December 18, 2016
After more than eighteen months reading (almost) constantly about crypto currencies, I think that the entire space can be reduced to the four best opportunities for investors.
There are currently more than 600 crypto currencies, so I have not investigated them all, but from everything I have seen, there are a few to be interested in. I have mentioned the first and leader, Bitcoin, elsewhere on this blog. Of the remaining three, I’d like to highlight a second coin today.
It is called Ethereum and plans to be the first distributed global computer. The best way that I can personally describe Ethereum is as a business layer. It also has plans to create usable smart contracts that will be verifiable and secured via the blockchain. This has the potential to be incredibly disruptive (web hosting, law, financial services, real estate and on and on).
Where Bitcoin is designed to be a currency, Ethereum is a platform that will appeal to a very wide range of businesses and Ether / ETH (the coin) will be the money used to power and secure it.
You might want to just Google it and do some reading…
I’m not going to kid around here, there is a lot of very complex terminology to understand if you plan to dive in. The learning curve is very steep. For example, I have just spend the last hour trying to understand this discussion about the expected issuance and inflation rate. Phew!
This complexity is not helped by it being at such an early stage, which means that the space is dominated by developers who might understand the topic and each other, but they are not – as a breed – generally very good at accessible communication. You have been warned.
A systems admin friend and I (mostly him…) tried to mine Ethereum ourselves in January and February 2016. Those were the very early days. Despite all the tech knowledge, experience and equipment we could bring to bear, we failed totally. So while it is possible to simply buy, hold and sell, most of the other potential aspects of the platform will probably be out of your reach for now.
Ethereum has had it’s problems in 2016, but only launched late in 2015. I find it hard to imagine that the price will go crazy in 2017, but now is the time to be buying before the progress that is currently being made is delivered and get the price moving. In other words, this is less of a “tip” as you might expect in a newspaper (“It’s going up!) and instead is more general advice (“The future is exciting and the price seems to be attractive”).
My guess – and it is only a guess – is that the recent softening will continue for a few months and the price will drift lower for a while. This feels to me like a time to be buying. Just to put a stamp on it, the price is currently trading at 7.57 euros (Ask) and 7.60 euros (Bid) on Kraken, a leading digital currency exchange.
Crypto prices can really jump around, so it is entirely possible that a trade can be made in the short(ish) term. However, I personally feel that this ought to be seen as a buy and hold situation. As I mentioned, these are very early days for Ethereum and it will be several years before we really know whether the platform is likely to succeed and how.
(Disclosure: I own a few Ethereum and plan to buy more through 2017).
It goes without saying that this is for information and entertainment purposes only. Crypto currencies are high risk and very volatile assets. You should not invest money that you cannot afford to lose. Asset prices rise and fall and your author accepts no responsibility for your financial decisions.financialguy