Any asset allocation is kind of like a you’re weighing the options available to you right now so in terms of liquid allocation buckets available to you have fixed income which I think is not interesting to most of the investors. Bitcoin
When allocating new capital, you kind of look at and then there’s of course crypto you and when you’re allocating new crypto or allocating new cash, you’re trying to ask yourself which of these have the best risk and return profiles.
Ethereum is a platform more akin to the internet and stuff is built on top of it. In Ethereum there are entire companies’ applications economies being built on top. There are many analogies you can use but once it was like kind of windows you know back in the day you ship you want to invest in Microsoft because so many applications are built on top of it. Ethereum is getting to the point now where it’s not just this like cryptocurrency that you speculate on but dozens upon dozens of useful applications is built on top of it and use it and that’s a very enviable position to be.
Every tech company wants to be a platform and Ethereum is already a platform.
Value Ethereum
It’s like without getting too smart you can just kind of look at the tabs. Ethereum’s tam is open-ended there’s in a way you can’t value it because what it can do is completely open-ended.
Decentralized finance or what people could defy basically using Ethereum to do things that banks used to do borrowing, lending and you know things like that.
NFTs non-fungible tokens where essentially any artist now has a piece of magical software that allows them to mint unique and scarce digital assets. We could never create scarce digital assets prior to practically speaking Ethereum’s kind of nft technology so now we have these two things if you try to value Ethereum three years ago you couldn’t have come up with any of these because you wouldn’t have known ahead of time that they were going to be invented.
Narrowly speaking you could value Ethereum opportunity in terms of the scale of the financial system if you just look at defy and that’s roughly speaking about three trillion dollars a year that the amount of the global banking and auditing system is it generates per year about three trillion dollars.
If you just want to be taken a conservative you take the global financial system and the baking system and the auditing system three trillion dollars in revenue a year. If Ethereum captures .1% of that revenue it would be worth about four thousand dollars a token, if it captures one percent, it would be worth forty thousand dollars per Ethereum and that’s a 20x from where we are today so like that’s very clear and that’s only one-use case and because it’s a platform it can like six months from now, we could be talking about some entire new case we couldn’t have imagined and estimated right now.
Basically, Ethereum captures fees for using it. What Ethereum is I think it’s still a very vague concept for a lot of people like maybe to contrast it with bitcoin. Bitcoin’s main value proposition is that it’s a scarce digital asset it’s now emerged it’s only 21 million bitcoin that will ever be generated and because of that it’s scarce and if enough people believe and it has value then it has forms this belief network and effectively you people use it as a reliable and neutral store of value that’s kind of the bitcoin value proposition but it doesn’t do anything really else beyond that and it just wants to solve the money use case or the store value use case in a digital format.
You can’t really write an application to Ethereum there’s nothing for you to do that’s part of the reason why when you join one of these like bitcoin clubhouse or bitcoin twitter the only thing, they well ever talk about is the price because there is nothing else to talk about.
You join Ethereum twitter or Ethereum clubhouse and it is just an endless deluge of kind of technological development and software releases.
Ethereum is software I mean bitcoin is software too but it’s software that has no roadmap or the roadmap is very done basically the bitcoin people think that the less roadmap the better because then you can’t screw it up with Ethereum it’s an extremely rich roadmap it’s like going to the aws re-invent conference it’s like okay the year is 2021 what new features are we going to ship this year, what new features are we going to ship next year, how are we going to improve the user experience for wallets for storage for insurance it’s like it’s viewed as the same way as a software company would manage their product roadmap so it’s just constantly evolving piece of software and because of that stuff is built on top of Ethereum.
You can be a software developer on Ethereum being a software developer on bitcoin has very thin meaning it basically means like we can may be support it in the wallet you can’t there’s nothing you can do and the reason why Ethereum can do this is because essentially to run basically Ethereum is a network of computers that elect to run the Ethereum software to validate transactions and the way you deploy applications to the Ethereum computer is by targeting this runtime called the Ethereum virtual machine.
Java has a virtual machine Ethereum has a virtual machine you see the parallels very clearly and you write applications to it an all and this virtual machine runs on top of actual hardware it could be x86, could be arm and these are about 10,000 computers distributed nodes distributed in the world so people treated like a computer system that they run just like they treat aws as a cloud that they can deploy applications to so when people think about I find that people who don’t like bitcoin because they find it to be a little bit of a more about a religion around a digital rock and constantly fighting this belief system it’s very political when that doesn’t resonate with them I find that it resonates better when you talk about Ethereum as don’t worry about this cryptocurrency nonsense it’s just software and you can write applications to it and you know what if you’re software developer you can and you know JavaScript.
The language for Ethereum which is called solidity is very similar you can deploy an application in a weekend and once they can see that they don’t have to argue about supply and tokenomics and all that stuff you just treat it as kind of a place where you can deploy useful applications and that’s the right way to view it as software.
Bitcoin is kind of digital equivalent of gold, whereas Ethereum is kind of like addresses the entire financial system in the financial system gold is just a subset of things that you trade on the stock exchange right gold is just a subset of money so it’s almost definitionally smaller than the tam of Ethereum and right now bitcoin is bigger just because it’s had longer time to tell it’s narrative to convince buyers it has bigger mind share than Ethereum but it has more tm than Ethereum so institutional buyers have been hammered finally to like maybe accept bitcoin as something they should consider in their portfolio after a decade but the Ethereum story people are still afraid to say the word on cnbc so it’s just earlier.
Ethereum exists because it enables developers to write smart contracts better than Bitcoin in the near-term. Zcash will exist because it will attempt to do privacy better than Bitcoin in the near-term, and the token gives you access to the anonymity protocol. — Nick Tomaino
I love this stuff — bitcoin, ethereum, blockchain technology — and what the future holds. Abigail Johnson
https://valueandprices.com/what-is-the-next-big-thing-like-bitcoin/
