Welcome to our weekly mailbag edition of The Daily Cut.
This is where you get to put your questions to Teeka Tiwari, Jeff Brown, Dave Forest, Nick Giambruno, Jason Bodner, Dan Denning, and the rest of the Legacy Research crew.
So if you have a burning question you’d like to ask any of them, be sure to send it to us at [email protected].
Coming up, Teeka reassures a reader about the future of the bitcoin blockchain…
Nick warns against keeping bitcoin on crypto exchanges…
And Jeff shares his take on the semiconductor supply crunch that’s hitting everything from washing machines to TVs to Ford F-150 pickup trucks.
I (Chris Lowe) will also bring you the latest responses from your fellow readers on a question that’s lit up the Legacy mailbag lately: Is a college education a waste of time?
First, two questions about bitcoin (BTC).
As I wrote about in more detail in yesterday’s dispatch, so-called miners are the auditors of the bitcoin network.
They provide the expensive computing power necessary to secure it cryptographically. And they verify that each new group of transactions (called a block) added to the blockchain is the real deal.
In return, they receive newly issued bitcoin. Right now, that reward is 6.25 bitcoins.
But thanks to a phenomenon called the halving, every roughly four years, the reward gets cut in half. This will happen until 2140. That’s when we’ll reach the hard cap of 21 million bitcoins… and the last bitcoin will be mined.
Looking to the future, one reader wants to know what’s in it for the miners after they mine that last bitcoin…
Reader question: If miners are needed to maintain the nodes on the bitcoin blockchain, what happens when the maximum number of bitcoins is reached?
Where’s the incentive for anyone to “maintain” the nodes with no bitcoin reward?
– Thomas S.
For an answer, we turned to one of the world’s most closely followed crypto experts, Teeka Tiwari.
Teeka was the first person in our industry to focus a major financial newsletter, Palm Beach Confidential, solely on crypto.
He first recommended bitcoin to his readers in April 2016. Since then, it’s up 8,532% – enough to turn a $1,000 grubstake into $86,320.
And he’s helped many of his readers become crypto millionaires.
Teeka says there’s no reason to worry about the future of bitcoin. It all comes down to a change in the way miners will be rewarded…
Teeka’s response: Hi Thomas, that’s a great question. The short answer is miners will continue to run the network when all the bitcoins are mined. They’ll earn their money through transaction fees.
Over time, transactions will grow as bitcoin reaches mass adoption. And mining fees will replace the reduction in mining rewards.
In 2036, 99% of the bitcoin supply will have been issued. By then, miners will primarily be earning bitcoin from fees associated with keeping transactions secure. Hope that clears up any confusion for you.
Next up, a subscriber of The Casey Report wants to know whether it’s really so important to keep your crypto in a digital wallet app rather than on an exchange…
Reader question: I have used Coinbase up until now because of its ease. I also have a Cash App account. I could put my future bitcoin in there. Is there really a high risk to holding on Coinbase and other exchanges? I have never considered my own wallet, and I don’t know how to get one.
Thanks again for the great work – I learned things I did not know from your articles. I really do appreciate it. Thank you.
– Drew W.
Standing by with an answer is Casey Report chief analyst Nick Giambruno.
Nick recommended bitcoin as an alternative “hard asset” to gold in June 2018, back when bitcoin was trading for just $6,300. (It’s at $36,944 at writing.)
He’s also given our Casey Report readers the chance at a 138% gain on software maker MicroStrategy (MSTR).
He recommended this stock to his readers last June after it announced it was converting part of its balance sheet from U.S. dollars to bitcoin.
Nick’s response: You can think of bitcoin as a digital bearer instrument. A bearer instrument gives whoever has it in their possession ownership of it.
So your bitcoin absolutely is at risk if you keep it on Coinbase or Cash App. If you own your bitcoin on those platforms – or with any other custodian – you don’t really own your bitcoin. You own a bitcoin IOU, which is something very different.
It’s much more secure to hold your bitcoin in your own wallet, off the exchange’s website, and where you control the private keys. As bitcoiners like to say, “Not your keys, not your bitcoin.”
These steps might seem complicated at first. That’s why I created a series of walkthrough videos to guide you through the process of setting up your own wallet. Casey Report subscribers can access these videos here and a PDF guide here.
If you’re not yet a Casey Report subscriber, find out how to join here.
Switching gears, longtime readers will need no introduction to Legacy’s tech expert, Jeff Brown.
Jeff is a Silicon Valley insider and early-stage tech investor. He’s scored a series of stunning wins in tech stocks for his paid-up readers.
One of the profit opportunities he’s put on his readers’ radars is the boom in semiconductor stocks.
Readers of his large-cap tech investing advisory, The Near Future Report, are up triple digits on two semiconductor stocks he recommended.
Nvidia (NVDA) is up 319% since Jeff added it to the model portfolio in January 2019.
And Taiwan Semiconductor Manufacturing Company (TSM) is up 201% since he added it to the model portfolio two months later.
But a semiconductor crunch has been making headlines as demand outstrips supply.
And one Jeff reader wants to know what this means for the tech sector…
Reader question: Can you provide an outlook on the semiconductor sector? With the short supply and high demand, what are the short-term and long-term effects on this sector?
What is your outlook on when manufacturing will improve to meet the demand and growth for 5G, artificial intelligence (AI), data centers, robotics, electric vehicles (EVs), electronics, the Internet of Things, etc.?
– Mike H.
Jeff’s response: Hi, Mike. Thanks for sending in this question. The semiconductor sector is getting a lot of attention these days. I’m happy to provide an update.
As you noted, semiconductors are used in many tech trends. They’re the “brains” of all electronics. And as bleeding-edge technologies such as AI, robotics, and 5G become more prevalent and complex, the demand for semiconductors goes up.
That’s why the recent supply shortage has been causing so much trouble.
One of the areas most impacted by the recent shortage has been cars, which now have a lot of complex electronics in them. Even rental agencies have struggled to find enough new cars.
The rise of EVs is one of the main causes of the crunch in this space. Each EV needs up to five times more semiconductors than an internal-combustion-engine car.
I wouldn’t be surprised to see the number of EVs sold in 2030 jump to more than 40 million – perhaps as high as 50 million. For this reason alone, we can predict the semiconductor market will continue to expand over the next several years.
Right now, the makers of these chips are playing catch-up.
Semiconductor manufacturers such as TSM, Samsung, and Intel are spending tens of billions of dollars to build new foundries to keep up with this growing demand.
But it takes time to build these complex factories and get them prepared for mass production. Sometimes, this requires constructing entirely new fabrication plants, which usually takes two or three years.
And sometimes chipmakers simply add another manufacturing “line” to an existing semiconductor plant. This can happen far quicker, in less than a year.
We will start to see relief from many of the shortages toward the end of this year. But there are sectors of the semiconductor market that will see shortages well into 2022.
We’ll wrap up today with a question that’s stirred up a hornet’s nest: Is a college education a waste of time and money?
Legacy Research cofounder Doug Casey says it is.
In a recent edition of our Casey Daily Dispatch e-letter, Doug said young people should think twice before investing in a college degree…
It’s a gigantic mistake to sit in a classroom with other young people who know as little or less than you do, while dissipating $200,000 or $300,000 and four or more years […]
College has become an extremely expensive and stultifying way to transform kids into […] no more than drones, cogs in the wheel.
His take continues to strike a chord with your fellow readers…
I think Doug is spot-on with his opinion that kids should avoid college. Beyond the ridiculously high costs, nearly every public university is nothing more than a proxy for the leftists, socialists, and Marxists. Ask yourself why leftists end up in teaching professions. It’s because they would never make it in the real world, where one is forced to compete.
Instead, they hide out in colleges and poison the minds of our children. And most parents unwittingly agree to pay through the nose for this treatment. Complete idiocy.
– Phil N.
I’m neither financially literate nor college-edumacated. In fact, I’m from Mississippi. So I’m probably just a backwoods hick. I’ve only left the country once when I was a kid to visit the Bahamas with my dad.
I will be home-schooling my kids and encouraging no college indoctrination – I mean education – for them.
I am a tradesman, and I am doing much better than most of my college-educated friends who are fighting debt due to a degree they are not even using.
– Christopher V.
But not all your fellow readers believe a college education is overvalued…
I’m thankful my doctor studied medicine.
I’m thankful I can hire a person who studied law to defend me in court if I am falsely accused.
I’m thankful the teachers in our nation’s schools studied education.
I’m thankful for people with degrees in cybersecurity who help keep our nation safe… and for people with engineering degrees who designed the bridges I drive over… and hundreds of other college and university graduates who serve each of us in countless ways every day.
– Karen W.
That’s all for this week’s mailbag.
Remember, if you have a question for anyone on the Legacy team, send it to [email protected].
Have a great weekend.
May 21, 2021