Ethereum Is Set To Be Our Internet Money — The Energy Usage Argument Is Over. | by Jayden Levitt | Nov, 2022
You must look at the fastest-growing blockchain before it is too late.
Photo by Riccardo Annandale on Unsplash
Have you ever heard stories of how people got into something early, at the ground level, and made absurd amounts of cash?
If you had the guts to invest in Amazon after the dot com bubble burst in 2000, you could have bought Amazon stock for $8 a share.
$8 a share would have given you 500 times the return on your original investment.
A 2000-dollar investment into Amazon would have netted you over $1 million.
Ethereum, held by 13.1 million US citizens, is owned by 40% of cryptocurrency holders and has grown 26% since last year.
Ethereum is worth a closer look based on the size of its market cap, the speed of adoption, and the growing use cases.
Even if you’re a Bitcoin maxi or a Stock Market Investor, Ethereum is the poster child for Blockchain technology, and there is no world where Blockchain does play a significant role in the next 20 years and beyond.
The potential upside is beyond belief, and so are the risks.
I’m in no way saying that investing in Ethereum will be 500 X your money. I’m just saying that compared to anything else out there, this looks like a pretty strong bet.
Ethereum is a technology for building apps and organisations, holding assets, transacting and communicating without being controlled by a central authority.
No need to hand over all your details to use Ethereum because it’s decentralised, like Bitcoin, except recently, Ethereum has moved its consensus to a proof of stake model and made its network 99.5% more energy efficient.
This is huge for institutional adoption. But, people are still skeptics.
It’s got me thinking about why, and I think I’ve found the answer.
It seems crazy to say, but Bitcoin is still relatively new.
In his book, Innovation and Its Enemies: Why People Resist New Technologies, professor Juma discusses why skepticism and confusion are often inevitable with new technology.
Here are some takeaways from the book from 600 years of technology history.
- new tech is constantly under public pressure to stay the same.
- people resist new tech when the benefits appear to favor a small group.
- New Technologies face opposition when the general public feel benefits only accrue in the long run.
- People are ok with New technology as long as it doesn’t challenge what we already know and our position in the food chain.
If you removed the words”new tech” from the above and replaced them with “Ethereum”, you’d have an excellent visual for why people are missing this opportunity.
People insist on resisting change until it becomes our new normal, and we wonder why we ever lived without it.
The most significant resistance to cryptocurrency, and rightly so, is the negative environmental impact Proof-Of Work blockchains are having on the environment.
Ethereum’s successful merge event made the blockchain 99.5% more energy efficient by moving it to a proof-of-stake network.
Here’s Ethereum’s annual energy consumption:
A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers promise to invest your money and generate high returns with little or no risk.
Named after career criminal Charles Ponzi, who famously sold investors a stamp arbitrage, he won their trust by paying them out profits within 45 days using money from new investors.
Ethereum has no centralized party or single point of failure, so your Ethereum cannot be subjected to fraud. It is also a very risky asset that is currently highly volatile.
There is no 3rd party reinvesting your Ethereum or sending it to another unsuspecting person.
Ethereum has a shot at being our internet money, and its excellent use case is the ‘smart contract’ capability invented by Ethereum co-founder Gavin Wood.
Smart contracts are self-executing lines of code automatically verified and executed via a computer network with the terms of an agreement between a buyer and seller, removing the need for a middle person.
‘Smart Contracts’ deployed to blockchains make transactions traceable, transparent, and irreversible.
There is nothing transparent about a Ponzi Scheme. Ethereum is the opposite.
While absolutely no one can predict the future, we can use the past to measure what we expect to happen.
Assume we measure the global money in circulation and compare it as a percentage of decentralized digital assets; it’s estimated that digital assets currently make up 0.5% of the global money supply.
Over the next ten years, that 0.5% is either going to go up or it’s going to go down.
- Regulation and government control may make it go down.
- People becoming more digitally native and progressively moving into a more digitally immersive world may increase it.
It’s my view over a long-term time horizon, it will go up. Remember, none of this is financial advice.
Play with money you can afford to lose, and you’ll be fine.
This thesis is backed by the most widely followed Cryptocurrency expert and thought leader in the space.
Pseudo-anonymous Twitter user Punk6529 uses this “expected value outcome” and has done since the inception of Both Bitcoin and Ethereum.
My first form of analysis is an “expected value” analysis. eg
Say there is a 50% chance that crypto % of total assets goes to 1% and a 50% that crypto ends and goes to 0%.
In this case, we should be neutral. 50% x 1% + 50% x 0% = 0.5% = where we are today.
The chances that crypto doubles are significantly higher than it goes to zero, which means the expected value is positive.
Therefore I would like to have a crypto investment, even today.
[I first did this analysis when crypto was 0.005% of the global market cap]
Ethereum’s market cap currently sits at an estimated 0.16% of the global money supply.
Here are the outcomes based on an investment of $1000 and Ethereum increasing from its current 0.16%.
Ethereum Increases to 1.6% = $10,000
Ethereum Increases to 3.2% = $20,000
Ethereum Increases to 6.4%= $40,000
Ethereum Increases to 16%= $1000.00
It’s impossible that we only have one Blockchain to dominate them all. Bitcoin and Ethereum complement each other well, and there’ll be other chains that offer different solutions.
You will ultimately have to decide whether you believe in Ethereum’s future potential.
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This article is for informational purposes only; it should not be considered financial, tax or legal advice. Consult a financial professional before making any significant financial decisions.