Ether Is a Great Investment Because… It’s Complicated

Ether is currently moving much slower, in terms of price action, than what we would expect. I believe this is because understanding the ‘bull case’ for ether is a relatively complicated task. At least, much more so than bitcoin. With bitcoin, it’s simple, it’s a store of value. There is a hard cap of 21 million and there will never be any more than that. This is as simple as it gets.

Understanding the bull case for ether, however, requires delving into the Ethereum ecosystem — and putting your nose in a few good articles. Most people, especially those who aren’t already invested, aren’t going to be receptive to technical jargon like ‘EIP-1559’ and ‘layer 2 scaling solutions’. As far as the layman can see; Ethereum can’t scale, it’s inflationary and — most importantly — ether’s price doesn’t move.

However, when we consider what makes a good long-term investment, we should really be focusing on the future of an asset not purely its current state. Where will it be in five-, ten-, or twenty-years’ time? No one has a crystal ball and so we can’t say for certain however, this is why we perform fundamental analysis. If an asset is strong fundamentally then, over time, it should perform well.

The fundamentals of Ether are currently quite weak, despite a very strong ecosystem. However, the fundamentals are changing. Delving deep into the details is not the purpose of this article, so I strongly recommend getting up-to-speed through the following video.

One of the more important points made in the video is that, through EIP-1559 and the transition to proof of stake, ether will become a triple-point asset. This means it will be (1) a capital asset, you will earn more by holding it; (2) a consumable asset, you can transform it into other assets; and (3) a store of value asset, it’s deflationary. On top of this, because of its design, Ethereum will be even more secure than Bitcoin.

All of this is not neatly packaged into one narrative like Bitcoin the store of value or Cardano the ‘Ethereum killer’. Once again, it requires a little more digging in order to understand. This is what makes it a good investment. Whilst the wider market scrambles to buy-up simple narratives, those who have an understanding of what is to come, will have the window of opportunity.

Ultimately, when ether transitions, it will no longer require people to understand it. The economics of the token will have changed, and the price will naturally reflect that. It’s easy to imagine, in one- or two-years’ time, people lamenting that they didn’t buy ether back when it was inflationary.

In sum, the bull case for ether is yet to be priced in whilst the market still doesn’t understand what the future holds. This provides an opportunity — primarily for nerds. Of course, I am not ignoring the fact that there are still ways that Ethereum can fail. Perhaps Cardano will surprise us all. However, in my opinion — given what we know — ether is the most undervalued asset in the market.

This article should not be construed as financial advice. Do your own research!



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Jacob Madden

Graduated with a BSc in marketing from Lancaster University. Interested in topics surrounding crypto, finance, economics, politics and philosophy.