Crypto IS the future, gold is not. Gold I still think does OK, but crypto will steal the show over the next decade. I still think GDX may 100 a share , up from 16 bucks in March in the years ahead. HOWEVER Gold is no longer 'the play' and therefore GDX may never reach that level. The issue with gold is....its just a shiny rock. Crypto is evolutionary, movement of a billion dollars in seconds. Try that with gold bars.
But Gold will get capped, simply because its not a favored winner of the future. With Crypto hype, the world banks can start to create their own crypto and extend their relevance in world finance, perhaps for another 50 years. Also please consider true diversification out of pure USD assets.
For valuation, nothing will beat Bitcoin, it is the new gold. Bitcoin I don' think will ever become a currency, newer blockchain innovations ahead will be. But I do think Bitcoin moves from 13K to 250K a coin, maybe even 1 million. Bitcoin is a Ponzi scheme, but so is gold, I'll ride this wave as far as it can go.
Other cryptos I like are Ethereum, I think Compound at $115 right now is a buy, but consider dumping if it falls below 94. And taking some profits at $225. Click here to understand the kick off reinventing global finance with DEFI .
I have about 1/3rd of my savings directly into cryptos, and a 1/5th in crypto stocks, I'd like to move that to 1/2 in crypto stocks. Its quite hard to drop some existing positions. So I am taking this stuff seriously. I'll reconsider my positioning post January 2021.
I am not a financial advisor, but consider starting to read some of my past posts and do your own research to get onto the Crypto Rocket
A friend from my high school has been an entrepreneur in the crypto world. I asked him to read my last post, and he gave me a list of links he recommends.
I am sharing them here, and will read/watch them myself.
In discussions with my friend John, I have asserted I think the central banks will setup a new money exchange system based on cryptos between central banks. The banks will try to co-opt the crypto revolution by re-inventing the monetary system. I do think this will help.
I ran across a good video painting picture of what may lay ahead:
We are in the early stages of the largest financial revolution in human history, and few are noticing. Our world operates on an underlying foundation operating with same mechanics established in 1913. The world is prime for a technological disruption.
World finance accounts about $25,000,000,000,000.00 GDP per year!
This is where DEFI comes in, and it will transform every aspect of human finance.
Before I get into what it is, you need to understand the building blocks in DEFI.
Blockchain
A technology that allows a 'digital general ledger' to be publicly maintained by everyone, but changes can be done only by the persons who have authority to make a change. For example, if I own entry 1234567890 in this general ledger, ownership is recorded as mine using a digital key I know. To change who owns this entry, only *I* can initiate a change of ownership. It is un-hackable by anyone else in the world to do so.
- Anyone in the world can look at this entry and see it exists, and who owns it, but cannot 'steal' it. To learn more watch this.
Cryptocurrency - a valued asset (cash/collectible)
The first implementation of Blockchain to represent a 'digital asset' was Bitcoin. If you own 1 Bitcoin as of 10/2020, you own a digital entry that is worth about $11,000.
(Bitcoin) - Meaning, if you want one Bitcoin, the market price to buy one would take $11,000 dollars to exchange for one entry in the "Bitcoin Blockchain" by a person who possesses one of them. To learn more watch this.
Important Cryptos to be aware of
Bitcoin - the new digital gold, valued on scarcity and the premium collectable coin, learn more.
DAI - stablecoin, the value stays very close to $1.00, pays 2% APY
Digital Wallet - (Coinbase) - replaces savings account
With advent of bitcoin, the question is how do you store your digital keys in a safe place, and make it easy to spend it on demand? You could spend the time to learn the complexity of bitcoin, and its software, and keys to manually make an exchange for goods or money. Or you could trust a vendor to manage your keys and make it very simple to use Crypto Currencies. CoinBase.com is the largest generally most trusted Digital Wallet. This is in effect the new "Bank Savings account". To learn more watch this. To sign up for Coinbase please use this link that gives me credit. (click). After you create your account, you can apply for Day trading services are available here.
Smart Contracts
By using technology you can tie a digital asset (cryptocurrency) to the execution of exchanging assets.
(Ethereum v2.0) - For example, I could setup a 'bet' on who wins the super bowl, once the winner is determined, an automated execution is triggered to transfer the 'bet' to the winner'. This concept is essential for everything going on in 2020, to learn more watch this.
Smart contracts have been going through extensive evolution, figuring out the 'fee cost' to execute a contract and limits to that cost. (called 'Gas Cost')
DEFI is 'decentralized finance'. However what I will be describing is a mixed bag of 'decentralized financing' and the creation of a new world financial system mixed with private and decentralized finance (DEFI) components.
Please do not read on unless you grasp above concepts. Watch this video for basics of DEFI before reading on.
Decentralized Exchange of Tokens - (UNISWAP / UNI coin) - Replace Global Currency Exchanges.
The concept is built upon smart contracts, with only purpose is to provide an automated very low cost way of exchanging between crypto currencies. This is replacing the centralized global currency markets. Using this coin, you can move money between the supported crypto currencies some mentioned above. This is a complicated evolution, with the latest released in September 2020. The liquidity market for this has shot up to over 2 billion dollars.
- To learn more, watch here.
This protocol will be the conduit for trillions to move from FIAT currencies to Crypto Currencies.
There are new crypto currencies that provide value (money/crypto) to be used as part of a smart contract or other very low risk lending. This provides market liquidity to be used in financial transactions (see Flash Loans below) Moving value between assets is slow on cryptos, as a single trade may take 20-60 seconds to complete. There is also cost to move between cryptos (fees, gas cost). A liquidity pool provides trading services at a lower cost than executing on the underlying target technology using its own private pool to capture the lower cost to execute the smart contract. Typically a fee of 0.3% fee.
- To learn more about liquidity pools, watch this.
Yield coins - (DAI/COMPOUND/AAVE) - Replace fixed income investments
There are new crypto's that pay an APY between 1% and upwards of 9% for you to deposit funds. This is pretty impressive when 30 year bond pays about 1.5%! Depending on the crypto coin , you do have the added benefit/risk of the coin valuation changing. If you want to avoid these coin changes, choose a stable coin like DAI giving 2% APY. If you want to take on more risk, an aggressive token called COMPOUND promise 8% APY or more. The money is used in secured 'flash loans' (described next), and other market maker activities in the crypto markets. (margin loans, arbitrage, etc). Watch this to learn more on AAVE, LEND click here for COMPOUND
The ability to borrow money for arbitrage, swapping collateral, and self liquidation. The money is borrowed and repaid in the same transaction scope of one smart contract. There is a fee paid for borrowing money in this near zero risk transaction. Some of the yield coins mentioned above derive their yields from providing liquidity for flash loans. Flash loans are hitting on the millions per transaction as of October 2020, its only matter of time Billions will be used in a single transaction. To learn more, watch this.
NFT - Unique identification of digital content to represent ownership
(Added 5/26/2021) A non-fungible token (NFT) is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable. NFTs can be used to represent items such as photos, videos, audio, and other types of digital files.
This can eventually represent ownership of any document, such as a home title. In this example, a home title could be printed, scanned, and create an NFT that is issued through your town, state, or federal government. The mechanism of creating the NFT could become a legally binding representation of the government document. Once created ownership can be controlled by who owns the NFT using their credentials to control ownership, rather than using manual processes to execute ownership transitions or to verify ownership. The record of ownership would be distributed world wide, rather than in your local township that may have a catastrophic loss of records. The efficiency gain across the legal and financial system is compelling.
I expect things to explode and continue to get complicated, with new standards, new coins, and yes, failures. On the other side is a very bright future for humanity, and a likely leveling of the wealth gap that we see today in the transition!
