Understanding Ethereum and its surging popularity
Ethereum is a top cryptocurrency of all the blockchains and cryptocurrencies in the market. And experts predict its popularity will only grow in 2022. Several reasons explain Ethereum’s increasing popularity, such as its ability to work on smart contracts, DeFi, apps, and new tools.
All the critical and innovative aspects of the blockchain industry revolve around Ethereum. And this isn’t surprising since its features are promising. Ethereum isn’t built to be just a store of wealth or a medium of trade. It goes far beyond that, also being a decentralized computer network.
Let’s take an in-depth look at Ethereum and its increasing popularity.
Table of Contents
What is Ethereum?
Ethereum is one of the numerous cryptocurrencies that have emerged over the past years. Being the brainchild of eight co-founders, Ethereum was developed in 2015. While Ethereum is the platform’s name, the singular unit is called ether. Ethereum operates on a distributed ledger – or a decentralized computer network – also known as a blockchain. The ledger manages and keeps a record of the currency. In other words, you can compare it with a running receipt of all the transactions that have occurred in the cryptocurrency. Computers in the respective network check the transactions to ensure the data’s integrity.
This decentralized network makes Ethereum very appealing, as users don’t need an intermediary – like a bank – to exchange money, which means the currency is almost autonomous. What’s more, the transactions users make on Ethereum are nearly anonymous – even if they are publicly shown on the blockchain. While currency is the term used to refer to the whole cryptocurrency field, it may be more helpful to consider it a token that you can spend for a specific purpose. For instance, Ethereum enables functions such as buying and selling goods and sending money. But it goes beyond these features, forming the basis for several apps and smart contracts.
Even if ETH price experienced continuous fluctuations throughout its evolution, the network has still managed to progress and become the second-largest crypto in the market. Ethereum price has appreciated rapidly in the past few months compared to other cryptocurrencies.
What functions does Ethereum offer?
Ethereum powers several applications that offer multiple functions, such as:
- Smart contracts. Smart contracts are some sort of permission-less app that executes when the conditions of the respective contract are met.
- Decentralized finance. Using Ethereum allows some people to avoid centralized control over how they manage cash and other assets.
- Non-fungible tokens. Ethereum can power these tokens and enable an artist to sell their pieces directly to buyers through smart contracts.
- Currency. A crypto wallet allows you to send or get ether. Supposing the digital currency is an acceptable payment method, you can also pay for certain services and goods. Decentralized apps/ dApps. Ethereum powers online apps that enable users to invest, play games, track investment portfolios, send money, follow social media, etc.
Why is Ethereum so popular?
Ethereum stands out due to its unique features and benefits it offers. Here are some of the most popular factors that lead to Ethereum’s surging popularity:
- Broad functionality. Ethereum doesn’t only facilitate cryptocurrency transactions. Users can also enjoy other platform features – for instance, it allows developers to create their own apps or services. This enhanced functionality makes Ethereum more appealing to digital creators than other platforms.
- Vast, trustworthy network. Cryptocurrencies can be risky, as they are very volatile. For this reason, investors choose platforms that have proved themselves to be stable and successful. Doing this allows them to lower the risks that come with cryptocurrency. Ethereum meets investors’ needs, proving its stability multiple times.
- Ongoing progress. Ethereum was designed from the very beginning as a platform that offers solutions to the existing issues in the fiduciary currency market. Accordingly, Ethereum can only progress in the future since developers are always looking for ways to enhance the platform. Due to its popularity, Ethereum tends to be the favored blockchain network for exciting and new decentralized apps.
- No need for intermediaries. You cannot generally proceed with a financial transaction without dealing with banks. Similarly, you need lawyers to write and interpret a contract. But with Ethereum’s decentralized network, you no longer need third-party intermediaries for these things.
Expect the best from Ethereum 2.0
Ethereum 2.0 is the latest update to the Ethereum platform, which is predicted to happen this summer. The significant primary change with this upgraded version is that crypto will move from a proof of work to a proof of stake mechanism. This will eliminate the necessity of miners who run validations on costly crypto mining equipment. Miners will no longer need to verify transactions, as Ethereum will use stakes’ owners to this end.
The validators can earn rewards by staking their currency. However, stakers should validate transactions that conform to Ethereum’s rules – otherwise, they could quickly lose their investment. Smaller investors can also engage in the staking system and get rewards if they pledge coins with a validator.
Use Cases of Ethereum
Besides its primary features, Ethereum can also solve issues such as identity verification. Nowadays, governments depend on identity proofs like Social Security Numbers or Passports. But with Ethereum, it’s easy to digitize an identity, and thus, government officials reduce paperwork, making the process secure and more seamless.
The pandemic has shown the lacunae that exist in the healthcare system globally and also in infrastructure. Ethereum’s health apps can solve critical issues in developing new vaccines for skin viral outbreaks that may occur in the future. Tools can connect the healthcare system worldwide and help predict pandemics and healthcare crises before they even happen.
Ethereum also benefits the gaming industry. Nowadays, gamers spend several hours collecting digital coins without significant value outside the game world. But Ethereum will progress to focus on games where crypto becomes recognized-in-game tokens. This translates into the development of virtual economies with real value and cryptocurrencies that can be traded within the game and outside it. This will have a tremendous impact on gamers, validating both their effort and time.