Over the past year, within a 12-month period, the price of Ethereum’s Ether increased from $10 to $242, increasing by a staggering rate of 2,320 percent. With an initial investment of around $10,000, some Ethereum traders including Jason Pappafotis, a 37-year-old physicist based in Alabama, recorded hundreds of thousands of dollars in profit.
Yet, most traders don’t intend to cash out their investments in the near future, considering the potential of the Ethereum network and the industry’s expectations for decentralized applications and decentralized autonomous organizations.
Ethereum has experienced a rapid increase in value, primarily due to the emergence of the Enterprise Ethereum Alliance (EEA) and the initial coin offering (ICO) market. Recently, Ethereum world news reported that the ICO market crossed the $1 bln mark, officially becoming a billion dollar market on its own.
Despite the lack of viable products and active user bases, ICOs are continuing to attract more investors from both the cryptocurrency community and institutional investors.
Getting to know
Vice spoke to six early investors in Ethereum that have held Ether either since its pre-sale or since 2015. Most traders and investors in Ethereum, as well as other cryptocurrencies such as Litecoinand Ethereum Classic, are investing their money in digital currencies and assets to obtain a more thorough understanding of the structure, monetary policies and purposes of these cryptocurrencies.
In May, multi-billion dollar investment firm Fidelity revealed that the company has been mining Ethereum and utilizing both Ethereum and Bitcoin as payments in order to grasp a better understanding of the two technologies.
“We have built proofs of concepts that accept Bitcoin micro-transactions. We set up small Bitcoin and Ethereum mining operations, just done in the spirit of learning,” said Fidelity CEO Abigail Johnson.
However, the vast majority of early investors have invested in Ethereum for its long-term vision of establishing an ecosystem for decentralized applications; an ecosystem that is censorship-free, transparent and fair for users, developers and stakeholders.
Currently, a wider range of organizations are experimenting with the Ethereum network and its smart contract technology. Some multi-billion dollar companies within the EEA including BHP Billiton, JPMorgan Chase and Microsoft, are attempting to use smart contracts to automate certain processes and operations.
When companies successfully commercialize Ethereum and its framework for decentralized applications, the Ethereum network will start to handle actual user bases. As Coinbase co-founder Fred Ehrsam emphasized in the past, in order for Ethereum to handle one to 10 mln active users, it will need to scale by a factor of 100 times.
Still, a very active development community is working to scale the Ethereum network on a daily basis and traders are considering the long-term development of Ethereum.