My thoughts on an Ethereum Investment

I received a phone call a few days ago from a good friend of mine telling me that he found a new Bitcoin asking about my opinion on this topic. Since a lot of my friends know that I did huge percentages on Bitcoins four years ago some of them are approaching me every month telling me that they have found the new unicorn currency they would like to invest in and asking me for advise. So you can imagine that I have heard about almost all those super lucrative unicorn Bitcoin replicants but non of them gain my attention after I did my research as the Ethereum did. I decided to share my thoughts about the Ethereum project trying to explain how it works and which chances and risk might be incorporated while buying those coins.

First of all Ethereum isn’t just a new or a better Bitcoin. They have similarities based on the blockchain structure which is a common trait both share. Bitcoin is designed around a structure which contains the amount of BTC and a message which can be send from one to another party. This sounds relatively straight forward and in fact it is but what is there additionally needed to ensure a transaction of funds from A to B? In this case I wouldn’t call Bitcoins simple but efficient since this a more beneficial way to express the character of a currency.

On the other hand there are those Ethereums which contain in the place where the Bitcoins have the parameter for a message a possibility to completely free code any outcome, event or algorithm which can be described in a mathematical way. This feature of course enables an exceptional wider use of this technology. Comparing the Bitcoins to real life coins those Ethereums might be compared to real life contracts which can be used for a variety of completely automized processes for property transfers and services.

I believe that this technology might totally revolutionize our environment in a way we cant even predict yet since one major field of the Ethereum project will be the financial sector adapting the blockchain technology to create derivatives which include swaps, options and futures all settled in the same network which makes clearing houses redundant. You might ask why this technology will replace todays financial operating systems as we know them. Answering this questions is straight forward since the basic principle of efficiency which will simply decrease the cost of transactions and the settling of trades when they come due in an automatic and universal way.

Coming back a step closer to everyday applications we are all facing throughout social interactions the Ethereums might be also used to create renting contracts for tenements, cars or simple fund transfers which should occur under certain circumstances in any possible time intervals including paychecks, allowances, gambling or even crowdfunding. Its even possible to use Ethereums and create an own currency which can have a pervasiveness compared to the US Dollar or a simple coin which might be used in a small online store.

There are almost no boundaries to this technology and this is exactly the reason why it grabbed my attention. I think that our modern society needs a technology which is based on laws and possibilities  which the invention of the internet enabled. At this point we are kind of mimicking our real life processes, coding them and in fact transferring them into the digital world. This Blockchain invention might just really create a digital environment in the way it is meant to be with todays technology, completely freed from the real boundaries we are facing in real life. I mean this Ethereum is something like one of those first computers in the early 1950s, so its super clumsy and it can of course do some of the calculations which can also be done in a different more common way. It feels like we don’t know what we might be able to do with it right now or why there should be a reason to use it in the future but we know that this technology has a future even if the whole dimension of the outcome and transformation of our life is unclear at this point in time.

Efficiency is a not only a decisive part of our human nature it is a main driving force for the whole civilization process and this is the reason why I believe that Ethereums will succeed in the long run.  This technology enables to make the most intermediaries obsolete due to the fact that Ethereums can settle any contract without the need of paying an extra charge for the intermediate service itself. A good example is the success of Amazon because there is no reason for me to search for a specialized brick and mortar shop if I am interested in for example a shaving knife which I have actually bought last month. I just searched for it on Amazon bought it 27% cheaper than in the shop and I did not even need to spend my time to go out and physically buy it. This is all efficiency is about and this is why the Ethereum solution will outperform any intermediary services we know today.

Beside all those new traits Ethereum also incorporates all the Bitcoin aspects which concern the decentralization of power so that there is no government, organization or group of competitors or hackers who can harm or disrupt Ethereum driven services by force since there are no disadvantages of a server which might be shut down. The network operates decentralized on every single computer and therefore is absolutely independent which is in my opinion a decisive advantage.

Some last words about the financial point of view. Ethereums have grown to the second biggest Market Cap „Currency“ (1 Billion) within six months and trade for around 10€ right now. Following some chart analysis there might be a support level found at 6€ and a rough estimate of the volatility is around 20%. Ethereum has by far the biggest relative value growth within all „Currencies“ in relation to the liquidity issues so if you are interested in those type of assets the Ethereum is definitely the way to go similar as the Bitcoin was 4 years ago. Compared to the possibilities which the technology offers it might be even a better shot today than those Bitcoins were in the past. One additional aspect is the support from Microsoft in the whole project and since Microsoft is of course a listed company they will not invest into something where they would not expect some increase in shareholder value.