|image Source Google – Bernardmarr.com|
Bitcoin is easy to understand: slow-moving digital gold. When people say that bitcoin is a currency or it’s not used to make purchases, they show that they don’t understand it. Bitcoin is long-term savings account protected from inflation using code, thanks to scarcity (there are only 21M bitcoins). That’s it.
Ethereum is a lot harder to understand. It has hundreds of use cases. This is why if you start to learn about Ethereum and what it does, you can do well out of it. Every day I learn something new about Ethereum. It’s a beast.
Why should you pay attention to Ethereum?
- It’s the second-largest cryptocurrency. It launched in 2015
- The network effects of Ethereum are impressive. Network effects helped the previous generation of tech companies make a lot of money. The next generation of tech will be blockchain-enabled, decentralized technologies such as Ethereum.
Some experts even say Ethereum will surpass Bitcoin in both size and price. This is why you need to pay attention to Ethereum.
Here’s the One Sign That Determines Whether the Ethereum Price Goes Beyond Bitcoin
Raoul Pal is a finance legend. He recently went from putting most of his money into Bitcoin to placing some of his money in Ethereum.
Raoul came up with a simple way to measure the potential future price of Bitcoin and Ethereum. Both cryptocurrencies have a concept known as addresses. An address is like a user’s account.
Raoul has shown that as the number of user accounts goes up — just like with Facebook, Twitter, Uber, Netflix, etc. — the price per coin and the total value of the network go up too. (I said network because Ethereum and Bitcoin aren’t companies — another cool feature of both technologies. Ethereum is built by thousands of developers all around the world that has dedicated their time to the project and combined their resources.)
This phenomenon is known as Metcalfe’s Law. The finance world has used Metcalfe’s Law for many years. All you need to know is the law helps explain how a network grows, and it helps you value a network such as Ethereum, without being a child genius.
It’s clear from Raoul’s analysis that Ethereum is “more viral than Bitcoin.”
|image source – Raoul Pal Tweet|
BTC = ETH. Fact. Different assets, different ecosystems, same adoption, same behavioral economics = same but different… — Raoul Pal
Should You Invest in Ethereum?
Only you can answer this question based on your situation. Stocks feel wrong to me right now. I don’t like buying at the highest prices in history. So I definitely have and will buy more Ethereum. I apply the 80/20 rule to Bitcoin and Ethereum. If I invest $1000 then $800 goes into Bitcoin and $200 goes into Ethereum.
There is no doubt Ethereum is going to play a huge role in our lives. I think it’s worth a small investment, but only if you have the money you’re prepared to risk.