Right now, the vast majority of people have little-to-no idea what distinguishes Ethereum from something like Dogecoin, and so their prices go up and down for the same reasons. But, behind the scenes, they are vastly different. This is the ultimate inefficient market: the relevant information isn't really penetrating yet to unlink Ethereum's and Dogecoin's price paths.
I have zero interest in investing in memecoins like Dogecoin. But I am bullish on Ethereum in the long term, say, 5-10 years, for reasons I'll describe below.
The people working on Ethereum are brilliant and fully engaged with doing all the grit work necessary to create a new kind of money. Unlike Bitcoin, which uses an incredible amount of energy because it's based on "proof of work," as is today's Ethereum, later this year (assuming things go as planned) Ethereum will be based on "proof of stake," which uses a very tiny fraction of the energy. But there are many difficult challenges involved in making proof-of-stake money as secure from malicious actors as it needs to be. Those challenges are the subject of much of the current engineering work in the Ethereum world.
Other work is involved in bringing down transaction fees to almost nothing. That will happen over the next few years, and involves something called "zero-knowledge proofs." ZKPs have been in development for a couple of decades, but only now is that technology being completed to the point that this type of practical application is possible. While there are efforts such as the "lightning network" to do something analogous in the Bitcoin world, the possible approaches just don't intrinsically work as well as what is possible with Ethereum as their basis.
That's because of the other major difference between Ethereum and Bitcoin. Ethereum includes a Turing-complete virtual machine so that software can be developed that runs on it, and that interacts with publicly-available data storage, not owned or controlled by any company, which will exist as long as Ethereum does, that anyone can access. That, too, is something new that will have a lot of ramifications. The twist being developed now is that zero-knowledge proofs will be built into the virtual machines.
Ethereum will not replace the credit card industry, which has layers to handle disputes, etc. Dispute resolution must be done by some centralized entity, and if you have that, you (arguably) might as well back it up with a centralized database. (However, that being said, it is also true that businesses will almost certainly arise to provide such dispute resolution services for blockchain-based transactions.) But there are use-cases for which dispute resolution is simply unnecessary, most notably, "micropayments.
I have been monitoring the ongoing engineering work closely, and my impression is that they are doing a great job at anticipating the problems that will emerge and spending the time (and money) to do the necessary engineering. It's a bit like building an airplane. There are a lot of pieces that have to be done right. Before they were, there was no airplane. Before they are done right for the blockchain world, there will be no real blockchain-based money.
But I think Ethereum has a nontrivial chance of being the breakthrough, creating what truly is a new kind of money with new, advantageous properties, and affecting the world of finance in a major way.
I am practicing what I'm preaching... one manifestation is that I'm writing software that runs on it... I'll say something here if/when I have something you can interact with.
I will be buying more Ethereum soon. I think there's a nontrivial chance that a lot of the world's finances will run on Ethereum in 10-20 years. To be part of it, you'll have to have Ethereum. And the amount of Ethereum will not be growing forever. So market forces will, if all this comes to pass, put a lot of upward pressure on the price of each coin. Even if it goes down from its current price of $1000 to $100 in the next months or the next couple of years, the upside possibility is still there unaltered. To see what will happen, there's no option but to wait until the airplane is built and see whether it works better, for its purposes, than earlier means of transportation.
With all the above as background, here's a brief outline of why I think Ethereum is a good, but highly speculative investment today:
1) 10 years from now, there will be about the same amount of Ethereum as there is now.
2) Ethereum may provide a significantly better basis for a significant portion of the world's financial transactions than exists now.
3) Ethereum's market cap is now on the order of $100 billion. The world's economy is on the order of $100 trillion. Therefore, if 10% of the world's economy runs on Ethereum 10 years from now, Ethereum's market cap will be $10 trillion, or 100X its price today. So Ethereum coins would be worth something on the order of $100K at that point. I think that outcome is very possible. Which would make it a good idea to invest in Ethereum today.
4) The reasons I think that is possible are twofold: a) I think this type of technology will probably have that level of importance in the future; and b) I think Ethereum is well-positioned to be the version that gets there. My reasons for being bullish on Ethereum, in particular for being the one are, again, twofold: a) in proof-of-stake systems with a design that works properly, security is based on the amount of money devoted to staking, and that is highly related to market cap, and Ethereum will soon be the proof-of-stake system with the greatest market cap, and b) as far as I can see, there is more engineering momentum and smarts being invested in the Ethereum ecosystem than in any of its competitors.
1) I may be fundamentally wrong: this type of technology may just not play a significant role in the future.
2) While I think Ethereum is the currently-existing technology that is most likely to fill the niche, because, when it converts to proof-of-stake later this year, it will have both the highest market cap for a proof-of-stake blockchain and the most engineering momentum, I may be wrong. Something else, such as competitor Polkadot, may do so. Or, Bitcoin may unexpectedly change course in a huge way. (Market cap is highly relevant because, in a well-designed proof-of-stake system, the security of the system is ultimately based pretty much purely on the combination of a) its market cap and b) the decentralization of the entities owning the coins.)
3) Something wholly unexpected and unforeseeable (at least by me) may come out of nowhere to better fill the niche.
4) There are some complications I'm not addressing in the above. Most notably: most of the transactions will take place in "layer 2", which, at least today, often uses coins that are not Ethereum. However, the security of those coins will be based on Ethereum itself. So, there will be natural pressure for Ethereum to have a high market cap relative to these other coins.
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