Ethereum [1] is widely regarded as the number 2 crypto-currency behind Bitcoin. Vitalik Buterin, the creator of Ethereum is a Bitcoin fanatic who understood deeply, the intrinsic value of crypto-currency and the limitations of Bitcoin.
Ethereum is a "Turing Complete" platform that allows programmers to build trustless smart contracts enabling highly creative value transfer. Ether is the currency integral to the operation of Ethereum. Each computation requires Ether. This is truly a world first. Ethereum can also be described as a virtual machine that runs on top of the internet stack. It cannot be censored or shut down since it is decentralized (no single point of failure).
Ok this is all great but the reader just wants to know whether they should buy. Have they missed the boat or is it about to sail?
How do we come up with a meaningful valuation for Ether? Well, at its core is a team of developers, keen to improve the world, akin to an early Google. These folks are highly motivated both politcally and financially to bring Ethereum to the mainstream. I see it entirely feasible that the market capitalization of Ethereum could grow to at least that of a large tech company in the next three years, say $500 Billion. There are currently $94 Million Ether in circulation and there is expected to be 100 Million in circulation by around 2020 [3]. Inflation is minimal [4]. This equates to roughly $5000 for 1 ETH.
Conclusion:
The author recommends ETH as part of a diversified crypto portfolio. There is plenty of upside potential which outweighs the downside. Aside from the money it is a very cool project to be a part of.
References:
- https://github.com/ethereum/wiki/wiki/White-Paper
- http://www.marketwatch.com/story/this-is-how-much-money-exists-in-the-entire-world-in-one-chart-2015-12-18
- https://np.reddit.com/r/ethereum/comments/5izcf5/lets_talk_about_the_projected_coin_supply_over/dbc66rd/
- https://ethereum.stackexchange.com/questions/12501/what-is-ethereums-inflation-rate-how-quickly-will-new-ether-be-created
Disclaimer:
Investing in Crypto-Currency carries high risk.