Blockchain could be one of the biggest stories of the second half of the year.
That’s because the technology behind blockchain is truly revolutionary. But on a simpler and more direct level it is interesting for another reason: there are huge amounts of money to be made.
For instance, have you ever heard of Ethereum? It’s a crypto currency, just like bitcoin. And it recently shot from 42 cents to $14 dollars. That’s 32 times your money.
And it did so in just four months.
Why is why I’d like to share a short note from Charlie Morris’ Atlas Pulse with you. It explains what Ethereum is and why it’s been so successful.
Ethereum: Bitcoin 2.0?
Charlie Morris,
Taken from Atlas Pulse
I’ve mentioned Ethereum on several occasions. It is the main challenger to bitcoin and the greatest tragedy is that I never bought it.
Chart note: The chart shows the price of Ethereum in US dollars. It was 43 cents on 22nd October 2015. It recently touched $14. That’s a 32 bagger in just 4 months.
I’ve asked my friend Adam Cleary, who is a true guru on these matters, to tell you more about Ethereum. Adam Cleary an entrepreneur, digital currency investor and investment manager. As the founder of Bullion Bitcoin Adam was the first person to put gold on the bitcoin blockchain – creating a gold backed currency called Bits of Bullion.
Ethereum – the challenger emerges
Since the beginning of 2016, Ethereum has seized the imagination of the crypto currency space, with the price of its crypto currency, the ether, rising from $0.95 at the beginning of this year to $13 at the time of writing. At this price Ethereum has a market cap of just over $1bn and has stormed into second place in the crypto currency rankings, outstripped only by bitcoin.
Ethereum was originally funded by a crowd sale in August 2014 when it raised $18.4m in bitcoin. A punter contributing 1 bitcoin worth $600 to the crowd sale received 2,000 ether – an effective price of $0.30 per ether. These 2,000 ether are today worth $26,000 – a 43x return and a good trade in anyone’s book.
Ethereum is commonly explained as being Bitcoin 2.0 – a next generation bitcoin. But actually what differentiates Ethereum from bitcoin is that it doesn’t set out to be primarily a currency and payment system, but rather a computing platform.
Put very simply, Ethereum is a world computer that you can’t shut down, that enables contracts and transactions to be executed automatically without human intervention. The ether crypto currency acts as the fuel to power the engine of this computing platform. Ether is consumed by miners for accessing resources of the network. The more ether a user holds, the more “gas” they can pump into the computational engine of the Ethereum virtual machine.
What Ethereum plans to facilitate is a network of interconnected devices where machines can transmit money and data in a manner that dwarfs the efficiency of human input. Ethereum could enable entirely new industries to be created whilst traditional business models, particularly in finance where providers act as middlemen, could increasingly become obsolete.
Ethereum today is where bitcoin was in 2012 when the first bitcoin light wallets emerged. It has untested infrastructure and needs to build its credibility and broaden the network effect with developers actually building applications as opposed to speculating in the price of ether. By extension if you think you have already missed the rally consider this: the price of bitcoin was $13 in December 2012 (the same price as ether today) – a year later in November 2013 it was $1,000 – a further 77x return. Maybe there is still time to board the train…
In the crypto currency world Ethereum may be to Bitcoin what Google was to Yahoo! in search engines. Or it may be the digital oil to bitcoin’s gold. Either way an allocation to Ethereum looks like a must have for any crypto currency enthusiast – given the vibrant momentum of this emerging challenger.
Category: Investing in Bitcoin