Ethereum has been fast rising in the cryptocurrency space.
The coin has evolved to become the second largest virtual currency after Bitcoin; it is also believed that Ethereum has spurred the emergence of a number of other coins.
Founded in 2015, Ethereum value has risen over time having hit an all-time high of GBP 1,071 in January 2018. And just like fiat currencies, its price fluctuates from time to time; here’s the latest ETH GBP price.
To put all these into context, 2017 saw the prices of nearly all cryptocurrencies grow in more than triple digits – for instance, Ethereum started off at a price of $10 back in 2017 and by the following year in January, its value had grown by about 13,900%.
Perhaps this is the reason why the coin remains one of the most traded cryptocurrencies worldwide today. However, for you trade any currency profitably, you’ll still the basic understanding of how to identify the best currency trading pairs.
In this guide, you will learn what Ethereum is, what smart contracts are, and what Ethereum can be used for.
That said, let’s get started!
What is Ethereum for Beginners?
In the simple terms, Ethereum is an open source application operating on the blockchain technology and permits developers to create and deploy decentralized software applications.
How different is Ethereum from Bitcoin?
First of all, Ethereum is similar to Bitcoin is the sense that they are both distributed public blockchain networks. Despite this, there are notable differences between these two coins; but they differ significantly in their capabilities and purpose.
Bitcoin contains a peer-to-peer cash system, a blockchain technology that offers online Bitcoin payments.
Ethereum, on the other hand, is used to run the programming code used by decentralized applications. Unlike Ethereum’s, the Bitcoin blockchain is actively used to keep track of ownership of cryptocurrencies (Bitcoin).
It is also essential to mention that miners in the Ethereum blockchain earn a digital currency called Ether, a currency that powers the Ethereum network.
Other than trading, the Ethereum network also allows users to pay for fees, transactions, and other services using Ether.
What is a Smart Contract?
A smart contract is a computer code that makes it possible for shares, money, and contracts to be exchanged. Smart contracts run on the blockchain network and operate like automated computer applications that execute certain functions when some predetermined conditions are met.
Smart contracts run smoothly on blockchain without much hitches relating to downtime, fraud, third party interference, or censorship.
A lot of block chains have limited functionalities when it comes to code processing – however, Ethereum operates a bit differently. With Ethereum, developers can create pretty much any form of operation; this provides developers a chance to create any form of software application.
What Can Ethereum Be Used For?
As mentioned earlier, with Ethereum, developers can create and deploy decentralized applications. These applications provide specific services such as a peer-to-peer cash system (Bitcoin platform) to its users. The advantage of decentralized applications is that they are not run or manipulated by anyone since they operate on the blockchain network.
Most services offered across the world can be changed from centralized structures to decentralized ones. Think about how much easier things would be if, for example, all loan facilities were to be decentralized. People would have easier access to better services – intermediary services such as voting systems, titling processes, and so much more would be more accessible to users across the world.
Recently, Ethereum created a standard token called ERC20 that can be used to track specific digital assets. At the moment, these tokens can be used as digital collectibles; this means that they can be used as proof of ownership of certain precious digital assets. Currently, a good number of games such as the Overnight Hit use the tech; this is a game where users buy Cryptokitties, then collect and store digital cats.
Another great use of Ethereum is in building Decentralized Autonomous Organizations (DAO); this is an autonomous and a fully decentralized organization that runs on programmed codes developed on the Ethereum blockchain. The code is meant to replace the conventional rules and structures of organizations by getting rid of the centralized way of operating firms.
Everyone who buys tokens becomes a DAO owner; but instead of getting shares or equity ownership, the organization grants its users voting rights. DAO provides a new decentralized business model for both non-profit and commercial organizations.
As a result of the Ethereum Foundation creating the ERC20 token, numerous other cryptocurrencies have been created through the platform. Developers can raise funds using an Initial Coin Offering (ICO) by issuing their own versions of the ERC20 token. In the last two years alone, billions of dollars have been raised using the Ethereum platform.
Final Words
Ethereum is undoubtedly one of the world’s most popular platforms in the crypto space. In fact, Ethereum and Bitcoin are the most traded coin pairs today. The adoption of this digital currency is becoming more and more mainstream as tech talent continues to flourish in the sector. And even as Ethereum hopes to be tomorrow’s distributed world’s network for decentralized applications, we’ll certainly be keeping a keen eye on the platform to witness its impact on the future of digital currencies.
