The Bull: a Three-Term Take on ETH

Welp, looks like it's time to try and counter some of the negativity, fud, and trolling infecting the board lately. The sentiment reminds me a lot of Q4 2016 (after the DAObacle and the subsequent bleed out of ETH from $20.00+ down to $6.00 and the accompanying existential dread).

Here's a brief look at why I'm short-, medium-, and long-term bullish on the Ethereum project (and by extension ETH).

Short-Term

  • 1: dApps: The first (and some of the greatest) dApps on Ethereum have launched or will be launching soon.

    • a: Maker is already an unmitigated success and could very well become the go-to stablecoin by the end of this year. (I can’t overstate how impressed I am with Maker; it’s truly a revolutionary project in and of itself, and operating within the Ethereum ecosystem is a beautiful synergism that will only help both endeavors in the long run).
    • b: Golem looks to be launching Brass on the main net soon. This is still one of the sexiest projects out there, both in the mainstream and crypto communities. Granted, some of the lustre has worn off given the team’s tendency to overpromise and under deliver (and their terrible PR), but if they can deliver even a fraction of what they’re looking to accomplish, GNT (and again by extension ETH) could be prime for an explosion and could bring more mainstream eyeballs and adopters to the space.
    • c: Digix Gold-backed tokens. Another stable-currency of sorts, but more importantly, the first serious tokenization of real-world assets. Launching on main net soon.
    • d: Augur will launch on the main net in a matter of weeks (not months?). Prediction markets are a perfect fit for blockchain. And, yes, there is more use for Augur than simply gambling on sports. Individuals and corporations alike could self-insure / hedge on a micro- or macro-basis.
    • * Example: Farmer Frida worries about her crops in the irregular dry seasons that afflict her region. She decides to insure herself by establishing a prediction market wherein she bets that there will be at least one dry season in the next four. If she loses the bet, great, because that means she has had four wet seasons and the good crops that come with them. If she wins, she’ll collect on the bet and be able to better weather a dry season (and the diminished crop that resulted). This kind of insurance / hedging has only ever been possible at an institutional level and at amounts that are either prohibitively expensive or just don’t make sense for the average individual. Augur makes it all possible at a fully decentralized, micro level.
  • 2: Consensus: maybe the largest blockchain conference in the West, last year’s conference came when ETH hit $100 (it seems almost quaint to look back and watch some of the conference participants gush about hitting that milestone). May 14-16 should be a nice shot in the arm for blockchain generally and Ethereum specifically.

  • 3: Price Action: Both BTC and ETH seem to be consolidating (finally) around $6,500-7,500 and $370-410, respectively. Bulls and Bears seem to be content to graze quietly in their fields and woods. (If you had told me this time last year that the board would be licking its wounds at this price level, I’d have told you you were insane; if you had told me that we’d hit a high at $1,400 I’d have slapped you and called the state mental health institute).

Medium-Term

  • 1: Scaling: The Ethereum Foundation is working furiously toward scaling solutions (as well as the migration away from PoW). Plasma, Sharding, Casper, are all priorities for the Foundation and its other allies in building out a scaled, decentralized blockchain. If anyone can do it, they can. (Note, scaling has plagued blockchain for almost 10 years, but it plagues every network and organization. IMO, this is still the biggest question mark in whether Ethereum can become the Web 3.0 it wants to be or merely a blockchain solution; if the former, watch out, because we’ll all be the oil barons of the 21st century; if the latter, we’ll still be well off from here).

  • 2: EEA: The EEA continues to add interesting allies, but maybe more importantly for the medium-term, plans to make a marketing push. A polished, Ethereum-focused marketing campaign could be just what Ethereum needs to gain the kind of mainstream traction that will push it to the top of the heap in terms of price and adoption.

  • 3: Institutional Investment: Physically settled futures is the first step toward ETFs, which would allow more and more institutions to get on board with the latest commodity asset. And when I say institutional, it’s not just corporations and banks; think sovereign funds and fixed-income providers with trillions at their collective disposal. Even without ETFs or other more traditional investment vehicles, you could more and more hedge funds, family funds, and corporations getting on board and buying crypto currencies as part of their portfolio.

  • 4: Proof of Stake: PoW is getting a bad wrap in mainstream media—expensive, environmentally unfriendly (we can all disagree about the degree to which PoW contributes to pollution, but no one would argue that it doesn’t contribute much more than PoS would), and already being pushed out of communities and jurisdictions that don’t want to sell all their power to a handful of crypto mines. PoW also inevitably leads to some degree of centralization based on economics alone. Staking brings with it the promise of a cleaner, just as secure blockchain, as well as dividend-like rewards for stakers. If implemented successfully, PoS could make ETH the most attractive cryptocurrency by itself (let alone the network and platform that it enables).

Long-Term

  • 1: Web 3.0: This goes without saying, but if ETH can scale to the level it aims to and can create a robust, dApp-driven platform, it would be world-changing (and the price would more than likely reflect that). Even if ETH only manages to provide a decentralized backbone to just a handful of successful and widely adopted blockchain projects, the price could still soar.

  • 2: dApp Store: The analogy isn’t perfect, but if Ethereum becomes a dApp store and ETH is the fuel/toll for operating on the Ethereum blockchain, you could be looking at the next edition of the Apple / Android App Stores. ETH holders and stakers will have effective shares of that dApp store on their hands—benefiting from both platform usage (scarcity / security, etc.) and the resulting price action and from staking, whether individually or in a pool. This alone could drive a market cap into close-to a trillion dollars.

  • 3: Widespread Adoption: If (when?) Ethereum becomes the go-to blockchain for individual and enterprise solutions (and it is easily the best situated to do that from today’s perspective), the demand (and value) of ETH will track accordingly. And, as we know from the last 10 years of the evolution of the internet (see: social media), networks have a geometric effect on value as they spread.

    • Get thousands of people using applications on the Ethereum blockchain routinely—price is great.
    • Get a million people using applications on the Ethereum blockchain routinely—price is huge.
    • Get a billion+ people using application son the Ethereum blockchain routinely—price is unimaginable.
  • 4: Unforeseeable Usage: When the internet was first coming to mainstream adoption, no one quite knew what to make of it. The idea of an internet-based marketplace was almost farcical—who would want to buy something without seeing / smelling / touching / trying it first? The same went with banking, purchasing, storing knowledge bases, etc. We know how that went. What other use cases will blockchain enable? Can we even fathom them right now? Could you have envisioned a fleet of driverless vehicles summoned on your smart phone just a decade ago? How about five years ago?

    • Technology is wild. Ethereum and blockchain are on the bleeding edge and are just building up momentum.

TL; DR: The future is extremely bright. Strap in. Enjoy the ride. And don't get bucked off on anyone's terms but yours.

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