Some financial investors have approached me about investing in cryptocurrencies and lately, they were wondering what more is there beyond bitcoin. Since ETH is in the news more now, they were asking about this one in particular. If it was a good investment or not.
Short answer: Depends.
First question: What problem does it solve?
Answer: Many. It is a multi-layered services blockchain. A strongly written and flexible platform, if you want to call it that. It does something more than bitcoin does, but gives up something a long the way to make it so. If you want more information into this, check out Andreas 18 minute talk on it:
So far so good... but then, it quickly becomes difficult to answer the investor's question. Is it a good investment?
This post is not a long provable investigative look into ETH, but rather to bring up a point I made a few days earlier that I discovered trying to answer this. ETH is powerful, but the power it has, it gives it away. You can possibly run an autonomous insurance company on the chain with BILLIONS in token worth, but that does not mean that ETH is worth that much. So it gives up it's worth so others can have it. A great trade-off for "humanity". You can even sense here that bots in the future, will be serving us like this... it does not care what it is worth itself but rather, what service it gives. ETH takes the gold here. But to take it, it must give it away. ETH is not free and runs on "gas". To have these cheap fast transactions right now means having tons of gas at cheap prices. Wait until it grows. But even if it can, and multiple companies jump on it making it worth trillions, you can't have gas that is worth trillions. Goodbye cheap transactions. Like what is happening with Bitcoin right now. Bitcoin is the pioneer right now in trying to solve this problem, and maybe ETH can learn something from it when it does. But while Bitcoin is sailing the high seas, ETH is still doing pre-check lists, planned pre-hard forks at the harbour.
Back to my point. ETH value can't grow past a certain value or else it loses it's inherited value to do the very thing is grew popular to be. So although ETH investor's would love to see their ETH x100, it can only grow as much as the market is willing to pay, as expensive the gas can be. Their inflation rate helps right now to keep things cheap, but that is no way to grow the value of your ETH. So all in all. It's a balanced network. I admire it, but it's no store of value. It will deflate with growth. And with their push to switch to PoS, further centralising the network, it doesn't get any better for the latecomers. It empowers the pre-miners of ETH, which we can all guess safely who or whom they are.
Hence, I could not recommend ETH as a long term investment. Possibly as a short term until it reaches somewhere close to $1K, but unless you are going to actually use the network to build something with its coding, you might as well keep investing with BTC. Even with spawning off new cryptos from it (like bcash and maybe segwitx2) , it's a massive store of value for the planet.
So BTC becomes the foundation which you store your gold and drive your wealth, and ETH becomes the OS of the new DAOs? Maybe. BTC are starting to do some crazy things which allow very smart contracts. We'll see.
Many may know by now that I'm not pro-ETH but I am pro anything that solves a problem without hurting anyone. And when it comes to recommendations, I'm careful because my word is on me. There is no lose in potential gains, but there is lose in actually spending your devalued investments.