It’s empty, barren, snow covered, isolated, it’s up for sale, and someday will be worth millions. It’s land; and it is a closer analogy to Ethereum that you may realize.
Explaining how cryptocurrency and blockchain technology works to those not close to it can be a daunting task. Often we refer to analogies to help provide context to a complex idea. For example, since it was introduced, Bitcoin has been compared to gold and Litecoin has been compared to silver. Explaining to someone the complex computational requirements needed to solve a block and create a hash can be a challenge, but when you say “That computer is mining Bitcoins” it puts it in perspective. (and makes it sound pretty cool!)
So how does Ethereum relate to real estate? Lets look at the example of land ownership and make the comparison.
A land developer finds an empty piece of land in the middle of nowhere and see the value in it. They buy it up and hold on to it. That land is not going to turn a profit for you right away. It is just going to sit there and wait. Land investing can be a long process. But by sitting on that asset, the property is growing in value. That land may be 30 km away from the closest town, but over time, urban sprawl creeps out that way. Houses and shops start popping up near your land. Urban dwellers looking for cheaper housing are moving out of the city and looking for new places to live. The landowner now works with a developer to build up a community. That landowner may now sell their property to a housing developer for a tidy sum, who will then build houses and shops on it. Now a vibrant community has sprung out of where there used to be just barren, snow covered, isolated land.
Let us compare that to Ethereum. Ether is made available to the market, and is akin to the land. It is bought up by investors and early adopters. There is no immediate use for it since it can’t really be spent. There is no market to spend Ether with (yet), so it sits in the reserves of the early adopters. The Ethereum community grows as the framework is built up. This is your urban sprawl, as the community moves from Frontier to Homestead. Now that the community is ready to grow even further, developers look to build up their apps and programs on the Ethereum backbone. In order to run your apps, you need Ether to fuel them. The developers build their programs on top of the fuel that runs the Ethereum network; Ether. The investors sell it off to the developers at a tidy sum or work with the developer to make the community thrive.
It is the developers working with those who own the land (or network fuel) that grow the community and give it value. Ether in itself isn’t worth anything. Ether has value in the development that will be built on it. While other cryptocurrencies are based on the Mine-and-sell plan, Ethereum is built on a Invest-and-Develop framework.
And it is only a matter of time before your favourite store sets up its next shop at the corner of Frontier St. and Homestead Ave.