For the majority of my crypto journey that started in late 2012, I really only held bitcoin long term. While there were many times I speculated on altcoins, even running my mining operation in 2013 around them, I kept everything moving back into bitcoin. I may have missed out on some massive appreciation from coins that would ultimately 1000x, but I always was not keen on picking winners and losers. For the most part I tend to stick with things I believe will long term.
However, for the first time I have moved part of my bitcoin stash into a long term investment that I dont plan on trading or selling, which is Ethereum. I decided that the correct amount for myself personally was to diversify 25% of my long term bitcoin stash as I would be comfortable, albeit still upset, if it were to go to zero. I made this transition through weekly averaging starting in December and finally made the full move a few days ago. I decided this would be the best move forward instead of doing it in one go.
So why did I make the move over and what is my reasoning behind such a large percentage of my portfolio? If you want a quick TLDR and dont care about the reasons, here it is, Ethereum is actively taking steps to make ether an asset that is a store of value rather than what I believe was a utility token in the past. So how are they doing this and what are the plans moving forward? Mostly it focuses around ETH 2.0 which is going to be broken into phases, the first one, phase 0, launching hopefully before the end of the year. (optimistically, before the end of the summer). Phase 0 creates the new ETH 2.0 chain, but more importantly it brings the ability to stake ETH.
Staking ETH in phase 0 does have high rewards but I would personally avoid it for the time being and let others with higher risk tolerance risk their coins first. Nothing brand new is 100% secure and when it comes to your money, I always recommend slowly easing in. Also phase 0 is a one way bridge where you will need to move your ETH 1.0 over and you wont be able to have access to it until the chains merge, which all likeliness wont be for a few years. However if you have a high risk tolerance and you don't mind not having access to your coins for a few years, the staking rewards will most likely be in the 6%-10% a year range.
The importance of staking not only creates a sort of dividend for those willing to hold ETH long term, but it creates a supply shock as a large percentage of coins no longer will be in circulation. They will literally be locked up with no way to sell. Even with a large percentage of the network staking you will most likely be getting 3% dividends on your stack per year, which brings in long term investors looking for a deflationary asset that pays a dividend unlike gold or bitcoin. High net worth individuals have always seen cashflow scare assets (see real estate) as a way to store value and I believe this will be no different.
Look forward to part two where I will talk about how the inflation rate of Eth 2.0 is doing a complete 180 from Eth 1.0. If you have any questions feel free to ask them below!
-Calaber24p