Ethereum is “the most valuable asset in the world”, and now it’s just a waiting game – CEO of Ether Capital

(Kitco News) With the crypto space focusing on the Ethereum merger, which is only three weeks away, many are looking at the long-term investment picture, and for some, Ethereum is emerging as the top draw.

“I see it as the most valuable asset in the world. It’s just a waiting game now and everything unfolds over time until it reaches that goal,” said Brian Mosoff , CEO of Ether Capital, to Kitco News.

There are a few key elements behind Mosoff’s sentiment. These include Ethereum’s potential as a network, its post-merger staking capabilities with the proof-of-stake protocol, and its yield.

What sets Ethereum apart?

Following initial crypto industry excitement around Bitcoin, Ethereum changed the recipe, Mosoff described. “For me, what’s exciting about Ethereum is that it’s going to capture all of this economic activity in this one layer,” he said. “Bitcoin is this global settlement layer for a single bitcoin asset, but Ethereum is this global settlement layer for any asset or set of assets,” he said.

Whether it serves as a settlement layer for more crypto-native activities like Metaverse, NFTs, or DeFi, or it is used to settle stablecoins. Or even applied to tokenize dollars or yen, or euros and used as a settlement layer between data centers, completely removing the SWIFT network, Mosoff said. “It’s an order of magnitude improvement over what a blockchain could be,” he noted.

The idea is now ready to go, and it’s only a matter of time before all these new economic possibilities are built online on the Ethereum blockchain.

“You’re looking at more transparent on-chain insurance and loans or a layer 2 built-in privacy mechanism. There’s so much going to be built into this space. It’s a long bet term of what is going to happen in the next five to ten years,” he said. “This is a global movement on how to program all kinds of economic activities and give communities the ways to have bottom-up capabilities to create tools and ways to interact that you can’t in the traditional financial system.”

Mosoff pointed out that Ether Capital has invested the majority of its balance sheet in Ether as a core strategic asset and a yield-generating instrument. “We call this a one-of-a-kind asset. We have completely bought into this and continue to believe that it will outperform many of these other verticals. We haven’t scratched the surface yet,” he said. .

Fusion

All eyes are on the merge, which is set to take place on September 15, despite recently discovered bugs in the mainnet merge updates.

The merger will see Ethereum transition to the more energy-efficient proof-of-stake protocol from the energy-intensive proof-of-work protocol. Energy consumption after the merger will drop by 99.9% and the issuance of new ETH tokens will be reduced by around 90%.

With the proof-of-stake protocol, minors are no longer needed. Instead, people would stake their coins to be validators and verify new transactions before adding them to the blockchain. Individuals would be chosen based on the number of staked tokens they possess and will be rewarded with Ether (ETH) by the network.

“It will turn an unproductive commodity into a yield-generating instrument,” Mosoff pointed out. “Bitcoin is not productive. It just sits there. You can keep it. You can use it as a tool to accomplish something, have more self-sovereignty, and be able to move your assets between jurisdictions. But you cannot generate a return without putting it in trust with a third party or exchanging it. And Ethereum will become the link with the protocol. Now you are going to be able to stake this ETH, which is in fact the risk-free rate.

Post-merger, ETH staking could return between 8% and 12%, according to some analysts.

This is a big deal for institutional investors interested in crypto and want to maintain their ESG mandates. However, there are other short-term risks associated with the merge, including a potential proof-of-work fork, delays, or bugs.

“There may be additional volatility between now and whenever the merger happens because of the stories that are swirling around, rumors, people saying there’s going to be a proof-of-work fork, it’s not really alright happen, it’s going to be delayed,” Mosoff explained. “I don’t think it should be said that this is a guarantee of success. But if it does happen, you are now going to have this asset with all the most interesting activities that correspond to these ESG mandates from which you can generate a return. This is a really big deal in crypto.”

And investors who stayed away will start paying attention. “We’re talking about investors who want to deploy $500,000 or millions of dollars,” Mosoff said. “How do they do it? What’s it going to look like? And we’re still at that part of the conversation to figure it out.”

For Mosoff, the exact date of the merger is less important. “It has to happen when the developers are comfortable with it. You can’t have a problem. It’s not about phasing the merger over a three-month period. It’s about a single-block switch. The stakes are very high.”

Mosoff advises new investors not to get too caught up in the fluctuations of specific 24-hour or seven-day price movements. “I don’t think they’re doing themselves a favor by focusing on whether it’s a good week or not. It’s not an asset class that you hope will rise 5% steadily per year for the next ten years. This is not a dividend-paying stock of any of the Canadian banks.

The potential for Ethereum is to be that layer of settlement for all global economic activity. And that’s worth a lot more than just valuing the market capitalization of a big tech company, Mosoff pointed out.

“So when people say Ethereum could be a $2 trillion asset, which would be 10 times what it is today. To me, that sounds like not understanding the exponential part of the curve and what Ethereum’s growth may look like. Ethereum is trying to be that trusted layer of the internet, and so much activity will connect to it for security and confirmation to other participants. That’s trillions of It’s hard for us to imagine how valuable that can be.

It could take 20 years, but that’s why it’s a waiting game while the community builds and grows, Mosoff added.

Regulatory barriers

A potential impediment to the development of Ethereum and crypto, in general, would be harsh regulatory oversight that could discourage experimentation, according to Mosoff. “There’s a messy regulatory tussle between how much you can control these assets. Are we ending up with a fork in space?”

One scenario is that the community will end up with this watered down version of crypto, with the authorized version of DeFi being whitelisted and trading.

“Do you think if the internet had been invented today it would have evolved the same way? As open and permissionless as it has become. I don’t think that would be the case. I think governments would want more of control, and things would have come closer to an Internet experiment in China or Russia. And that would be the Internet that we would have,” he said. “The focus in crypto is definitely on regulation and compliance enforcement, and whatever happens technology and innovation will have to deal with.”

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. This is not a solicitation to trade commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for loss and/or damage resulting from the use of this publication.

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