‘Ethereum’s price tumbled down by 4%’
Saw similar news clipping before? I bet you have! Realizing that the value of Ethereum has fallen by 4%, many of us would have assumed that it is something like a currency but Ethereum is a lot more than just a currency. We will brief you on everything about Ethereum in this blog post with its applications. Let’s begin.
What is Ethereum?
‘Ethereum is a decentralized platform that runs smart contracts’, according to the Ethereum website. This might be a little confusing to the people who are beginners. Ethereum (or Ether) is a cryptocurrency built upon blockchain technology.
Comparing it with ‘Bitcoin’ may give you a better perspective as Bitcoin is what people have heard for a long time with rising prices in the market. Ethereum boasts itself as ‘the world’s programmable blockchain’ which utilizes smart contracts to make transactions.
What are smart contracts?
A smart contract is a programmable contract with a set of rules and agreements between the buyer and seller which executes itself after conditions are met. Let’s understand this with an example.
Imagine you went to purchase a car from another, requiring a tedious process of legalities and ownership transfer involving a line of pesky middlemen. With Ethereum into the picture, a smart contract would automatically transfer the ownership after the transfer of funds, making it fast and third-party free. The use-cases of Ethereum are not just limited to this, we will dive into more later in the blog.
The Ethereum price was $2500 at the mid of June 2021.
Do we need to pay to execute a smart contract?
The execution of smart contracts requires computational power, electricity, and storage. The person working on the contract would need to be paid in some form.
This is where the concept of Gas comes in a frame that is paid to the person executing the smart contract. The Gas is then converted to ether (or Ethereum) to keep the cycle working.
Origin of Ethereum
Launched in 2015 by a group of blockchain enthusiasts, Ether (or Ethereum) is now widely accepted as a form of payment by various online merchants.
Vitalik Buterin, also regarded as the world’s youngest crypto billionaire, is the company’s CEO and is also credited with originating the Ethereum concept. Joe Lubin, the founder of Consensys, a blockchain applications developer that uses the Ethereum network, is also regarded as a co-founder of Ethereum.
Ethereum is regarded as the second-largest cryptocurrency by value after Bitcoin with a market cap of $300 billion by the mid of June 2021.
Projects in Ethereum
The use of smart contracts made a long road for Ethereum to explore its applicability in every field. Even if you look at your daily routine, you will find various cases where decentralized applications of Ethereum could have lead to a better environment.
Decentralization is the process of transferring control and decision-making power to a decentralized network. With no middlemen (thanks to smart contracts) and no points of failure, we will look at some of the use cases of Ethereum with the potential to change the industry standards.
With the increasing vulnerabilities of the hacks on various platforms, securing the identity was just a mere lie. Even if creating an identity on social media platforms, you were never in control as they are all centralized entities.
uPort, which works on Ethereum, provides decentralized identity management to have control of your data. Forget about hacks or leaked information, with no centralized server your identity is in safe hands.
Have you ever thought of lending your computer storage or power to a stranger?
Take this similar to Uber where you can list your car for making some extra bucks renting out your car. Don’t let your old computer sit in your storeroom, use it for your benefit.
Looking at the central exchanges for trading in fiat currencies, the trading in cryptocurrency needs to be built on a decentralized platform for users.
Uniswap, a decentralized exchange protocol, is built on Ethereum for easy trading without the use of any intermediaries. 1inch also works on the same lieu for easy trades.
While there are centralized platforms as well for trading (such as Binance), people can opt-in for exchanges based on their utility.
Even in 2021, there are people who do not have access to banks or are not entitled to loans on credit scores. With DeFi in the frame, people can have decentralized, permissionless, and transparent financial services available to them.
Aave, which is built on Ethereum, is a platform that allows users to borrow or lend a wide range of digital assets. This helps both parties for easy transactions with lower fees.
NFT (Non-Fungible Tokens) is a unit of data stored on the blockchain certifying a digital asset to be unique. Creators across the world can launch their artwork or song albums and distribute them to people in the form of tokens.
Zora, built on Ethereum, provides a marketplace to buy NFT in exchange for cryptocurrencies and provides value to the work curated by creators.
Is Ethereum the future?
Ethereum was the first project in the field of blockchain technology to explore its use beyond cryptocurrency. It would be wrong of me to say a technology that is perfect, it is only limited to the brainers sitting across the world and trying to fork and make their way.
In 2016, $60 million worth of Ether (or Ethereum) was stolen by hackers which were raised for a project called The DAO. This even led to a negative impact on DAO (Decentralized Autonomous Organizations).
The value of Ethereum or any other cryptocurrency is volatile (fluctuates at every second). In the recent downslide of May 2021, Ethereum slipped down by 40% reducing the market cap to a larger extent.
Another reason poses a risk to energy consumption and depleting fossil fuels. Cryptocurrency mining in general requires a vast amount of energy to validate transactions. We need to look at cleaner sources of energy for the process of transactions.
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