The Next Trillion-Dollar Crypto

Next Trillion-Dollar Crypto

“By 2010, a young Vitalik Buterin had spent thousands of hours playing the game World of Warcraft,” says Paradigm editor Chris Campbell in a sneak peek from his and James Altucher’s soon-to-be updated The Big Book of Crypto.

“During this time, [Vitalik]” — the Russian-Canadian co-founder of Ethereum — “built up his characters exactly how he wanted them. They were perfect. He was proud.

“But one day, the game’s creator removed a key feature of one of the main characters,” Chris says, “effectively destroying hundreds of hours of gameplay in milliseconds.”

“I cried myself to sleep that night,” said Vitalik.

Vitalik Buterin
Source: Wikipedia

“He quit the game,” Chris continues. “The idea that someone could just destroy his hard work willy-nilly led him to hate the centralized architecture of the internet and video games.

“[Vitalik] already felt that way about political structures; now it was obvious to him that unhampered centralization was a problem in all systems,” Chris adds.

“By the way, this disgust was further planted in his mind by his father, Dmitry Buterin, who grew up in Russia and saw firsthand what authoritarian regimes are like.

“Dmitry taught Vitalik to value openness, freedom and transparency. (See the Addendum in The Big Book of Crypto for our never-before-seen ‘lost interview’ with Dmitry Buterin from 2017.)

“It was because of these values that Bitcoin fascinated Vitalik, but he didn’t think Bitcoin was enough.

“Fixing monetary policy alone won’t inherently fix the problems of centralized institutions.

“Bitcoin, Vitalik realized, doesn’t fix the problems of trust, transparency and ownership on the internet and in real life.

“So he set out to find the solution.

“Don’t get me wrong: Bitcoin is still a big deal. It’s minted no shortage of millionaires and billionaires. It will continue to do so.

“But the next trillion-dollar coin is Ethereum,” Chris claims. (To give you an idea, Bitcoin’s market cap just recently surpassed $1 trillion. Ethereum’s market cap? About $335 billion today.)

“Ethereum is what Facebook, Google, Netflix and Amazon were over a decade ago. Most people just haven’t figured it out yet.

“I’ll tell you why I think Ethereum has such incredible potential,” he says. “But please, do your own due diligence.

“The important thing to realize: Cryptocurrencies have a purpose.

“You can cut out the middlemen. Someone in Brazil can pay someone in Switzerland without having to get permission from someone (or something) in New York City.

“And further, they’re just the natural evolution of money. An evolution… to dataism.

“Bitcoin is the first sketch,” says Chris. “And here’s the thing…

“We’re going to find in the coming years that cryptocurrencies can do much more than just disrupt traditional banking — they have the potential to change more industries than anyone thought possible.

“I believe Ethereum will lead the way,” Chris says.

According to CoinPedia last week: “All eyes are on ETH, with expectations running high for it to hit $3,000 and speculation building about a potential climb to $5,000” — thanks to an upgrade next month. (We’ll share more on that event another time.)

“But ETH isn’t even where the real money will be made in crypto,” Chris observes

“The real money will be made in early-stage cryptos that benefit from the growth of Ethereum and Bitcoin.”

Paradigm’s iconoclast crypto investor James Altucher and his team believe we’re entering the final days of crypto’s “gold rush.”

And they’ve identified six tiny cryptos that could be 10X — or even 100X — over the next 12 months. If you haven’t already done so, give James’ interview a viewing today.

“Buyers Still Appear Aggressive”

“Yes, many names are still down from the Tuesday drop. But buyers still appear aggressive and are attempting to repair some of the damage,” says Paradigm’s trading pro Greg “Gunner” Guenthner.

“Semiconductors have completely flummoxed the bears and continue to defy gravity,” he says. “And growth stocks are back in gear thanks to some solid earnings reactions.” Albeit, the tech-heavy Nasdaq has shrunk about 0.20% to 15,800, but the S&P 500 index is moving in the opposite direction — up above 5,000, in fact. As for the Dow, the staid index is up 0.50% to 38,620.

We also have several important economic numbers to report today:

• Mid-Atlantic manufacturing: The closely watched Philly Fed index leapt into positive territory for the first time in six months. The reading came in at 5.2 for February — a strong showing since January’s -10.6 — walloping the consensus forecast of -8.0

• Industrial production: Down 0.1% in January, slightly less than expected. Manufacturing alone fell 0.5%, but utility output increased 6% due to cold weather. All told, 78.5% of America’s industrial capacity was in use during January — below the 50-year average of 79.7%

• Homebuilder sentiment: The National Association of Home Builders’ Housing Market Index rings in at 48 this month, up from 44 in January. It’s still below the 50 midpoint between expansion and contraction, but the indicator’s been steadily increasing for the past three months.

Taking a peek at commodities, the price of oil is up 2.25% to $78.36 for a barrel of West Texas Intermediate. And gold, up 0.40% according to Kitco, is just a few dollars shy of $2,000 per ounce. At the same time, silver is up 2% to $22.85.

Crypto continues to rock ’n’ roll; at the time of writing, Bitcoin is up almost 1% to $52,200 and Ethereum is up 2.20% to $2,800… with $3,000 easily in striking distance.

Follow-up File: This Story Has Everything

“Ukraine is practically broke,” says Paradigm’s macro expert Jim Rickards. “In the face of this, Biden came up with a harebrained scheme to steal the $300 billion of Russian reserves (in the form of Treasury securities) now frozen in U.S. and European banks.

“Biden has some buy-in on this from GOP senators.” On Jan. 23, the Senate Foreign Relations Committee voted 20-1 in favor of the unprecedented Rebuilding Economic Prosperity and Opportunity (REPO) for Ukrainians Act. Ugh. The lone holdout, by the way, was Sen. Rand Paul (R-KY).

“If it were to pass the full Senate and House of Representatives and be signed into law by President Joe Biden, as expected, the act would pave the way for Washington's first-ever seizure of central bank assets from a country with which it is not at war,” Reuters notes. [Emphasis ours]

“Freezing assets happens with some frequency,” says Jim, “but actually stealing them is tantamount to a default by the Treasury.

“If Biden gives the stolen $300 billion to Ukraine, this would destroy confidence in the U.S. Treasury securities market, hike interest rates, downgrade the U.S. credit rating and more.

“Is this the dumbest plan ever? Not quite…

“Some genius dreamed up a way for Ukraine to issue ‘reparation bonds,’” Jim snarks.

“Kyiv could raise money by selling bonds backed by future claims for war damages against Moscow,” says British journalist Hugo Dixon at Reuters.

“It would be better if Ukraine’s backers just gave it more cash” — just what in the actual heck? — “as the United Kingdom did [last month],” he says. “But elsewhere fatigue is setting in.”

Umm, yeah?! The latest U.S. palooza is a $95 billion foreign aid package for Ukraine, Israel and “other allies” — which passed the U.S. Senate, but House Speaker Kevin Johnson allegedly says the House won’t be “rushed” into passing the bill.

“Issuing ‘reparation bonds’ would circumvent these problems,” Dixon chirps. “Ukraine would sell securities which pay out if — and only if — it receives reparations from Russia for the damage done by the war. Interest payments could also roll up and only become payable if Kyiv gets compensation.”

Sounds, heh, mighty speculative.

But Jim clarifies: “The reparation bonds would be secured by the $300 billion of frozen Russian assets. If Russia wins the war (they will) and no reparations are actually paid, the $300 billion would be used to pay off the bonds.

“It’s like a deferred steal instead of an immediate steal,” Jim says

“Wait, it gets better…

“Who would actually buy these bonds? The Wall Street eggheads would structure them in tranches with some [debt] more senior in payment” (or debt that ranks highest in the order of repayment).

“The senior tranches (probably AAA-rated just like subprime mortgages in 2006) could be sold to institutions and the lower-rated tranches would be sold to … wait for it … central banks!

“These central banks would buy the reparation bonds with printed money,” Jim adds. “That printing causes inflation. So you end up paying the price since your money is worth less.

“This idea has everything,” he closes, “stolen collateral… inflation… and the destruction of confidence in the U.S. dollar.”

Scrapping Jackie Robinson’s Legacy?

One of only four statues of Jackie Robinson was stolen from a Wichita, Kansas, park on Jan. 25.

On Tuesday, police announced the arrest of a 45-year-old man who allegedly hacked the bronze statue from its base.

Source: X

In a statement, local law enforcement said there’s no “evidence indicating that this was a hate-motivated crime.” Instead, it appears the “theft was motivated by the financial gain of scrapping common metal.”

But the Jackie Robinson statue didn’t even make it to a scrapyard: “The statue's remains were found by the Wichita Fire Department dismantled, burned and unsalvageable in a small trash fire,” says the local CBS affiliate.

Bronze thefts seem to be on the rise: At the Port of Los Angeles, for instance, three bronze memorial plaques were swiped.

Perhaps worse? When three suspects were arrested during a routine traffic stop, they had “stolen bronze cemetery markers in their possession,” the Los Angeles Port Police announced Tuesday.

There must be a special place…

A Farewell to Hometown Charms

“The ‘Big Sort’ is alive and well,” a reader writes apropos of Tuesday’s episode of the 5 Bullets.

“I grew up in a small town in northeastern Connecticut that was at the time (1995–2012) ‘red’ though not heavily so,” he says. “My dad (very conservative) was actually the mayor for two terms.

“I joined the military and moved around quite a bit, but always looked forward to rejoining my family there. Careerwise, I got that chance and moved back in April 2020. Starting to family plan with my wife, we looked around at the mayhem that gripped that area and came to the realization that we had no desire to raise a family there. So we picked up and moved closer to my wife's family last year in a very red area in a purple state (southeastern Pennsylvania).

“My cousin, living in the suburbs of Pittsburgh, got so fed up watching his community fall apart during the pandemic that he picked up and moved his wife and four kids to Tennessee in 2022. He spent almost 20 years building up his practice (vet equipment sales manager), so that move took him back to square one in a new sales territory with a $20K pay cut to boot.”

“I made the choice to no longer live in upstate New York when they passed the (un)SAFE Act. At the time, I was active duty in the Army and would not be allowed to bring home my rifles,” says another contributor.

“I went home on leave to see about jobs I could get when I came out of the Army. My sisters and brothers had either moved out of state or were struggling to make ends meet.

“The restrictions on what I could do with some property I could buy cheap from a family member were very burdensome (minimum setback limits, limits on length of driveway, type of shingles, etc.).

“The cost to live there was more than I could afford. I settled in Kentucky. I earn less than I would in New York, but I have more left over every month and a better life.

“But I still love the place. The hills in my hometown are lovely, and most of the long-term town residents are great. Few people my age or younger are staying because of the cost and rules.

“It hurts that after seven generations living in the same town, I was one of the last.”

On that wistful note, we’ll close our episode today. Take care…

Best regards,

Emily Clancy
Associate editor, Paradigm Pressroom's 5 Bullets