Ethereum
What is....
Ethereum?
Ethereum much like Bitcoin is a blockchain-based platform that uses this technology to create a distributed ledger. This ledger records all transactions made with its native coin Ether (ETH).
The Ethereum network was created by a group of extremely talented individuals led by now crypto legend Vitalik Buterin. After some debate about where/how to run Ethereum, the developers eventually decided to create their own blockchain for the network. As a result, the Ethereum blockchain was officially launched at the end of July 2015.
Less than 2 weeks later Ethereum was ranked #4 largest crypto by market cap. Accelerating to the #2 largest crypto behind Bitcoin by January 2018, holding this ranking ever since.
What really separated Ethereum from the rest of the pack is that it was not trying to compete directly with Bitcoin at the time. Instead, Ethereum brought an entirely new concept to the table, Smart Contracts.
Smart contracts are an electronic term of agreement similar to the way legally binding contracts of the physical world work. The biggest difference is that a smart contract has the terms of the agreement written directly into its code. In short, this means that if the terms of the agreement are met the contract is executed and both parties receive the agreed-upon result. Alternatively, if the contract becomes void the collateral of the involved parties will be returned to their original owners without needing to go to court or involving a third party.
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it used for?
There are some significant differences between Ethereum and Bitcoin, but the most notable is Ethereum’s use of smart contracts. While smart contracts are commonplace nowadays ETH was the first blockchain to implement this technology, giving it the first-mover advantage. As a result, Ethereum is the home to over 2,800 Decentralized Applications of the overall 3,800 DApps currently operating (DApp Statistics).
If you would like to learn more about DApps be sure to check out some of our other articles, or the resources below.
Decentralized applications (dapps) | ethereum.org
To summarize, ETH is similar to the internet in the sense that it is the foundation for DApps to build upon. It provides the infrastructure to allow many different types of projects to function and work together. Ethereum has been called Digital Oil thanks to its properties that allow entire ecosystems to build upon it.
For more on Smart Contracts: Smart Contracts Definition (investopedia.com)
the long-term potential?
Like Bitcoin, it is extremely difficult to accurately predict where the price of Ethereum will be in the future. Despite this truth, there seem to be three classes of individuals within the crypto space: moon boys, interested speculators, and sophisticated stackers. In this article, we won’t be digging into the specifics of each group, but there is one major similarity, individuals in all 3 groups believe that in the future (timespan differs depending on the group) specific cryptocurrencies will be worth far more than they are today.
As this article focuses specifically on Ethereum I will quickly dive into why I believe ETH will be worth many multiples of its current value in the next 5-10 years. To start Ethereum has an extremely active and dedicated development team working to improve the project. These updates are released periodically with a very important upgrade called, London, arriving on Aug. 5th, 2021.
The London upgrade introduced the EIP-1559 to the Ethereum protocol. EIP-1559 was a huge moment in Ethereum’s history as it introduced fee burning during every transaction. Long story short fee burning removes ETH from the market and puts more pressure on supply helping raise prices.
Lastly, the London upgrade is an important milestone in the roadmap towards Ethereum’s eventual upgrade to ETH 2.0 expected to release sometime in June 2022. This is a highly anticipated event as ETH would move from Proof-Of-Work to a Proof-0f-Stake protocol.
If you are interested in learning more about ETH 2.0 or the differences between POW and POS make sure to stay tuned.