As the world heads into an era of the digital revolution, people’s interest in crypto is skyrocketing. Investments in Bitcoin, Ethereum, and other cryptocurrencies continue to spiral every year.
From financial institutions to retail investors, everyone wants to be a part of the decentralized digital landscape. This adoption of cryptocurrency by the financial industry and the wider public has largely been driven by rapid price rises in recent years. But also, cryptocurrencies like Ethereum have expanded their uses from trading Ethereum to hosting a diverse library of digital applications that are built on its platform.
Unlike Bitcoin and many other cryptocurrencies, Ethereum was not created only to support its digital token, ether. Ethereum has always positioned itself as an ‘open internet’ that powers thousands of decentralized applications (dApp) using blockchain technology. It has created a booming economy of decentralized finance (DeFi) without any financial intermediaries like banks, exchanges, or brokerages.
When Ethereum was first launched in 2015, all you could do was transfer ether from one Ethereum account to another. Here’s what you can do today:
Buy, Sell, and Trade Ether
Ether (ETH) is the native token of Ethereum. It is a peer-to-peer cryptocurrency that runs the Ethereum network. You can use ether to create smart contracts, build decentralized applications, and make regular payments. It works like other cryptocurrencies to receive funds and pay someone in real-time. You can also swap it with Bitcoin, stablecoins, and other cryptocurrencies.
Ether can also be used to pay for “gas”, which refers to the fee required to execute a contract or transaction on the platform. It is the pricing value of all transactions conducted on Ethereum. You can also earn interest on ether and other tokens supported by Ethereum.
Smart Contracts
Ethereum also facilitates smart contracts; a transaction protocol that automates the execution of an agreement when predetermined conditions are met. Smart contacts run on blockchain and do not require the involvement of an intermediary. You can use these contracts to exchange assets, including money, money, property, or digital assets.
Smart contracts are immutable and all transactions executed on them are registered permanently. While you can modify the contract in the future, you cannot edit it. The transactions conducted on the original contract will not be altered.
Decentralized Applications (dApps)
Ethereum powers a broad array of decentralized applications. All decentralized applications have a backing code that runs on a decentralized peer-to-peer network like Ethereum. The primary function of these applications is to support financial services using ether or other Ethereum-based tokens. These applications facilitate lending, private payments, borrowing, and earning interest without requiring your personal data. Ethereum supports applications of many categories, including token swaps, trading and prediction markets, crowdfunding, and insurance among others.
Real-World Applications
Ethereum supports decentralized autonomous organizations that are digital organizations that work in a democratic fashion without any hierarchical management. Due to this democratic functioning manner, many real-world applications are adopting Ethereum, such as voting systems and banking systems. Voting systems use Ethereum to publicly display polls and ensure a fair process without the involvement of any intermediary.
Banking systems also use Ethereum to prevent hackers from gaining authorized access to the database. Many banks use Ethereum to securely transfer remittances and payments. Similarly, Ethereum can also be used in shipping to track cargo and prevent misplacement of goods. The platform can provide the provenance and tracking framework for assets required in the supply chain.
Featured image: Unsplash (DrawKit Illustrations).
