A few days ago, I told someone I was looking forward to March Madness.

This is not what I had in mind.

As we continue to watch the war in Ukraine unfold, the economic effects are beginning to take shape.

On Tuesday, the price of U.S. benchmark West Texas Intermediate crude spiked 11.5% intraday to as high as $106.78 per barrel. (Today, prices are nearing $112 as we go to press.)

International Energy Agency announced yesterday the release of 60 million barrels of oil from global reserves to help relieve the global supply situation. Fat chance. According to CNBC, this amounts to about 6 days of Russian production and about 12 days of Russian exports.

Meanwhile, according to AAA, the national average for a gallon of gas has risen to $3.65 per gallon.

While I don’t want to diminish the human cost, I do hope you took the advice from our experts who gave bullish signals on energy over the past few months. Energy stocks are on a roll, and that’s unlikely to change anytime soon at the rate things are going.

Other economic impacts will likely play out from this conflict. Under increasingly punishing sanctions from the West, will Russia turn to China? Will Europe pivot its energy policy and lean on the U.S. (instead of Russia) for liquefied natural gas (LNG) as it seeks to decarbonize its economy?

Another interesting development I’ve noticed is the role cryptocurrencies are playing in the Ukraine/Russia conflict.

Stick with me here…

As ordinary Ukrainian and Russian citizens have found themselves caught up in the chaos, I’ve seen reports of people turning to cryptocurrencies as a way to access money and help those in need. For example, this article from Coindesk touches on several crypto-fundraising projects that have circumvented the traditional finance system to quickly raise and disburse funds to humanitarian efforts.

Of course, all of this is overshadowed by the destruction and suffering right now. But keep an eye on these details. War and conflict have a way of accelerating economic and technological trends. Stay tuned…

Picking Up Where We Left Off…

In the meantime, I want to pick up where we left off last week in our discussion about the basics of cryptocurrency.

As I explained back then, my colleague Jimmy Butts is in the process of walking his readers through the basics of cryptocurrency. He’s been spending the past few weeks answering some of the most common questions readers have, encouraging investors to educate themselves about crypto (even if they aren’t willing to invest), and he even just recently made his first two recommendations in this space for premium readers.

It’s all part of the expanded mission of his premium advisory, which we’ve rebranded as the Capital Wealth Letter.

Below, Jimmy addresses three common questions readers have about this new form of money.

Enjoy,

Brad Briggs
StreetAuthority Insider

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3 Basic Questions About Cryptocurrency, Answered…

As you may be aware, I recently announced that my premium readers and I will be dipping our toes into the cryptocurrency waters. As I explained, while our fundamental mission will still be primarily focused on equities, we’d be doing ourselves a disservice if we didn’t expand our horizons a little bit.

I’ve received a lot of wonderful feedback, and I’m very grateful for all of the responses.

Today, I want to continue those discussions by addressing a few more questions I’ve received.

As I’ve mentioned before, my goal here is simple. Whether you decide to invest in cryptocurrencies or not, I’m hoping you’ll walk away with a better understanding of this new alternative asset class.

With that said, let’s get to it…

Question #1: Why is it called “crypto”-currency?

This is a great question, and I’m glad some of you aren’t afraid to ask. The easiest way to think about this is that cryptography is the secret sauce in cryptocurrencies. And this is why people are so excited about it…

Cryptography is the study of secure communications techniques that allow only the sender and intended recipient of a message to view its contents.

Cryptography plays a crucial role in making bitcoin secure… and it’s far from new.

Think about when you log into your bank account online or enter your credit card information on your computer to make a purchase. This sensitive data is secure because of modern cryptography.

Web browsers and Internet protocols help us create digital secrets automatically when we send private information from our computers and smartphones. Similar cryptographic technology is used by the bitcoin network.

Hence the name cryptocurrency. There’s a lot more to say, of course, but this leads us into another question I’ve received…

Question #2: What Is The Blockchain?

Remember last week, when I said that in our current system there are a lot of players at work behind the scenes to transfer our money in exchange for goods? All these players create weak spots in the transaction that can be exploited by fraudsters.

If you sell something on Craigslist or Facebook Marketplace, you’re probably only going to accept cash.

When it comes to bitcoin a common question is how do we know if the person opposite us has enough bitcoin in their wallet to pay for the good or service we are selling?

And the answer is the blockchain.

Let’s think about this in the context of bitcoin. If bitcoin is money, then its blockchain is the ledger that keeps track of who owns this money.

The blockchain is basically a database. It stores data about every single transaction. Everyone can see the block data. But since it only records bitcoin addresses (not names), it offers a degree of anonymity. And since the blockchain data is visible, bitcoin users can agree on its accuracy. That means we can trust the blockchain, instead of having to trust other bitcoin users.

What’s more, the blockchain doesn’t belong to any one database. It’s not centralized.

In a centralized database, there’s one copy on a computer or server that users can access. If the server fails, the entire network is shut down. Also, if the data on the server is compromised, then all the users will see faulty data.

A distributed database, on the other hand, has no single point of failure. Many copies of the database exist. And these copies can be used to verify each other’s accuracy.

Bitcoin operates on a distributed network. It’s estimated that more than 10,000 computers are running the Bitcoin protocol around the world. If some of these “nodes” fail, the bitcoin network continues to function. Also, thousands of copies of the blockchain exist, which helps ensure the integrity of the data.

This is a key part of why you often hear that blockchain technology will revolutionize our way of life. Remember, blockchain is really just a ledger… a special type of distributed ledger, but a ledger, nonetheless. And a big benefit of this distributed system is that verification comes from the consensus of many nodes. The network has agreed that the transactions in a block that is being added to the blockchain are all valid.

It would be hard to hijack this network. Consider that a malicious group would need to control more than 50% of the processing power of the bitcoin network to corrupt the blockchain. That’s an unlikely scenario, given the size of the network.

Question #3: How High Will The Price Of Bitcoin Climb?

Bitcoin’s price, like any other freely traded asset, is the market’s consensus of its worth. Its price is the equilibrium that balances supply and demand at that moment in time.

How high bitcoin’s price can go is anyone’s guess. But even the loftiest price targets out there are achievable.

Think about this… bitcoin — and other cryptocurrencies — are competing with global currencies like the U.S. dollar, and even gold and silver. Like anything in business, these forms of money are jockeying for their place in the world. Looking to steal market share from one another. For years gold was the standard, then we went off the gold standard and now the U.S. dollar is king. The euro and Chinese yuan are always nibbling at the heels of the U.S. dollar to knock it off its pedestal.

Now, bitcoin has elbowed its way into the room and is looking to steal share from gold and traditional currencies.

It is estimated that the total value of all the gold that has been mined (so far) is around $8 trillion. The amount of broad money globally according to the Central Intelligence Agency’s World Factbook sits at about $80 trillion. (“Broad money” includes coins, bills, time deposits, money-market, savings, and checking accounts.)

These market values of gold and cash can provide some benchmarks for hypothetical prices of bitcoin.

At bitcoin’s recent high of $69,000, it had a market value of about $1.3 trillion. At $100,000 per bitcoin, its value would be close to $2 trillion. That’s only 25% of gold’s current total value and less than 3% of global broad money.

At $500,000 per bitcoin, its total market value would be nearly $10 trillion, which would exceed the value of gold, but it would only be about 13% of global broad money.

That’s really not that far-fetched of a price target over the long run if bitcoin becomes a global money standard and takes sizeable share from fiat currencies.

Editor’s Note: As we mentioned earlier, Jimmy just made his first two cryptocurrency picks over at his premium service.

And he just released another BIG prediction about cryptocurrencies in his annual list of predictions for 2022…

In short, Jimmy and his team predict that cryptocurrencies will surge again in 2022… but the big winner won’t be Bitcoin, Binance, or Ethereum. They think another cryptocurrency is now a better bet for new investors. It is 321 times faster than its prime competitor and could surpass it in value…

Learn more about our “shocking” investment predictions for 2022 right here.