Source
r/ethtrader•
psymbol

Why is Ether ever going to be considered a store of value?

SENTIMENT

Edit: I need to rephrase: Why do you see an upside to ether price ?

With the great big frontier of coming up with a stablecoin for the ethereum network (Dai/DGX and more)

Why do some of you still see the price of Ether as undervalued? will it not eventually function ephemerally in the ether of its blockchain while all of its network participants work to program their own digital currency that may or may not achieve success ?

Does it have something to do with PoS? Upcoming Network versions?

Thank You.

Posted Apr 2, 2016, 10:23 AM UTC · edited

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nanomindGentleman•

IMHO it is something we have never seen before in this specific form. People will buy Ether first as a means to an end (apart from the speculation thing right now). For example to settle a smart contract; this can be done with other value tokens for sure. But since you are operating with this Ether with ease and Devs and the network effect will keep growing the eco-system; people will experience and see it as having value in itself.

I think the Mist browser is a very smart idea. If it works out as planned this will become a multi-tool-wallet that will help you settle all sorts of smart contract stuff; from a bet with a friend; to buying a car; and dealing with an ID check, etc..

So although it may not be designed as a "store of value" as I keep hearing; in the end people will decide for themselves what is.

My bet is on Ether at the moment.

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TreeOfLibrtyGentleman•

So although it may not be designed as a "store of value" as I keep hearing; in the end people will decide for themselves what is. My bet is on Ether at the moment.

Exactly.

History says (very clearly) that people will decide for themselves to use whatever is practical (keyword there) at the time.

Let's not forget that tulips(!) were once used as a store of value.

In terms of a "use" or "application" standpoint, ETH is infinitely more appropriate / applicable / useful on the nascent yet rapidly growing Ethereum network, than tulips ever were at any time during their prime.

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BenBerlin•

Lets also not forget that tulips aren't the main competitor here :-P

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lokventHopeful developer•

Even better, the tulips worth the most were the ones infected by a certain fungus that gave them stranger colors.

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hablamanos2•

yeah, and there were only a handful of them in existence, and that species is now extinct.

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Jackieknows•

Yes, and imagine how cool it will be to have a developed dapp store in Mist

https://i.ytimg.com/vi/IgNjs_WaFSc/maxresdefault.jpg

https://www.youtube.com/watch?v=IgNjs_WaFSc

This will be so f*cking cool in the future

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ItsAConspiracy•

Currencies have network effects. For now at least, ether is the one currency you know everyone on Ethereum uses. It also has a billion-dollar head start, and built-in earnings potential with PoS.

It's actually possible to build a stablecoin as a contract-for-difference on ether, which still leaves ether as the store of value.

I watched e-gold get shut down, and don't see why anyone would want to switch from an unstoppable cryptocurrency to another gold-backed digital currency that can be instantly annihilated by a government.

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psymbolOP•

I was reading up on CFD's when digging in to bitshares, still can't quite wrap my head around the rationale of collateral.

It sounds much like a futures contract...is it?

and while i agree that the counterparty risk posed to everyone at DigixDAO is real, they seem like a solid team with commitment, if it fails with gold, they look like they have the capacity to steer the ship out of the shitstorm that a government pay bring forth.

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ItsAConspiracy•

Basic CFD: You want stable value, I believe ETH will go up and want to increase my gains. We both put $100 worth of ETH into a contract, which takes a price feed we both trust. Later, you can redeem whatever amount of ETH is worth $100. If the ETH price has gone down, you get extra ETH which comes out of my deposit. If ETH has gone up, you get less ETH and I get the extra.

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psymbolOP•

Thank You.

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PseudonymousChomskyEarly Adopter•

I've been considering that stable coins on Ethereum will be a good store of value. Can you give some CFD examples that have gone well for backers of the stable asset, and also examples that have gone bad?

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appcodr•

Technically ETH is just like Bitcoin, a pair of public/private keys. So I'm not sure why all this talk about considered/not considered store of value.

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TreeOfLibrtyGentleman•

So I'm not sure why all this talk about considered/not considered store of value.

Because Bitcoiners keep repeatedly coming over here and asking the question--sometimes even pretending to be "genuinely" curious--even though it's been asked literally 100+ times at this point.

I guess it's their subtle attempt at trying to undermine the fact that as you said, the two (ETH & BTC) are literally identical in this context.

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saibog38•

It's not just bitcoiners; the ethereum foundation is one of the main sources of that rhetoric. Their FAQ on ether states that:

Ether is to be treated as "crypto-fuel", a token whose purpose is to pay for computation, and is not intended to be used as or considered a currency, asset, share or anything else.

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VoxeNnGentleman•

yeah well, lets see how long that stays up there.

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Dumbhandle•

When strong, act weak. When weak, act strong.

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MrNotSoRight•

Very valid point. It's not clear to me why it's not intended as a currency while it seems (to me) more capable than BTC...

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blakemiles84•

My guess is they added that in there as a CYA in the event of pump and dump drama.

As the 'tulip' references above point out, you can't tell people what they should and should not place value in.

When they wrote that, I doubt they would have guessed that the future would yield the uncertainty that has been fostered because of the block size stalemate. I would argue that's as much of a factor in the price rocketing up as the actual perceived future value of ETH.

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TreeOfLibrtyGentleman•

My guess is they added that in there as a CYA in the event of pump and dump drama.

As the 'tulip' references above point out, you can't tell people what they should and should not place value in.

When they wrote that, I doubt they would have guessed that the future would yield the uncertainty that has been fostered because of the block size stalemate. I would argue that's as much of a factor in the price rocketing up as the actual perceived future value of ETH.

I agree with the rest of your post up until the bold part. I believe that is more coincidence than anything else. To suggest that ETH's price is only (or mostly) as high as it is because of bitcoin blocksize drama, is really missing the mark IMO.

Ethereum is literally everything Bitcoin is and then a whole lot more. There is nothing that Bitcoin can do that Ethereum can't, but there is a whole bunch of stuff that Ethereum can do that Bitcoin can't and never will be able to do.

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ponziunit•

Buying tomorrow's computing power with today's dollars.

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McPheebGentlemoon•

Not sure why anyone would consider ether a store of value. The one true store of value, gold, earns that moniker because it has little industrial application and is extremely chemically inert. Gold recovered from a thousand year old shipwreck is still exactly the same, and still has value, as gold, beyond being an interesting artefact. The term is totally inappropriate for crypto, or fiat, or stocks, or bonds, or any of the the stuff humans dream up to play make believe with.

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fatpuggle•

why buy gold ehen there is bitcoin? there is a lot less bitcoins

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McPheebGentlemoon•

Gold is very low risk, as my shipwreck example illustrates, it will always be highly valued by the market. Bitcoin is very high risk, we can't be sure how the market will value it in the future.

If you want safety ie. You want to be sure you won't go broke, you should have some gold. If you want speculative upside, perhaps Bitcoin is a good choice, but don't discount the risks.

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TreeOfLibrtyGentleman•

If you truly believe (aka fell for) the whole "Bitcoin is digital gold" schtick, then I've got a bridge to nowhere that I'll gladly sell to you for the right price...

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fatpuggle•

i am a believer because i believe in the network and am waiting for the tipping point where adoption goes parabolic. If and when some other crypto surpasses its market cap is when i will bet elsewhere. Bitcoin is as good as gold in my book.

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McPheebGentlemoon•

I encourage you to make an honest risk assessment of that position. You seem focused on the upside "parabolic adoption." Have you thought about the downside, where the market value drops to a few dollars? Are you are comfortable with that risk/reward proposition? Have you thought about how you might hedge against an unfavourable outcome?

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huntingislandLong-term Bull•

i am a believer because i believe in the network and am waiting for the tipping point where adoption goes parabolic.

How does that happen at 3 tps?

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FaceDeer•

The gold recovered from a shipwreck is physically the same, but its value is not even remotely the same as it was when it sank.

There's no "one true store of value" because value is a highly subjective thing and fluctuates over time. It used to be that aluminium was a precious metal more valuable than gold - bars of it were stored with the French crown jewels. If someone at the time had declared aluminium to be the "one true store of value" we'd be laughing at them now. Gold is less likely to have an extreme increase in supply than aluminium, sure - metallic aluminium's scarcity was solely a result of industrial extraction processes not having been developed yet, the element itself is very common in minerals. But it could happen even for gold someday.

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McPheebGentlemoon•

Sure, value is a subjective property that varies between observers. The gold was highly valued at the time the ship sank. The gold is highly valued today. The gold has been highly valued at all points in time between. So, the gold has functioned as a store of value. The element, gold, is not common in minerals as you assert. Gold is inert, forms very few compounds, and is found in its elemental form almost exclusively on Earth. Other fun facts - gold is soluble in a mixture of hydrochloric and nitric acid, called Aqua Regia. The oceans of earth contain about 20 million tons of gold.

I do agree "one true store of value," was a bit overblown, but hey, I'm a gold bug, so I'm allowed a little leeway. If you know of a better store of value, I'd love to hear it.

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FaceDeer•

I suppose we all have our particular favorites.

I certainly don't deny that gold has been a rather good store of value in most places and most times, and if there was a generic economic catastrophe of unknown nature approaching it'd be a good default guess for something to invest in. I just don't like how some folks seem to imagine it as being some kind of Platonic embodiment of the concept of value. Gold's value goes up and down just like any other commodity.

Now that I think about it, perhaps ingots of aluminium would be a good thing to squirrel away as savings in the event of apocalypse. Should civilization collapse aluminium could become rather valuable again, and it's super cheap right now. :)

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saibog38•

If you actually tried to store a significant amount of wealth in physical aluminum (not some sort of custodial/futures contract with counterparty risk), you'd probably appreciate the practicality of using gold instead.

For example, pretend you're a wealthy man who wants to protect some of his wealth - say, a million dollars (in reality a trivial amount by the standards of the truly wealthy) - from custodial/counterparty risks. You're considering either gold or aluminum, in the form of actual metal stored under your own control. Gold is currently valued at ~$43,400/kg, aluminum at ~$1.50/kg. Factoring in the far greater density of gold, you're looking at 1200 cm^3 (.0012 m^3) of gold to store your million dollars of value (that'll fill about a quarter of a shoebox), compared to 250 m^3 of aluminum - that's 200,000x the volume you'd need of gold, or roughly four shipping containers filled to the brim with solid aluminum. Additionally, long term aluminum storage requires a humidity and temperature controlled environment lest your investment be devalued due to corrosion. Gold on the other hand is one of the most unreactive element on the periodic table under "normal" terrestrial conditions. It can be left at the bottom of the ocean for a thousand years with no significant degradation, so your small gold safe wouldn't require any special considerations beyond physical security.

So storing your gold would require a tiny safe (or even just a small hole in the ground or whatever other method you want to come up with); storing your aluminum would require a climate controlled vault the size of a swimming pool, one that would probably cost a few tens of thousands of dollars minimum just to build (there's a few percent off your investment straight away), not to mention operating and maintenance costs. Then think about if you ever have to transport it, particularly inconspicuously - good luck sneaking a fleet of trucks loaded with aluminum anywhere. Moving/concealing 20 1kg gold bars is in comparison trivial (each is about the size of a smartphone, just heavier).

There's real reasons why gold has endured as the pre-eminent store of value for multiple millennia. It hasn't just been a stubborn fad that refuses to die for no good reason.

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TreeOfLibrtyGentleman•

The gold recovered from a shipwreck is physically the same, but its value is not even remotely the same as it was when it sank.

That is flat out wrong and proves that you do not understand gold as a store of value.

What changed from the time the gold sank, was the "value" of the fiat currency that it is/was priced in.

The price of gold only changes because the underlying pricing currency fluctuates (usually in a negative way due to devaluation / inflation).

Gold is money--period--and history says so.

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McPheebGentlemoon•

Exactly right.. Empires come and go. Gold just sits there. Exactly the same. Gold is money. History says so.

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FaceDeer•

You could say the exact same things about ingots of copper recovered from a shipwreck. Gold isn't special.

The value of gold changes from place to place and time to time no matter how you measure it. You could measure the value of gold by how many acres of land a kilogram can be traded for, or how many tonnes of rice, or how many slaves, or how much antimatter. Hop in a TARDIS with a kilo of gold and you'll get wildly different results as you travel from place to place and time to time. Fiat is just a way to facilitate that bartering process, it doesn't really matter how much the intermediate paper is worth if you only hold it briefly.

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McPheebGentlemoon•

Copper in seawater? Ingots of copper would be corroded to shit. This is basic chemistry. Also copper is much more common And easier to mine than gold.

Hop in a tardis with a kilo of gold and you will find all people, through time, highly value gold. Fiat is just a way for governments to steal from populations.

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McPheebGentlemoon•

Why do some of you still see the price of ether as undervalued?

In my personal experience, dealing with multiple currencies and commodities and stocks, people always want to know the price in dollars. Dollars are the common reference in the fiat world that everyone understands. People, in general, don't want to be bothered with a bunch of fluctuating exchange rates. While it is possible to create as many digital currencies as desired, the majority of people are going to ignore most of them because it is just too much hassle. Ether, being the native token, is likely to be naturally chosen by most because it is used to pay for gas.

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conv3rsion•

Other tokens / currencies will be used to pay for gas in the future. This was stated during the coinbase talk.

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McPheebGentlemoon•

Are you sure? I need a link to a video with a time or something. This has been bantered around for like six months now. I've seen evidence both ways on this point.

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spgrk•

If Ethereum becomes successful, Ether will gain value not only because people will need to buy it to use for Dapps, but because of the reputation it will thereby gain as an essential commodity which has the additional property that it can easily and securely be stored and transferred from one party to another.

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avnaco•

In addition to all the network effects mentioned, ETH is a claim on computer time. It may not be a fast computer, but you know you're code will be executed. That's a lot more than I get with fiat.

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ILoveEthPermaBull•

ETH will yield dividend with PoS.

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maxturkeykalesandredditor for 7 days•

It's speculation. People think that if Ether gains popularity as a technology, they will find greater fools to buy ETH as a token.

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[deleted]•

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