This morning I wrote a blog discussing coins I sold off to buy more bitcoin. I mentioned that I wasn't selling all of my non bitcoin crypto assets, but I didn't mention what I am holding onto. I wanted to write out a little bit about each coin I kept and why I kept it so I could possibly get some feedback from you guys.

I was originally going to discuss every coin other than Bitcoin I'm still holding in this blog, but my writeup for Ethereum started to run long, so I decided to just discuss Ethereum in here and write another followup discussing my remaining coins.

Ethereum

I saw an interesting tweet storm a few months back theorizing why Ethereum's price may drop in the upcoming months:

1. The demand for ETH was high with all the ongoing ICOs
2. The returns on ETH were higher than the returns for the coins being bought with ETH.
3. When people realize they can make more money by holding onto ETH instead of participating in a crowdsale, they will stop participating.
4. When people stop participating in crowdsales, the demand for ETH drops, as will the price.

It was a cute and clever argument that I've found to be true. For instance, I participated in the Iconomi ICO last August at the suggestion of @razvanelulmarin. When ICN tokens first hit the market they were roughly $0.20 per token while ETH was roughly $13 at the time. From October til last month's peak, Ethereum increased roughly 32x while Iconomi increased roughly 25x. These were huge gains from a coin I loved, yet it still didn't equal Ethereum. Some of the other ICOs had much smaller percentage gains than Ether did.

When crypto experienced a longer downtrend the past 7-10 days, Ethereum's price was dropping at a faster rate than Bitcoin's. Many pulled out and claimed they would rebuy at a much lower price.

There have been concerns about the centralization of power in the Ethereum foundation, the difficulties with scaling issues, and the presence of competition in Tezos.

I chose to sell roughly 25% of my ETH when the price was slightly over $300: I bought some Golem (which I sold 2 days ago) and mostly more Bitcoins to loan out on Poloniex. However, with the current price levels I am holding the rest.

Why I'm not worried about scaling

Ethereum's approach to scaling issues is multifaceted.

Some of these implementations will take much longer than others and are very difficult computer science problems. For instance, sharding refers to network validators only needing to validate some but not all of a network's transactions. Having less required confirmations allows for much faster block times. However, it brings up it's own issues by adding possible attack vectors on the network.

But regardless of the difficulty of some of these problems, the combination of approaches will cumulatively scale the scaling process. Proof-of-Stake is coming, off chain payment channels are coming, changes to the Ethereum virtual machine are coming.

These two articles discuss some of the roadmap in more detail than I did:

Ethereum & the Hodlors that love them

Scaling Ethereum to Billions of Users

Why I'm not worried about competition from Tezos

Tezos will represent smart contract platform competition to Ethereum, but there are many differences between the two. The largest difference is that Ethereum is thin-layered while Tezos aims to be fat-layered. This means that Ethereum intends for any possible applications to be built on top of it, while Tezos aims to be a multi-faceted platform with many different features. This makes Ethereum's possibilities endless, and the sky really is the limit, while Tezos will still require changes to be made to the platform itself to implement new ideas.

Why I'm not worried about centralization

In response to centralization, the Ethereum Core Developers began publishing their weekly meetings so people can see what the decision making process is like.

Example from this week:

Not to mention, many cryptos have centralized power due to other factors:

• A few mining groups in Bitcoin have a lot of the hash rate.
• Steem uses Delegated-Proof-of-Stake, and witnesses hold a lot of power
• Tezos will have a similar system to Steem

Plutocracy is really no less centralized than the Ethereum Foundation.

Every so often, a blog post or reddit thread blows up with someone who has new concerns about Ethereum. And generally when it does, Vitalik comes in, refutes most of the arguments, and drops the mic.

I think Vitalik looks like Tom Brady in desperate need of about 1000 calories more per day.

Here are some good Vitalik rebuttals to read:

Vitalik rebuts people who think Ethereum is useless

Vitalik refutes Tuur Demeester's critique of Vitalik's end of 2016 article on the philosophy of Proof-of-Stake -- note that the rebuttal has more like than the original article.

Conclusions

Big things are coming for Ethereum. I believe in their team, think the scaling issues have good solutions coming, am not worried about Tezos (although I do own some Tezos) in the same way that I worried about competition for coins I sold yesterday, and I'm not worried about the Ethereum Foundation's power compared to mining or witness power in other cryptocurrencies.

I do want to have more BTC than ETH right now because of reasons I listed yesterday: I can make more loaning and through airdrops, and the big changes for Ethereum are not quite here yet. But I would rather buy into an idea and team I fully support and believe in now while the price is low than into risky projects with unknown teams that have a lot of major competition and ETH still makes up >30% of my crypto portfolio.

One last point is, with the move to Proof-of-Stake, having a war chest of Ethereum tokens will allow me to transition over to becoming a miner, so that I can make easy income from Ethereum like I do with Bitcoin.

Will write up the remaining cryptos in another article coming in a few hours.

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My name is Ryan Daut and I'd love to have you as a follower. Click here to go to my page, then click in the upper right corner if you would like to see my blogs and articles regularly.

I am a professional gambler, and my interests include poker, fantasy sports, football, basketball, MMA, health and fitness, rock climbing, mathematics, astrophysics, cryptocurrency, and computer gaming.