Ethereum price and why Ethereum will be bigger than Bitcoin
Good day everyone! It is CryptoPortfolio project and my name is Dan. Today I want to give my thoughts and analysis of the reasons for Ethereum to overcome Bitcoin in terms of capitalization. The decision to make a review of this project was made by you, the subscribers of my telegram channel. I want to say thank you for participation and next time you will also be able to vote for my next video.
What is the reason for me to make a video about this price surge? Well, I simply wanted to give you my 5 cents on the fundamental advantages of Ethereum which predicted this dramatic price increase. Still, do not forget that Ethereum growth is paid by Ethereum complexity and bugs are inevitable, so invest the money you are ready to loose. Let’s move on.
Let’s start with news. As we know, news agencies can be right about something only if that something has already happened and news report only the facts. Let’s see what those crypto news sites cherry picked as the reasons for recent price surge
First, it is all about the congestion of Bitcoin network. Users looking for ways to transfer money start choosing other crypos, and it is no surprise that their choice is Ethereum. In Bitcoin, if you try to transfer 1 million dollars then the transaction fees will be bearable, buuut if you try sending 5 dollars, be ready for miners to eat your transaction or, if you don’t want to pay that much, you will have to wait for more than 12 hours until the transaction will be mined. As you know, at least now, such situations are impossible in ETH. Whatever you send, the fee is low and adjustable.
Second, as Steve Balmer’s famous Microsoft Presentation stated “developers,developers, developers”. There is a huge amount of existing and coming ICOs on Ethereum. And all projects need what cryptocurrency? Right, ether. And in order to invest you need ether. There are already more than 370 projects on Ethereum blockchain and this number is changing everyday. Developers and Ethereum protocol will play the most important roles in Ethereum price increase.
News sites usually like to attack Ethereum, especially coindesk which is controlled by Barry Silbert (who is also known as Barry Shillbert). Nobody cared about Ethereum until we put on the metamask.
In short, what are the reasons for the price surge?
Convenience goes first. Send money anywhere, any amount with very low fees.
Inflation rate is another Ethereum advantage. I’ll expand on this a little later.
Corporate attention is one of the biggest reasons. If you are not aware about it, yet, simply watch my video “What is Enterprise Ethereum and why it is important”. May be, it is a possibility, that ethers are being bought by corporations right now, but I don’t have 100% proofs so I will not speculate on it.
Price discovery is the reason because we simply are unable to measure the possible future price for ETH or any other crypto. But I think we are able to somehow compare existing numerical data and find approximate future price of ETH. Everything depends on demand and supply. And I’ll cover it a little bit later in this presentation.
Value transfer is the biggest contributor to Ethereum capitalization right now. All the projects on Ethereum and ICOs on Ethereum and only ethers are accepted. That is pretty much it.
And now I want you to see how much will ETH cost when Ethereum will reach Bitcoin capitalization. Assuming that there is going to be 90 million ethers, the price for one ether will be about 200 dollars which is 5 times bigger than the price right now. The capitalization is going to be 19 billion dollars. And when you think about cryptosphere you understand that in realty, there is not a lot of buyers and sellers, so I think that when the time is right, we will observe huge growth of capitalization across all cryptocurrencies. Everything is possible , especially such things as Ether overtaking Bitcoin in one year. But, again, anything can happen, so be prepared for Ether moving in any direction this year. By the way, this table you see on this page Is incomplete, it shows only the last time periods. If you want to see all the time periods, you should check out my telegram channel where I uploaded the excel file with all the time periods and projections of capitalization and price.
Let’s project the value of generic ETH portfolios. But basically, the more you have now, the bigger your portfolio in USD terms will be later. For example, if you have 25 ethers right now, you will have 5250 dollars when Ethereum will overtake Bitcoin. If you posess more than 250 ETH, you will have 52 500 USD. And if you are a lucky guy who have more than 1000 ethers, your portfolio will be bigger than 200 000 USD. Anyway, do not look at this as an investment advice, it is simple projection of ETH price when we overtake Bitcoin’s capitalization.
In any case, Ethereum’s future is bright even if we do not reach certain capitalizations within a year. Again, if you want the whole Excel file, just download it from my telegram channel.
How can we evaluate the price of ETH? To be honest, it is impossible to do, because it is absolutely new type of asset which needs time to figure out its true fair value. But we can try.
What is the quantitative data that will determine the ETH price?
Number of transactions. ETH already has 1/3 of Bitcoin transactions. Does it mean that ETH should already have 1/3 of Bitcoin capitalization? May be. It would place ETH at 5 billion USD which is close to current ETH valuation. It is very possible that number of transactions will be the crucial part of ETH valuation.
Then we have number of companies that work on public chain. Unfortunately, this data is hard to obtain but I guess in future it will be more accessible.
Then the trading volume of ETH. It is certainly not the best indicator, but it is an important indicator. It shows demand for cryptocurrency.
Finally, DAPPS that actually work. I think it has direct connection with number of transactions. But also, DAPPS collect money from investors. And this flow is going from fiat to ethers which is healthy for price increase.
Then, What are the assets, the value of which can be absorbed by Ethereum?
Gold. Is it possible? Not, it is not, but Ethereum has such characteristics as Gold which is :limited supply, scarcity, and it is valuable to people. And do not forget that gold is valued at 7 trillion dollars worldwide. It is a huge incentive to hold more ether for a long time period.
Payment mechanism. Visa’s capitalization is more than 200 bln USD but, at the same time, it can process much bigger amount of transactions at a faster pace. Ehtereum’s scalability solutions and mass adoption could boost Ether price to numbers exceeding 3 zeros at the end.
Then, this is the most interesting part. The currency. Will ETH become one? It certainly already has reached capitalization of some African countries but when will we achieve capitalization of developed nations? This will haunt us in our sleep because in this case even one ether holder can become a millionaire.
Financial instruments. Will ETH absorb value from financial instruments? It is hard to imagine but is still possible. We will see.
Why inflation rate is important for every ETH holder? Because the value of our portfolios will evaporate if the inflation is too high. This is the reason everybody likes cryptocurrencies. They promise the inexistence of high inflation that makes you poorer and your 100 dollar bill less valuable each month.
Vitalik and the Ethereum team promised to curb inflation and make it as small as possible under Proof of stake protocol which will stop the creation of new ethers at 100 million ethers supply.
When should we expect POS to take place? By the end of 2017.
Remember to invest wisely and do not forget that sometimes it is much better to hold than to trade.
Bye until the next time!