Editor's note: Cryptocurrencies are on the verge of going mainstream. And with inflation fears and easy-money policies devaluing the dollar, many folks are hunting for assets outside of traditional finance. So today, we're sharing an updated essay from a February Stansberry Digest, where my colleague and crypto expert Eric Wade covers why bitcoin is the perfect "safe haven" from dollar-backed assets...
I trace the dawn of the Internet as we know it today to a single event...
It happened in 1994... The release of a web browser ultimately called "Netscape Navigator."
Until that moment, the Internet was the province of programmers and computer engineers. You had to have hard-to-find hardware and specialized knowledge just to access it.
And once you did, you'd find a tiny screen crammed full of text and a dictionary full of keyboard commands.
Here's what the first version of the Netscape Navigator browser looked like...
As I said, Netscape Navigator changed everything... You didn't need to memorize hundreds of commands to use it. You could simply point your mouse at a link and click it.
Colors and pictures suddenly appeared beside text... And Netscape Navigator even came with new security features that made it possible to safely process credit-card transactions online.
The Internet was never the same.
Today, I can't help but think that the crypto world is like the Internet in 1994...
Using bitcoin, the world's most popular cryptocurrency, and others requires specialized knowledge. And many people – maybe you're one of them – have been turned off over the past several years because of these so-called barriers to entry...
Addresses, marking the location of cryptos, and private keys to access them look like gibberish... Sometimes, you even have to type specialized commands into web forms to interact with smart contracts. And you often must spend hours migrating tokens from one blockchain to another.
I know that dealing with these clunky features can be hard, frustrating even...
That's why in everything we send out, my analysts Andrew McGuirk, Stephen Wooldridge II, and I spend a good amount of time providing step-by-step instructions on how to get started. And of course, we precisely detail how to buy each and every crypto we ever recommend.
It's a little more work, but I believe being a part of this revolutionary industry is more than worth the small amount of additional effort to get started.
And there is much more upside ahead...
Today, I will explain why crypto is on the cusp of a "Netscape moment" – a breakthrough that we look back on today with obvious recognition of the brilliance of web-browsing software and everything that came after Navigator 1.0.
Soon, crypto will go mainstream. Let's discuss why you want to bet on radical innovation...
When I was 27 years old, I made a once-in-a-lifetime investment that shifted the course of my life forever. My business partner and I paid $7 to acquire the rights to the domain name Wallstreet.com.
In 1999, when I was 31, my partner and I sold Wallstreet.com for more than $1 million. We locked in 14,000,000% gains in a little more than four years... on the same domain we had bought for $7.
I turned down a lot of offers on the path to $1 million. And that's because back then, I quickly realized that the Internet wasn't going to be a passing fad.
Folks were starting to realize what I knew already... The Internet had the power to change everything about the way we lived and worked.
Cryptocurrencies and blockchain technologies have that same potential...
I've watched this pattern of breakthrough computing abilities play out again and again.
When I was a child, my parents used mainframe computers at their jobs at the Los Alamos National Laboratory during the 1960s and 1970s.
Soon, personal computers burst onto the scene and captured dramatic market share through the 1980s and 1990s. Then, the 2000s belonged to the Internet... and the 2010s brought the transition to smartphones and mobile computing.
It's clear to me that the 2020s will belong to blockchain computing...
"Blockchain" is one of those words that has the power to confuse even the smartest people. It gives us capabilities that simply weren't possible before. As I shared in DailyWealth back in 2019...
The Bitcoin blockchain, for example, allows us to transfer bitcoin person to person (or "peer to peer") without any intermediary. (Bitcoin with a capital "B" refers to the blockchain, whereas bitcoin with a lowercase "b" refers to the cryptocurrency.)
When I transfer U.S. dollars to you, we either have to do it in person – with me handing you cash – or through the banking system, which involves me telling my bank to send money to your bank account.
But how does this actually work?
A good analogy is to 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 permanently added to the spreadsheet.
Everyone can have their own copy of the spreadsheet. It's completely transparent.
Until now, the Internet has always required us to trust third parties...
We trust banks with the "dollars" that are stored in our bank accounts – but certainly aren't sitting in the vault waiting for us...
We trust Google's parent company Alphabet (GOOGL) to hold and protect our searches and spreadsheet data...
We trust Facebook (FB) with our photographs and personal interests or "likes"...
And we hand over a lot of data to Amazon (AMZN) whenever we use its marketplace... which is used to sell more products back to us, like things we merely mention in a conversation.
Blockchains are different than private databases...
Rather than locking all the information away for a certain person or group to use, the data stored on a blockchain are done in plain view on computers all around the world.
In the simplest terms, this is precisely what a decentralized blockchain is... data that anyone can see and verify at any time.
Imagine a bank like JPMorgan Chase (JPM) opening up all of its accounting books and giving everyone the ability to review its individual accounts at any time. Each account wouldn't have a customer name, of course, but it would have a unique identifier... So you'd know that Account-1ac7, for example, had $20,201 in it.
Once you have publicly verifiable data like that, you can start doing things that have never been possible before. For example, I could write a program that says if any account has more than $10,000, I'll lend it $5,000 in, say, Ethereum (ETH) tokens, at an interest rate of 5%.
In a yield-starved world where central banks like the Federal Reserve have already said they'll likely keep interest rates low for years to come (and in the case of the Fed, keep printing dollars and buying assets, too), that sounds pretty good to me.
In this scenario, consider if Account-1ac7 applies for a loan... The software could simply verify that the account has the appropriate balance, put a hold on $10,000 of those funds, and transfer it $5,000 in Ethereum instantly. No middleman or human would need to be involved.
And the thing is, this isn't just conjecture... It exists today.
This movement is called decentralized finance ("DeFi")...
And the industry is growing faster than any financial innovation I've seen in my three-decade career in finance.
Fans of DeFi are so ardent, they have a description for the "old world" of banking that most people use today... "Traditional Finance" or "TradFi."
TradFi requires several layers of middlemen. It requires brokers, clearinghouses, auditors, and specialized insurers.
DeFi replaces all of that with a few lines of computer code.
If you've paid attention to the crypto space over the past year or so, you can see that we're rapidly heading toward a world where literally all assets will be stored on blockchains. I'm talking about all assets across industries that you might not associate with cryptos today...
In the future, you'll be able to borrow money against your Apple (AAPL) stock, for example... or take out insurance on the Ethereum you've stored in an interest-bearing account.
The concept scarcely existed a short time ago. We can verify that because everything in DeFi is trackable on blockchains...
At the beginning of 2020, just $700 million was being put to work in DeFi trading, lending, and insurance platforms. Today, that number is roughly $55 billion – up more than 7,800%. Take a look...
However, I admit that it can be hard to use DeFi right now... You must download special browser plugins and – quite frankly – use some poorly designed websites that are often built by anonymous developers.
That's why I'm so excited about the marriage of DeFi and TradFi that is just starting to happen today.
The big players need to enter the space in a big way...
When they do, rather than forcing users to learn new tools, they'll simply make them easy to use on existing platforms.
That is the crypto "Netscape moment" I'm talking about. And there are signs everywhere that it's upon us...
PayPal (PYPL) launched the ability for its 360 million active users to buy and sell crypto in October 2020. And the digital-payments company is now letting its customers sign up to "check out with crypto" when they use PayPal at millions of online stores.
El Salvador just passed a law designating bitcoin as legal tender for its residents. And just a short while ago, the Office of the Comptroller of the Currency – basically the U.S. Treasury – told U.S. banks it can use blockchains to store and transfer funds.
Today, perhaps 200 million folks use crypto in one way or another...
And banks, payment processors, and even whole countries are about to give billions of people simple ways to use crypto, too.
In some cases, those folks won't even know they're using crypto. A bank could, for example, convert dollars to a dollar-pegged crypto to process a payment instantly – instead of the traditional two to three days for an automated clearinghouse to do it.
And what if banks decide to give their customers access to the DeFi services that are already attracting millions of users around the world? The industry would explode overnight.
We've seen prices on cryptos go parabolic in the past. Today, bitcoin trades for about $32,000, up nearly 240% since this time a year ago... which is even more impressive when you consider that crypto's legendary volatility has driven the price of bitcoin down 50% since it topped over $60,000 in early April.
My subscribers have ridden these moves higher, and I believe the popularity of crypto is about to take off.
And what I'm really excited about now is seeing the number of cryptocurrency users go parabolic, too. With the DeFi movement accelerating, 2021 is the year I believe that will happen...
Then, maybe one day 20 years from now, somebody will post screenshots of the early versions of what these platforms and software looked like... They will be that important.
Good investing,
Eric Wade
Editor's note: The rise of cryptocurrency has created the perfect opportunity to make 25 times your money outside of traditional finance. On Wednesday, Eric revealed a small group of under-the-radar cryptos that he believes are set to soar... and he's not talking about bitcoin or Ethereum. These little-known names could be your ticket to success as 2021 changes the future of money forever... Click here to learn more.
