A short while ago I was reading about a lot of new companies initiating ICOs. If I understood correctly, investors that owned Ether would exchange Ether for tokens that company created. Later, if the company is successful that investor might exchange those tokens for more Ether than they previously had, and then exchange the Ether for USDs or other fiat currency. So, one incentive for buying Ether is to be able to use it to invest in tokens created by companies trying to raise money.

I also understand that developers can leverage the Ethereum blockchain, use Smart Contracts, and create Dapps. So, that's is cool and a reason for developers to invest, to bootstrap their new service or app, learn the tech, etc.

However, I've read about a number of large companies investing in the underlying technology, but not Ethereum or the Ethereum network itself. If I understand, they can setup their own blockchains, nodes, clients, smart contracts, whatever.

Why should developers or casual investors, or anyone invest in Ether vs. similar technology? What are definite future benefits to accruing Ether?

Update: For example, here is an example of a large company recognizing the benefits of the technology, but seemingly not contributing to the growth and value of Ethereum itself. http://fortune.com/2017/11/10/blockchain-hpe/. This doesn't seem to help Ethereum or small stake holders at all.

closed as primarily opinion-based by Richard Horrocks, Ismael, gisdev_p, flygoing, Distic Nov 30 '17 at 13:48

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An ethereum blockchain can be either public or private.

On one hand, if you are e.g. a national bank, you may want to register transactions between your local agencies on a blockchain, but you probably do not want these transactions to be public.

On the other hand, if you want to create a cryptocurrency or a share for your company, you want the user/share holder to have confidence in the value of your token. If you use a private blockchain, it can disappear with you. So you have to use a public blockchain that does not depend on you, that is the main ethereum blockchain which means you and your users will have to spend ether to pay for the gas.

Thus both use cases are different. However, when a company uses the ethereum technology for internal purposes, it recognizes the value of this technology and it makes the community grow: people at the firm learn to write smart contract in solidity, to use the ethereum tools, and they can reuse those abilities for the main ethereum blockchain.

  • Thank you Distic, but I'm still a bit lost here. Beyond raising money for startups, and beyond developers learning and applying this tech, what is an incentive for the average, non-technical person to join in on this economy. The more I learn, the more excited I get about the technological impact, but looking at it from a different perspective... For example, how do I convince say my grandmother that buying Ether is a good idea? Why would every day, non-investor, non-developer people have reason to buy early, and small amounts now vs. just waiting till some service or product requires it? – user11495 Nov 30 '17 at 15:44
  • @MichaelPrescott: If you wait more services require it, it may be more expansive. And only with ether (or other cryptocurrencies) you can use smart contracts. – Distic Nov 30 '17 at 15:54
  • The point is, they don't. Blockchain is a relatively new concept which probably will remain of limited interest for the layman for the following 5-10 years. At the moment it's a neckbreaking technology and the high-risk-high-reward that attracts expert investors, but it offers nothing to somebody who has no technical or financial expertise (and the time to take care of it). If you are not used to trading stocks, it offers nothing more to you as a financial tool and it does offer little services for those not interested in the technical side. – frollo Nov 30 '17 at 15:55
  • @frollo: you can do e.g. provably fair gambling right now on the ethereum blockchain. So there are use cases. I agree the value of ether comes more from speculation than from those, but it is not nothing. – Distic Nov 30 '17 at 15:59
  • @Distic how many gamblers there are out there with the skill and the mindset actually required to understand what you are doing when you buy and use Ethereum? It has a lot of uses (with an underlying Turing-complete VM, it has infinite uses) but the practical ones are still far from the typical interests of the man on the street (or the interests are better served by classical services). It's like the Internet of the beginning: it will probably grow to something common, but we are still years away from that. – frollo Nov 30 '17 at 16:09