Understanding Ethereum - The Daily Gwei #280
The most bullish thing for Ethereum is to be understood.
Ethereum is often criticized for many different things and I believe this is in part due to Ethereum being harder to understand than something like Bitcoin. Though, this is just a consequence of the fact that Ethereum is a fully expressive platform that enables a large range of use-cases and communities to blossom and this expressiveness attracts a wide and diverse set of people who are all focusing on whatever areas of Ethereum that interest them.
Wikipedia’s definition of Ethereum.
Let’s take a common question that I still see being asked a lot as an example - “What actually is Ethereum?” Well, for me, this is easy to answer - Ethereum is a decentralized, permissionless, censorship-resistance platform that allows anyone to build on top of it and to use it (in other words, Ethereum is freedom). Though, of course, this means basically nothing to almost everyone whereas describing Bitcoin as “digital gold” is an easy thing for people to grasp (they already know what “digital” means and obviously they know what “gold” is). So is there actually a way to explain Ethereum in simple terms? Well, maybe, and I like to focus on Ethereum’s dominant use-case - DeFi - whenever I’m trying to articulate Ethereum’s value prop to new people. This is because there’s lots of different things you can relate back to DeFi - you could basically say it’s like having a bank account in your pocket or that it’s like Venmo/PayPal except you can send any form of value to anyone in the world pretty much instantly.
Another thing that Ethereum has been heavily criticized for since basically day 1 is its monetary policy. Now, while I strongly believe that Ethereum’s monetary policy is the best in the crypto ecosystem, it is not nearly as simple to understand as something like Bitcoin’s (21 million hard cap and the amount of newly minted BTC halves every 4 years). To understand Ethereum’s monetary policy, you first need to understand that it’s very different to Bitcoin’s and that this is a feature, not a bug. So how is it different you may ask? Well there is no supply cap, no halving of issuance every 4 years and the monetary policy has already changed a few times in the past. Though, I believe this is a positive because after EIP-1559 and the eth1<>eth2 merge are implemented, Ethereum’s monetary policy will be extremely robust and lead to a symbiotic relationship for the entire network.
Lastly, Ethereum is often criticized for its “shifting narratives”. First, there was ‘The DAO’ that ended in the worst way possible, then it was ICOs that also mostly ended badly, then there was a brief stint with CryptoKitties that “clogged” the Ethereum network, then we had DeFi summer/yield farming, then came along NFT winter and we also had other things sprinkled in between all of this (DAOs, decentralized versions of web2 apps, social tokens and more). As you can see, Ethereum has been through a lot, but I think that criticizing Ethereum for experimenting with many different use-cases is short-sighted. After all, each of these use-cases didn’t really go away - they just evolved into something better.
I think at the end of the day there’s really no point trying to find some simple way to define Ethereum because that’s near-impossible. What we should really focus on is the app layer (DeFi, NFTs, DAOs, web3 etc) and try to find ways to explain the value prop of these things to regular users. I believe that once people actually understand the value prop from the app layer perspective, the value of Ethereum in their minds will naturally fall into place.
Have a great day everyone,
Anthony Sassano
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All information presented above is for educational purposes only and should not be taken as investment advice.