I have several top picks for cryptocurrency investment, but Ethereum was my first love –the cryptocurrency that woke me. This article will explain why I believe Ethereum is a great investment that will survive years of HODLing.
Whether you’re a cryptocurrency fanboy who keeps up with every new coin, or you’re a timid cryptocurrency beginner; in this article I am going to make a case for Ethereum.
Of course, I do need to tell you I am not a licensed anything, and this is not financial advice. This is an opinion piece.
I’m going to explain what makes Ethereum different than Bitcoin, along with a number of benefits of the platform, and then wrap it up with some major players that are working with the platform.
Ethereum vs Bitcoin: What’s the Difference?
While we’ve got other articles on Invest in Blockchain about the differences between Ethereum and Bitcoin, I’ll save you the click –but I’ll also keep it short for brevity.
Simply put, Bitcoin is a straight up digital currency. That’s all it was ever intended to be. This is why they call it “digital gold” in mainstream vernacular.
Ethereum is a platform –sort of like a computer operating system. Which means it can run “apps” –my simple metaphor for “smart contracts”. In addition to being able to run smart contracts, it also has its own cryptocurrency that comes along for the ride –that cryptocurrency is called Ether. Ether itself is comparable to Bitcoin, but that’s as far as the comparison goes; Ethereum is a much more advanced blockchain technology.
Bitcoin is a threat to the current financial system because it removes the need for national currencies and transferring it around the world doesn’t require a middle man. This has proven to be a thorn in the side of banking institutions because it eliminates a majority of their revenue-generating fees, like escrow, currency conversion, and other premiums.
But Bitcoin is still simple; I pay you, you pay me. A small fee is taken off in the form of Bitcoin to cover the computing cost of the transaction (“mining”), however that fee is not manipulated by a person, it’s computed on the blockchain.
With Ethereum, it starts off the same way; I can pay you, you can pay me. That little cost of computation is called “gas” and it too is a nominal cost.
Where things turn “apples and oranges” is the introduction of smart contracts. Since a smart contract is basically an “app”, that means that functions can be committed on the blockchain.
A smart contract can set itself into motion based on criteria defined by its creator, and can be used for complex business functions.
Variables can be set that allow a business process to run autonomously. For instance, a real-world example would be a real contract.
Bill wants a mortgage. So, “if” Bill’s credit score meets requirement a, b, and c, then makes a payment, Bill has a mortgage. Any contract can become a smart contract.
So, why do we trust smart contracts? The blockchain is a ledger that is stored on thousands of computer systems –it’s decentralized and public, to a point.
Its immutable, meaning that because there are so many copies of it; if there is an anomaly, that anomaly will be automatically corrected by the majority. To manipulate (or deceive) the public ledger, a malicious hacker would have to hack all copies at the exact same time and then repeat every transaction that was committed after it. Over the internet. Thousands of machines around the globe. This technology doesn’t exist today.
Since all parties involved have a copy of the ledger for their own verification, it can be easily incorporated into existing systems.
As a result of the immutability of the blockchain, it can be trusted. It doesn’t need human eyes.
Speed and Efficiency
In our existing contract system, all contracts are reviewed by a human in queue –this adds weeks or months wait time to certain processes.
Take social insurance, for example. Your social insurance number could be replaced by an address on the Ethereum blockchain, and all related processes could be run on smart contracts. This would speed up the archaic system as we know it today. This is why people are excited about Ethereum.
Plays Nicely with Others
Another key feature of Ethereum smart contracts is their ability to integrate with existing systems and transact anything of value.
Anything that can be turned into a data point (and that’s everything) can be represented –put in a wrapper, in essence– and moved around within a smart contract.
Assets, people, and even national currencies or other cryptocurrencies can be put into an Ethereum smart contract and moved around through a defined process.
All databases and the functions they are used for can be taken out of volatile and inefficient existing systems and placed onto the Ethereum blockchain and converted into smart contracts –vastly improving data protections, honesty, transparency, and efficiency.
No More Black Box
Right now all data collected, used, and stored is done so under a shroud. Companies can potentially “cook their books” and are supposed to adhere to laws that govern how they use money, how they handle public data, and so on. Think Enron, or the recent Equifax scandal.
Different softwares store data differently, in different formats, and costly integrations between all of these systems come with massive price tags –integrations cost businesses billions every year.
The blockchain could lessen business reliance on expensive integrations and this cost alone makes the value of Ethereum incredibly substantial.
Enterprise Ethereum Alliance (EEA)
Companies are already beginning to work together to figure out how to make this decentralized technology work in a way that is equitable for everyone.
When you pay attention and notice major players like Scotiabank, J.P. Morgan, ING, Credit Suisse, Accenture, and Microsoft are joining forces –and only somewhat recently, I might add– you’ll see the perfect storm that i see. Big things are coming to Ethereum.
Ethereum has a good reputation among Enterprise Ethereum Alliance members, its technology is robust and scalable, and it’s wide open for further investment and implementation.
One final thought; remember the implications of the technology. Ethereum can potentially rock the establishment and it’s a major game changer. There are going to be those trying to cause fear, uncertainty, and doubt (also known as FUD) in order to slow down growth or lower the value so they can quickly buy in.
“First they ignore you, then they laugh at you, then they fight you, then you win”.
I see FUD all the time, by big players trying to manipulate the price of Ether. Take Jamie Dimon of J.P. Morgan –he parades around calling blockchain technology a fraud, but he’s a member of the EEA and is developing his own blockchain tech. Oh, and his company is largely responsible for the deception and failure of the 2008 financial crisis. What a guy.
Once you immerse yourself, you’ll see all of the moving parts; the motivations behind the news reports, and the context. Decide for yourself whether you can squirrel a little (or a lot) of money into Ethereum, before it’s too late and this substantial opportunity is lost.
Ethereum to the moon! Thoughts? Let us know in the comments.