It’s fair to say that Bitcoin gobbles up most of the attention compared to other cryptocurrencies, certainly in areas of non-specialist financial media. That’s understandable: It was the first digital currency; it is by far the biggest by market cap; and, it also had those huge gains back in 2017, which can be said to have gone down in financial folklore.
Yet, there are many cryptocurrencies out there – more than 1600 as of mid-2018 – and the fact that some have function-specific purposes (outside of being just a decentralized digital currency) should be interesting to investors, including casual investors. “Function-specific’ means just that, the cryptocurrency is designed to perform a function. For example, the (now inactive) KodakCoin, which was designed facilitate payments for licensing photographs, or PotCoin, which serves the (legal) cannabis trade in the United States.
However, some cryptocurrencies go beyond being a currency with a singular purpose. In fact, some go well beyond being a currency. It’s part of the reason that some investors find the Eth trade so intriguing. Ethereum is about so much more than its supporting cryptocurrency token, Ether. As Mike Orcutt from the MIT Technology review put it, “Whatever’s going on in here, it’s about more than ‘magic internet money.’”
Lofty goals for Ethereum’s creators
Orcutt was referring to the Devcon 2018 conference, an annual get together for Ethereum developers, backers and enthusiasts. They were there to discuss Ethereum’s future, and almost none of the discussion was centred around the platform’s token, Ether. Indeed, there was a big focus on Ethereum 2.0, a kind of upgrade to the platform, seen as a key for the blockchain platform to realise its potential.
The idea is that Ethereum should be a general-purpose computing platform, one which its backers believe might one day not only change financial transactions, but social ones too. The use of smart contracts on Ethereum’s platform is just part of it. Put simply, whereas Bitcoin creators wanted to launch a decentralised currency, Ethereum’s backers want to decentralise the internet.
That might not sound interesting, but it’s potentially revolutionary, and something that could be monetised by investors. We are talking about an internet that is no longer controlled by Google, Amazon, Facebook and so on.
Price has rallied in spring 2019
Ethereum hasn’t had the same news coverage as Bitcoin, but it’s been the second highest cryptocurrency by market capitalisation for quite a while now. More importantly, it’s been moving upwards this year along with Bitcoin. There seems to be a renewed optimism among cryptocurrency investors of late, especially as Bitcoin, which can drag others along with it, has enjoyed sustained gains for the first four months of 2019.
Yet, for Ethereum it seems that observers are waiting for some sort of breakout moment, a tipping point that might take the price of Ether beyond the highs of January last year, when it was worth over $1000 per coin (the price at the time of writing is hovering around $160). Nobody is saying that’s going to happen tomorrow, but if Ethereum’s backers realise their ambitions it’s anyone’s guess how valuable the underlying currency could become.
Not everything is perfect, of course. Far from being a slick, targeted operation with stated goals, Ethereum’s development is scattered and uncollaborative. However, that’s the nature of creating something that has decentralisation at its very core; it’s supposed to be open to anyone.
Yet, investors hoping that Ethereum becomes the next best thing can perhaps be buoyed by the analogy of its creator, Vitalik Buterin, who claims Ethereum is currently at the point of “a smartphone from 1999 that can play Snake.” If we consider what smartphones are like today, then we can see that Ethereum’s founders have big ambitions indeed.
This article is for information and educational purposes only and does not form a recommendation to invest or otherwise. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.