If You’d Invested $500 in Ethereum in 2015, Here’s How Rich You’d Be Now

Few (if any) asset classes are as polarized as cryptocurrencies. On one side, like companies micro . strategy And Field He has embraced this trend adding Bitcoin to their balance sheets. But on the flip side, venerable investors like Warren Buffett and Charlie Munger have rejected this trend. Indeed, Munger once described Bitcoin as “disgusting and contrary to the interests of civilization.”

The same dynamic has played out in governments. China issued a blanket ban on all cryptocurrencies, while El Salvador recently made Bitcoin an official currency. Meanwhile, other nations are stuck in the middle, grappling with how to regulate the asset class. No matter which side you take, there is one indisputable fact: cryptocurrency has created massive wealth in a short period of time.

Over the past five years, the collective value of the cryptocurrency market has increased from $14.2 billion to $2.6 trillion, with an annual growth rate of 185%. No other asset class has produced returns anywhere close. And Ethereum (CRYPTO: ETH) Stand out from the crowd.

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Investing $500 in Ethereum

In 2011, Russian-Canadian programmer Vitalik Buterin became involved in the Bitcoin community, first as a blogger, and later as a co-founder of Bitcoin Magazine. As Buterin learned more about blockchain technology, he came to see Bitcoin as a relatively limited platform. In fact, compare it to a calculator, which means that it does one thing well (peer-to-peer payments), but it does only one thing.

This led to an epiphany. Buterin envisions a better blockchain, more like a smartphone, which means it will integrate a calculator-like tool into Bitcoin, but will also expand on that. After his ideas were rejected by several existing projects, he decided to create his own cryptocurrency. And in July 2015, Buterin and five co-developers launched Ethereum, the first programmable blockchain.

On October 20, 2015, the price of Ethereum bottomed at $0.42 per coin. Since then, its value has increased by more than 1,000,000%. This means that investing $500 at the low point would be more than $5 million today.

Is Ethereum still a good investment?

The programmable nature of Ethereum means that developers can write code on the blockchain, creating computer programs that execute automatically under certain conditions. Self-executing computer programs are called smart contracts, and they form the basis of decentralized applications (dApps) and decentralized finance (DeFi) services.

Today, there are more than 2,800 dApps spread on the Ethereum blockchain, ranging from video games to social media platforms. This makes Ethereum the largest dApp ecosystem by a long shot. And with $170 billion currently reserved in Ethereum DeFi products, it is also the most popular DeFi ecosystem.

Why is this important? Blockchain technology relies on a distributed network of miners to validate transactions, allowing funds to be transferred electronically without going through a traditional financial institution. In the context of DeFi, this means that users can hold, lend or borrow cryptocurrency without involving any bank. By eliminating this centralized middleman, DeFi products have the potential to lower costs, eliminate bias, and expand access to financial services.

More than that, dApps and DeFi services are not free. Miners must be compensated for their work, which means that users pay transaction fees using the original blockchain currency. So here is the question: Will dApps and DeFi products become more popular in the future? Given the range of benefits, I think the answer is yes. And if I’m right, Ethereum’s status as the largest dApp and DeFi platform gives it an advantage, simply because it offers more diversity. Over time, this should attract more people to the platform, causing the price of the cryptocurrency to rise.

But there is still another point to consider.

Another reason to own Ethereum

Today, Ethereum has a market capitalization of $488 billion, making it the second most valuable cryptocurrency. This has translated into popularity with institutional investors. In fact, a recent study from Fidelity indicates that 52% of institutional investors own digital assets, and among those surveyed, Ethereum was the second most popular holding.

Most importantly, 71% of those surveyed expressed their plans to buy digital assets in the future, which means that adoption is on the rise. With the emergence of this trend, the popularity of Ethereum should lead to more institutional investors buying the cryptocurrency, driving its price up.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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