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Analysis
26 Feb 2023

A naïve approach to valuing Ether

In “A framework for evaluating token prices” we suggested a conceptual way to think about the fundamental value of cryptocurrencies. In this article, we analyze “Access Utility” and its impact on token price in a very naïve and stylized way.
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In “A framework for evaluating token prices” we suggested a conceptual way to think about the fundamental value of cryptocurrencies. The framework is nothing more than an overarching guide for deeper analysis. As a first step in that direction, we will start by analyzing “Access Utility” and its impact on token price in a very naïve and stylized way.
The value added of the Ethereum network is access to a wider set of utility
The Bitcoin network is designed to enable transactions of its native token, bitcoin, and the secure storage of this token on the Bitcoin blockchain. The Ethereum network was created to expand on the limited set of possibilities offered by the Bitcoin network. Ether, the native token of the Ethereum blockchain, can of course be held and transferred, just like bitcoin. But the added component of the Ethereum network, is that Ether can be used to pay for performing more expressive types of transactions. Compared to Bitcoin, the value added is the access to the utility from these more expressive transactions. In real virtual life on the Ethereum blockchain, the more expressive transactions have taken the form of creating and transacting with other tokens, decentralized lending, minting and selling NFTs, decentralized trading between these tokens and/or NFTs, etc.
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