Most people know Ethereum as the king of altcoins and the only crypto to ever pose a threat to Bitcoin’s supremacy. As far as cryptocurrencies go, Ethereum is one of the digital assets that enjoy great popularity and acceptance worldwide. However, unlike most of its peers – or, better said, competitors – Ethereum is much more than just another digital coin in the stack. Its use cases go far beyond those of virtual money, giving it a huge advantage over other crypto projects and causing confusion among crypto enthusiasts who are unfamiliar with its technology.
Everyone seems to be excited about crypto and blockchain technology for one reason or another. Digital assets like Ethereum offer a great alternative to fiat currencies, being fully decentralized, extremely safe, and ensuring protection against inflation, among other benefits. But what most people want to know is what you can do with them in real life and how these innovations can be put to good use.
In the case of Ethereum, you’ll be amazed at how many answers you’ll get to these questions. If you’re on your way to becoming crypto-savvy and want to learn more about Ethereum and its applications, there’s much to talk about, so let’s get down to business.
Ethereum vs. Ether
First, we have to get things straight about Ethereum, and its capabilities are so diverse compared to other cryptos. That’s because Ethereum is not just a cryptocurrency; it’s also a very popular and highly efficient blockchain-based platform that enables an entire host of applications that most people are unaware of.
In fact, Ethereum is not the crypto everyone is so hyped up about. That’s Ether (ETH), the native cryptocurrency underpinned by the Ethereum blockchain. But since ETH is the most popular of its applications, the two terms have come to define the same thing, although technically, that’s not correct. Therefore, Ethereum can do a lot more than other crypto projects, being dubbed as a world computer, especially with the upcoming Ethereum 2.0 upgrade.
Method of payment
The most obvious use case of Ethereum, and the one that’s most famous for, is serving as a payment method. ETH, the coin that fuels the Ethereum network, can be used like any other digital currency for transactional purposes. The token was designed to pay for transactions on the Ethereum network and for gas fees required to benefit from any services the platform provides.
Just like Bitcoin, Ethereum can be used to buy or sell a wide variety of products and services, being the second most popular and valuable crypto by market capitalization. In this respect, the two currencies are very similar. As one of the most commonly used altcoins on the market, ETH has caught the attention of many traders, therefore turning into a very lucrative investment opportunity. To include ETH in your investment portfolio, you should check Ethereum price USD on exchange platforms and keep an eye on price swings to determine its performance.
Smart contracts
One of the greatest things about Ethereum is its smart contract functionality which has changed how people do business. Unlike traditional contracts, smart contracts employ computer programs stored on a blockchain to automatically enable transactions based on predetermined terms and conditions that the buyer and the seller have agreed upon. People can use these smart contracts to exchange all sorts of assets, from money and real estate to digital rights or other types of data and services.
The most interesting feature of smart contacts is immutability. This means you cannot make any changes to the contract once it has been executed, eliminating the risk of data tampering, which is a major point of concern for traditional contracts. Any actions that you may perform afterward, like subsequent transactions, are going to be stored on top of the initial agreement. So, future additions will not alter in any way the original elements of the contract. This ensures enhanced transparency and reliability for all parties involved.
Decentralized applications (Dapps)
Given that Ethereum is, in fact, a blockchain platform, developers can use it to build a wide variety of applications. While most people focus on the network’s capabilities to power decentralized financial applications, also known as DeFi, like smart contract-powered loans or exchanges, the possibilities go far beyond these examples being virtually limitless.
The biggest difference between traditional applications and decentralized applications is that the latter ensures direct interaction between users and application providers since there’s no central entity standing in the way. Therefore, Ethereum completely removes developers’ reliance on central power, ensuring greater convenience and boosting transparency. To make things even smoother for businesses, Ethereum also offers special development services in this respect.
Decentralized autonomous organizations (DAOs)
A decentralized autonomous organization, also known as DAO, is an innovative type of digital organization whose structure lacks a central governing authority. All the organization members work together to achieve their common goals democratically. So, these are member-powered structures where everybody has a say in decision-making.
As you can see, decentralization is the operative word for all Ethereum’s applications, and DAOs make no exception. The DAOs built on the Ethereum blockchain rely on smart contracts to ensure a fair voting process before any action is taken. To partake in the governance of a DAO, one has to invest funds that will grant them tokens representing their part of the DAO’s shares.
Final thoughts
Ethereum provides a very complex and powerful technology that many people and organizations can benefit from, which has contributed to its rising popularity over the years. Also, the platform has recently gone through its most important update, the Merge, which is expected to expand its capabilities further, so the network’s use cases are likely to increase in the near future.
