The era of Ethereum is coming: In the next 10 years, the price increase of ETH will be driven by these 5 factors

特邀专栏作者

2020-03-11 17:18 (UTC+8)

This article is about 5051 words, reading the full article takes about 8 minutes

We will draw our conclusions in this article by exploring the mechanics behind the price of ETH and why ETH is likely to see a price surge in the next decade.

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We will draw our conclusions in this article by exploring the mechanics behind the price of ETH and why ETH is likely to see a price surge in the next decade.

Editor's Note: This article comes fromBabbitt Information (ID: bitcoin8btc)Editor's Note: This article comes from

Babbitt Information (ID: bitcoin8btc)

, Author: David Schwartz, translator: Xi Yu, published with permission.

Author: David Schwartz is a software engineer, graduated from the University of California, Berkeley, currently living in Los Angeles. David helps organize Ethereum meetup events in Los Angeles and co-manages the @EthereumLA Twitter account.

Ethereum is the first permission-less global economy. For those new to the ecosystem, Ethereum is, in simple terms, an economy. Ether (ETH) is the currency of this economy. Ethereum is essentially a borderless "digital country" where the code is governance and everyone in the world is a "citizen" of this country. Anyone anywhere in the world can write code for Ethereum to provide logic-based automated services, such as digital bank accounts, financial exchanges, lending platforms, etc., and deploy it on Ethereum.

The code on Ethereum is auditable and will always run according to the coding rules; anyone in the world with internet access can access Ethereum services without asking third-party permission. The creation of Ethereum had a major impact on global finance. Current fiat currencies, such as the US dollar and the euro, have systemic problems due to their permission-based nature. By increasing trust and efficiency in global trade and settlements, Ethereum has become the best economy in the world.

Many investors who follow the crypto market remember the initial coin offering boom, which, while rife with scams, commanded high valuations for projects that did not have a purely speculative basis. A few years later, it is clear that Ether has the potential to grow on fundamentals rather than speculation in the next cycle. We will draw our conclusions in this article by exploring the mechanics behind the price of ETH and why ETH is likely to see a price surge in the next decade.

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The current global "permission-based" economy

An economy is a series of transactions built on trust. The global economy is the sum of all transactions within and between countries. Within each country, such as the United States, the collection of transactions is added to form the Gross Domestic Product (GDP). Without trust between two parties, very few transactions will occur, bringing the economic machine to a standstill.

To achieve these goals, governments employ complex systems of technological infrastructure and human capital to back their fiat currencies. Today, these government-deployed systems often enable online transactions, credit card payments and physical cash, with possible jail terms and threats of violence for those who commit financial fraud or attempt to counterfeit currency.

The government not only manages the technology behind these currencies, but also the issuance of the currencies. They can and do print the money they want. However, they need to be careful not to print too much, or they will cause inflation or lose trust in global financial markets, which will lead to rapid price increases for goods and services. Countries that keep inflation low while maintaining low unemployment and high-quality jobs will thrive.

The government manages its financial infrastructure through a permission-based system. Governments grant licenses to banks, which then grant access to technology companies (Visa, PayPal, Venmo, Plaid), which in turn grant other businesses or users access to their applications or APIs, and so on. At each level, this permission is used to control the economy, prevent money laundering and enforce KYC rules. The government sees and does everything from the top.

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Existing permissioned system lacks financial innovation

For payment networks like Visa, many fiat currencies are backed at rates determined by larger financial markets. This makes travel easier for citizens of all countries and enables a healthy global economy. However, in order to provide these services, Visa requires a license from each government/country in its network.

Additionally, in order to create financial products, businesses must pay expensive legal fees to ensure they are compliant with regulations and can operate. Businesses must pay these fees in the country in which they operate and ensure they follow the latest laws and requirements. These high costs protect citizens from fraud, but come at the cost of innovation and enable financing for rent seekers. Rent seekers reduce economic efficiency by increasing existing wealth shares without creating new wealth.

Creating new innovative startups to compete with incumbents like Visa is nearly impossible without significant funding. The capital cost of requiring approval from and interacting with multiple license-based governments is prohibitive for anyone without access to substantial capital.

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"Trusted" Platforms

Consumer trust in these "trusted" institutions is not always guaranteed. These companies are fine with the status quo, but users who are being charged high fees and developers who can build better products should not be complacent.

Unfortunately, only a small portion of the population is able to innovate in the financial industry due to its permission-based nature and high barriers to entry. You may have a team of talented developers, but if you don't have a track record, or don't live in a country with a strong network of venture capitalists, or go to a prestigious university, it's unlikely you'll be successful in Innovate financially, because the chances of success are slim compared to those companies that don't have a lot of capital.

Unlike retail and newspapers, the financial industry has never experienced the disruption wrought by the Internet. What we need is a platform that anyone can trust. It doesn't take a lot of money to find rent seekers and an overly complicated legal system. Here lies a viable permissionless alternative built by a host of developers and researchers: join Ethereum.

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The Ethereum economy is a network nation-state economy not controlled by any third party, and users can rest assured that any code placed in their system will always execute as coded. Ethereum is the tool developers use to deliver new and innovative self-sovereign products to people around the world, including but not limited to bank accounts, exchanges, ETFs, derivatives markets, lottery systems, gambling sites, virtual reality worlds , game items and digital collectibles.

Ethereum has two main advantages against nation-state economies and their products. First, Ethereum is permissionless, and second, it has more efficient technology than the traditional banking system. Instead of having humans involved in the settlement process, everything in Ethereum is automated. That being said, most governments and banks are currently transitioning to blockchain technology similar to Ethereum, such as JP Morgan’s Quorum, a permission-based, slightly modified version of Ethereum. So it is the permissionless aspect that makes the Ethereum economy truly innovative, as countries use the technology to converge to increase efficiency.

Ethereum is an open financial system. This is a powerful driver of innovation. Anyone with an internet connection can develop services on Ethereum or access those services, and no one can block or censor them. A savvy group of developers is working hard to build better financial services. Just as the Internet changed the way data flows, Ethereum will change the way money works.

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early attraction

A major issue facing Ethereum adoption is ecosystem self-sovereignty and private key management. Private keys are long passwords that allow access to user funds and require technical expertise to store and use properly. However, new wallets are being created using advanced encryption techniques such as multi-party computation (MPC), which makes usability and account recovery much easier for everyday users.

network effect

In addition to improvements to the current Ethereum 1.x technology, Ethereum 2.0 is about to be released and will revolutionize the field, thereby providing enough throughput for Ethereum to become the de facto global settlement layer for the world economy. Ethereum will be at the center as governments and banks migrate to Quorum and other blockchain technologies.

network effect

Ethereum has huge network effects. Any innovation made by a single developer on Ethereum is available to all other developers. If a developer creates a protocol (such as an interest-generating bank account), all other developers can use that protocol in their applications, and no one can stop them. They don't have to ask their permission. Therefore, every time a new innovation happens on Ethereum, it grows the ecosystem exponentially.

No other platform other than Ethereum has these network effects and developer interest. Many VCs poured money into rivals trying to beat Ethereum, and these similar platforms hardly ever needed it. These projects take a while to disappear because they have a lot of money, but they are just blank blockchains. Ethereum is by far the only platform with real traction.

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1.Staking

Bullish on Ethereum

We’ve explored why developers may choose to develop on Ethereum, and how the platform is poised for a massive wave of innovation, but how will this be reflected in the price?

There are 5 main drivers of ETH price growth over the next ten years. Each factor can be attributed to reducing supply or increasing demand, driving prices higher.

Staking is the process of securing the Ethereum network by locking up tokens and using them as collateral to provide users with good security. If a pledger acts in good faith, they are rewarded. Otherwise, they are punished through a mechanism called slashing.

It is estimated that as much as 3 million tokens out of the current circulating supply of approximately 110 million ETH will be locked and removed from the circulating supply due to staking. Ethereum staking is currently expected to launch on July 30, 2020, but staking may be delayed if security testing indicates that additional changes are necessary.

Other blockchains that also offer staking have much more locked up. For example, as of now, Tezos has 77.65% staked tokens of the total supply, but this is higher because Tezos tokens have very little usage apart from the hype. As we will see shortly, Ethereum is a robust ecosystem with a large number of applications competing for ETH as collateral, reducing the funds available for collateral.

2. End mining

Permanently removing miners from the system for staking will reduce the new supply of ETH and will happen over the next year or two after initial staking. In the short time after Ethereum 2.0 goes online, mining and staking will exist at the same time. The blockchain network can be protected through mining technology, but new ETH can be generated as a reward for miners.

3. Apply Collateral

Many innovative applications on Ethereum require ETH locked up as collateral to function properly. For example, MakerDAO is a project that creates a stablecoin, DAI, which currently tracks prices in U.S. dollars. Multiple complex mechanisms exist, but ETH is collateral for DAI. DAI is essentially a stable synthetic ETH. Another form of ETH that can be used as a reliable payment for goods and services. Even when the price of ETH used as collateral dropped from $1428 to $83, DAI remained stable, which is a robust system.

Just by growing the business and having more users buy and lock up ETH to create a more stable token, MakerDAO reduces the supply of available Ether. There are many applications that rely on ETH/DAI and compete for this scarce resource. As more projects are launched, the demand for Ethereum is expected to increase dramatically, while more and more supply will be locked in these services.

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defipulse.com: Value of ETH locked in apps over time

4. Gas fee

ETH is used to pay for gas on the network. In 2019, the average daily gas fee on Ethereum was $95,000. With the release of Ethereum 2.0 and increased throughput, and more developers building on Ethereum, the total amount of gas paid is expected to increase significantly, forcing users and/or companies to buy ETH for services.5. Speculation》，《Finally, we see pure speculation, which is common in all financial markets, especially high-growth high-tech industries. As we have seen before in 2017, a bull run in cryptocurrencies can lead to spectacular price growth. What happens next time when users have real products and protocols to use. Instead of investing in false promises, they can experience the power of an open financial system.》，《ETH: A new model for money》。