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How Does Ethereum Have Value

Do Cryptocurrencies Have Intrinsic Value? It Depends

Do Cryptocurrencies Have Intrinsic Value? It Depends

Do Cryptocurrencies Have Intrinsic Value? It Depends By Jake Frankenfield | Updated August 3, 2017 6:38 AM EDT Hydropower: The Key to Bitcoin Mining in the Future? Cryptocurrencies have experienced significant increases in value in the last year. But things have looked less clear in the past few months. As there has been talk of the bubble bursting in the stock market, so too has there been talk of a cryptocurrencybubble pop. Is now a good time to assess the value of cryptocurrencies from a more reasoned perspective? In order to predict cryptocurrencies future value, we should work to understand how value is derived. Value is a measurement of the goodness of a given thing. Some things are instrumental goods, meaning they are goods because they allow us to access some other good. Intrinsic goods are good in and of themselves -- they are the thing we work to attain. Adam Smith said in the Wealth of Nations that money can serve no purpose other than purchasing goods." Currencies are instrumental goods. To be effective, currencies have to bemediums of exchange and stores of value . So, the value of a currency is in its ability to do those things efficiently and effectively: facilitate transactions and act as stores of value. Cryptocurrenciesas Mediums of Exchange and Stores of Value A few years ago, when digital currency was just rising in value, Paul Krugman asked this question, in a blog post titled Bitcoin is Evil. He wrote, to be successful, money must be both a medium of exchange and a reasonably stable store of value. And it remains completely unclear why Bitcoin should be a stable store of value. Talking with Bitcoin boosters, Krugman complained, When I try to get them to explain to me why Bitcoin is a reliable store of value, they always come back to with explanati Continue reading >>

Where Do Ethereum Tokens Get Their Value From?

Where Do Ethereum Tokens Get Their Value From?

Where do ethereum tokens get their value from? Where do ethereum tokens get their value from? Bitcoin was the first blockchain, and the leader in a technological revolution. On the back of fundamentals in the underlying technology, a prominent advocate of blockchain, Vitalik Buterin, built a new technology which many are quoting as a decentralised world computer, or the Web 3.0 for short the Ethereum network. The network has its own cryptocurrency known as Ether . However, there is also an option to create a token which can be used to run specifically coded smart contracts. These tokens are generally sold to markets to generate cash, to fund a companys vision via an initial coin offering (ICO), which works in a similar way to an initial public offering (IPO). From here, a new token economy has formed, with people investing and trading these tokens, which sit on the top of the ethereum network. Tokens have value because they have scarcity, and they have utility. They are scarce becausethey have a limited number of tokens available, and theyhave utility because they have an inherent use, in the smart contracts which are built on the Ethereum network. The number of different verticals in the space is astounding. If you can think of it, its probably already being developed somewhere in the world. Online casinos, decentralised exchanges, outsourced computational power sales, micro payments processors, consensus algorithms, and cross chain compatibility tokens are all on the market. This is basically crowd funding on a different level. Individuals arent putting up cash for an equity stake in the same way as they are in an IPO, but rather they are putting up cash for a speculative use case on each company themselves. By analogy, its similar to buying the digital coins (which Continue reading >>

The Investment Case Foreth

The Investment Case Foreth

In 2015, well-known value investor Bill Miller made an investment case for BTC in his essay The Value Investors Case forBitcoin? Value investors are generally known to analyze assets based on cash flows, so it was surprising to some to hear that a volatile digital currency that lacks cash flows was on the radar of a highly regarded value investor. Id like to take the same probabilistic approach to evaluate ether (ETH), the digital currency that the Ethereum blockchain is based on. Currently hovering around $1.1B in total market value, its likely that ETH is starting to show up on on the radar of traditional value investors. Ethereum was one of the fastest projects ever to reach $1B in marketvalue The genesis block for Ethereum occurred on July 30th, 2015 and the blockchain has been running for over a year and a half. This is a long-time in the blockchain world but a short period of time in the grand scheme of technology. Unlike Bitcoins monetary policy, which was clear to all from the beginning (21M fixed supply, 50 BTC distributed from the blockchain every 10 mins with halving every 4 years until the year 2140), the monetary policy of Ethereum has always been nebulous. The lack of a fixed supply has turned off some people and its not clear exactly what the long-term supply will actually be. Heres what is known currently: Total ETH created (as of 2/13/17): 88,966,410 (see ) ETH created at launch: 60M (sold to the crowd) + 11.9M (allocated to the developer fund) ETH created each year: 15.6M (fixed amount each year) Inflation rate: Year 1: 21.6%, Year 2: 17.8%, Year 3: 15.1%, Year 4: 13.1%, Year 5: 11.1%, Year 6: 10.4%, Year 7: 9.4%, Year 8: 8.6%, Year 9: 7.9%, Year 10: 7.3% Given the current plan for coin distribution, there will be 227.1M coins in existence after 10 ye Continue reading >>

What Is An Ethereum Token: The Ultimate Beginners Guide

What Is An Ethereum Token: The Ultimate Beginners Guide

What is An Ethereum Token: The Ultimate Beginners Guide Angel Investors, Startups & Blockchain developers... To a beginner, the entire concept of Ethereum and Ethereum token can get very confusing very fast. The idea that Ethereum not only has its own currency (Ether) but also has tokens on top of that which can act as currency themselves, can be a little mind-boggling. Before we even begin understanding what Ethereum tokens are all about, its important to grasp some basic concepts. The entire Ethereum network is a giant mass of nodes (computers) connected to one another. In fact, the entire network can be visualized as a single entity called the Ethereum Virtual Machine or EVM for short. All the transactions that have happened and will ever happen in this network are automatically updated and recorded in an open and distributed ledger. So what is the advantage of this? Before we explain that it is important to know what a smart contract is. Smart contracts are how things get done in the Ethereum ecosystem. When someone wants to get a particular task done in Ethereum they initiate a smart contract with one or more people. Smart contracts are a series of instructions, written using the programming language solidity , which work on the basis of the IFTTT logic aka the IF-THIS-THEN-THAT logic. Basically, if the first set of instructions are done then execute the next function and after that the next and keep on repeating until you reach the end of the contract. The best way to understand that is by imagining a vending machine. Each and every step that you take acts like a trigger for the next step to execute itself. It is kinda like the domino effect. So, lets examine the steps that you will take while interacting with the vending machine: Step 1: You give the vending mac Continue reading >>

Where Do Ethereum Tokens Get Their Value From?

Where Do Ethereum Tokens Get Their Value From?

Where do ethereum tokens get their value from? Where do ethereum tokens get their value from? Bitcoin was the first blockchain, and the leader in a technological revolution. On the back of fundamentals in the underlying technology, a prominent advocate of blockchain, Vitalik Buterin, built a new technology which many are quoting as a decentralised world computer, or the Web 3.0 for short the Ethereum network. The network has its own cryptocurrency known as Ether . However, there is also an option to create a token which can be used to run specifically coded smart contracts. These tokens are generally sold to markets to generate cash, to fund a companys vision via an initial coin offering (ICO), which works in a similar way to an initial public offering (IPO). From here, a new token economy has formed, with people investing and trading these tokens, which sit on the top of the ethereum network. Tokens have value because they have scarcity, and they have utility. They are scarce becausethey have a limited number of tokens available, and theyhave utility because they have an inherent use, in the smart contracts which are built on the Ethereum network. The number of different verticals in the space is astounding. If you can think of it, its probably already being developed somewhere in the world. Online casinos, decentralised exchanges, outsourced computational power sales, micro payments processors, consensus algorithms, and cross chain compatibility tokens are all on the market. This is basically crowd funding on a different level. Individuals arent putting up cash for an equity stake in the same way as they are in an IPO, but rather they are putting up cash for a speculative use case on each company themselves. By analogy, its similar to buying the digital coins (which Continue reading >>

Why Ethereum Has Value?

Why Ethereum Has Value?

This column is authored by Shivam Thakral , Founder, BuyUcoin Although there are many cryptocurrencies out there competing with bitcoins to get the market share, none of them is able to challenge Bitcoin but one cryptocurrency out there named Ethereum is able to challenge it & becoming the second most popular crypto in the world. But what is Ethereum and how it is different from Bitcoin? Ethereum is often touted as a world computer. What that fancy language really means is that ethereum is a platform for the creation of decentralized applications (dapps), using what are known as smart contracts . Smart contracts are bits of code that automatically execute an action after certain requirements have been metsay, sending a slice of an apps profits to investors after a predetermined date has passed. Bitcoin has smart contracts, too, but ethereum makes them really easy to use since theyre baked into the systems design. All of this takes place on a blockchain, which bitcoin uses, too. All ablockchain does is act as a public ledger that lists everything that goes on in the network in real-time. Its the tool that makes the whole thing possible. The blockchain, and thus the ethereum network, is distributed across thousands of computers (or nodes) around the world. Its also Turing complete, which means that smart contracts on the blockchain can handle most computational functions, allowing them to be pretty sophisticated. For example, say that I want to send my colleague Jordan some money. I would register this contract between myself and Jordan on the blockchain and the ethereum network would automatically facilitate the exchange of money. Since the blockchain is a public ledger, anyone and everyone can see that this transaction happened. You may have heard that bitcoin is relat Continue reading >>

Ether And Ethereum: What They Are And How They Compare To Bitcoin - Business Insider

Ether And Ethereum: What They Are And How They Compare To Bitcoin - Business Insider

Matt Galligan, a serial entrepreneur and investor in ether, said he was also looking to the five-year mark, when he expects the platform to have matured to the point when it has a lot of uses. "The space is still really early," Galligan said. "There's going to be a lot of froth and volatility." Ethereum is a platform for sharing information that cannot be manipulated or changed. It's a blockchain similar to the one underlying the bitcoin cryptocurrency that records information chronologically and publicly. In the future, Ethereum may be used to securely transfer money to your bank or to send documents to your insurance company. Today, these processes require multiple steps for verification and authentication, but Ethereum makes verification a one-step process because the information is incorruptible in the first place. Ether is the unit of currency in Ethereum. It's a token that can be exchanged for services on the platform. The currency is the "fuel for the Ethereum virtual machine," said Andreas Weiler, the head of markets at Smith and Crown, a crypto-financial research group. Ether, Ethereum, and bitcoin are not the same things While often compared to bitcoin, ether is not actually a competing currency. Bitcoin is explicitly a digital form of money and payment system, whereas ether is a means of buying services within Ethereum. Ethereum is still in beta and not widely used, but some investors believe it may someday be a foundational layer of the internet. Ether is still a financial risk, however, because Ethereum hasn't yet taken off and there's no guarantee that it will. "When you invest in ether, you are not actually doing anything you are holding ammo, which will allow you to execute code when there is code worth being executed on the platform," Weiler said. In t Continue reading >>

Do Blockchain Tokens Havevalue?

Do Blockchain Tokens Havevalue?

Value is an esoteric concept. When it comes to valuing networks it can become especially convoluted due to its traditionally theoretical nature. Yet blockchains must maintain a sufficient market capitalization to secure the value held within their respective networks. This is easy enough to take for granted when prices are soaring and speculation provides a massive disconnect between the security being provided and the actual need for it, but in a speculative contraction there must be a mathematical reason why a blockchain token is actually useful (as others have highlighted). One of the more popular attempts to value networks is Metcalfes Law. This performs well for information networks where the value of connections increases exponentially according to a constant, but poorly in value networks (like blockchains) where connections are valued at varying degrees. For value networks, I believe Beckstroms Law may provide a better fit. If I wish use my bank to send a wire transfer of $1,000 from Country A to Country B, it will cost $25. If I wish to send $1,000 of Maker Dai from Country A to Country B, the cost will be $.05 (the approximate cost of a value transfer on Ethereum at the time this was written). Plugging this into Beckstroms formula: In this instance, value added to a single user by the network is $24.95. Multiply this by 100M transactions/year and the net benefit to users of the network is $2.95B. However, the benefit to the network itself is only $5M. The other half of Beckstroms formula factors security into the cost of using the network. This has been an Achilles heel for almost any scenario where the internet is used to store real value. What is brilliant about blockchains is that, in the context of Beckstroms security function, the benefit to the network o Continue reading >>

Eli5 What Gives Ether Value? : Ethereum

Eli5 What Gives Ether Value? : Ethereum

EDIT: I'm not asking why the value of Ether has been growing. I am asking why Ether has value at all/why people are even buying it (other than a quick turn around investment). Many of the comments helped me understand, so thank you! I know Ethereum blockchain is designed different than the BTC blockchain, arguably better. I also know about the big news about large companies like Toyota joining the EEA. But how and why does this affect the current value of buying/selling ether? With bitcoin people are actually using it to buy and sell goods (legal and illegal), and all of that big news about Japan, and the BTC ATMs in China and India. Heck, I paid some Etsy dude for some coffee mugs in BTC. But this isn't happening with Ether. Hopefully my question is clear. And I by no means am trying to poop on ethereum. Just trying to learn. Continue reading >>

How Do People Give Value To Cryptocurrency And How Is The Price Of Cryptocurrency Defined? | Bitconnect

How Do People Give Value To Cryptocurrency And How Is The Price Of Cryptocurrency Defined? | Bitconnect

Precious metals gain their value/perceived value due to their utility and limited supply, and price is often tied to supply/demand. Supply/Demand is a simple economic factor that affects the price of many things. In some countries Bitcoin and other cryptocurrencies is classed as an asset, in others as a currency. Bitcoin, for example has a maximum of 21 million whole units, divisible 100 million times. With over 7 billion people on the planet, if even 1 billion were to adopt Bitcoin, 21 million whole units would not spread very far without a significant price tag. The supply is also bought in at a constant rate and is unchangeable due to the coconscious rules. This creates a supply that is limited, and thus people will pay more to get the coins they think have value. Block reward halvings, like the Bitcoin halving of 2016 caused the price to slowly increase as the halving approached, due to the reduced supply of new incoming coins imminent. This can affect the price of many cryptocurrencies, but in the case of Litecoin, did not even make a major dent in the price. The energy put into securing blockchains can be intensive. In the case of proof of work (POW) blockchains which are the most popular form, electricity usage can be intense. In the case of Bitcoin, the blockchain uses as much energy securing it at present as a small country uses. This has a factor on the price, as it takes a certain amount of energy on average to mine one Bitcoin. This goes up with difficulty increases. The more secure the blockchain and the higher the mining difficulty , the higher the perceived value and price and the harder the coins are to get through mining. This can have an impact on price and ties in with the energy usage above, in the case of proof of work blockchains such as Bitcoin a Continue reading >>

What's Ether Worth? A Probabilistic Valuation

What's Ether Worth? A Probabilistic Valuation

Is Ether worth $260+? Should I recommend it as an investment to friends at its current price?These are the questions that have been nagging at me after watching Ether increase 10x in value over the last four months. In March, I first learned about Ethereum. Its coder-friendly smart contracts resonated with me. "This is the next step, a platform for blockchain applications," I murmured during late night research sessions on Epicenter .I emailed tech savvy friends to spread the word. The friendly price helped my recommendations. I told friends to buy Ether (the token underlying the Ethereum blockchain) at $16, $22, $32. I made small, gleeful investments at these prices. My enthusiasm has since been mimicked around the world. The price of Ether broke $50 in April and $200 in May. It now sits at $261, and Ethereums $24 billion market cap is second only to Bitcoins in blockchain. Ethers huge gains are a microcosm. The blockchain space as a whole has experienced a massive influx of capital: from $23 billion in March to $101 billion as of this writing. A broad cross section of the world is excited about the disruption and new capabilities blockchain will create. Before we answer those questions, a little housekeeping. This analysis assumes a basic understanding of blockchain technology, and this IBM article can help. And some Ethereum basics. Ethereum is a distributed protocol (set of software code) running on computers all over the world. Applications running on Ethereum pay gas in Ether to use the platform. For more, read Fred Ehrsam s explanationofwhy Ethereum is the the leading digital asset. It's important to understand that blockchain protocols are a new beast. These assets provide value and have use cases different from gold, fiat currencies, and stocks. Bitcoin has co Continue reading >>

Gas - What Gives Ether It's Intrinsic Value? - Ethereum Stack Exchange

Gas - What Gives Ether It's Intrinsic Value? - Ethereum Stack Exchange

I think this question is out of scope for this stackexchange and voted to close it, but since it's still open... (note that the first several sections are greatly-simplified world-views and thus opinions; the last section is very subjective). N.B. that I do not possess a finance background and that for answering your question about intrinsic value, I'm using a definition aligned with an intrinsic theory of value , not a subjective one, as, say, working from a marginalistic framework; the rest is generally applicable. Things have value if there is a demand for them. The value is higher the harder it is to obtain them. For example, your family heirloom watch is one of a kind (due to its provenance) and may be priceless to you. However, the watch might be one of many to a watch collector and thus is of lower value. If the price a buyer is willing to pay for something is greater than the price the owner is willing to part with it for, then an exchange can take place. So if your watch would fetch $1000 on the open market, even if someone is willing to offer you $10000 for it, you wouldn't sell. Similarly, if you had a second watch that was otherwise identical to your heirloom watch, you'd accept an offer of $10000 but reject a low-ball offer of $900 since you could go elsewhere to sell it. Your classic supply and demand. Note that the intrinsic value of any two similar watches is equal: it is whatever the value of being able to keep time is (multiplied by the lifetime of the watches). The additional sentimental value of the heirloom is extrinsic (or subjective) value. Let's look at fiat currencies, first. Why are they valuable? To understand that, we need to step back and look at asset-backed currencies. In the past (and now, but just to a different extent), people valued g Continue reading >>

8 Answers - Why Does Ether (ethereum) Have Value? - Quora

8 Answers - Why Does Ether (ethereum) Have Value? - Quora

What could be a good reason to start investing before 2018? ETFmatic offers free investing accounts until April 2018 if you fund your account before December 31! Originally Answered: What factors will determine the value of ether and ethereum? Like Bitcoin, the fiat value of ETH is determined by those who buy and sell it alone. The currency is used to pay for smart contracts within the Ethereum network, so one might say that Ether tokens are backed by the value that these smart contracts provide. So far (June 2016), nearly all value is speculative as smart contracts have not yet found a killer app. WePower - blockchain based green energy trading network. WePower token is backed by green energy. Token grows with platform expansion. Backed by biggest funds. Originally Answered: How do we value something like Ethereum? How do we value things in general? Intersubjective value theory holds that you probably factor in predictions. Predictions on what your future will look like with or without the trade, predictions what others will think your future will look like with or without the trade, predictions on what the future of others might look like if they made the trade or didnt. Heuristically, you look at what everybody else is giving up (price) compared to your opportunity costs (costs). Value comes from evaluations between things, in addition to evaluation of others between these things, not the thing itself. Continue reading >>

Why Ethereum Has Value ?

Why Ethereum Has Value ?

CEO & Co-Founder at BuyUcoin Blockchain and Cryptocurrency Architect Although there are many cryptocurrencies out there competing with bitcoins to get the market share, none of them is able to challenge Bitcoin but one cryptocurrency out there named Ethereum is able to challenge it & becoming the second most popular crypto in the world. But what is Ethereum and how it is different from Bitcoin? Ethereum is often touted as a "world computer." What that fancy language really means is that ethereum is a platform for the creation of decentralized applications (dapps), using what are known as smart contracts . Smart contracts are bits of code that automatically execute an action after certain requirements have been metsay, sending a slice of an app's profits to investors after a predetermined date has passed. Bitcoin has smart contracts, too, but ethereum makes them really easy to use since they're baked into the system's design. All of this takes place on a blockchain, which bitcoin uses, too. All ablockchain does is act as a public ledger that lists everything that goes on in the network in real-time. It's the tool that makes the whole thing possible. The blockchain, and thus the ethereum network, is distributed across thousands of computers (or "nodes") around the world. It's also "Turing complete," which means that smart contracts on the blockchain can handle most computational functions, allowing them to be pretty sophisticated. For example, say that I want to send my colleague Jordan some money. I would register this contract between myself and Jordan on the blockchain and the ethereum network would automatically facilitate the exchange of money. Since the blockchain is a public ledger, anyone and everyone can see that this transaction happened. You may have heard tha Continue reading >>

Is Ethereum More Important Than Bitcoin?

Is Ethereum More Important Than Bitcoin?

By Adam Hayes, CFA | Updated June 13, 2017 1:57 PM EDT Blockchain technology, the distributed ledger system that underpins the digital currency Bitcoin, is getting a lot of attention from Wall Street lately. With uses ranging from cross-border payments to settlements and clearing of over-the-counter derivatives to streamlining backoffice processes, the potential for disruption in the financial industry and elsewhere is growing more real each day. While bitcoinis the most widely used and well known use case of blockchain, Ethereum may be thekiller app that allows for this disruption to finally take place. The tokennative to the Ethereum blockchain , Ether (ETH), has recently risen to over $10 per ETH, and the market capitalization of all ether is nearly $800 million, making it the second most valuable blockchain behind bitcoin (which represents approximately $6.5 billion of value).What is Ethereum and why is it interesting? Ethereum was developed to augment and improve on bitcoin, expanding its capabilities. Importantly, it was developed to feature prominently smart contracts:decentralized, self-executing agreements coded into the blockchain itself. Ethereum was first proposed by Vitalik Buterin in 2013 and went live with its first beta version in 2015. Its blockchain is built with aturing-complete scripting language that can simultaneously run such smart contracts across all nodes and achieve verifiable consensus without the need for a trusted third party such as a court, judge or legal system.According to its website ,Ethereumcan be used to codify, decentralize, secure and trade just about anything. In late 2014, Ethereum raised over $18 million in bitcoinby way of a crowdsaleto fund its development. The Ethereum Virtual Machine (EVM) is capable of running smart contr Continue reading >>

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