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By Jeff Benson
In brief
Kevin O'Leary, the Canadian investor best known for his role as "Mr. Wonderful" on the reality competition show "Shark Tank," has made a U-turn on cryptocurrencies this year.
He's now driving straight toward Ethereum after the network's London upgrade last week, which started creating deflationary pressure on ETH's price.
"If Bitcoin is sound money because of the 21 million coin supply ceiling, Ethereum enjoys the same benefit now," O'Leary told viewers on Cameo, an app for people to pay celebrities to shoot short videos. "It's ultra-sound money because there's no supply floor," said O'Leary, in what amounts to a paid ad for ETH.
O'Leary was referring to the effect of EIP-1559, a code change within last Thursday's London hard fork that changed the network's fee structure. Instead of fees going to miners, they now go back to the network and are then burned, or permanently removed from circulation. With the supply growth rate of ETH decreasing—over 18,600 ETH ($59 million) have been burned since Thursday—the price has risen 21% in seven days.
The shark compared it to a business becoming profitable, with more revenue coming in than expenses going out. Profits being burned, he suggested, is the equivalent of giving a stock dividend to shareholders.
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Like some other major investors, O'Leary publicly shifted his stance on Bitcoin as the cryptocurrency's market cap swelled in the second half of 2020 and peaked in early 2021. On the record as calling BTC "hot garbage" in 2019, he shifted in March to an investment strategy that involved placing 3% into Bitcoin and Ethereum.
Mr. Wonderful's co-star, Dallas Mavericks owner Mark Cuban, is also a big proponent of Ethereum. In April, he told podcast host Laura Shin: "Obviously with EIP 1559, everything changes. What happens going forward is going to really impact how people perceive it specifically as a store of value." Cuban was making a larger point that Ethereum already has utility, given NFTs and smart contracts on the network; EIP-1559 reinforces its use as a store of value.
Some outside the traditional investment world have been quick to point out that the effects of EIP-1559 are still being tested.
"I think EIP-1559 is quite cool but anyone making predictions about ETH supply thanks to EIP-1559 is going to be proven wrong—in any direction," tweeted former Zcash Executive Director Josh Cincinnati.
"The uncertainty around the hard fork in general is likely putting downward pressure on the market right now," Taylor Monahan, CEO of wallet provider MyCrypto, told Decrypt ahead of EIP-1559 last week. That's partially because network developers aren't done innovating; the blockchain is changing consensus mechanisms in the coming months. "If the hard fork occurs and everyone thrives, that pressure should alleviate in the weeks following the fork. Until people start to think about ETH2 or whatever the next scary thing is."
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