Ethereum [1] is widely regarded as the number 2 crypto-currency behind Bitcoin. Vitalik Buterin, the creator of Ethereum is a Bitcoin fanatic who understood deeply, the intrinsic value of crypto-currency and the limitations of Bitcoin.
Ethereum is a "Turing Complete" platform that allows programmers to build trustless smart contracts enabling highly creative value transfer. Ether is the currency integral to the operation of Ethereum. Each computation requires Ether. This is truly a world first. Ethereum can also be described as a virtual machine that runs on top of the internet stack. It cannot be censored or shut down since it is decentralized (no single point of failure).
Ok this is all great but the reader just wants to know whether they should buy. Have they missed the boat or is it about to sail?
How do we come up with a meaningful valuation for Ether? Well, at its core is a team of developers, keen to improve the world, akin to an early Google. These folks are highly motivated both politcally and financially to bring Ethereum to the mainstream. I see it entirely feasible that the market capitalization of Ethereum could grow to at least that of a large tech company in the next three years, say $500 Billion. There are currently $94 Million Ether in circulation and there is expected to be 100 Million in circulation by around 2020 [3]. Inflation is minimal [4]. This equates to roughly $5000 for 1 ETH.
Conclusion:
The author recommends ETH as part of a diversified crypto portfolio. There is plenty of upside potential which outweighs the downside. Aside from the money it is a very cool project to be a part of.
References:
- https://github.com/ethereum/wiki/wiki/White-Paper
- http://www.marketwatch.com/story/this-is-how-much-money-exists-in-the-entire-world-in-one-chart-2015-12-18
- https://np.reddit.com/r/ethereum/comments/5izcf5/lets_talk_about_the_projected_coin_supply_over/dbc66rd/
- https://ethereum.stackexchange.com/questions/12501/what-is-ethereums-inflation-rate-how-quickly-will-new-ether-be-created
Disclaimer:
Investing in Crypto-Currency carries high risk.
"Inflation is minimal."
I just wanted to point out that Ethereum is actually DISinflationary to begin with. There is actually No inflation. In fact, it disinflates as the ETH reward goes down over time reducing the supply but the demand grows with adoption.
True, you could argue that adoption may decrease lowering the demand, but then, we wouldnt be talking about $5300 would we?
I would also like to note that I have small mining farm mining Ethereum myself :).
It's a great investment I believe, and with 2 hard forks looming and %268 percent growth this year.... Now is the time :).
+trucudus. Many thanks for your reply. Do you have a price projection, based on fundamentals you would like to share?
Sure. As Ethereum nears the forks, you will see some pretty nice pops (Even today it rose almost %10 in the ETH/BTC Market due to the fork looming in the immediate future. This happens because people know that any Ethereum they are holding will give them an equal amount of the new currency as well as allowing them to hold their ETH... So, if the new currency becomes worth %11 of ETH, then the traders just made %1, see? So it's a very good investment strategy. Of course, after the fork, the currency will naturally be over bought and the price will drop back to it's natural supports. This will happen again near the end of the year. That's what makes now a good time for short term investors. But at this point we are talking about %10 to a maximum of say %40 by the end of the year, which would put Ethereum around $450, $500.
But if you really want my2btcents... I'd say it will approach $1000 by the end of the year. This is due to the forks, along with the general hype of cryptocurrencies right now, followed by the usual end of the year pops as people spend their Christmas money and end of year bonuses as well as trying to finagle taxes for EOY purposes.
All of that points towards a $1000 EOY price for Ethereum : ). If you aren't in it for the long haul, that would be a great time to sell. Of course, I believe that Ehtereum could definitely win the scalability race. If it completes in the near future... It could very well over take Bitcoin : ).
Again, just my2btcents. Take it with a grain of salt.
+trucidus some interesting insights there. I can see ETH being $1000 by EOY. I just fail to see it toppling Bitcoin. Buterin is both a BTC fanboy and understands game theory ; he knows that Bitcoin is king and Ethereum is queen. If another currency were to rise above Bitcoin, that would set a precedent for the king to be overthrown and thus create instability in the crypto realm. Rest assured that Buterin is not in competition with Bitcoin but working in harmony for the greater good, like a good royal marriage.
Actually I wrote an article about a huge conglomeration of cryptocurrencies... Well, that was a tangential point anyways. There are two technologies listed in that article that would greatly help this idea. And besides, if we had a bunch of cryptocurrencies working together, it would also solve the scalability problem quite nicely : ).
Here is a link to that article if anyone would like to read it.
https://steemit.com/cryptocurrency/@trucidus/smartbridge-vs-atomic-swaps
Good info - I shall digest
I have adjusted my projection down from $5300 to $5000 for 1 ETH.
Good information. Thanks for sharing. Upvoted:Following.
Thanks Mike :)