Can buying ethereum make you rich?


Get rich quick questions scare me. Especially in crypto.

Anyone who gets rich quick normally loses it all. Why? They haven’t learned the crucial money lessons along the way before the money overflows their bank account. So, they get overconfident and make dumb decisions that result in taking stupid risks.

Still it’s a reasonable question.

With everything happening in Web 3.0, can buying ethereum make you rich? Let’s dissect.

This statement has been thrown around a lot. Is it true? Well the quote has gained traction because the supply of ethereum has massively decreased. Only 13% of Ethereum is floating around.

Those who own ethereum, like me, can choose to lock it up for two reasons (1) to become a network validator of transactions (2) to join an investment pool and lock up (stake) in return for interest.

The ethereum that is locked up gets unlocked when version two is released in approximately March of next year.

Here’s what’s misunderstood.

1. When supply is unlocked it could crash the price of ethereum

The common consensus is that the price of ethereum is going parabolic right now because there simply isn’t supply. It makes sense. The big question is what happens in March next year?

Well, crypto expert Raoul Pal thinks prices will crash. People who locked up their ethereum to get a financial incentive will now be able to take their ethereum back and cash it in. No doubt lots of people may want to do that. When lots of ethereum hits the market it could cause prices to go down.

There’s another possibility, though.

2. The opposite could happen — prices could go higher.

Crypto influencer Ben Armstrong has a different opinion. Right now you’re incentivized to lock up your ethereum and support the project. When the March ethereum 2.0 update happens, why would you suddenly cash out?

You’ve been earning 7%–8% interest on your ethereum. Wouldn’t you simply roll it over and keep getting the passive income? When you look at the unlock scenario in that way, it becomes almost silly for people to sell their ethereum. I believe the opposite will happen.

If the ethereum 2.0 update is successful then it will give people even more confidence in the project. The current features will be uplifted and more use cases will become viable.

The initial launch of ethereum was all about smart contracts. Wannabe clever people in finance were throwing this phrase around like mad to look cool.

Entrepreneurs used the smart contract feature to raise money for their startups using ICOs (similar to an IPO). The regulators stepped in and ended the ICO party.

In 2017/2018 the price of ethereum crashed by 90%. Many doomsdayers ran around with their hair on fire and thought it was all over. But smart contracts is only one use case.

Decentralized finance then became a huge trend. Many of the projects that built products to help everyday people borrow money without a middle man did extremely well. Again, many onlookers didn’t understand that most of Defi is built on top of ethereum. Naturally when Defi exploded, so did the value of ethereum.

NFTs (Non-Fungible Tokens) were next. Digital artwork and collectibles began selling on websites like OpenSea. Suddenly, all the copyright issues content creators face were solved through this innovation. NFTs, too, are also built mostly on top of ethereum. Price explodes again.

Most important change to ethereum

This use for ethereum has been missed by many people. Bitcoin has always been known as a form of digital gold or savings account. It’s scarce. For this reason bitcoin has done extremely well over thirteen years.

But then ethereum started introducing all these changes. We had one update referred to as the London Hard Fork that decreased the supply of ethereum. We also had the concept of locking away your ethereum in return for interest. Now we have ethereum 2.0 next year that further adjusts the supply.

With all the changes, ethereum is now becoming a lot scarcer. Some say ethereum will be scarcer than bitcoin. Therefore, ethereum could now become another form of scarce, hard money that can’t be created out of thin air like US dollars.

Ethereum could become a savings account — many people don’t understand this. Blockchain is a complicated world after all. So as you can see ethereum is a chameleon that changes its colors every year. As the technology grows, so too do the use cases.

The more useful ethereum becomes the more valuable it becomes.

I just read the book about ethereum called “The Infinite Machine.” I figured it would be a good time to do some deep research on ethereum given the ever-changing opportunity it offers investors.

The author of the book has spent many years in and around ethereum, as well as with the creator of the idea and author of the Ethereum Whitepaper, Vitalik Buterin. I learned a few things about Vitalik:

  • He believes ego is the enemy. He doesn’t want to become some god-like cult figure who can have enormous power over ethereum. Over the years he has removed himself more and more, intentionally, from affecting the outcome of the project.
  • He wants ethereum to succeed at all costs. One of the project’s top employees, Ming (and friend of Viatlik’s) was fired. Vitalik did nothing to save her because the project is bigger than any individual.
  • He worships decentralization and open-source software. He understands the huge problems created by Big Tech, that make us think we’re getting a free lunch with their products and then use our data for evil.
  • The longer Vitalik has been involved with ethereum, the more decentralized it has become.

When the leader of a technology is obsessed with changing humanity’s future, and not to stroke their ego, pay attention. Ethereum is designed to do good, not evil. It’s built into the code so no one person can change it without a democratic process. The same democratic process that has protected the western world and brought abo
ut prosperity.

Ethereum can go up in price. The problem with investing in anything like ethereum is there are always hidden risks.

The ethereum 2.0 upgrade could fail or be delayed. Solana and Cardano are two blockchains similar to ethereum that could gain traction and overtake it. I highly doubt it, though. Ethereum has first-mover advantage and many more developers build on it.

If ethereum doesn’t fix its high transaction fees and the speed of the network, it could go down in price. Unlikely … but possible.

So can you get rich off Ethereum? You can. Many people who invested early or even in the last twelve months have made fortunes.

The price used to be $388 USD twelve months ago. Now it’s over $3000 USD. I’m not focused on getting rich off ethereum. Here’s what is missed:

Ethereum is the future of humanity.

That’s a bold statement, I know. Hear me out. Ethereum is a supercomputer that has the fastest network adoption in history (faster than the internet). The use cases for ethereum are growing every day. All the layers of technology that sit below an app on your phone can be replaced with ethereum. All that nonsense talk about “the cloud” — gone.

Ethereum is becoming the foundational layer of the internet. It’s helping us to decentralize everything so that no founder, app, business, or currency can rule our lives ever again. Users will own their data. Users will own the apps they use and benefit from their growth. Trust will be brought back to technology. Humanity will be saved from itself.

If ethereum succeeds it will power a lot of our daily lives. If the idea of ethereum succeeds it will change humanity forever in a good way. That’s far more powerful than getting rich off ethereum.

This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.

This article is originally from Data Driven Investor.


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