The Stock Market, Investments, and Investing Thread
(02-05-2021, 02:19 PM)Scythianchad Wrote:
(02-05-2021, 07:37 AM)¢OoL€€ Wrote: hello guys what do you think is best thing to invest now in 2021?


I'm going to second this. For risk/reward ratio ETH is easily the best you can do right now as far as I'm aware of.

First off, it has a major tailwind in an overall crypto bull run. A good number investors are of course looking to get rich in a bubble, but many others are also warming to crypto as an asset class due to national currencies losing value due to inflationary monetary policies.

Since cryptocurrencies are decentralized and since the networks are showing over time to be cryptographically and operationally reliable, many are considering crypto as a potential store of value for warding off inflation since the policy for minting new coins is algorithmic and transparent.

ETH is the second largest cryptocurrency by market cap so it stands to benefit by just being one of the prominent assets in an asset class coming into favor.

Second, ETH is not yet a household name like bitcoin, however it is generating higher transaction fees and ,more importantly, Ethereum currently settles more transaction value on chain.  These two data points indicate that the Ethereum network is already more valuable than bitcoin or any other crypto asset, yet the market cap of ETH still lags behind. To me, that looks like an opportunity.

Third, there is a comically larger quantity of devs, projects, and enterprise integrations in the Ethereum network than any other. This has led to a nascent, flourishing ecosystem of domain-related decentralized applications from decentralized finance to the creation of non fungible tokens and their decentralized marketplaces. ETH is the one common currency and collateral in nearly all of these projects.

Fourth, there are several supply 'black holes' that are locking up large quantities of ETH. The first of these is ETH locked up in staking (where miners deposit 32 eth as collateral to run a node and earn rewards for securing the network). The second major 'black hole' is ETH getting locked in various DeFi protocols as collateral. The last one is long-term institutional buying such as the Grayscale Trust.

Fifth, Ethereum might eventually become net deflationary . How could this happen? Basically, Ethereum is going to implement an improvement proposal to burn the transaction fees. That means that if transaction volume is high enough then more ETH could get burned than what the protocol pays to the miners for securing the network in creating new blocks. This would make ETHs monetary policy superior to even Bitcoin, not to mention more secure. The fee burn proposal is set to go in effect later this year and is reported to be working fine so far in test nets.

Ethereum still faces scaling hurdles and it's not guaranteed the transition to Ethereum 2.0 entirely succeeds. Much has already been done to improve scaling and prior major network upgrades have been implemented without a hitch. Still, these risks are material must be acknowledged.

There is also the possibility that another smart contract platform surpassses Ethereum or that institutional money for some reason continues to favor bitcoin since it's  'easier to understand'.

In my view those risks are easily worth accepting when I consider Ethereum and ETHs current unrecognized value and vast potential as existing projects continue to flourish, more projects get built on top of it, and more individuals get informed and pulled in.

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RE: The Stock Market, Investments, and Investing Thread - by billydingdong - 02-05-2021, 07:13 PM

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