You could spend $1,000 to dig a hole OR you could invest in Ethereum
Last week a company named The Cards Against Humanity made more than $100k digging a hole… for no reason. Digging a hole. FOR NO REASON.
Of course your friend Tommy who lives in Noe Valley and his purebred Pug will find it horrifying. “Do you realize? $100k to dig a hole? While they could have helped Peta and all these poor pets living in tiny tiny tiny cages! What a disaster!”.
Of course your friend Bradley will find it “So cool bro! Robert in Sunnyvale put $1,750? Duh! I could put 10x more easily.”. Bradley… that successful motherfucker who just bought THIS house you can only dream about when he raised 10M$ for his social app called “Duh!” — The “Yo!” of the Uber of the Airbnb but on Mobile.
Of course your grand-ma… doesn’t give a shit and she’s quite right. So should you.
So you like to burry cash, huh?
And I’m talking to you Robert in Sunnyvale, OneDollar,Bob in baton rouge and jp in Santa Clara: If you don’t know what to do with these $1,000 why don’t you just buy a bunch of Ethereum (nope, not a drug)? Worst case scenario you might make some money and dig that additional 20 feet to expand your pool and get the award of “the one with the largest in the ‘hood”. Congrats!
What is Ethereum?
Wikipedia: Ethereum is a public blockchain-based distributed computing platform, featuring smart contract functionality.[1] It provides a decentralized virtual machine, the Ethereum Virtual Machine (EVM), that can execute peer-to-peer contracts using a token called ether.
For you and I, it’s a crypto-currency (ETH) like the Bitcoin (BTC) that you can either mine or buy on platforms like Coinbase.
Why is it the right time to buy?
- Bitcoin is cool but bitcoin is saturated
Today, bitcoin is getting close to 300k transactions per day and grew 100% since 2015. Let’s do some maths and try to assess the maximum capacity of the network.
On the Bitcoin network, transactions are stacked in what’s called a “block”. Each block contains up to 1,000,000 bytes of data. The average size of a transaction is 250 bytes. Therefore, the max capacity of a block is 4,000 transactions. Elementary, my dear Watson.
1 block is built every 10 mn or so. Therefore we get (60 mn x 24 h)/10mn = 144 blocks per day.
Max transactions validated per day = 144 x 4,000 = 576,000 transactions.
Conclusion 1: Once Bitcoin network reaches the max capacity, all the transactions it cannot handle will have to flow somewhere else. On the Ethereum network for instance.
- One crypto-currency cannot rule them all
In Bitcoin as in Ethereum, transactions happen once a block containing this specific transaction is validated by the network.
How does a block get validated by the network? It has to be “mined” by a miner — a pool of servers with high-processing capacity somewhere in a gigantic warehouse where electricity is cheap.
Then, how do these Bitcoin miners get paid? They have two income resources:
- They get a given number of BTC every time they mine a block
- The seller agrees to pay a fee on the transaction so the transaction gets picked up
However, the bitcoin value relies on the absence of inflation. A fixed number of bitcoin will be produced over time — the last bitcoin will be mined in 2136 — and miners will be less and less compensated in BTC for mining the blocks (50 BTC in 2009 vs 12.5 in 2016). This process is called the halving.
Therefore, every time halving happens, buyers and sellers have to increase the fee they’re willing to pay to have their transaction validated and convince the miners to keep mining.
Conclusion 2: In the near future, the fee will become too high for buyers/sellers to stay on the Bitcoin platform and they will transition to a cheaper network where the miners can get paid without relying heavily on the fee. On the Ethereum network for instance.
- Ethereum flaws will be solved
Lots of people have complained about the Ethereum instability and its internal divergences on the right path to follow. Hence the 4 heavy modifications of the structure of the network (i.e.: hard forks) that occurred over the last year. However, I find pretty healthy the ability of the network to question itself until it finds the perfect shape and feel more reassured than concerned about this situation.
Conclusion 3: Ethereum is taking a new, more democratic, approach of the blockchain. If we recall well, when the Bitcoin was created in 2009, it also had its flaws that were fixed over time. ETH only have 12 months experience, let’s give it some time to find its final architecture.
Still here? Dafuq are you waiting for? Cancel that transfer to “Cards against humanity and spend that $1,000 on ETH!
Because an image is worth a thousand words, below is the chart of the Bitcoin price over time. Even if Ethereum only gets half of this growth, these $1,000 would bring you $40,000 in 2 years.
Side note: I’m just a regular internet user, just like you. The recommendations in this article are only based on common sense and my very personal interpretation of things.
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