Crypto can be quite divisive area of investing. It certainly does not help when Peter Thiel calls Warren Buffett “Sociopathic Grandpa” for criticizing Bitcoin or when Buffett characterizes Bitcoin as “rat poison squared”. When I tweeted on April 1st that I’m going to cover Ethereum this month, some of my followers thought it’s April fool’s joke. It’s clearly not.
The last thing I want is to be dogmatic when it comes to investing. The world is a strange place, and understanding how the world works is a herculean task, especially given that your understanding of the world needs to be constantly refreshed to keep your knowledge updated. This month’s deep dive is an endeavor to perhaps update such understanding.
I am hesitant to call this *my* deep dive. Let me explain why.
Broadly speaking, there are primarily two types of coverage on crypto. They are, unfortunately, at opposite extremes. While most bulls consider crypto to be panacea, many bears depict crypto as a collective moral failure. In this piece, I have not quite explored the philosophical, sociological, and political implications of crypto or Ethereum. To the extent you are looking for such analysis, you won’t find it in this piece. I don’t think those are irrelevant concerns, but I thought those are somewhat beyond the scope for this piece. As a newbie in the crypto space, I mostly studied closely what and how other bulls think about Ethereum. Then to understand the bear case for Ethereum, I studied the people who are bullish about crypto or/and Bitcoin but not on Ethereum. Because of this context, I have spent considerably less time on understanding the views of crypto bears who think the whole space may eventually have no value at all. Instead of calling it my deep dive, it is more fitting to call it a literature review of Ethereum by a curious analyst. One could perhaps rightly say I mostly borrowed ideas!
In section 1, I discussed crypto’s early days, Vitalik Buterin, and how he, along with his cofounders, started Ethereum. Acquired’s three-hour episode on Ethereum was a great help.
In section 2, I explored some basics on Ethereum. Crypto, just like traditional finance, can be filled with technical terms and jargons. Thanks to Google, Investopedia, and some substack pieces, I outlined these basics in relatively plain language. While Ethereum has its own white paper, it’s not the easiest read for non-technical people.
In section 3, I discussed the bull case for Ethereum. Of all the pieces I read, I think Packy McCormick did an excellent job in explaining the bull case in lucid language. Justin Drake’s Ethereum episode at “Business Breakdown” was also helpful.
In section 4, I elaborated on the bear case for Ethereum. John Pfeffer’s paper on crypto as well as his interview at “Invest Like the Best” was the most compelling bear case I came across during my research.
Both bull and bear case valuation are discussed in their respective sections.
Finally, in section 5, I share my final thoughts on Ethereum as well as disclosure of my overall portfolio.