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Why the next crypto rally is happening today... How bitcoin goes to $1 million... Understanding blockchain... Bitcoin is proof of concept... The 'reset' of big banking and more... Watch our 'Capitalism in Crisis' replay now...
Editor's note: Yesterday, our colleague Eric Wade made a compelling case for bitcoin's place in the global economy, and he also said that "investors who realize this are going to become fabulously wealthy in the process."
Today, Eric is back with examples, including why bitcoin could hit $1 million in the next decade, how another cryptocurrency could increase 40-fold in price in the near future, and "use cases" for cryptos in several industries. We hope you enjoy.
New millionaires will be minted... likely even billionaires...
We will soon see another bull run in bitcoin and cryptos of a magnitude that will put even the dot-com bubble to shame.
In fact, thanks to a single metric – scarcity – I (Eric Wade) believe that within eight years, bitcoin could be worth 100 times as much as it is today.
And the major catalyst ushering in this new age was the bitcoin "halving" event earlier this year...
Halving refers to the payouts, or rewards, that bitcoin "miners" receive for securing the network.
By cutting the rewards in half, bitcoin's "inflation rate" – the flow of new bitcoin entering the market – drops as well. This means bitcoin, as a currency, gets stronger over time as its inflation drops.
Why the next crypto rally is beginning now...
Anticipation of the 2020 halving dominated crypto-related headlines for more than a year. We wrote about it here in the Digest back on February 13...
Crypto enthusiasts know that these events happen roughly every four years. And in the past, they've boosted bitcoin's market price.
"Halving" was designed by the pseudonymous Satoshi Nakamoto when he or she developed bitcoin and its underlying blockchain code. It's designed as a way to limit inflation.
When it finally came on May 11, bitcoin's inflation rate fell to about the same as the U.S. dollar's (1.8%).
Here's the key point...
Previous bitcoin halvings have roughly marked the starting point for huge run-ups in bitcoin's price. After past halvings, bitcoin has soared as much as 8,000%.
We expect to see similar gains this time around...
One model, known as the Stock to Flow model ("S2F"), takes a look at bitcoin's scarcity by dividing its supply (its "stock") by its annual production or inflation (its "flow"). Since bitcoin's future supply is known, we can use that calculation to project future price ranges.
By that model, as I shared in a Masters Series essay on Saturday, bitcoin could hit $100,000 sometime in the next four years and $1 million per token within the next eight years...
Variations on the S2F model show the price of a single bitcoin rising as high as $288,000 within the next four years.
Of course, all these models are based on what has happened in the past and what we know about the future. That means they're far from guaranteed.
But my own calculations are similar. And on a stage in front of hundreds of investors at the annual Stansberry Research conference last October in Las Vegas, I predicted that bitcoin will go to $1 million in our lifetime.
I said it wouldn't be a straight move higher, but that bitcoin's appeal would become more widespread among investors and speculators.
Today, bitcoin is quickly going mainstream...
As the Federal Reserve and other central banks continue to print more and more money amid the ongoing pandemic, a lot of people are starting to understand the power and use for bitcoin and other cryptos as an alternative to the U.S. dollar...
As I wrote yesterday, even the U.S. government seems to be paying more attention.
On July 22, the Office of the Comptroller of the Currency ("OCC"), the Department of the Treasury agency that regulates the U.S. banking system, quietly released a letter explaining that it could take "custody" of cryptos on behalf of their customers...
In plain English, this means that, overnight, cryptos became as legitimate of an asset as the title on your home or car or a certificate of deposit. I wrote yesterday...
I call it the single biggest news event since the bitcoin network hummed to life in 2009...
What the OCC letter does is clear the path so that every bank in America can let you swap between dollars and bitcoin instantaneously.
You won't have to set up any new accounts. And you won't have to move money around... You'll just have to click a button.
This adoption isn't going to happen tomorrow, but it's coming soon.
And this is why you need to buy bitcoin today...
But here's another critical point I want to make so everyone understands the importance of what I'm talking about today.
While bitcoin introduced the world to the idea of computer-based currencies, it has also spawned a new wave of technological innovation across many industries...
To understand why, you've got to understand not just bitcoin but the technology that powers it...
Here is a good primer on what I'm talking about...
Every crypto has a blockchain as its core technology. Think of the bitcoin blockchain as a giant Excel spreadsheet that shows the complete transaction history and location of every bitcoin.
Every 10 minutes, the spreadsheet gets updated as an additional "block" of new transactions is added.
Picture that as someone opening up the spreadsheet and adding thousands of new transactions to it. That's a new "block." A blockchain is merely a chain of new blocks.
Everyone can have their own copies of the spreadsheet. It's completely transparent.
Let's say Jim sends 1 bitcoin to Sally. When the transaction is processed by the blockchain, the spreadsheet is updated. Jim's balance is docked a bitcoin, and Sally's is credited one.
But who updates the spreadsheet? And how do we stop people from trying to make false updates to the spreadsheet, awarding themselves more bitcoin, or trying to send the same bitcoin to two different people at the same time?
That's the job of bitcoin "nodes" and "miners." They're computers that run software to support the bitcoin network and keep it operating smoothly.
Miners are run by individuals or groups of people who contribute money toward buying powerful computer systems, known as mining rigs.
Why do people contribute time and powerful computers to the bitcoin network? Because they can get compensated in bitcoin.
But to get that honor, these computers must first solve a complex mathematical problem, and compete with others doing the same thing.
The first miner to solve the problem wins 6.25 bitcoin, and they get to post the next block to the blockchain.
Bitcoin itself has been a proof of concept for blockchain technology...
Its success has shown the world it's possible for independent and fragmented entities (miners) to enable strangers with their own computer power to exchange value with no need for intermediaries.
And it can be done in a completely transparent, verifiable, and open way.
To put that another way, the bitcoin blockchain is single-handedly doing the job of more than 100 years of financial infrastructure.
It's the Federal Reserve, the Treasury, the banking system, and auditors all in one package...
It's immune to government control (and government manipulation). And with a fixed supply of ultimately just 21 million bitcoins... it can't be inflated away.
No other currency in history can claim that... not even gold, which suffers a form of inflation as miners dig more of it from the ground.
That's why many people describe bitcoin as gold 2.0.
And that's why I anticipate that bitcoin's underlying blockchain technology will "reset" our financial system, as I wrote in yesterday's Digest.
But cryptocurrency can change the world in other practical ways that many people don't envision yet...
Take the "reset" of big banking, for example...
This is something our founder Porter Stansberry covered in his "Capitalism in Crisis" video, which went live last Thursday. (You can watch it right here for free if you haven't already.)
Banks like Goldman Sachs (GS) and JPMorgan Chase (JPM) have entire teams and buildings dedicated to confirming and spot-checking the trades and transactions their firms make.
It costs them billions of dollars every year...
But one crypto could change all of that. It represents the reset of big banking.
What if an independent-payments platform could automatically execute when certain conditions came true?
That's the essence behind "smart contracts."
Ethereum, the world's second most-popular cryptocurrency, proved smart contracts are possible when it launched in 2015.
It rapidly grew to become the second-largest crypto token by market cap. It allows developers to write computer code for financial transactions. That's why some people call it programmable money.
Think of Ethereum as a global computer network that entrepreneurs and computer programmers can build the apps of the future on. The Ethereum network is powered by ether (ETH).
The network is so powerful because:
- Money and payments are built into it.
- Users can own their data, and apps don't spy or steal from them.
- Everyone has access to an open financial system.
- It's built on neutral, open-access infrastructure, controlled by no company or person.
Ethereum is at the very heart of the reset of big banking...
Just look at the decentralized finance ("DeFi") movement. Thanks to Ethereum's automated smart contracts, developers have been able to use it to create all the services you can get at banks.
For example, you can now lend out your Ethereum and earn interest on it, you can borrow Ethereum, you can use it to get insurance on your crypto holdings, and you can build an automated crypto portfolio with it.
You can even trade derivatives and options directly on Ethereum.
To date, more than $4.2 billion of value is locked into smart contracts running on Ethereum. That's up from $1.1 billion just six weeks ago and up more than 800% from September 2019. And we expect that number to continue growing rapidly.
As DeFi grows, Ethereum is looking more and more like an international banking system. But it's more efficient, open to everyone, and offers products that are impossible in traditional banking systems. As entrepreneurs bring things like credit scoring to Ethereum, we could see the launch of mortgages, car loans, student loans, and more – all directly on the blockchain.
Essentially, Ethereum provides a way to codify, decentralize, secure, and trade just about anything instantly.
And investing properly here will yield huge returns.
For instance, my Crypto Capital subscribers locked in 100% gains (in dollars) on Ethereum in just three months, and we still think it could go up another 40 times from here as it morphs into a trillion-dollar asset.
My subscribers have booked eight triple-digit winners this year alone, the latest coming just yesterday. But it's definitely not too late to get in on this trend. We believe bigger gains are still to come.
The reset of both the dollar and big banking alone will affect every household in America. And, honestly, it will spread across most of the world.
Yet there are more "resets" that cryptocurrency will push ahead too, like credit cards, online and in-person banking, supply-chain breakdowns, and fraud.
Believe it or not, I'm only scratching the surface of crypto's potential here today...
There are plenty more "use cases" and much more to the crypto story than most people understand.
Bitcoin grabs the headlines, and for good reason, but I hope by now you can see how the technology that powers it can potentially "reset" our financial system and disrupt industries all over the world.
What's more, smart investors who know where to look for crypto investments have the ability to make life-changing returns, with potentially just a small initial investment...
This is part of the reason Porter wanted me to join during his most recent "Capitalism In Crisis" presentation.
If you haven't been one of the thousands that have already tuned in, I urge you to check it out now. It's totally free, and I join Porter about halfway through via video.
I talk much more about cryptos, how I see them fitting in our world moving ahead, and why I think every investor should own a little bit of crypto today.
Click here to watch the video right now.
Recommended Links:Don't Buy Bitcoin Until You See This...
Just $100 in bitcoin in 2010 would have made you one of the richest people in America with a net worth of over $10 million today. And just recently, bitcoin kicked off a huge new rally – up more than 50% this year. Now people are pouring into cryptos like we haven't seen in years... but don't do anything until you see this new warning.
Now Airing: Porter Stansberry's Surprising New Prediction
More than 55,000 people recently signed up to hear a huge announcement from Porter Stansberry. He surprised the audience by detailing "The Ultimate Asymmetric Bet." It's an investment you've probably never considered before and only takes $100 to get started. (It also has the highest upside potential we've EVER seen.) Get the full recommendation here.
"I know so many 'educated' folks who choose to simply bury their heads in the sand rather than study what the next 10+ years will bring in order to adapt. I got burned in the 2008/2009 crash and I learned my lesson... Pay attention to the national and global economy, educate yourself to what's happening now, play defense for the future, adapt to new way of doing things (Bitcoin), while playing offense in your current business. It has served me quite well. We took the COVID crisis in stride and made great returns in the stock markets with Stansberry's research; despite being predisposed to commercial real estate by trade.
"I recently read a book by self-published author Stefan Aarnio. He also figured out the 80-year 'cycle' of 'hard times' as he calls them, but couldn't quite put his finger on why. Your article about 80-year saeculum's actually gave his thesis validity. Hard Times Create Strong Men is a great opinion book (albeit raw and self-published) that describes why the country is so divided and in massive turmoil. He wrote it in 2018 and predicted 2020 as a major inflection point. Your article is the justification that Aarnio was not so off the mark after all. His borrowed mantra is: 'Hard Times Create Strong Men. Strong Men Create Good Times. Good Times Create Soft Men. Soft Men Create Hard Times.'
"I think this concept needs to be more mainstream so that we as a society can see that we are just following a historical pattern. Perhaps that will help us realize we are not that far apart after all." – Paid-up subscriber Miguel D.
Good investing,
Eric Wade with Fred Marion
Burbank, California
August 4, 2020
Stansberry Research Top 10 Open Recommendations
Top 10 highest-returning open positions across all Stansberry Research portfolios
StockBuy DateReturnPublicationAnalystMSFT
Microsoft11/11/10751.2%Retirement MillionaireDocMSFT
Microsoft02/10/12642.5%Stansberry's Investment AdvisoryPorterADP
Automatic Data10/09/08473.1%Extreme ValueFerrisFSMEX
Fidelity Sel Med09/03/08380.0%Retirement MillionaireDocHSY
Hershey12/07/07318.9%Stansberry's Investment AdvisoryPorterMTCH
Match Group12/12/17296.2%Retirement MillionaireDocSLP
Simulations Plus12/26/18290.9%American MoonshotsRootMAX-T
Midas Gold04/05/16275.9%Stansberry Gold & Silver InvestorShawBRK.B
Berkshire Hathaway04/01/09253.3%Retirement MillionaireDocDOCU
DocuSign10/31/19241.9%Stansberry's Investment AdvisoryDiBiase
Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio.
* Position originally recommended by Tom Dyson in The 12% Letter portfolio and carried over into Income Intelligence.
Top 10 Totals4Retirement MillionaireDoc3Stansberry's Investment AdvisoryPorter1Extreme ValueFerris1American MoonshotsRoot1Stansberry Gold & Silver InvestorShaw
Stansberry Research Hall of Fame
Top 10 all-time, highest-returning closed positions across all Stansberry portfolios
InvestmentSymbolDurationGainPublicationAnalystInovio Pharma.^INO1 year1,139%Venture Tech.LashmetSeabridge Gold^SA4.20 years995%Sjug Conf.SjuggerudNvidia^NVDA4.12 years777%Venture Tech.LashmetRite Aid 8.5% bond 4.97 years773%True IncomeWilliamsPNC WarrantsPNC-WS6.16 years709%True Wealth Sys.SjuggerudConstellation BrandsSTZ5.45 years631%Extreme ValueFerrisChainlink crypto1.37 years597%Crypto CapitalWadeJDS UniphaseJDSU1.73 years592%SIAPorterMicrosoftMSFT9.05 years468%Income Intel.DocProShares Ultra HealthRXL4.52 years420%True WealthSjuggerud
^ These gains occurred with a partial position in the respective stocks.
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