There is a Reason Ethereum’s Ether is the #2 Coin By Market Cap
There are some compelling reasons to buy Ethereum’s Ether, the #2 coin by market cap. Forget about ETH’s price relative to BTC. Think about the fundamentals.
NOTE: This page was written when Ether had been stuck around $300 for some time. You’ll note that the price has gone up and down since then, sometimes by large amounts. The price may change, but the logic applies regardless of market conditons 🙂
If you are new to crypto, you probably heard about Bitcoin (and maybe ICOs), and have had your eye on the top coins by market cap.
If you have had your eye on the top cryptos and ICOs, then you probably have had your eye on Ether.
If you have had your eye on Ether, then you’ve probably watched Ether’s value relative to Bitcoin plummet after Ether reached its all time high this summer (as a general trend).
That, if you are even remotely normal, probably has you either filled with regrets or has you shifting your investable funds over to BTC.
That isn’t a bad move, but there are some solid reasons to buy, hold, and be generally bullish on Ether despite the stagnation (or, in the future despite its increases or pull-backs).
Why was Ether stagnant during Bitcoin’s rapid rise from $3,000 to $7,900 after the summer of 2017? Is it that the ICO fad passed quickly, is it that the forks and futures trading of BTC has sucked investors out of alts for a moment, is it because Ether is a newer currency and its time hasn’t fully come yet? Probably all these things, it is hard to say. Bitcoin is the brand name people know. However, once people get into Bitcoin, Ether (and a few other top alts like Ripple, Bitcoin Cash, and Litecoin) are the obvious next step. Of all those next steps, Ethereum and Ether have a lot of things going for them. In other words, I don’t know exactly why the price is what it is, but I do know a few solid reasons to buy Ether anyway (at any price, but specifically at the current $300 or less price).
NOTE: This page isn’t saying “you should buy Ethereum,” it is offering reasons to buy Ethereum (AKA Ether). We all need to make our own investment choices. If you want someone to make those choices for you, hire a fiduciary.
Reasons For Ether and Ethereum
The following are a list of things to consider about the Ethereum network and Ethereum:
Ether is a usable cryptocurrency like Bitcoin… in theory at least: You can’t buy much with any crypto, but if and when you can, it is only reasonable to think that the top few cryptos will be embraced as payment methods. Word is Amazon owns two domains with coin names in them, AmazonBitcoin.com (which redirects to Amazon) and AmazonEthereum.com (which doesn’t). Ether isn’t the fastest or cheapest currency in its current iteration, but as you go down the list you’ll see these issues are actively being addressed.
For the moment, Ether is relatively stable (like an actual currency): Bitcoin’s price is mimicking a stock experiencing a period of rapid growth. That is a good investment and value store (for the moment), but its kind of awkward for a currency. Ether’s price has been rather stable recently. In terms of price alone, cryptos with more stable prices like Ether make more sense as currencies than Bitcoin.
Ether is the top #2 coin by market cap. Its market cap went up since the summer, even though its price didn’t. In other words, the market is there, it is just stagnant. With Bitcoin catching so much positive press, it is likely on a matter time until that excitement trickles down to the other top coins again. The #2 coin is a logical place to trickle.
Ether isn’t going down… Bitcoin is going up. Not just because it is glorious, but because there has been rabid hype over the forks (and lack of bans and announcements of futures trading). There is a good chance Ether will rise again after the mid-Nov fork.
Ethereum’s network is built to be so much more than just a blockchain for a cryptocurrency. The Bitcoin blockchain supports one type of contract, the Bitcoin cryptocurrency AKA “token.” Ethereum’s network is meant to create new coins, be used for different types of contracts, and even be used for app development. There is even a Minecraft-like game stored on Ether’s blockchain called Etheria.
“Unlike Minecraft, which is centralized and owned by a major company, Etheria cannot be taken down.” – Five Best Experimental Ethereum-based Apps from Cointelegraph.com.
Ethereum’s developers, miners, traders are active and generally have some level of consensus. There was just a gathering prior to Devcon3 and the latest version of Ethereum just launched (its called “Metropolis ” its essentially Ethereum 3.0). There are a lot of coordinated forces around the world working together to make Ethereum better. Meanwhile the Bitcoin Core team is about to go to war with Bitcoin Segwit2x. Bitcoin keeps forking because the community lacks broad consensus. That isn’t happening with Ethereum (although it could).
About 1/2 of ICOs are built on Ethereum’s network. That is good for Ethereum in terms of adoption, even though there are some scammy ICOs (which could be part of why the Ether market got a little stagnant). Don’t worry though, an ICO doesn’t change the integrity or supply of Ether anymore than Bitcoin Cash changes the supply of Bitcoin. A bad ICO on the Ethereum network is like a bad third party app on the Google app store or Steam. It isn’t great for the company who owns the platform, but like, it doesn’t say much about the platform directly other than that it is open and free enough to allow for the good and bad to coexist. Ethereum’s network is open source and decentralized, it isn’t like Vitalik Buterin is personally vetting every ICO.
You need Ether and an Ethereum-based Wallet for Ethereum-based tokens: If you want to buy into an ICO that is releasing an Ethereum-based token, you need Ether. If you want to hold that token, you need an Ethereum-based wallet. A chunk of the top 100 cryptos by market cap are ethereum-based tokens. Thus, Ethereum’s network has its tendrils in a substantial portion of the crypto market. In times when the entire crypto market grows, it is very likely that Ether comes along for the ride because of this. If there ever is a really popular ICO, you an bet the demand for Ether increases.
Speaking of upgrades. Ethereum’s network has more updates planned. Without boring you, updates include: Plasma/Raiden to make it faster and cheaper to do transactions, Casper to move from PoW (Proof of Work) to PoS (Proof of Stake) which will let you earn interest on Ether held, ZK-Snarks to make it anonymous, and “shards” to increase scalability. All these ideas actively being worked on. In other words, what Bitcoin is doing with the Lightening Network and Segwit, Ethereum is doing minus the controversy.
There is essentially a limited supply, just like Bitcoin… although the “why” is a little complex and rooted in an issue that Ethereum must deal with as it grows. Currently, there are about 95 Million ETH circulating with 5 ETH created every 15 seconds (for comparison there are 16.6 million Bitcoin). As more Ether is mined, the difficulty of mining curves up until it the creation of new ETH essentially “freezes.” This difficulty time bomb is known as “Ice Age.” Ice Age isn’t all good news, it essentially forces the devs to evolve ETH or watch the network freeze up (this was hard coded on purpose to ensure an evolution of the network, and it is an active point of focus by the Ethereum community). To our point however, Ice Age essentially means that the ETH supply is not infinite. People say ETH has an unlimited supply… but this claim is misleading. Yes, new Ethereum-based tokens can be created (for example the crypto tokens created by ICOs), but these tokens aren’t the token Ether (ETH). Meanwhile, ETH essentially has a limited supply in practice as noted. When all is said and done, Bitcoin will have about 21 million Bitcoins in circulation and Ethereum [depending on how things go] should have very roughly 100 million – 200 million (that is 95 current as of late 2017, plus 18 million a year until 2021, plus some coins burned if they switch to PoS; I notably don’t have an exact answer here, just illustrating that the supply is indeed limited in-practice). This could change with Casper and future updates, but the bottom line is that the supply is very far from “unlimited.” Its hard to tell if the idea that Ether has an unlimited supply comes from misunderstandings or if it is pure FUD spread by Bitcoin or other altcoin bulls. I assume it is a mix of both. See: The Issuance Model in Ethereum from Ethereum.Org.
In other words, Ethereum’s future looks really bright. Especially after the Nov 16th fork. Does Ether take off starting after the fork? Does it take a year for Ether to pop again? Does it take 5 years? Or does it sit at this price forever? It almost doesn’t matter, Ethereum’s network is cool and Ether is the top #2 crypto by market cap. If you just love Bitcoin and don’t care for crypto, then your choice is simple. If you care about crypto, Ether is an obvious choice. Rushing to Bitcoin and ignoring Ether is a bit like rushing to Microsoft and Ignoring Apple (or vice versa). Sure, there were times when one player was clearly in the lead, but ultimately these two different products proved themselves based on their own merit. I wouldn’t suggest ignoring any of the top cryptos… especially Ether.