All are welcome, Step into the hype. Buy Ethereum! Buy Litecoin! NO, you say?steemCreated with Sketch.

in #blockchain7 years ago

No, don't step into the hype. Think about this, both Ethereum and Litecoin are inflationary compared to Bitcoin. I will attempt to show you why you will never achieve a peak price hype as we are experiencing now after the bubble bursts.
circulating supply.JPG
You can see that BTC has 16.3M supply, ETH has 91.1M and LTC has 50.8M. Back in the bubble of Dec '13 when we had an ATH for bitcoin, lite coin was priced at $30-$40, then the bitcoin bubble that was driving the speculation burst. We saw Litecoin return to its nominal level of $2-$5, a range it has been for 80% of it's life. Litecoin has a maximum supply of 84M, which is 4x as much as bitcoin will ever have. chart.JPG

We can see where the bubbles exist in these graphs by looking at the volume spikes, there have been 3 major events in Litecoin's price. Dec 2013, and the subsequent collapse of Gox, Jul 2015, and right now. However during these events Litecoin has continued to churn out coins. Now as we are back at peak BTC, we see that the peak price of Litecoin is only 35% of its peak from the previous ATH.

Now lets look at Ethereum, the latest target for the "well I didn't get into bitcoin, this is the next best thing" crowd.
ethchart.JPG
We are now experiencing ETH's first foray into the BTC ATH hype train, and it is paying off in spades for early adopters. However as before there are many who are getting into ETH right now, the top of the market. Much of the pricing is based on hype and speculation. The network whilst very promising for the future, currently has very limited applications layered on top of it. Certainly compared to the services Bitcoin has to offer at this stage, or even during its previous ATH.

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This bubble will burst and when it does we can learn from Litecoin that the rate of inflation compared to Bitcoin will be important. Ethereum is designed to use Ethers for fueling the network applications, it was never designed to be what Bitcoin is, a replacement for remittance and a store of value like gold. To that end it was designed so it's fuel was not hoarded but released, and it is designed to continue to release coins at a rate of approximately 12M coins per year until the Proof of Share system is implemented.
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Put that into perspective, not only is the current supply 4 times larger, but in one year nearly an entire bitcoins amount of total supply will be released. This makes it incredibly unlikely that the price of ETH could ever match Bitcoins current price, and it makes it very unlikely that people who are buying at the top can find a ROI after the market corrects.
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So no don't step into the hype, be patient eventually we will have a correction and the time will be right to buy certain cryptocurrencies again. Some will never be a good investment. For some, and Ethereum maybe included, it will be much better to buy the tokens the DACs layered on top release. A good example maybe storj, or gnosis.

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Ethereum is switching to Proof of Stake. It also captures lots of ETH in it's ICOs and so a lot of it is going to be locked up.

Yes, I brought up the POS in my article and at the end I talked about the tokens on top of the network, or ICOs, and I have current investments in both. However coming from a background in Bitshares, I have seen similar arguments made. In particular I had a friend who was an advocate and lost a large majority of his BTC in Protoshares and Angelshares. He refused to look at the concerning aspects because he was drinking the kool-aid.

I think a major flaw of Bitshares was the development centralization, when the developers wanted something done, they did it without real concern to the original bargain made with the founding investors. This will be somewhat true in Ethereum as well, POS centralizes the power to make decisions, and the older developers have a ton of ETH. Your mention of a third split also somewhat shows this problem IMO. What ever the devs decided to do in Bitshares or in this case Ethereum will be done to the developers liking. Additionally lets say that the development was completely agnostic, the POS system will allow and attract wall street or other bad actors to take over a POS system.

Your video also mentioned comparing it with gold, visa, and financial instruments. I think that it's centralized control, lack of privacy, and uncertain safety will be a huge barrier to overtaking current cryptocurrency alternatives for payments and store of value. I enjoy the discussion, and hearing your viewpoints.

Ethereum will likely reach $100 next month, probably in the next week.

I agree, however the point is if you buy now and a gox/major bug type event happens, you may not see the price return to that level maybe ever if inflation/supply is too high.

That is why you hedge and diversify your assets. You don't want to go all in on anything.

Listen, I don't do that, but you do have people ask you about this sort of thing who know nothing and they are just trying to put in money now at the top of the market.

I have even had family members who own no crypto asking me at the top of the markets if they should buy, and they only look to buy one type of crypto. These people who are buying at the top often lose because they soon sell off, since they have no faith or understanding of the cryptoworld.

ethereum barely works, ltc is old tech and not scalable even after segwit

Solid blog. Nice to see I'm not the only one who thinks like this. Sell the coins that you know nothing about. Do proper research on any coin you buy. If the market falls at least you can hold your coins knowing they have a long term future. I found this great website: https://www.coincheckup.com They seem to give this complete indepth analysis of all cryptocoins. Check for example: https://www.coincheckup.com/coins/Litecoin#analysis For a complete Litecoin Report

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