Long Ethereum Thesis - (Part 1) Long ETH short BTC?

11:35 AM

I have often accused Crypto currencies of being bubble territory. This has not changed, especially for Bitcoin.

As Warren Buffet says about gold, it looks nice but have no real value.

Ray Dalio, one of my absolute heros in trading buys gold because of historical context.

Cryptos do not have any real value or historical context.

So I have been skeptical. Until now.

Source: hhttps://i1.wp.com/coinspondent.de/wrdprss_XXX/wp-content/uploads/2016/10/Bitcoin-vs-Ethereum-1.png?fit=672%2C372&ssl=1


Bitcoin to me, had a value-add no different from Western Union and to a certain extent Visa and MasterCard.

It was a way to transfer value between parties effectively and at little cost.

These are two industries have significant distprutive value but not a lot.

Bitcoin works as a base means of transferance currency. That is all.

Advantage 1: Smart Contracts

Ethereum has ability to produce smart contracts. The business model allows for contracts and conditional transference.

A common example, is the vending machine. You put in the money, it is irrevocable and it will produce a can of soda in exchange.

The ability to define properties and produce payment is staggering.

There are already applications to gambling, airline insurance and even stock markets.

I can see potential even in the alibaba.com space or trade finance, it is could be a major disruptor.

Disrupting these areas are much more lucrative.

Advantage 2: Decentralized Independent Cryptos

Ethereum has a mover advantage over its competitors.

It has the DAO (Decentralized Autonomus Organization) which allow for other cryptos to form off of the ethereum network.

Dai for instance, another crypto currency based on the value of SDRs (Special Drawing Rights) is on the Ethereum network.

Augur, an online prediction site is being developed utilizes the Ethereum network.

These are coins on their own, but run off the Ethereum blockchain.

Advantage 3: Friendly to users

The Ethereum Virtual Machine (EVM) allows all programming languages to use the network, meaning it is also accesible.

Advantage 4: First mover

In the above 3 advantages, they are the first to move into this and are currently the largest.

Dash, Litecoin, Ripple etc are not as developed in these areas.

With so many projects in the pipline, i do not see other cryptos affecting these advantages.


Even today as I publish this post, BTC rose 5% while ETH did practically nothing. It is apparent that Bitcoin is still the favoured child amongst Cryptos and is quite possibly in a bubble. However its long term value to me is  questionable.

In Ethereum, there could quite possibly change the world as we know it and they are ahead of the pack. Till this vision is realized I will be long.

Stay tuned for Part 2 & 3 where i go into further depth on my thesis and how I will manage this actively.

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