Ethereum Forecast To Surpass Bitcoin By 2018

Tyler Durden's picture

Back on  February 27, when bitcoin was trading in the mid-teens, we wrote "Step aside bitcoin, there is a new blockchain kid in town."

In recent days, the world's second most popular digital currency, Ethereum, has been surging (despite its embarrassing hack last June when some $59 million worth of "ethers" were stolen forcing the blockchain to implement a hard fork to undo the damage), prompting many to wonder if some big announcement was imminent. It appears that yet again someone "leaked" because on Monday, an alliance of some of the world's most advanced financial and tech companies including JPMorgan Chase, Microsoft, Intel and more than two dozen other companies teamed up to develop standards and technology to make it easier for enterprises to use blockchain code Ethereum - not bitcoin - in the latest push by large firms to move toward the holy grail of a post-central bank world in which every transaction is duly tracked: a distributed ledger systems.

Commenting on the sharp - for the time - rise in ETH price (which had moved from $13 to $15), we said "the move may be just the beginning if most corporations adopt Ethereum as the distributed ledger standard: Accenture released a report last month arguing that blockchain technology could save the 10 largest banks $8 billion to $12 billion a year in infrastructure costs — or 30 percent of their total costs in that area." Since then most corporations have indeed adopted Ethereum as the distributed ledger standard.

* * *

Three months later, and with Ethereum 15x higher at $230, Bloomberg today writes: "Step aside, bitcoin. There’s another digital token in town that’s winning over the hearts and wallets of cryptocurrency enthusiasts across the globe."

It's not just the lede that is familiar, it's everything else too, especially the forecast.

The value of ether - the digital currency linked to the ethereum blockchain - could surpass that of bitcoin by the end of 2018, according to Olaf Carlson-Wee, chief executive officer of cryptocurrency hedge fund Polychain Capital who was interviewed by Bloomberg.

"What we’ve seen in ethereum is a much richer, organic developer ecosystem develop very, very quickly, which is what has driven ethereum’s price growth, which has actually been much more aggressive than bitcoin," said Carlson-Wee, in an interview on Bloomberg Television Tuesday.

As we previously reported, while Ethereum suffered an embarrassing hack last summer resulting in the theft in millions of ether, the cryptocurrency has drawn the interest of industries from finance to health care because its blockchain does far more than let bitcoin users send value from one person to another. "Its advocates think it could be a universally accessible machine for running businesses, as the technology allows people to do more complex actions in a shared and decentralized manner."

Which is why ethereum is gaining increasingly more converts. Carlson-Wee wasn’t the first to forecast a bright future for ethereum. Fred Wilson, co-founder and managing partner at Union Square Ventures, laid out an even more ambitious timeline for the cryptocurrency in an interview earlier this month.

"The market cap of ethereum will bypass the market cap of bitcoin by the end of the year," said Wilson, who is also chairman of the board at Etsy.

In fact, if one looks at the relative market share of various cryptocurrencues, and extrapolates current trends, ethereum could surpass bitcoin in just a few months.

Bitcoin currently dominates a little less than half of the digital currency market, down from almost 90 percent three months ago, according to Coinmarketcap.com data. Meanwhile, ethereum has quadrupled its share, which now represents more than a quarter of the pie.

Indicatively, as of this moment, the market cap of Bitcoin is $37 billion, 75% higher than Ethereum. If the optimsitic forecasts are accurate, Ethereum, which is currently offered at $230, will cost roughly $400 next time we look at  it, if not more. What is more interesting is that while bitcoin hit an all time high of approximately $2900 one week ago, it has failed to recapture the highs, even as ethereum has continued surging ever higher, perhaps a sign of a broad momentum shift from the legacy "cryptocoin" to the "up and comer."

"We’re absolutely still in the infrastructure building phase," Carlson-Wee said. "But I do think within one to two years, we’ll start to see the first viral applications that are user facing."

In any case, for readers interested in putting money into either extremely volatile crypto, be prepared, in fact assume, a complete loss of your investment as chasing such speculative manias rarely has a happy ending. Then again, trying to time the peak of any bubble is a fool's endeavor. Just look at the S&P.

Bitcoin’s growth has started to catch up to its fundamentals, which is likely what has been driving its astronomical gain as of late, he said. Others have attributed the surge to speculation, as well as increased interest in Asia and adoption by established companies.

 

Impressive performance aside, more than $150 has been knocked off bitcoin’s price since late last week amid concerns about transaction speed, safety and a possible price bubble.

Full interview below.

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J bones's picture

It will surge till its too expensive and another crypto is created and believed to be better.

Putting my paycheck of real physical time into something not real. Doesnt seem like a REAL great idea.

Xatos's picture

I'm mining the balls out of Ether right now. 

nuubee's picture

My understanding was that Ethereum was centrally mined, confirm/deny? I won't get on board with a crypto where mining is controlled/centralized.

Laowei Gweilo's picture

>>> re: "will surge till its too expensive and another crypto is created and believed to be better" <<<

 

pretty much why it's even worse than 'fake paper money'

 

anything that can be created out of thin air electronically and basically be that replacable has even less instrinsic value than FIAT

crypto-currencies gonna face the exact same problem a  non-gold standard FIAT has

 

I'm all for crypto-currencies in theory in terms of their decentralized nature, but unless it's backed by something with real value, they're basically no different than Starbucks points or USD

Mr. Universe's picture

At one time quite a few Banks in the US issued fiat currency. To finance the war the revolutionaries issued Continentals, which fell to a fraction of their value for several reasons. The new constitution had hoped to prevent that from happening again, yet regional banks issued their own notes and chaos ensued. I understand the anonymous factor in crypto currencies but folks what is it really? Mined? seriously, you call turning on a computer and running a program mining? Sounds like the guys with lots of computers can out mine those with less, no special expertise is needed and no skill set. Talk about value! To review, cryptos are based on nothing, come from nothing and have an intrinsic value of zero. Sure, we need at least a few dozen moar of those. Fly, you fools!

Jubal Early's picture

Well said, but in theory nearly all those bank notes were backed by gold or silver.  The "chaos" was due to fraud, not too many different dollar (weight in silver or gold) bank notes.

Kreiger recently pointed out that many new cryto's were coming on the market based on etherium which is supported by many banks.  This sounds similar to those dollar notes from the 1800's except that now it is more vapor backed by vapor.

MaesterBlaester's picture

Bitcoin isn't created out of thin air. It has to be mined and the mining computations require incrementally more power input. A bitcoin is backed by the proof of that work being completed. That has a whole lot more intrinsic value than FIAT.

Sudden Debt's picture

How stupid can you be right?

Bitcoin IS created out of thin air. Show me a man who's actually putting labor in mining.

running a computer who "mines" isn't actual work. It's like those phone games where your farm is creating "crops" for the next time you logon!

You can buy some "crystals" to make ik go faster, just like you can upgrade CPU power to "mine" more bitcoins.

 

IT'S AS IDIOTIC AS IT SOUNDS!

UnacknowledgedX's picture

re: "Show me a man who's actually putting labor in mining.

The man shoveling coal into the boiler to generate the electric energy to run the bitcoin miner.

 

gold-is-not-dead's picture

The men who created GPUs and ASIC machines. Bitcoin is backed by gold, platinum, silver, electric power, software engineers, etc...

Heavy's picture

Once the robots mine enough bit coins will they go get robot hookers like on futurama, or will they kill us all for our idiocy?

BadKiTTy's picture

Fantastic analogy! This sums up bitcoin and crypto currencies for me. Its an app where you collect tokens and you think you are getting richer. Perfect! 

UnacknowledgedX's picture

Which is why bitcoin will be worth many thousands, and the universe of knock-offs will be worth nothing. First mover advantage plus network effect.

wulf's picture

Ethereum is so fucking complicated that merely discussing it looks like a joke.

You can find things like this in their reddit discussions:

I've been fooling around with Solidity for the past few days. I'm finding that some simple 100-line contracts cost around 1 million gas to deploy.  1,000,000 gas @ 22Gwei, and $150/ETH, is around $3.  That's pretty ridiculous. There are very few ways to make something worth $3 with 100-lines of code. At this rate, the only thing worthwhile building will be Token ICOs. Even $.03 would be pushing it -- this stuff should be nearly free.

In short, no normal human being can understand that shit. Same applies to bitcoin.

But you can always buy it hoping that there will be a greater fool later on.

AngryNinja's picture

You can mine Ethereum. Price should pop in the next couple of day, the largest exchange in China are offering it starting June 1st.  Ride the wave nd cash out the cryptocurrency rage is going to lose steam over time. The real technology that matters is the blockchain and the smart contracts, which you can do without the need for mining, coins, and all the shit that people are all fired up about. 

ultraticum's picture

And what exactly is the difference between "blockchain" (with no need to mine coins) and a centralized database?

Bitcoin is the value standard in distributed blockchains precisely because of the hashing power required to secure the transactions and their value.

fx's picture

I have a hard time assessing the value of the currencies compared to that of the underlying technology, i.e. blockchain. The tech is certainly very valuable - but how about the coins on top it?
But then, they are integral to the technology. You can't do a bitcoin blockchain transaction in any other currency than BTC. same with ETH. This is not like a paypal transaction where you can choose any fiat (EUR, $ etc) and then bank accounts are involved in the background.

the smart contracts are not smart at all if they do not automatically execute - and for that you need the associated irrevocable transfer of value/wealth - e.g. via ether coins.
So perhaps you could explain to me how blockchain smart contracts can work without the coins - as you claim they can?

AngryNinja's picture

You are viewing a smart contract as a contract in the legal sense of the word. Thats not what a smart contract is. Smart Contract is the ability to program and confirm a desired outcome across a distrubted database. The payment piece could occur outside the blockchain and the contract. 


The phrase "smart contracts" was coined by computer scientist Nick Szabo in 1994, to emphasize the goal of bringing what he calls the "highly evolved" practices of contract law and related business practices to the design of electronic commerce protocols between strangers on the Internet.

Szabo's 1994 description was:[3]


A smart contract is a computerized transaction protocol that executes the terms of a contract. The general objectives are to satisfy common contractual conditions (such as payment terms, liens, confidentiality, and even enforcement), minimize exceptions both malicious and accidental, and minimize the need for trusted intermediaries. Related economic goals include lowering fraud loss, arbitrations and enforcement costs, and other transaction costs.


Szabo, inspired by researchers like David Chaum, also had a broader expectation that specification through clear logic, and verification or enforcement through cryptographic protocols and other digital security mechanisms, might constitute a sharp improvement over traditional contract law, even for some traditional kinds of contractual clauses (such as automobile security interests that provide for repossession) that could be brought under the dominion of computer protocols.[4]


Within the recent hype around blockchain,[5] "smart contract" is mostly used more specifically in the sense of general purpose computation that takes place on a blockchain or distributed ledger. In this interpretation, used for example by the Ethereum Foundation[6] or IBM[7], a smart contract is not necessarily related to the classical concept of a contract, but can be any kind of computer program.

aurum4040's picture

Wow Zerohedge is full of incompetent crypto 'analysts'. I read the posts of people down playing Ethereum and talking up gold who have absolutely no idea what they speak of. If you legitimately know how Ethereum works and of it's potential there is absolutely no way you down play it. In fact you'd be buying at $230 right now. Youve heard it here first - Ethereum will have a market cap that exceeds 500 billion dollars in the next 5 years, perhaps more.....Centrally mined?? Lmao buy yourself a rig and make some money 'centrally' in your basement. What a joke ZH has become, well many of their commenters anyone. Unbelievable. Do your due diligence and until then leave the commenting for those who know what a DaPP is and how to program one for starters. This is where the computer 'geek' programmers/developers who also know how to invest crush anyone in their path. It's bigger then HFT in fact it's bigger then the world itself. Watch and learn. 

TheReplacement's picture

Global silence about all this etherstuff is just a solar storm away.  That fact alone makes it impossible to call it a store of value.  Until that happens it can be a medium of exchange but it will never be money.

Raffie's picture

Ethereum is being adopted big time like BTC except for the business end.

What Ethereum is

https://blog.coinbase.com/a-beginners-guide-to-ethereum-46dd486ceecf

J bones's picture

Sounds like something the FED would say. We are mining more instead of we are printing moar.

Its creating something out of nothing and calling it money. Aka Fiat

Xatos's picture

That's because you're ignorant. It's 4x harder to mine now than it was May 1st alone. Read now, chime in later.

BarkingCat's picture

It's true value is 0.

You guys can blow all this blockchain stuff out your collective assholes.

It is obvious that none of these promoters took advance computer science courses, at least nothing about efficiency of algorithms.

Put even 1/10th of 1% of world's financial transactions on any of these and you will experience some real life problems that will grow exponentially.

Jimmy Jimmereeno's picture

".........Put even 1/10th of 1% of world's financial transactions on any of these.........."

Same old argument as with the precious metals -- so much bullshit, so much not understanding how markets function, so much not understanding how something like btc can initially accommodate USD100 in total "float" and now can accommodate magnitudes greater.

ebworthen's picture

Sure, sure.  A done deal.  The best thing ever.

Trust Guido when he tells you this, best thing ever!

No risk, you'll be rich, get in now before it is too late!

ebworthen's picture

"Ethereum" as in "Ether".

Ether:  a light volatile flammable liquid C4H10O used chiefly as a solvent and especially formerly as an anesthetic.

RedDwarf's picture

"It will surge till its too expensive and another crypto is created and believed to be better.

Putting my paycheck of real physical time into something not real. Doesnt seem like a REAL great idea."

First mover advantages are not easy to overcome, especially with network effects in play.  ETH is giving BTC a run because it offers some impressive capabilities.  If a new crypto comes along and wants to win, it will also have to be a step up in order to win.  It's not really about the price per unit, it's about the functionality and acceptance.  Crypto is very divisible, it will not matter if it is $1,000,000 in current money terms per BTC or ETH.

You know know this has been going on for years and the trend is still growing right?  This is not a flash in the pan, this is still the early adoption phase.  This will take many more years to play out.

Yes, a given crypto may fail, but the core blockchain technology is revolutionary and it is going to revolutionize money.  So buy what you can with money you don't mind losing of the various cryptos that have a chance of being something and sit on them for the next few years.  Even if most disappear, some will explode, and eventually one or two will win and you'll make a massive return.

BarkingCat's picture

Go crack open some advanced computer science books and read up on Big O and then get back go us how any of this is going to work out.

The topic itself will not give you the answer but perhaps it will trigger something in the thought process.

Jimmy Jimmereeno's picture

"..crack open some advanced computer science books..."

You're obviously an academician.  Have you ever speculated or invested your own money in any financial asset?  I thought not.

Harlow1793's picture

This guy makes an interesting argument saying Ethereum is actually pointless, don't know enough about computers myself to know if this is right or not: https://thecryptocoinblog.com/2017/07/03/ethereum-is-garbage/

 

Sounds like he knows what he's talking about though...

Squid Viscous's picture

what is the current market price to bitch slap Olaf Pants a Wee?

bobdobolina's picture

The creator of ethereum already blew it by re-writing history after the vulnerability was detected

CPL's picture

And the previous crypto scams he's been involved with.  His partners are infamous for the pump and run playbook.

youarelost's picture

Sure after all the big boys bought in before it went up

JustUsChickensHere's picture

DASH seems to address the privacy issue well (as does Monero and Zcash), but ALSO tackles the governance and decentralisation problems that Bitcoin has. (Also supports InstantSend - no need for an add on Lightning layer)

That is a nice combination of improvements.

 

Bunga Bunga's picture

Ethereum will switch to proof-of-stake, then the stakeholders can control it. Bitcoin is a true proof-of-work cryptocurrency and the cost to mine them will deremine the value. When Bitcoin is the gold, Ethereum will be the paper money (since you need very little energy to make them). In addition Ethereum supply is unlimited, every central bank's wet dream.

UnacknowledgedX's picture

Thank you Bunga Bunga for the revealing details. I will stick with bitcoin. 

HobbyFarmer's picture

401k investments, organic farm land, PM's, career expertise, crypto-currencies.  If plan A doesn't work out, it's nice to have a hedge / plan B just in case. 

I like both XRP and Ethereum; the future of these two looks promising.

GodHelpAmerica's picture

And ethereum will be supplanted by another unforeseen cryptocurrency. Currency rooted in technology is not an effective way to store your wealth when computer science is improving exponentially faster than you can accumulate it.

RedDwarf's picture

Encryption is math, not computer science, and that is what the blockchain actually is - math.  2+2 = 4 regardless of changes in computer science.  The only way to break a blockchain is to determine that the math itself was flawed for a given encryption scheme, and BTC uses three so you need to find flaws in all three.

The most efficient way to run a calculation that we can even conceive of with our understanding of physics is with a quantum computer.  This is a computer that literally uses subatomic particles.  This theory will likely become reality some day, and when it does our computing power will expand by thousands of times to a million fold or more.  Imagine a laptop with more computing power than a million current laptops.

So we also know how much energy it takes to swap subatomic particle states.  So we know how much energy it takes to run a quantum computer (assuming 100% efficiency).  So we know the solution space, and the energy, we now know how much energy it will take to crack the BTC blockchain.  Are you ready?  It takes the energy of a literal supernova converted to computations even with a quantum computer a million times better than current tech.

Now, there are real ways to break bitcoin, but they won't involve breaking the blockchain.  That is unlikely to ever happen, and even if it did we'd just switch to better math.

logicalman's picture

You don't have to crack the blockchain to make any crypto unuseable when everything's tracked. Just make the penalties for using it high enough.

 

BarkingCat's picture

"Encryption is math, not computer science, "

That statement right there shows you don't know what the fuck you're talking about. Computer Science is based upon math. What the hell do you think subject of graphics is? It's a whole shitload of calculations and a whole shitload matrices.
Do you think I was reading about the Enigma machine in a computer science class and all the math behind it for fun??

RedDwarf's picture

Computer science uses math, as all sciences do, but it is NOT MATH.  They are different fields.  Otherwise we would just call it math.