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Ethereum 2.0 Is Casting Big Doubts on ETH’s Value as an Investment: Fund Manager

Nick Chong

Nick Chong | May 22, 2020 | 12:00

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Ethereum 2.0 Is Casting Big Doubts on ETH’s Value as an Investment: Fund Manager

Nick Chong

Nick Chong | May 22, 2020 | 12:00


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Over the past few weeks, there’s been a strong uptick in excitement about the Ethereum 2.0 upgrade.

The excitement is surrounding the improvements the upgrade is expected to have on the Ethereum blockchain. At Token2049’s Ethereum Asia Supermeetup in March 2019, the blockchain’s enigmatic founder Vitalik Buterin told a crowd on the upgrade:

“[It is] a way to bring technical improvements, like PoS and sharding, together to improve the Virtual Machine, Merkle Trees, the efficiency of the protocol, and a whole bunch of small technical things that you have never heard of.”

While there are many expecting the upgrade to prove the investment case for Ethereum, one fund manager is arguing the opposite.

Ethereum 2.0 Could Diminish the Crypto’s Investment Potential

Kelvin “Spartan Black” Koh of The Spartan Group — a crypto-asset investment firm and advisory based in South-East Asia — said that he is currently more bullish on Bitcoin than he is on Ethereum at the moment.

He attributed this assertion to the fact that at The Spartan Group, they see “considerable uncertainty” regarding the upgrade, hence their hesitance to be bullish on ETH as a medium to long-term investment.

Some Are More Optimistic About ETH 2.0

Koh and his team are assessing that there are uncertainties around how Ethereum 2.0 could affect ETH’s investment potential. Yet some commentators are certain the upgrade will have a positive impact on the cryptocurrency.

Adam Cochran — an adjunct professor at a school in Canada, alongside an angel/venture investor in crypto — released an extensive 50-tweet thread on why Ethereum 2.0 will result in “society’s largest economic shift.”

The analysis was extensive, but they boiled down to three core narratives:

  • The introduction of Proof of Stake will dramatically decrease ETH’s inflation rate, with founder Vitalik Buterin postulating a more than 50% decrease in new supply.
  • Due to the technical improvements that will be implemented with Ethereum 2.0, the fundamental demand for the cryptocurrency is likely to explode higher. As Cochran wrote: “With the release of ETH 2.0, we’re going to see ETH drastically increase its tx/s and therefore its commercial and consumer viability.”
  • Expected to be included in the ETH 2.0 rollout is an improvement to the codebase that will burn Ethereum transaction fees, potentially decreasing supply over time.

These factors working in tandem, his analysis concluded, will result in the introduction of Ethereum 2.0 creating the “largest economic shift in society.”

Ethereum 2.0 Launch to Be Delayed

Whatever the case, some think that it may be a while before Ethereum 2.0 truly comes to market.

Developers have time and time mentioned July or summer 2020 as a launch date for the upgrade, but BitMEX’s research team has postulated that this is well too optimistic. They wrote in a recent report:

“Ethereum 2.0 is exceptionally complicated. With so many committees, shards and voting types it seems reasonably likely that something will go wrong and that there will be significant further delays.”

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