Shownotes
In my opinion, one of the most important events of the year will be taking place with the Ethereum 2.0 "merge". The process that will bring together the beacon chain and the main net will create a true deflationary token. It will also be moving from proof of work to proof stake.
There are benefits to this this merge that should greatly increase the value of Ethereum in the future.
News and Links
https://ethereum.org/en/upgrades/merge/
https://decrypt.co/100823/ethereum-major-upgrade-testnet-merge-june
https://currency.com/eth-2-0-what-s-happened-so-far-and-when-is-the-next-phase
https://cointelegraph.com/news/new-york-state-senate-passes-bitcoin-mining-moratorium
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I can be reached by email at mcintosh@genwealthcrypto.com and on twitter at @McIntoshFinTech. My mastodon handle is @mcintosh@podcastindex.social. Looking forward to hearing from you!
Website
Music Credits
Protofunk by Kevin MacLeod
Link: https://incompetech.filmmusic.io/song/4247-protofunk
License: https://filmmusic.io/standard-license
The following music was used for this media project:
Music: Ethernight Club by Kevin MacLeod
Free download: https://filmmusic.io/song/7612-ethernight-club
License (CC BY 4.0): https://filmmusic.io/standard-license
Artist website: https://incompetech.com
Transcripts
the
Speaker:Hey everyone, no one on this podcast is a financial advisor and all the information
Speaker:presented on this podcast is for informational purposes only.
Speaker:Now that we have the legal stuff out of the way, let's jump on in.
Speaker:Welcome to the Generational Wealth of Cryptocurrency podcast.
Speaker:I'm your host Macintosh.
Speaker:Today we're going to talk about the Ethereum merge.
Speaker:All right everybody, the tea is hot and steeping.
Speaker:Not a whole lot of news this week, we'll get to that in a few minutes, there is a little
Speaker:bit.
Speaker:And in fact, some of the news I will be expanding on later this week in more of a long form.
Speaker:So the next episode we'll be covering part of this news in more depth.
Speaker:But today, we're going to talk about the Ethereum merge and we've talked about this a few times.
Speaker:I think we talked about it in detail in one episode, what the expectations were.
Speaker:I wanted to kind of cover it again with a revised roadmap, maybe some new details, because
Speaker:it is coming.
Speaker:Interestingly, earlier this week I saw an article that said the merge was going to happen
Speaker:on June the 8th.
Speaker:I'm like, what?
Speaker:So there's different test networks that they use, and they've got one called Ropstein.
Speaker:Ropesten, anyways.
Speaker:That merge, that test merge is happening on that network on June the 8th.
Speaker:And the way they did the headline, it made it sound like the merge was actually happening
Speaker:on the main net.
Speaker:So it was a little confusing.
Speaker:You can rest assured that on June the 8th, the actual merge will not be happening.
Speaker:So what am I talking about?
Speaker:Little bit of background.
Speaker:So with the Ethereum, currently, it works just like Bitcoin does.
Speaker:So you have proof of work mining.
Speaker:So you've got servers doing calculations, trying to solve a puzzle basically, to put
Speaker:it simplistically, and mine Ethereum.
Speaker:They have chosen to move to a proof of stake system.
Speaker:To my knowledge, this has not ever been done before.
Speaker:This has been a long process.
Speaker:I think it was far more complex, frankly, than they thought it would be.
Speaker:However, it is coming to completion.
Speaker:So there are three components of what's going on.
Speaker:You have the main net, which is the currently operating network where you have miners who
Speaker:validate transactions and they mine blocks.
Speaker:You have what's called the beacon chain.
Speaker:The beacon chain is where the validators are in the system.
Speaker:So the beacon chain and the main net are currently operating in parallel.
Speaker:They do not interact with each other.
Speaker:And when the merge takes place, the beacon chain will essentially take over the miners.
Speaker:There won't be any work for the miners.
Speaker:They presumably, at least the majority of them, will become validators on the blockchain,
Speaker:on the beacon chain.
Speaker:This was supposed to happen a while ago.
Speaker:It did not, but it will be taking place over the next few months.
Speaker:In fact, recently Vitalik did say that he thought that it would happen in August of
Speaker:this year, of 2022.
Speaker:That does remain to be seen, but they have these weekly developer meetings and in all
Speaker:honesty from what I've been hearing coming out of those meetings and they published kind
Speaker:of the, what would the word be, the minutes, the notes of the meeting on Twitter.
Speaker:One of the developers takes the time to do that and so I read through those.
Speaker:That way I don't have to spend hours listening to these meetings and I'm able to keep up
Speaker:with what's going on.
Speaker:They seem very confident that this is actually going to be happening in the very near future.
Speaker:And that's only a couple of months off.
Speaker:After the merge takes place, of course, we will have people staking on the network.
Speaker:There are already actually a large number of people who do that.
Speaker:You can go to a, if you don't have 32 ETH, which is how many it takes to stake, you could
Speaker:go to some place like Coinbase or Kraken.
Speaker:I believe both of them run staking subs and you can actually put your Ethereum into a
Speaker:staking pool and participate.
Speaker:And what do you get in return in the long run?
Speaker:If you stake, I want to say if you stake 32 ETH, you get about, oh man, I want to say
Speaker:it's two ETH a year back.
Speaker:I think that's right.
Speaker:And of course, that number will fluctuate a little bit.
Speaker:It depends on how many people are staking.
Speaker:I don't know that it will go much below that.
Speaker:It probably won't go much above it either.
Speaker:It'll probably stay pretty stable, but that remains to be seen.
Speaker:So they're hitting their milestones for this project and it does look like it's going
Speaker:to happen.
Speaker:So beyond that, what would we expect?
Speaker:So let's assume in August of 2022, we get a successful merge and everybody's happy.
Speaker:We've got staking occurring.
Speaker:First of all, one thing it does not do is solve scalability.
Speaker:I'm sorry.
Speaker:It does not solve transaction fees.
Speaker:Your transaction fees, we will still have time when transaction fees are high.
Speaker:But it will allow though, there's a number of projects that are running in kind of parallel.
Speaker:And in fact, one of the discussions of ETH2 kind of broke it down this way.
Speaker:They said there's three elements, the beacon chain, which we've already talked about.
Speaker:That's the validation network, the staking network that will allow Ethereum to move from
Speaker:proof of work to proof of stake.
Speaker:They've got the merge itself.
Speaker:This is the process that will bring these two networks together.
Speaker:The validators will take over and the mining will stop.
Speaker:They also have something that we've not discussed a whole lot called shard chains.
Speaker:And shard chains are a way to bring some scalability and hopefully lower transaction fees.
Speaker:The beacon chain, by the way, went live on December the 1st of 2021 of last year.
Speaker:Shards at this point, I'm not aware that they're on any test nets or whatever.
Speaker:There's development going on, certainly, and they're hoping that they will ship it in 2023.
Speaker:It will absolutely take place after the merge.
Speaker:It will not be before the merge.
Speaker:So that's kind of the roadmap in a nutshell for what's coming up now.
Speaker:A lot of people think that the merge, when it does happen, will provide a solid boost
Speaker:in Ethereum's price.
Speaker:That remains to be seen.
Speaker:Historically, I would argue this type of thing, you'll certainly see a buildup in price prior
Speaker:to the merge.
Speaker:Now whether it sustains it afterwards, we'll see.
Speaker:One of the arguments against that is that there are people who stake already and when
Speaker:the merge happens, and very shortly after, that will actually give them the ability to
Speaker:close their staking up, essentially.
Speaker:Right now, unless you're staking with one of these major centralized exchanges that's
Speaker:basically doing some paperwork in the back end, so to speak, when you stake, you're making
Speaker:a commitment that your tokens at your Ethereum are involved in that until post-merge.
Speaker:So one of the arguments is after the merge, we'll actually see the price drop because
Speaker:a lot of people will take their money out of staking and maybe sell some of that off.
Speaker:I don't actually think that's...
Speaker:I think any dip would frankly be fairly short-term because if you recall, one of the things that's
Speaker:going on with Ethereum is we have the burning of transaction fees, essentially.
Speaker:So you have a reduction in Ethereum over time.
Speaker:And we've actually had days when the network is really busy where it has been deflationary.
Speaker:Now they burned a lot of tokens, but there's still been more tokens in general mined than
Speaker:were burned.
Speaker:Post-merge, the mining will stop.
Speaker:There won't be anymore.
Speaker:It will not be practical.
Speaker:And what does that mean?
Speaker:We'll be burning tokens, we'll be burning fractions of tokens really, but no mining.
Speaker:So we will be deflationary.
Speaker:So the supply of Ethereum will hit some all-time high basically right around the time of the
Speaker:merge.
Speaker:And it looks like if I'm not mistaken, if I remember correctly, it'd be around 120 million
Speaker:tokens.
Speaker:But post-merge, we'll see that number go down.
Speaker:So this is in a way similar to Bitcoin where Bitcoin, you have a fixed supply, 21 million.
Speaker:They'll not be mined any more than that.
Speaker:That number won't be hit.
Speaker:I think it's 2140 that it's hit.
Speaker:It's a long way off.
Speaker:Ethereum on the other hand, they did not set a fixed number, but they kind of approached
Speaker:it from this aspect where they said, well, we're basically going to make it deflationary.
Speaker:So when the merge hits, mining stops, people will be able to unstake their tokens if they
Speaker:wish.
Speaker:But you're going to see this immense pressure in my opinion from this deflationary aspect.
Speaker:So I do expect actually the price to go up afterwards.
Speaker:That is not financial advice and I'm not telling you to run out and buy Ethereum.
Speaker:I'm just giving you kind of my analysis of it.
Speaker:But I do think that's what will happen.
Speaker:So I think actually Ethereum will have a very promising future.
Speaker:Now we've discussed this.
Speaker:I talked about this just a couple of weeks ago or a week or so ago, week, week and a
Speaker:half.
Speaker:There's all this FUD out there, right?
Speaker:Oh, Ethereum is old and it doesn't scale and blah, blah, blah.
Speaker:Got high transaction fees.
Speaker:Meanwhile, nevermind Solana being down for hours and Terra Luna diving to zero, all of
Speaker:this kind of stuff.
Speaker:But okay, sure.
Speaker:So what I think will happen is I think at this point, it's already been delayed.
Speaker:I'm not going to dispute that.
Speaker:But I do believe somewhere around the August, September timeframe, proof of stake, the merge
Speaker:will happen.
Speaker:I do believe that you'll get a lot more focus at that point on scalability and understand
Speaker:one of the reasons why they chose not to run with scalability first is that they felt like
Speaker:there was being advances made by people like loop ring, for example, roll ups, right?
Speaker:These scalable structures that ride on top of Ethereum, so to speak.
Speaker:I don't think there's been enough adoption of that, honestly.
Speaker:And I do think that the scalability has hampered Ethereum.
Speaker:But after the merge, they'll focus on that.
Speaker:And I do believe even if they don't get it, they certainly probably won't get it in 2022.
Speaker:But I hope in 2023 by the end of the year that that happens.
Speaker:And that will really open the floodgates.
Speaker:We'll have a deflationary asset that's been online for a long time in terms of blockchain
Speaker:that is very secure, highly scalable.
Speaker:And there you go.
Speaker:And is already supporting billions of dollars worth of value on top of it.
Speaker:So it's maybe, quote, a long play in the blockchain world, 24, 36 months out.
Speaker:But I could see some really serious prices for Ethereum coming down the road during this,
Speaker:maybe during this next bull run.
Speaker:It depends on how long we're in kind of these doldrums.
Speaker:And if it's a year, then maybe it's not the next bull run, but the one after that.
Speaker:We will just have to see.
Speaker:All right.
Speaker:So that is kind of what's going on in Ethereum's world.
Speaker:I think a lot of people are very disappointed that a lot more hasn't happened this bull
Speaker:run.
Speaker:But the reality is, is that there's a lot of progress going on.
Speaker:And they've always been, the Ethereum development community, in my opinion, has always been
Speaker:very good about kind of ignoring what's going on, keeping their head down, so to speak,
Speaker:and doing the work.
Speaker:You could possibly argue maybe they're overly ambitious in their timelines.
Speaker:I think a lot of software developers are like that, frankly.
Speaker:But that's okay.
Speaker:All right.
Speaker:Just to kind of give my little market overview real quick.
Speaker:Everything in general is maybe up just a tad.
Speaker:I don't know.
Speaker:It's within this range.
Speaker:This is why I want to do video.
Speaker:I can't show you guys this kind of stuff.
Speaker:But it's in this range.
Speaker:We're at 29,658.
Speaker:I don't think we're breaking out yet, but maybe we'll get there soon.
Speaker:We will see.
Speaker:We will see.
Speaker:All right.
Speaker:All right.
Speaker:Cool.
Speaker:News.
Speaker:I did want to throw out this article.
Speaker:This isn't news, per se.
Speaker:I mentioned last week, or last episode, that Solana had experienced an eight-hour outage.
Speaker:I think it was eight hours.
Speaker:Anyways, another outage, blah, blah, blah.
Speaker:I saw a really, really bad video on Twitter of some of the core developers.
Speaker:He may have been the co-founder.
Speaker:I'm not sure offhand.
Speaker:They were in a meeting.
Speaker:There was three people.
Speaker:It was one of these Zoom meetings.
Speaker:Somebody recorded this, which they probably shouldn't have, really.
Speaker:But they were going on and on about Cardano being slow and blah, blah, blah.
Speaker:They're like, yeah, we go out there and make mistakes.
Speaker:That's how we develop so fast.
Speaker:It kind of made me mad, to be honest, because, again, about Solana, because, yes, as developers
Speaker:and I'm not a developer, but I know enough about it to whatever.
Speaker:I write code, if that makes you feel any better.
Speaker:I write a lot of code, actually, but anyways, we make mistakes.
Speaker:It's inevitable, but they were being very cavalier in this meeting about making mistakes
Speaker:that when they make a mistake, it affects people's finances.
Speaker:That's the thing that I don't... They're going to do okay.
Speaker:They may not become billionaires.
Speaker:They may only become millionaires if things don't work well, but the people who are investing
Speaker:in Solana who get wrecked because of stuff like this, they're the ones who get hurt.
Speaker:That's really what kind of bugs me.
Speaker:I saw this article though.
Speaker:I'll just throw this out real quick.
Speaker:Is Solana a buy?
Speaker:In other words, should you buy the Solana token with SOL price at 10-month lows and
Speaker:down 85% from its peak, which I did not realize it was so far down.
Speaker:I would actually argue, no, it's not going... I think it's going to go down more.
Speaker:It's at about $35 or so right now.
Speaker:I think we'll see $20 Solana before this is over because I don't think they're done.
Speaker:I don't think they're done going down, honestly.
Speaker:I would still not recommend buying it at $20, much less at $35.
Speaker:I've went through all that.
Speaker:I will not belabor that.
Speaker:I just thought that was an interesting little article.
Speaker:The one big news item, all right, unfortunately it's not really good.
Speaker:If you remember back in April, a whole two months ago, the New York assembly, their version
Speaker:of the congressional house, I guess, the house, but anyways, the state assembly passed a bill
Speaker:in April banning proof of work mining.
Speaker:That bill went on to the Senate.
Speaker:The Senate has now approved a bill that would prohibit mining, specifically any new Bitcoin
Speaker:mining, proof of work Bitcoin mining in the state.
Speaker:Now they're not going to run the current operations out.
Speaker:They're saying we can't have any new operations.
Speaker:All that has to do at this point is be approved, signed by the governor.
Speaker:Now I'm going to guess that the governor is going to sign that.
Speaker:I'm going to actually talk about this on the next episode because I think we need to unpack
Speaker:this because there's a lot here in my opinion.
Speaker:I will just say real quick what I think.
Speaker:I do believe that this is a huge mistake for New York.
Speaker:I actually think it's very weird, in fact, that the mayor of New York City is very pro
Speaker:Bitcoin at this point, or pro crypto if you want to put it that way.
Speaker:He's getting paid in Bitcoin and that's well known.
Speaker:And yet you've got this going on because of some agenda.
Speaker:So we're going to talk about this on the next episode.
Speaker:I'll put the link in the show notes, but next Friday's episode, that's what I'm going to
Speaker:talk about because I, whatever, I think it's worth the discussion, frankly.
Speaker:And I'm not just going to talk about New York, but I'm going to talk about these states in
Speaker:general and how they are handling this because it's getting to be very apparent that different
Speaker:states are doing different things and time will tell what that really means.
Speaker:I'm actually going to New York this week.
Speaker:I'm getting on a plane here in a few hours, so I'm going to get this podcast ready.
Speaker:It's going to go out on Monday morning and then I'm going up to New York for a work conference.
Speaker:I'll be there until late Thursday night.
Speaker:I should be hopefully getting back home.
Speaker:So I'm going to record this.
Speaker:I'm going to go ahead and record this next episode and they will be queued up and ready
Speaker:to go.
Speaker:So hopefully we won't have any breaking news this week.
Speaker:If we do, I will post about it on Twitter, but I will not have an opportunity to add
Speaker:any news to the next episode.
Speaker:All right.
Speaker:And so that's going to wrap it up.
Speaker:We didn't have any boost or anything like that this week.
Speaker:I did want to let y'all know earlier today, I actually made an actual donate button and
Speaker:I want to change the button so it says support the show because really I feel like that's
Speaker:far more accurate than donate.
Speaker:Donate has a whole connotation to it that I'm not particularly a fan of.
Speaker:But if you recall during the last episode we were discussing these other shows that
Speaker:do this type thing and some of the fun things that they've come up with as their users boost
Speaker:and whatever to support the show.
Speaker:I wanted to throw some of these out and I still don't know what 3333 means by the way.
Speaker:So silent of the times, if you want to actually maybe shoot me an email, macintosh@genwealthcrypto.com
Speaker:and let me know if you do know or if you just happen to choose that, I don't know.
Speaker:But a row of ducks as I mentioned last week is 2222 or 222 for that matter.
Speaker:You can change this as you wish.
Speaker:That's a row of ducks.
Speaker:A row of sticks, I heard this actually today or yesterday on the podcasting 2.0, somebody
Speaker:sent this in, is 1111, sticks, ones.
Speaker:The lead boost is 1337 and that has to do with a, I don't know, I was never into that
Speaker:kind of stuff.
Speaker:I've heard of it.
Speaker:Now I sound like I don't know what I'm talking about, which I do, but anyways, it's called
Speaker:the lead boost, 1337.
Speaker:Actually if you flip that upside down, I think that's what it is, L-E-E-T.
Speaker:Now I'm going to look it up.
Speaker:It's in lead text or whatever.
Speaker:Interesting.
Speaker:The historical usage of lead was a yearly or half yearly court of record that the lords
Speaker:of certain manners held.
Speaker:1337 means elite or lead.
Speaker:That's where the lead comes from.
Speaker:I don't know why 1337 represents that part.
Speaker:I don't, if you flip, L-E-E.
Speaker:See if I flip it upside down, boy, somebody's going to send me an email and say, you knucklehead,
Speaker:that's this, but I don't know.
Speaker:It's always, I've always heard it associated with that, whatever.
Speaker:The lead boost is 1337 and I heard another one on the podcasting 2.0, which I'd never
Speaker:heard before yesterday or today.
Speaker:This one is hilarious.
Speaker:I'm going to start using this one when I boost shows.
Speaker:It's the I can't drive 55 boost and it's 5555.
Speaker:I'm a little bit of a kind of a car slash truck person and yeah, that one's funny at
Speaker:least to me.
Speaker:So there we go.
Speaker:So maybe some things that you can do.
Speaker:That's it for this week.
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Speaker:You can support the podcast in three different ways, time, talent or treasure.
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Speaker:and guys, I got to tell you something.
Speaker:The stuff that's going on with these podcasting 2.0 apps is amazing.
Speaker:So on the last issue, last issue, last episode of podcasting 2.0, it comes out on Friday
Speaker:afternoons normally and they actually came out late this time because the person that
Speaker:they were talking to was an Australian.
Speaker:That time just worked for them.
Speaker:Anyways, they create the feed, which is something that you need.
Speaker:Don't worry about it.
Speaker:It's just, it's a backend thing.
Speaker:And they set the live tag and when it goes online, and this is a fairly automated process
Speaker:at this point, they show up as live and if the app supports the live tag attribute, then
Speaker:the app will tell you that that podcast is live and then you can start listening right
Speaker:then as they're recording, it's automated and it's getting really kind of slick.
Speaker:It's pretty doggone nice and there's things going on that in the end are just going to
Speaker:blow the doors off of all the YouTube and Apple podcasts, Spotify, whatever stuff that's
Speaker:out there.
Speaker:And it's just done by a bunch of people who says, we're tired of these companies taking
Speaker:control of our stuff and we want control and they're doing a terrific job of it.
Speaker:I'm doing what I can to help, which is honestly not a whole lot, but I do do what I can.
Speaker:Okay, sorry.
Speaker:If you'd like the content, I would love it if you would tell your friends about the generational
Speaker:wealth of cryptocurrency podcast and thanks for being here.
Speaker:I hope this has been helpful.
Speaker:I sure would love to hear from you.
Speaker:I'm on Twitter at MacintoshFintech and you can reach me by email at macintosh@genwealthcrypto.com.
Speaker:Of course, the generational wealth website is at genwealthcrypto.com.