Is Ethereum Dead?

“Is Ethereum dead?” is a question that crypto currency experts have posed since 2018. For those that don’t know, that was a few months after the amazing bull run Ethereum had in 2017 came to an end. 

Here’s the thing, experts have been declaring Ethereum dead since 2018, but Q4 of 2020 is quickly approaching and Ethereum still exists. In fact, the medium term future of Ethereum looks bright. 

This article will discuss why Ethereum is not dead. We will also cover why the future of Ethereum looks so great.

What died in Ethereum?

Those that proclaim “Ethereum is dead” do have a point – parts of Ethereum have withered away over the past years. Those parts include the ICO, the proof of work (POW), and the value of the coin. 

ICOs

Everyone remembers the ICO craze of 2017. You couldn’t go more than a few days without seeing the newest initial coin offering (ICO) on Ether. 

These ICOs all required investors to invest with Ethereum. And this ICO craze was a major factor in the popularity of the Ether network.

All good things come to an end, and the ICO craze was no different. US regulations, the IRS, and a few high profile ICO scams brought the ICO craze, and Ethereum, to a crashing halt at the beginning of 2018.

Proof of Work (POW)

Cryptocurrencies derive their value from two different systems: proof of work or proof of stake.

Generally, proof of work cryptocurrencies are preferred because value is derived from the amount of computing power behind the currency. 

A proof of stake cryptocurrency derives value from a small group of investors that control the power. These investors have a tendency to end up controlling the direction of the currency, which means that the small investors get left out as big investors make decisions that often negatively impact small investors.

Unfortunately, Ethereum is slowly moving from a proof of work system to a proof of stake system. 

The future of Ethereum is admittedly bleak, but Ethereum is not dead by any stretch of the imagination. 

Ethereum actually has one trick up its proverbial sleeve that could cause it to rebound above 2017 levels. That trick will be covered in the next section.

Coin Value

As anyone that invested in Ethereum in 2017 knows, the value of the coin has completely since then, which has led detractors to erroneously claim that Ethereum is dead. 

Well, they’re wrong. The crash in the price of Ethereum was caused by the end of the ICO bubble. It was not caused by anything inherently wrong with Ethereum.

This means that the price can, and likely will, rebound at some point.

Ethereum is in a rut

Now, Ethereum is obviously not dead. You can still go on Coinbase and purchase Ethereum. 

It has a high trading volume, a sizable market cap, and a handful of legitimate ICOs each year. 

That said, if you use 2017 as your base year, then Ethereum would certainly appear dead. But that would be an unfair comparison as 2017 was an anomaly. 

Anyway, we prefer saying that Ethereum is in a rut as it searches for the next major craze. The evidence indicates that there will be at least one more Ethereum craze before the proof of stake structure completely takes over Ethereum.

DeFi (Decentralized finance) to the rescue?

Decentralized currency is the newest aspect of Ethereum. 

It’s a huge, rising aspect at that. Huge enough that it will disrupt Ethereum in a very positive way. Of course, DeFi has a reputation as a boring part of crypto, so it doesn’t get much attention. 

Quite frankly, no one cares about DeFi since it’s not nearly as exciting as an ICO. 

The interesting part about DeFi, however, is that it allows users to invest their cryptocurrency in the blockchain with little to no risk. 

It has all the benefits of an ICO without all the regulations.

Users can invest capital into Ethereum without the anti-money laundering, know your investor, and know your creditor rules that brought the ICO phase to an abrupt end.

For an example, we decided to invest some Ethereum into one of the top DeFi platforms on Ether – Compound. 

The entire process took about 5 minutes. No ID, name, email, tax returns, or other personal information required. 

It almost seems too good to be true. Granted, the interest earned on our investment amounts to about 5% (paid daily) per year. But where else, in crypto or fiat, can you find that pays ~5% per year paid daily?

Not many places.

Now, are we saying that DeFi will bring Ethereum to the mainstream?

No, it probably won’t. But that wasn’t the question.

Quite frankly, Ethereum will still struggle with staying relevant as it moves to a proof of stake model. 

It’s unfortunate, but proof of stake models have not worked in the long term for cryptocurrencies.

Final Thoughts

To answer the question, Ethereum is not dead. It’s damaged and in a bit of rut. 

In other words, it’s sticking around waiting for the next craze to hit. 

The emergence of DeFi will likely bring Ethereum back from near death. In fact, DeFi might prove to be a bigger craze than the ICO craze that first brought Ethereum to our attention back in 2017.

With that in mind, now might be the best opportunity to load up on some Ethereum as a good medium term investment.