If charts could speak… what might THIS one say?

Usage: the dream of every blockchain speculator

I was given a lot of grief when I told my audience Ethereum was compelling at 79 cents, late last year.

At $5, I was called all sorts of fun stuff to suggest the growth had not really even started yet.

At $11, I’m no longer being called anything fun, but I still believe the growth has not really even started yet.

Consider:

Ethereum is programmable money in a way that Bitcoin tried to be, but just isn’t. Those were the words of creator Vitalik Buterin in a recent interview with one of the “big” (lol) Bitcoin news outlets. Buterin was previously a co-founder of Bitcoin Magazine and has been involved with cryptocurrency publicly since at least 2011.

Bitcoin was ambitious, and it did something neat: censorship resistant, disruption resistant state transition ledger reconciliation. This was useful in the real world because, for the first time, you had an online system that would record and verify within about 10 minutes movements on the ledger — or transitions in state.

I.e. “David gave 1 Bitcoin to Melissa.”

As long as Bitcoin has some economic value in your local currency, which it does due to its rarity and community of collectors/users, you can “conveniently” (that was the hope, anyway) trade your received Bitcoin for local currency. This is a novel way to sidestep the costs and slow speed of traditional money transmission via bank, Western Union, PayPal, et al.

Fine. Very cool, actually.

But something else happened to Bitcoin. VC funds began investing in Bitcoin, the currency, and peripheral startups working with “The Blockchain.” Users began to think of Bitcoin as the answer to all problems — ID verification, wealth storage, property titles, marriage records… in time, the prevailing notion went, “The Blockchain” would house basically everything of interest to a modern Internet civilization.

And, some Bitcoiners arrogantly espoused that “price is the least important thing about Bitcoin” while driving up the price, aware that if “The Blockchain” became the backbone for a new kind of society — that kind of price would go to the Moon, or further yet.

The Moon is a starting point for crypto to work, not a destination.

The issue with their theory is that all the great stuff they envisioned, 7 years into Bitcoin’s existence it is still not there. And it’s not even in development. It’s nonsense. The VC pocketbooks closed at a certain point. Banks, after an initial honeymoon period, decided that marriage is not for everybody. Some of the most promising Bitcoin developers, either due to lack of aligned financial incentive (they don’t own enough BTC) or due to receiving lucrative offers elsewhere, simply left the scene.

Believe it or not, when you’re one of the most sought after computer programmers or engineers on the planet, working for peanuts while getting harassed by teenagers who want their Bitcoin valuation to go lunar… that’s not nearly as compelling an offer as some in the Bitcoin community might believe it is.

The primary issue with BTC’s price is that a lot of that expectancy of imminent brilliance and innovation — disruption — is buoying the value. But it’s simply not coming. Santa is not real.

BTC still works great as a vehicle for non-traditional money transfer at $200 per coin, at $100 per coin.

Enter Ethereum

Ethereum is also a blockchain, like Bitcoin, but that’s where the similarity ends. It’s faster (meaning each “block” is solved in about 15-17 seconds, rather than in about 10 minutes). And it includes its own active scripting language, called Solidity, meaning all those fantastic starry eyed use cases for “The Blockchain” can now actually be built and deployed by smart programmers — provided they learn Solidity, and provided Ethereum has some kind of economic value to keep the network going.

If Bitcoin is a tokenized “currency” that didn’t require the approval of anyone to come into existence, Ethereum is a tokenized “World Computer” that doesn’t require the approval of anyone to spring into existence.

What is a World Computer? They explain it nicely in 90 seconds here:

After watching that video, you are probably very intrigued (the response of a normal person with some educational background) or very scared (the response of a person with some educational background and non-normal levels of BTC holdings).

BTC and Ethereum are not friends. They aren’t quite competitors; Ether will become currency by way of its ubiquity and usage within the World Computer, not by way of collectors fetishizing and hoarding it.

If Bitcoin was a very smart attempt at “digital gold” to improve transaction speeds and transaction costs, Ethereum is the world’s first “digital oil.” Just as you can’t run your internal combustion car without some quantity of petroleum that’s been converted into gasoline, you can’t run and execute global code on the Ethereum Virtual Machine (EVM) unless you have some quantity of Ether — gas (small amounts of Ether) get used up as you spin the World Computer’s CPU and hard drive.

Looking forward far enough into the future, this is neat because here we have a semi-rare digital object with a built-in use case: running the World Computer.

Gold (real gold that is, not Bitcoin) has many use cases underpinning its value, aside from investment/hoarding/transactions. It is used to celebrate weddings in certain parts of the world, NASA uses it for stuff, it is used in microprocessors/computer circuitry… similarly, oil has uses — gasoline, jet fuel, plastics, etc.

Bitcoin, however, doesn’t have all those uses underpinning its value. The utility offered by being able to shuttle value from one user to another is very real, but as Ethereum is already approaching the network node distribution of Bitcoin itself, it’s a tenuous and bizarre argument to assume that no users, no corporations, and no civilizations will find moving Ether as a compelling alternative to moving Bitcoin.

Especially when the block time is approximately 40 times faster than Bitcoin, the community is not in disarray, and due to all those programmable use cases glimmering in their eyes — not all banks, corporations, and governments are wildly opposed to Ethereum.

The next few months should be interesting for the cryptocurrency community.

Sound off-

These views are mine alone and are subject to change as new information becomes available.