Ethereum Overveiw and my price prediction for first Q 2018

Ethereum - Wordpress For Blockchain...

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Unlike "Bitcoin" (and its swathe of clones), Ethereum was built as a decentralized platform to host decentralized "applications" (DApps). This is important as it was the first "crypto" system to actively NOT describe itself as a "currency" (this means it has some intrinsic value).

Before proceeding, you have to consider that since it was released in 2013, "Ethereum" is widely considered the second "crypto" system built for wide adoption. This largely explains why it's consistently considered the "second" most highly priced "coin" of the market.

The important thing to consider with Ethereum is that whilst its core mechanics are somewhat similar to "Bitcoin", its underlying value proposition is almost diametrically different. Rather than the "system" itself being valuable, the focus is on providing a platform for others to develop applications (known as "smart contracts").

Whilst the system still deals with the transaction of "money", what it's really designed to do is create the ability for others to create complex systems that work on top of it. For example, a solar energy sharing system or traffic management application - all handled decentrally on the "Ethereum" network.

With its price seen as more "stable" than Bitcoin, and its ultimate position in the world more foundational, Ethereum is widely tipped as being one of the "alt" coins to watch. This tutorial will examine the system behind the "coin" and whether it's worth "investing" into...

Overview

Unlike its more famous "rival", Ethereum is not billed as a "currency" - instead, it's a platform. This is vital as it means the "adoption" of the system can be measured by how many "decentralized applications" (DApps) have been created on it...

DApps are simple applications which run on a client system ("turing virtual machine"), and are able to push data back to the "Ethereum" blockchain database network.

Whilst this may seem quite deep, the simple explanation as to why it's important is that it allows developers to create applications that not only able to run across "unlimited" servers in a global network (hence are able to run MASSIVE scale applications), but are also able to share & utilize data from other DApps.
There are several things to consider with Ethereum:

⦁ Core Focus On "Programmability"
The core Ethereum system supports a "virtual machine" which takes its own private programming language & delivers functionality based on it. This is different to the likes of "Bitcoin" which handles their operations with predefined constraints.

⦁ Acts As Infrastructure Layer
Likened to the "Wordpress of Blockchain", Ethereum was created as being a "platform" to give people the ability to create their own apps. This was unique in the "crypto" space, until Ripple and Stellar came around.

⦁ Central Development Team
Rather than leaving the development up to "the community", the team behind Ethereum have maintained a strong presence, allowing for fixes and upgrades to be handled on the system.

What Is Ethereum?

Market Cap: $72bn
Price: $700+ at time of writing
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Released in 2013/2014 by developer Vitalik Buterin (Russian-born, raised in Canada), Ethereum was created after he became interested in "Bitcoin" in 2011.

However, rather than creating a rip-off of the already-successful "Bitcoin", Buterin went further and worked on the premise that the "blockchain" technology could be used to create decentralized applications that others could write.

These applications would need a "platform" on which to work, so he created "Ethereum" to provide the required functionality. From the Ethereum Whitepaper (https://github.com/ethereum/wiki/wiki/White-Paper):

Commonly cited alternative applications of blockchain technology include using on-blockchain digital assets to represent custom currencies and financial instruments (colored coins), the ownership of an underlying physical device (smart property), non-fungible assets such as domain names (Namecoin), as well as more complex applications involving having digital assets being directly controlled by a piece of code implementing arbitrary rules known as smart contracts or even blockchain-based decentralized autonomous organizations (DAOs).

What Ethereum intends to provide is a blockchain with a built-in fully fledged Turing-complete programming language that can be used to create "contracts" that can be used to encode arbitrary state transition functions, allowing users to create any of the systems described above, as well as many others that we have not yet imagined, simply by writing up the logic in a few lines of code.
In other words, what Buterin was proposing was an ecosystem through which people could deploy their own "decentralized code".

Like other "crypto" systems, it would be built on the "blockchain" database system (which provides "decentralized" database technology).
This not only means that "anyone" can use it (it's completely free and open source), but also means that if you need to build decentralized functionality, the Ethereum "smart contract" system should facilitate it for you.

Like "Bitcoin", the main advantage to the Ethereum network is its decentralized nature.
ALL "crypto" systems are based on this paradigm, which ensures that the data within the system is both anonymous and secure (it's secured by the various "cryptographic" / "encryption" algorithms designed by the developer).

Ethereum works by taking a "turing virtual machine" and having it run across all the servers in its network. Each time a system updates, the others update to mirror the changes.
On top of this, the system is able to "compute" the various logic patterns presented in its scripts - allowing for a number of innovative features to be deployed, most notably the idea of "smart contracts"...

What Are "Smart Contracts"?
Smart Contracts - the core of the Ethereum idea - is the notion that data-driven transactions (either monetary other otherwise) can be derived by logic and trust - rather than a central validation system (as you'd have with a bank or business)...

The notion of "smart contracts" is to create small pieces of logic which determine the outcome of a transaction. For example, if you wanted to "sell" your house - and were open to negotiations - the idea of a "smart" contract would be that you'd be able to determine a "listing" price, and then a series of "lower" offers you'd be willing to accept.

If any of the lower offers is met, you'd have the system allow the transaction to occur - with all the money immediately transferred between all participants in the deal.

Whilst this may not appear too dramatic, the underlying idea - of a completely autonomous system - is. The REAL basis of "Ethereum" is to create an infrastructure-layer through which entire parts of the global economy could automate themselves... all running without the need for human intervention at all.
The practical applications are pronounced (if managed appropriately):

⦁ In A Hospital, Medication Could Be Administered Automatically...
Rather than having a nurse come around to administer the medication, all the IV/drugs you require could be managed from a central "control" system which controls the various "smart contracts" the doctor set up.

This would not only make medication more efficient, but would remove the need for a large number of doctors / nurses - and limit the number of human errors.

⦁ Autonomous Car Pooling (Taxis)
Rather than human-driven taxis, fleets of autonomous electric vehicles will operate with "smart" contracts where you automatically pay for the distance travelled.

This would give you the ability to pre-determine the price per journey, as well as creating completely automatic routes for the likes of airport and supermarket transportation

⦁ Warehouse Robots

Smart contracts could be created for each "robot" to get the correct packages from a warehouse. Each "package" they need to pack will be a new contract, allowing for an application to be developed to manage them all.

⦁ Public Transport

Rather than paying a base-level fee for a "blanket" transport card (as is the case with most systems today), the future of public travel would likely be determined solely on the distance you go.

For example, rather than buying a "ticket", you'd just swipe your phone (or equivalent device) in the station. This will create a new "contract" which ends when you swipe the phone / device at the destination station.

Depending on distance travelled & time, the "contract" will automatically pay the operator.

The point here is that the scope of the "smart contract" idea is actually much wider than many people have mentioned presently.

This is not about creating a new "currency" (like Bitcoin), but revitalizing an infrastructure, so that people are able to engage with others completely autonomously and without any regulatory or governmental issues.

Should You Buy It?
I are not regulated to give financial advice, so anything mentioned here is for education and entertainment purposes only.

If you are thinking about making a financial investment into any of the "crypto" assets, you need to seek the support of a regulated financial adviser...

That said, the big deal with ANY "crypto" asset is adoption.
Since no "crypto" system actually stores value, the main factor as to whether they are worth their "price" is what you can do with them.

In "investing" circles, the core basis of whether someone chooses to "invest" into an asset is whether it's over or under priced. Value and price are mutually exclusive - they both exist and are independent of each other. The trick the wealthiest "investors" use is to find where an asset has value but does not have price. This is known as "value" investing (of which Warren Buffett is undoubtedly the most famous).

What's important to understand is that when equating the "price" of an asset, you MUST identify the potential "value" it may have. This is where most people have slipped up with "crypto" currencies - they only have VERY narrow scopes of value.

When considering "Ethereum", you need to appreciate the underlying way in which you're able to determine its value is to consider its adoption, and likelihood of adoption. This is based on several factors:

⦁ Central Leadership
Unlike "Bitcoin", Ethereum is one of the few "crypto" systems to have a dedicated central leadership team, headed by Vitalik Buterin. This not only gives credence to the system, but acts as a point of contact for support & other issues.

A great example of how this works well was with the "DAO" hacking issue, whereby a "decentralized organization" had its funds stolen due to a recursion bug in the code. Rather than ignoring the problem, or blaming the community, the central committee was able to take decisive action by "forking" the system to create a fix.

Whilst this caused controversy and a split within the community, the underlying reality is that it gave the users the ability to use the system without the problem.

⦁ Extensible System
To further compound the differences to "Bitcoin", Ethereum's processing network is far more extensible than most other "crypto" systems.

This not only means that transaction processing times are much faster, but it allows the users of the system to actually rely on it for more "mission critical" applications than the other "crypto" systems out there.

This is important as it gives the ability for the likes of Ethereum (or Ripple/Stellar which are very similar) to work on operations that "Bitcoin" and other "currencies" simply don't have the infrastructure to handle.

⦁ Willing to Change / Upgrade
Finally, as mentioned above, in order to ensure the security and feasibility of the system moving forward, the central team have embraced changed & have been willing to go against their own ideals in order to secure their system.

This is very rare, as since most "crypto" systems are entirely managed by leaderless communities, they end up with a large number of potential problems that are unfixable without major upheaval. Ethereum does not suffer from this issue.

To determine whether you should consdier "buying" it, the simple answer is "yes" In my opinion. $700+ for 1 eth right now will not seem that high when it is soon trading at over $5,000 if not more then Bitcoin if enough people learned of it's value. I have a made a good deal already from the growth of Ethereum. This is looking to be the most promising time yet!

Ethereum, along with Ripple and Stellar amust some other new ones that are not fully developed, are in the best position in the "crypto" space.
There is still room for MASSIVE returns coming in the first half of 2018 the way it is looking right now.

I am curious what are my fellow steamians opinions?

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