As the price of Ethereum cycles through its latest market crash, investors have been left wondering whether the hope of crypto is still alive. The past several months have been a test to even the most staunch supporter’s endurance; Ether has repeatedly signalled recovery by creeping to a price of $220-$230 before being swiftly sent down to sub $200 time and again.
There really are no definitive answers as to why this is happening. The latest crash, which took $20B off the market cap of all cryptos, may well have been a result of some shakiness in the lead up to the Bitcoin Cash fork that takes place today. We won’t go into any detail about the Bitcoin Cash/Bitcoin ABC/BitcoinSV drama here but the article, “When the Fork Forks“, from BitcoinMagazine is a great round-up of the insanity occurring.
Ethereum has long been hailed by its backers as a wholesale revolution of how people do things. For the 3 years following Ethereum’s inception, there has been an endless struggle between the hypesters and the skeptics, with the latter being convinced that Ethereum is incapable of achieving anything of real-world value. This article will show that we are currently somewhere in the middle. While Ethereum is by no means having a radical impact on the average person’s life, it is also far from being a stagnant pool of dud ideas. What is obvious, however, is that the trajectory of this technology is pointed much closer to the moon than it is to the ground.
These are just some of the projects are making major strides in the world today.
It is fair to say that Bitcoin, Ethereum and others provide meaningful value in their ability to operate as currency outside of state control. This ability is somewhat hindered by the fact that – as demonstrated as recently as yesterday – their value can change by 15% at any given moment. Stablecoins offer users stability whilst retaining the low-cost, high security and global availability features of cryptocurrency.
Ethereum is the home of stablecoins. The platform allows for functionality that can “autonomously” balance currency pegs to ensure stability. MakerDAO (DAO – “decentralized autonomous organisation”) provides a set of smart contracts that allow for exactly this. The platform is fully operational and DAI – the dollar-pegged stablecoin of MakerDAO – can be created by putting up Ether as collateral.
Video Game Assets
The market for video game assets is experiencing some of the fastest growth in the world today. Users play games and are rewarded (or pay for) in-game items that can be traded with other players for real money. These in-game items have generated a market that is estimated to be well over $1B.
In the case of the Steam marketplace, which is by far the biggest marketplace of its kind, users pay a hefty fee when trading items and their sale can only be converted to Steam credit (currency that is locked to the Steam ecosystem). This is not desirable for the player but it is big business for the marketplace operator. Major game publisher, Blizzard, does things slightly differently, allowing players to buy in-game assets but explicitly banning the sale of these items to others.
Ethereum is turning this outdated and inefficient concept on its head, allowing players to own their in-game assets with the freedom to trade them however they choose. Ownership is just the beginning; with ownership comes the ability to track provenance and charge rent. In-game assets can also be ported across games, further enhancing their utility to the player and categorically outclassing the value offered by a marketplace such as Steam.
Not sure if Ethereum is achieving anything in the gaming sector? Have some of this!
Sharing excess storage allows businesses and individuals to benefit from access to the world’s spare computation while users sharing their resources can be rewarded at a granular scale (fractions of a cent and upwards). This concept first became a major topic of conversation when the Golem Project launched one of the first major Ethereum ICOs in November 2016. The team successfully raised $8M (in a matter of seconds – hinting at the bubble to come) to develop a peer to peer network of GPUs that perform work on demand and earning token rewards for doing so. 2 years on and the project is now well into beta with extensive developer documentation and clients for both Windows and Mac.
LivePeer is a similar venture but in this instance the shared computing resources are dedicated towards transcoding live streams. This project has also been underway for 2 years and the project is now in beta.
These are two projects of a much larger distributed computing economy that is rapidly growing on Ethereum. Projects like these were simply not possible prior to Ethereum as there was no way of efficiently providing the incentives required to operate such a marketplace. These crypto-economic incentives are unlocking access to entirely new industries.
Augur Mid-term Elections
Augur is a working product that allows users to stake funds on the outcome of particular markets. Users can monetize their expertise while forecasters can help to build more accurate predictions about the future. The market “Which party will control the House after 2018 U.S. Midterm Election?” was created on July 15 and in the lead up to the vote on November 6th had attracted over $1.2M in stakes. The total amount staked on Augur currently stands at $2.3M across markets ranging from the price of cryptocurrencies through to sports results.
Augur exists entirely on the Ethereum blockchain and we currently source its data to build our predictions for the price of Ethereum.
When a physical or digital asset is wrapped, it is effectively matched 1:1 on Ethereum as an ERC-20 token, creating a blockchain representation of an asset with all the benefits of the Ethereum world computer. This has been done for gold in the case of Digix DAO and even for ETH itself (as a means to benefit from the ERC-20 specification) for platforms like MakerDAO. Wrapping an asset lets an otherwise static security inherit the benefits of the blockchain on which it is wrapped.
In the case of Ethereum wrapping, an asset like physical gold can now “exist” on the blockchain, taking on a set of properties that enable its function inside smart contracts. Of course wrapping a physical asset onto Ethereum is not without its own separate issues: physical assets occupy physical space, and that physical space still requires costly auditing and proofs of reserve. Without absolute transparency there is as much room for corruption and human error as ever.
Wrapped Bitcoin (WBTC), however, does not take any physical space and both the WBTC and its BTC reserves are fully transparent on the Ethereum and Bitcoin blockchains respectively. This entirely mitigates the audit issue of blockchain based assets like the stablecoins GUSD, USDC, USDT and their varying degrees of opaqueness. Wrapping Bitcoin in this way allows Bitcoin owners to benefit from the utility of the many Ethereum applications mentioned (and unmentioned) in this article.
Gambling was one of Ethereum’s first obvious use cases. An Ethereum smart contract could receive a transaction, run a set of functions to produce a result and then have that result payed out automatically through another transaction that sends to the house or player. All of these steps can take place on the Ethereum blockchain where contract code is entirely open source and auditable, providing a level of transparency and fairness that has never been seen before in the market. The last 2 years have seen a number of amateur Ethereum-based casinos opening up, however it was not until October 2018 that CasinoFair, the first fully licensed platform in the space, was launched.
These are just a handful of example applications that are achieving real world value today. There are countless other projects in the planning and development phases with each year bringing thousands more exciting prospects for users and developers alike.
Following Devcon4 at the start of November, Ethereum’s sharding implementation has become more clear than ever and the benefit it will bring to developers, users and investors seems extremely significant. Supply inflation is likely to drop to near zero, users will be able to stake and earn ETH rewards with as little as 32 ETH ($5,500 by today’s prices) and developers will be able to build scalable applications.
Of course none of this changes the fact that the price of Ethereum is trading at about 10% of what it was in January, but the hardened ETH investors out there have barely flinched. As has been said time and time again, the fundamental value of Ethereum, and thus its future demand, is only getting stronger by the day.