Understanding Ethereum
Let me start by saying I am not a CFA or a registered investment advisor, nor am I a bitcoin maximalist or a crypto evangelist. However, I have spent much of the last decade researching and participating in the traditional financial system and the cryptocurrency ecosystem, and the differences between the two are considerable. Many people are working on the bridge between, but those who are less acquainted with the crypto economy ought to mind the gap.
Those on the traditional side of the spectrum must understand that the innovation behind cryptocurrencies is technical first, financial second. The most innovative aspects — novel network architectures and decentralized application infrastructure — are inherently technical. The foundation of the cryptocurrency ecosystem is not banks, brokerages, or cash flow statements. It is computer code running on hundreds of thousands of machines around the world. These new ecosystems may support familiar financial functions like lending and borrowing, but they do so in a fundamentally different way.
Armed with financial knowledge alone, you will be disappointed if you try to figure out what is so valuable about Bitcoin, Ethereum, or blockchain. DCF models are not easily applied to digital assets or the internet collectives behind them. A deeper understanding of what’s going on under the hood of these ecosystems is essential for realizing their immediate value and long-term potential.
