Ethereum: An Awesome Mission but a Horrible Investment

We were going to shy away from this topic because it seemed a little too advanced for our users. However, Ethereum’s crowdsale is starting to make news headlines and we want to make sure our readers don’t make an unwise financial decision.

The Ethereum crowdsale launched on July 23rd, allowing individuals to use BTC in return for Ether, the cryptocurrency used in the Ethereum network. Since then, they have raised over 25k BTC ~ $12M USD.

What is Ethereum? It has been hailed as “Bitcoin 2.0,” a term we have seen thrown around all too frequently in the cryptocurrency space, and has quite lofty goals. The goal of Ethereum is to take Bitcoin to the next level, creating a system that enables developers to decentralize everything. This is an impressive and commendable goal.


”Ethereum can be used to codify, decentralize, secure and trade just about anything: voting, domain names, financial exchanges, crowdfunding, company governance, contracts and agreements of most kind, intellectual property, and even smart property thanks to hardware integration.” -Ethereum.org


Ethereum is a great concept and has a great team behind it, including CoFounder of Bitcoin Magazine and outspoken Bitcoin community member, Vitalik Buterin. That being said, you should not expect to make a financial return on Ether “investments.”

Do not buy Ether expecting a financial return

You should only contribute to Ether if you believe in their mission and wish to support them. In this way, it's basically a Kickstarter campaign. You get the joy of contributing and you get to use the final product, but you won't make a financial return.

Why you won’t make a financial return

  • The crowdsale is uncapped. Everytime more BTC is contributed to the Ethereum crowdsale, it devalues the Ether purchased before it. There are 25 days left in the crowdsale and nobody knows how much Ether will be distributed by the end.

  • The algorithm is unfinished. Ether don’t actually exist yet, and key specifics such as mining algorithm and the built in inflation rate have not been decided on yet. The Ethereum team make no promises or guarantees that the Ethereum network will ever be finished. You cannot trade, move, or use Ether until the code is finished and the network is running.

  • The devs say the final product will definitely have built-in inflation, they just haven’t decided on a % yet. While Bitcoin has a fixed number of coins, Ether will have an infinite number of coins, with new coins produced every year at a rate that has yet to be determined.

  • There will be an additional 20% Ether added on to whatever the pre-sale final amount comes to. 10% will be given to the developers. 10% will be held by an endowment fund to support Ethereum in the future.

Even if Ethereum is wildly successful, which we hope it will be, you still will NOT make your money back from purchasing ether now.


Ethereum Documents:

Official Site

Terms And Conditions

Purchase Agreement

Roadmap

alt text for image

alt text for image


Disclosure:

Matt Odell has not taken part in the ether crowd-sale.


Disclaimer: This post is intended solely to provide information. As I have no knowledge of individual circumstances and technical level, readers are expected to complete their own due diligence before proceeding with anything mentioned in this article. The topics discussed in this post are advanced and readers proceed at their own risk. Readers are expected to complete their own due diligence before purchasing or selling anything mentioned or recommended.