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I invest a little play money in cryptocurrencies. And 2024 has beena greatyear for them.

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In fact, I occasionally share the story about how I tried to invest in Bitcoin when it was worth under $1,000 a coin, but I couldnt get the transfer to the cryptocurrency exchange. Eventually, I gave up and lived to regret it in theyears to come.

Along those lines, how would you have fared if youd gotten in on Ethereum in its early days? How much would you have today if youd invested $1,000 at the launch of the second-most popular cryptocurrency?

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In July 2014, Ethereum held an initial coin offering (ICO), raising money for the project through Bitcoin. It worked like a crowdfunding project, where investors bought in (paying with Bitcoin) for early access.

A year later, the actual Ether blockchain coins (ETH) started trading live at$0.31 per coin.

As of mid-April 2024, ETH trades at $3,157 per coin. That marks a roughly 10,000% increase in value.

If you had invested $1,000 at $0.31 per coin, youd have owned 3,225.81 ETH coins. At todays pricing, that would be worth $10,183,871.

Todays pricing doesnt even represent Ethers peak. On November 9, 2021, ETH reached a dizzying $4,815. If you had cashed out your ETH coins at its zenith, youd have walked away with a cool $15,532,258.

Because cryptocurrencies exist in ones and zeroes, rather than, say,physical gold and all the supply limitations attached to it, crypto creators must build in sometype ofscarcity.

For Bitcoin, that means halving the coins paid to miners for each block on a schedule of every 210,000 blocks.In fact,the next halving will likely have happened by the time this article publishes in mid-April.

Like Bitcoin, Ether must add scarcity and limit production over time. But unlike Bitcoin, it does so with far more complexity.It does so through a triple halving processincluding:fee burning, staking, and token issuance rate reduction.Read up on theEther triple halving processfor all the nerdy details.

That happens continuously, unlike the much-hyped halving events for Bitcoin. It produces the same resultthough: slowing new supply entering themarket,to drive up values.

Story continues

I opened by claiming that I invest a little money in cryptocurrencies. The simple truth, however, is that I consider it speculating, not investing.

Whats the difference?

Investments have intrinsic value. That value could come from its use, such as a home.Orit could come from revenue,in the caseofa business or an apartment building.You can measure the investments value based on that revenue,orbased oncomparable assets in the same market.

Cryptocurrencies dont produce revenue and have no tangible use. Theyre only worth wherever someone else is willing to pay for them, similar to collectibles like baseball cards or, dare I say it, non-fungible tokens (NFTs). To me, that makes them speculative.

Is there an inherent value in a decentralized currency? I imagine so but I have no idea what it mightbe,because theres nothing concrete to measure.

By all means, play around with money you can afford to lose in speculative assets like cryptocurrencies.Just dontbet the farm on something that produces no revenue or measurable value.

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This article originally appeared on GOBankingRates.com: Heres How Much a $1,000 Crypto Investment in Ethereum at Its Launch Would Be Worth Now

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Here's How Much a $1,000 Crypto Investment in Ethereum at Its Launch Would Be Worth Now - Yahoo Finance