Step Back, Elephant in the Room: it's time to talk about the price.
Here I present a bit of sentiment about the status of the Ethereum project and what is going on with the price. With 400$ Ether and 100 million dollar ICOs on the books, there is a lot to be said.
Ethereum is not a store of value.
Ethereum is not that decentralized.
Everyone is not using it as a "world super computer".
Ethereum is not scalable.
This is the Wild West.
Right now Ethereum is the ICO fabric.
This is why the price is booming. You know what I have said about riding Bitcoin bubbles. The same applies here: the momentum is far from over and it will almost certainly take prices that evoke similar emotions to 1000$ Bitcoin to bring anything to a stop.
Most of what Ethereum does today is moving Ether and ERC20 tokens. None of this smart contract magic in the front of everyone's minds. This is not the vision. The price is not relevant to the vision.
The Ethereum protocol is extremely immature, untested, and experimental. The Ethereum smart contract ecosystem is even more immature than the Ethereum protocol itself. If you are deploying smart contracts today, you should know this. There is no getting around the fact that this is amateur hour. There is a risk of the cart pulling ahead of the horse on this one; the core protocol level is unable to handle the businesses wanting to build their apps on Ethereum. Keep in mind, Ethereum can't even handle the current ICOs - its "killer app".
The tech behind Ethereum is extremely meaningful without the "token madness" entirely. If it was impossible to have tokens on Ethereum, there is still so much going on with the project that is increasingly meaningful. Given my comments on the state of the token economy - this should mean a lot.
No one is claiming ethereum is scaleable today. It is 20 tx/s on a good day. The development is transparent about their ambitions to move to solutions that can solve the scaling problems but as you will see in a bit, none of those are sure and tested. There are many contingencies that are hinging on unfinished and unknown problems.
If you want invest into Ethereum I think you should give this entire interview a watch. It is with Vlad Zamfir (Ethereum foundation researcher) who is incredibly levelheaded even with his position at the Ethereum foundation. Full of criticism this space is in dire need of.
On the ICOs
The state of ICOs today is something not many really saw coming; everyone knew how revolutionary ICOs would be but now that we are in the middle of ICO craze, the bubble has self inflated much faster than I had even imagined. This boom brings us to some of the problems with ICOs that I have outlined here and here.
I am really exited for what ICOs can do in the future. Everyone was exited to see the innovation these groundbreaking fundraisers carried. The problem is the ICOs are getting out of hand. Who is crazy enough to "essentially ask" for tens of millions for their whitepaper and some ICO code. No minimum viable product. There are reasons traditional venture capital happens in stages, with founders getting more money as they prove themselves as capable. This isn't necessarily happening with the multimillion dollar ICOs. But whatever, all the money is going into development on Ethereum. Their failures will teach the future innovators the hard way. Just as the failures of the dot com bubble allowed for the internet to form as we know it today. Just because some people will lose money doesn't mean it was a waste.
The price is going to go higher. It can go quite a bit higher indeed. We haven't seen the ranges that will almost certainly be triggered in the short term. Like I have said before, it will likely get to levels that trigger the same uncomfortable feelings 1000$ BTC brought in 2013. In the correction we will likely see a 60-80% loss in value like Bitcoin saw before, at least briefly. Who knows, apparently "the landscape is different today".
It will crash. Everything will, massively. It might be some bug or major hack, some regulatory scandals or even a network split; the correction from the insanity will come. All this said, markets can be irrational for a long time, much longer than you can remain solvent.
There is nothing that can be done to stop these bubbles, we simply must let them run their course and pop. The ugly truth.
The correction doesn't mean anything about a lack of innovation or utility of an industry - again, look at what happened with the internet bubble. The time is so soon, the execution is almost perfect. Once enough expensive lessons are learned, Ethereum and this technology as a whole will be ready for everyone. Finally.
Who is at fault for the chaos that is Ethereum and even crypto as a whole?
The problem with the point we are at right now is everyone is still making money. The investors who invest in scammy ICOs are ticket scalping their way to huge profits. You can't blame them. Everyone wants to be making money. I will admit it, I am somewhat of a capitalist. I don't blame investors for taking advantage of hype.
Some people (like the prominent community member @whalepanda) believe much of the responsibility for the crazy speculation and out-of-control ICO situation lies on the developers. To this I say: what developers? I think many of the developers launching these insane ICOs at the very beginning of their project are somewhat responsible. But it is not necessarily their responsibility to be setting low caps for their sales - this in fact could be a problem in its own right.
Now I would not necessarily describe the Ethereum Foundation or the developers in the same position as mister WhalePanda does in his recent post: I was wrong about Ethereum. The Ethereum Foundation, its members, and even Consensys are in a uniquely awkward position. I don't think it is fair to say they are promoting snake oil or anything of the like.
Is it the developers or prominent Foundation members duty to do anything? The crowd is funding, the crowd should be vetting thoroughly. Right now there is not the kind of self governance needed in the community.
Is it the place for individuals at the Ethereum foundation like Vitalik and Vlad to do more to emphasize the experimental nature of Ethereum at the present? Vlad has done a lot to try and tamper the enthusiasm - see some of his tweets and blog posts.
There might be something to "peddling the vision" that is nessacay to actually achieving the vision. The whole story is what could be, not what is possible today.
Vitalik (Ethereum Foundation; co-Founder) has been an advisor for many projects, although most projects haven't paid him a cent for the pleasure. There have certainly been many other projects that have listed him as an advisor but haven't even bothered to contact Vitalik in the first place. Vitalik showed his reason saying "in general best way for me to help everyone is to mostly focus on casper+sharding". Vitalik admitted his error eloquently saying it took "waaaay too long to properly internalize that advisorship is primarily about marketing, and not advising". He has socially committed to no longer being an advisor to any other ICO projects.
To those who think Ethereum is going to replace Bitcoin, I think you are wrong. Like has been said before, Ethereum is not a store of value in the same way Bitcoin is - there is no cap. Whatever it is that Ethereum is going to replace or become is going to hinge on many things going right. There are a lot of rocks to beach the boat.
Ethereum is moving to PoS. This is uncharted waters. Nobody has done proof-of-stake before. Sure NXT and Peercoin call themselves proof-of-stake, well they fall to solve the nothing-at-stake problems and don't offer the same concepts of finality that are so desired in this industry. Casper is nothing like any of the previous implementation attempts. Additionally, Casper PoS is much different than a Larimerian DPoS structure. This is the first time any of this will be battle tested. The research is strong, certainly more so than any competition; this does not change the gravity of the problem at hand.
The transition to PoS, even with the technical challenges at hand, will be technically easy - not politically easy.
Sharding, the primary solution to scalability problems that everyone buzzes about on the forums and reddit suffers from the unavailability problem. Not something often referenced in those reddit discussions. Sharding is hard too.
Oh and by the way, sharding is not even going to be ready for another two years. Nothing to worry though, these things take time - just keep this in mind when thinking again about the price of ETH and how crazy markets can be.
The moral of the story is this is all of this HARD. This might not work. There are unanswered questions and unsolved problems. Nobody has been here before. We are doing the things that most industries and investors scoff at. That's how we know we are on to something truly disruptive.