe that’s fewer (or no) advertisements being shoved down our throat. Or no more personal data being sold to third parties. Whatever it is, the masses on the network determine the direction of the network, not a handful of elite individuals at the top.
One of the key differences it that everyone on this network is now united by the social network’s native token (think “ETH” as the native token on Ethereum’s blockchain). In essence, this creates an alignment of direction. So, no more conflict between, say, users who want a private experience with their data, versus a profit-seeking boardroom that wants to sell that data.
You might be thinking “but how would the platform remain in business without dollars to fund it coming from advertisements or third-party data sales?”
That’s the point – there is no central authority that’s making those dollars. This is a decentralized, free platform with no CEO, no board room, no “bottom-line growth needs” acting like a tyrant.
Instead, you – yes, you specifically reading this – have the ability to participate in this buildout and have your voice heard.
I hope you’re beginning to see how transformative this is.
***A real-world example from Luke Lango’s Ultimate Crypto Portfolio
Luke is one of our crypto specialists, and the editor of Ultimate Crypto.
One of his recommended altcoins is Audius (AUDIO). Back in August, he recommended his subscribers sell a one-third portion of Audius for profits of 146%.
Audius is a great example of decentralization, and why it’s so powerful.
From Luke:
Audius is a decentralized music streaming application built on top of Ethereum, with the goal of disrupting the broken music streaming industry and enabling artists to earn from their work and fans to earn from their support…
The Audius music streaming platform is up and running. You can access it via desktop on Audius.co, or you can download the app in the App Store…
It really feels like you’re using a professional app ala Spotify or SoundCloud…
From a consumer perspective, the app works very much like any other music streaming app. You create an account. You pick your favorite artists or genres of music. You get a feed of music to listen to, and you can search artists or songs and listen to that content on-demand.
The big difference between Spotify and Audius from a consumer perspective is that Spotify gives you all that functionality for a fee, while Audius gives it to you for free – indeed, Audius actually pays some consumers for providing value-additive services.
Meanwhile, from an artist perspective, Spotify gives artists a cut of subscription and ad sales, while Audius enables artists to earn directly from their content without any middleman taking their cut.
How does Audius do this? Through the blockchain!
Audius has created a token upon which the entire platform is built. Artists earn tokens by having a trending song or a popular playlist at the end of a week. Fans earn tokens by doing things like creating playlists that other consumers on the platform listen to. Other stakeholders – like developers and node operators – earn tokens by securing the network.
In short, Audius has created a decentralized music streaming ecosystem wherein every participant in that ecosystem is directly rewarded for adding value to the ecosystem – without a central arbiter running the show or taking a cut.
No wonder the major tech platforms are scared.
(For more from Luke in Ultimate Crypto, click here.)
***The staggering wealth generation that’s possible
Below, is the perspective of Raoul Pal. He’s a former hedge fund manager and the founder of the respected investment shop, Real Vision. He’s also at the cutting edge of the crypto/digital space sector.
From Pal:
We have never in all of human history been given an opportunity that an entire asset class, not a stock, not a single token, an entire asset class goes up 100X in value, probably by the end of this decade.
This is I think the largest distribution of wealth and the fastest distribution of wealth in all recorded history.
Because unlike most other wealth distributions, things like railroads, phones, even computers, and even the internet, they accrue to giant companies. This is accruing to tokens which anybody can participate in.
Now, let’s try to clarify one issue you might be bumping on…
How are these tokens going to create all this wealth? Specifically, if they’re decentralized there’s no authority generating revenues and profits from use. So, where are the riches coming from?
***The “Law” behind the explosive wealth generative power of crypto tokens
Regular Digest readers recognize the name of our CEO, Brian Hunt. In addition to running InvestorPlace, Brian is a highly-successful investor, trader, and teacher.
We often feature wealth-building essays he’s written here in the Digest (you can access an entire an entire library of them in our InvestorPlace Education Center).
In one of Brian’s recent essays, he explained a concept that’s central to the source of value for cryptocurrency tokens – Metcalfe’s Law.
From Brian:
Metcalfe’s Law is a concept popularized by Robert Metcalfe, one of the pioneers of the internet and the co-founder of 3Com…
Metcalfe’s Law explains the massive power of the network effect.
The network effect occurs when each new user of a service, communication, or social media network increases the value of the network in an exponential way.
Metcalfe’s Law states that the value of a network (like Facebook or Uber) is proportional to the square of the number of users of the network.
Users in this case can mean social network members, drivers in a ride sharing network, sellers on eBay, or Amazon vendors.
For example, if a network has 50 users, the value of that network is 2,500 (50 x 50 = 2,500).
Add 50% more users to take the number of users to 75 and the value of the network jumps to 5,625 (75 x 75 = 5,625). That’s a 125% increase.
So, “use” becomes incredibly important to “value.”
Now, let’s make this even more granular.
Right now, Ethereum’s native token, ETH, is exploding in value. Part of the reason is that developers love Ethereum’s platform (like the creators of Audius, who chose to build on Ethereum). It enables all sorts of cool, robust functionality that supports what these visionary developers want to create.
But in order to build on Ethereum, developers must operate with ETH.
And if you, as a consumer, want to use some cool platform created on the Ethereum network, you’ll have to access it via ETH.
It’s basic supply/demand that as more people purchase ETH to enjoy (and build) the technologies created on its network, the price of ETH will rise…and rise in a way that complements Metcalfe’s Law.
You and I – through sheer luck – have the extraordinary privilege of being here today at the beginning of this rising ocean of adoption and wealth creation.
Ten years from now, our world and business models will look completely different – all because of blockchain/cryptos/Metaverse/NFTs and so on. As our broader population uses these amazing decentralized platforms, the enhanced demand for respective tokens will inflate their value.
Can you see how even a small amount of money invested in the right altcoin today could create extraordinary wealth after 10 years of snowballing global adoption?
As Pal wrote above, it’s an asset class that – as a whole – could rise 100X in value.
No one has a crystal ball, but this has all the makings of one of those investment opportunities in which, if you don’t act, you’re going to look back in a decade and just shake your head.
This is happening in front of our eyes. Let’s not miss it.
Have a good evening,
Jeff Remsburg
