It is hard to predict the future. It is actually impossible. What we could do is provide an educated guess(es) where the market it heading.
We don’t aim to provide an investment advice, mind you, but where we see Ethereum going in the next 3-5 years. We see the “Ethereum story” unfolding in one of these four scenarios.
One thing you should know before we start: Based on the recently formalized ERC-20 token standard, ERP20 is a digital asset (token) that is issued via the Ethereum network (blockchain). It is mostly used in Initial Coin Offerings (ICOs) when some company is raising money from the general public when it effectively creates a new cryptocurrency.
Scenario #1: Worst case
The ERP20 starts losing its value due to the overwhelming number of ICOs in Ethereum’s blockchain. This leads to serious problems, prompting the reversal of the growth trend.
At the end of the day, no one thinks of using ERP20 for ICOs any more, with developers and companies moving to other blockchain platforms, instead.
- Scenario probability: 5%
- Ether price effect: below $40
Scenario #2: Major problems
All those ICOs lead to a number of problems, with many of participants losing their money due to unforeseen bugs / programming issues with Solidity and its various implementations.
In this scenario, we could see a major problem that is similar to the DAO fiasco and the hard fork of Ethereum Classic. (Related: Ethereum Classic vs. Ethereum)
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This sort of situation would stop the momentum of Ethereum, and make the price of ether stagnate for a period of time.
- Scenario probability: 15%
- Ether price effect: below $200
Scenario #3: Most likely scenario
It doesn’t take a miracle for the Ethereum market to really take off. In fact, all we need is a handful of truly successful ERP20 tokens and ICOs.
Since there are quite a few ICOs out there, chances are some of them will hit the jackpot, and we’ll get an app that will eventually reach the tipping point. By this “tipping point” we mean that a dapp (decentralized app) would get mainstream consumers on board or — if it’s a B2B offering — find a way to make money for its developers and investors (coin holders).
The problem with this scenario — even though it’s most realistic — is that today we have other platforms that are even better suited to run apps inside a blockchain. We are referring to platforms such as Lisk and NEO that allow developers to use more popular programming language to make dapps.
Nonetheless, it expected that the Ethereum ecosystem dominates the dapp ecosystem, with other contenders fighting their way for a few percentage points of the market (which could make them successful, as well).
- Scenario probability: 45%
- Ether price effect: over $800
Scenario #4: Ethereum is the king!
This scenario envisions competitors that can’t come even close to Ethereum’s wide reach. Other cryptocurrency platforms with support for smart contracts will get their following, but for the time being — they will remain niche players.
There are actually many reasons why this could be the case, with almost 9 out of 10 tokens being created under ERP20 specs.
Another reason why Ethereum could end up dominating the landscape is that it is the only blockchain platform with support of major corporations through the Enterprise Ethereum Alliance (EEA).
Presuming that no accident will happen in the near future, it is very hard for competing platforms to cut into Ethereum’s market share.
In other words, under this scenario Ethereum will emerge as a Bitcoin of DAP platforms — the de facto standard.
- Scenario probability: 35%
- Ether price effect: over $1,500
[This article was inspired by Tony Aidinis’ response on Quora]