What Happened: Canadian investor and TV personality Kevin O’Leary explained in a Cameo video that Ethereum’s (CRYPTO: ETH) new upgrades could see it becoming ultrasound money in the near future.
— Taras.eth | Taras Bobrovytsky (@TarasBob) August 9, 2021
Although he is likely reading from a script provided by the person that purchased the Cameo video, some viewers on Twitter pointed out that he might not have agreed to speak on the subject unless he believed it to be factually accurate.
“There’s a major change going on right on in Ethereum that you should know about,” he said, acknowledging the introduction of EIP-1559 on August 5.
“It introduced a very important change to the monetary policy of Ethereum. Currently, the fees that users pay to send transactions go to the miners, but after this improvement, the fees will be burnt instead.”
“When you combine this with EIP-3675, which switches the network to Proof-of-Stake, and is coming in a few months, Ethereum will become deflationary,” he explained.
Highlighting that the number of coins in existence will begin to decrease, O’Leary made a case for Ethereum as ultrasound money by comparing its changed supply dynamics to Bitcoin’s (CRYPTO: BTC).
“If Bitcoin is sound money because of the $21 million supply ceiling [Ethereum] is ultrasound money because there is no supply floor,” he said.
At that point, O’Leary said that Ethereum can be thought of as a traditional business and can be analyzed like one.
Ethereum’s transaction fees would be the network revenue, while its expenses paid to employees would be the amount paid to Proof-of-Stake validators to secure the network, he said.
“Ethereum is going to be one of the only blockchains…that is generating profits and expect to have a price to earnings ratio of about 15 to 20 times,” he said.