If you’re reading this article, you may have heard of Ethereum several times over the past few years. That’s because ETH has become the second-largest cryptocurrency in the world, second only to Bitcoin.
Many consider Ethereum to be a revolutionary innovation, not just a cryptocurrency or decentralized protocol. Whether or not this is true can only be understood by digging deeper into the Ethereum blockchain.
What Is Ethereum?
Ethereum is a decentralized protocol built on the blockchain. What this means is that Ethereum can be used to make other projects on top of it, which makes it a “layer 1 solution”.
In fact, Ethereum is the building block of many Web3 projects like Chainlink, Decentraland, Uniswap, Polygon, and others. There’s more - Ethereum’s native currency, ETH or ether, can be used to trade or transact.
These reasons, among other things, have meant that Ethereum’s price has also skyrocketed ever since it debuted in 2015. Above all, ETH negates the need for a traditional intermediary like a bank.
What Is Ethereum Used For?
So far, we’ve discussed the basic use cases of Ethereum as a platform and a currency. It’s safe to say that it was just a condensed version of the true real-world ways in which Ethereum is used.
1. dApps
The Ethereum blockchain allows users to create decentralized apps or dApps on top of it. Think of it as a base for innovation on Web3. You can also consult a Cube Wealth coach or download a Cube Wealth application.
2. Smart Contracts
A smart contract is a programmable agreement that runs when certain pre-set conditions are met. They’re stored on the blockchain and are automated.
Smart contracts have become synonymous with Ethereum and are known to be fundamental building blocks of the ETH blockchain.
3. Trade
ETH, which derives its value from speculation, can be bought and sold on a cryptocurrency exchange. The price of Ethereum crossed $4600 towards the end of 2021 but is currently trading at $1,173.71.
4. Transact
Many popular brands like Shopify, Lowe’s, and others accept cryptocurrencies like ETH as payment. ETH can also be sent and received like cash using a crypto wallet.
How Is New Ethereum Created?
The Ethereum protocol creates new ETH whenever a new block is created on the blockchain platform. While users can’t mint ETH, they can create new blocks using a process known as crypto mining.
Unlike Bitcoin, there’s no limit on the total number of ETH that can be minted over time. However, there is a limit on the annual issuance of ETH. There are 118.96 million ETH on the ledger as of writing this blog. You can also consult a Cube Wealth coach or download a Cube Wealth application.
Is Ethereum A Good Investment?
Ethereum is a diverse protocol that’s the bedrock of hundreds of crypto and NFT projects. In fact, it wouldn’t be an understatement to say that it has become one of the most important pillars of Web3.
This has been reflected in Ethereum's price which has surged from $7.82 in 2017 to $1,173.71 in 2022. That said, cryptocurrencies across the globe are in a period of scrutiny, decay, and volatility.
Thus, whether or not Ethereum is a good investment depends on how you view the pros & cons of the cryptocurrency. It’s best to do your own research thoroughly before making any decision.
FAQs
1. Is Ethereum's blockchain public or private?
Ans. Ethereum's blockchain is public, meaning anyone can participate, view, and interact with the blockchain. Private blockchains are typically used for specific enterprise applications.
2. What is gas in Ethereum?
Ans. Gas is a unit of measurement for the computational work required to process transactions and smart contracts on the Ethereum network. Users pay gas fees in Ether to incentivize miners to include their transactions in blocks.
3. What is the difference between Ethereum and Bitcoin?
Ans. While both are cryptocurrencies, Bitcoin primarily serves as digital money, while Ethereum is a platform for building decentralized applications and smart contracts. Ethereum has a more extensive range of use cases beyond being a digital currency.
4. How can I keep my Ether safe?
Ans. Ether can be kept in digital currency wallets. Software wallets (available online, on desktops, or on mobile devices) and hardware wallets (physical devices) are the two primary categories of wallets. Hardware wallets are thought to be safer.
Conclusion
In conclusion, Ethereum is a groundbreaking and transformative blockchain platform that has revolutionized the world of decentralized applications and smart contracts. Introduced by Vitalik Buterin in 2015, Ethereum extends beyond being merely a cryptocurrency and serves as a robust infrastructure for creating and deploying a wide range of decentralized applications. Its innovative use of smart contracts enables self-executing, trustless agreements, opening the door to countless possibilities for businesses, developers, and individuals.
Other Posts You May Like:
