Why Putin is Embracing the Cryptocurrency – Ethereum
You’ll know that all cryptocurrency is starting to get a lot of attention.
Bitcoin is getting most of the press. Yet Ethereum is still relatively unknown to the masses.
But the whole idea of cryptocurrency is steadily gaining traction. Ethereum in particular is now being considered as not just the ‘next bitcoin’ but perhaps even bigger than bitcoin.
Olaf Carlson-Wee, CEO of blockchain company Polychain, thinks Ethereum will surpass the value of bitcoin by 2018. That’s highly possible. But it’s important to understand the difference between the two.
Bitcoin is a store of value, and it can also be used as a medium of exchange. You can pay for things — like your bills. In Australia people can pay their gas and electricity bill using bitcoin through the platform livingroomofsatoshi.com.
Ethereum, on the other hand, is a platform. It’s a network, an ecosystem that uses smart contracts to build digital applications. Ether, which is the token that you can buy and sell, is the ‘fuel’ that powers the Ethereum smart contracts and blockchain.
The ultimate goal of Ethereum isn’t to spend ether in the real world, but to allow for the mass adoption of the Ethereum project and the unfathomable number of applications that can exist in the Ethereum blockchain.
A reasonable comparison is the first days of the Apple app store. Remember, that began in 2008, not even a decade ago. After the app store went live, developers built apps and the ‘app-economy’ took off.
There are now more than 2.2 million apps in Apple’s app store. 2016 revenue was around $28 billion. Companies such as Instagram, WhatsApp and King Digital Entertainment (inventor of Candy Crush) all started as apps.
Facebook now owns Instagram and WhatsApp, paying $1 billion and $19 billion respectively for them. And Activision Blizzard paid $5.9 billion for King Digital Entertainment.
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That’s undoubtedly impressive. Yet it’s only a fraction of the potential power of Ethereum. In our view Ethereum is like the second coming of the internet. By creating a global, digitally connected network, it is building another internet. And we’re already seeing companies building innovative new applications on its network.
Like Golem, a distributed supercomputer network. It is like the Airbnb of computer power. If you have a computer and only use 40% of its processing power, you can rent out the other 60% through Golem, earning Golem tokens along the way. Or, if you need extra computing power, you can buy it using Golem tokens.
Golem also raised $8.6 million in 29 minutes releasing an Ethereum-based cryptocurrency in November last year.
And just this week the Basic Attention Token (BAT) was launched, raising $35 million in around 35 seconds. (Yes, that’s $1 million per second. Not bad!)
BAT is another cryptocurrency based on the Ethereum blockchain. BAT is a token for digital advertising. It’s specifically designed to be used on a new browser called Brave. The token can be exchanged between publishers and advertisers to display ads. Likewise they can earn BAT based on the attention given to its ads.
These are just two examples of new, Ethereum-based cryptocurrencies used to fund new businesses. While these new businesses might become multibillion dollar companies in the coming years, it’s Ethereum that underpins them.
Russia follows China’s lead
The importance of the Ethereum blockchain can’t be underestimated.
China is already seeing success with Ethereum’s blockchain for its own startups. Co-founder of Ethereum, Vitalik Buterin, praised the progress of Blockchain Labs in China. The company partnered with Ethereum in July last year and now funds promising blockchain projects.
Buterin has even started to learn Chinese. He knows China is a huge market for Ethereum, and crucial to its widespread adoption.
As we’ve pointed out previously, three other giants of industry in China — the Royal Chinese Mint, Alibaba and JD.com — are testing and experimenting with the Ethereum blockchain.
The Enterprise Ethereum Alliance (EEA) is even expanding into China with a brand new office in Hangzhou. The EEA is an Ethereum working group made up of Fortune 500 companies, academics and tech vendors. Some of its members include Accenture, BBVA, BP, BNY Mellon, CME Group, Deloitte, ING, Intel, Microsoft, Rabobank, Samsung, Santander, Toyota Research Institute and UBS.
But it’s not only China betting big on Ethereum.
Russia wants in as well. Here’s a country that was on the verge of banning bitcoin. Now, thanks to Buterin, a Russian citizen, Russia is embracing the cryptocurrency revolution.
Earlier this year Buterin met with President Vladimir Putin. The event statement from the Kremlin reads,
‘Mr Buterin described the opportunities for using the technologies he developed in Russia. The President supported the idea of establishing ties with possible Russian partners.
‘The conversation was held following the President’s meeting with heads of major foreign companies and business associations.’
A report from Cointelegraph explains Putin wants to build a new digital economy based on blockchain tech.
TAAS — Russia’s state-owned news agency — reports,
‘The blockchain technology may be massively launched in Russia within 7–10 years, Central Bank’s Deputy Chairperson Olga Skorobogatova said on Friday.’
Skorobogatova went on to say,
‘I think it will take us 7–10 years — not only the financial sector, but other sectors as well — to launch the production of this technology for serious projects.’
That’s the timeframe we’re looking at for bitcoin, Ethereum and our other cryptocurrencies to hit the mainstream. That’s the timeframe in which we expect them to rise in value 10, 20, maybe even 100 times higher than where they are today.
The fact that countries like Russia and China are figuring out how to get involved with Ethereum is massive.
It’s perhaps the most exciting thing about Ethereum. Bitcoin has the flashy headlines because of its current value. Ethereum, however, is more practical and has more real-world application. And as we’ve noted, it may eventually overrun the value of bitcoin.
It’s gaining ground among governments. It’s got big business on board. It’s already showing what it can achieve. And its development community is pushing ahead with updates and improvements to the network.
It’s easy to sit back and think you’ve missed the boat. The incredible price rises these cryptocurrencies have already enjoyed are hard to ignore. But the potential future gains are far greater than what we’ve already seen.
We remember people thinking bitcoin at US$200 was expensive. Heck, back then we were even unsure because of the incredible volatility. But that was our ‘traditional’ finance brain speaking. Our gut told us this was transformational. It was a revolution — and that’s exactly what bitcoin is.
But don’t forget how early stage this all is. It’s a huge punt on the future — a seven- to 10-year time horizon. You could lose your entire investment. In a couple of years this could all be worth nothing.
Blockchain technology isn’t going away. And maybe ‘the next Ethereum’ comes along and does it all better…making Ethereum redundant.
We can’t see the future, and any investment into a cryptocurrency is a massive risk. That’s why you should only use money you’re prepared to lose. It doesn’t have to be much, maybe just a few hundred dollars if that’s all you can afford to lose.
But the upside is huge. If Russia and China alone run with Ethereum full force, then Ethereum could easily reach parity with bitcoin. That would see more than a tenfold increase in its price.
That’s a risk we think is worth taking in the most exciting investment opportunity the world has ever seen.