While other coins offer similar features, Ethereum has gone beyond the scope of competing platforms. As such, it has become the go-to platform for developers looking to build their next big project. If you’ve heard the term “blockchain”, chances are you’ve seen or even participated in transactions using some kind of cryptocurrency. The blockchain is essentially a distributed ledger that records transactions across multiple computers and secures them via cryptography. One such example is Ethereum (ETH), and its value has risen significantly over the last year
Ethereum Runs Smart Contracts
The Ethereum network processes all kinds of data, including financial applications and agreements. This technology allows you to create your digital currency without having to be a developer. A user can simply specify how much Ether they want to invest in an asset, then choose whether they want to retain ownership (as opposed to lending his funds to another party) or not. For this reason, the Ethereum community calls itself the “decentralized autonomous organization.”
Ethereum’s Decentralized App Store
Ethereum lets users launch apps on its platform. Once launched, these apps become available not only to the person who created them but also everyone else on the Ethereum network. All accounts have access to all the apps on the network regardless of their status as owners or merely lenders.
It can support high volumes of traffic
When people think about cryptocurrencies, most often Bitcoin comes up. But while BTC is ideal for smaller sums of money, Ethereum is better suited for large sums. The main difference between the two currencies is that with ETH, each transaction can process thousands of transactions per second because it uses a different type of mining algorithm than Bitcoin. This makes it suitable for use within the finance industry by banks and other institutional players.
The Ethereum Foundation is based in Switzerland
The Ethereum project was founded in 2013 by Vitalik Buterin. It operates out of a Swiss foundation so that the team can benefit from tax incentives offered by this country. Despite being largely based out of Switzerland, many of the company’s employees work remotely due to differences in time zones.
It supports ERC20 tokens
ERC20 stands for Ethereum Request for Comments 20. These tokens are a way for companies to make sure their investors get back the exact amount they invested in the ICO. When you buy a token during an ICO, it represents ownership of the company. With ERC20 tokens, any exchanges that accept ETH automatically convert it into whatever token you purchased. However, most exchanges require you to do this manually.
It provides a Turing-complete language
For those unfamiliar with programming languages, Turing’s completeness means they allow programmers to mimic human thought. So this type of language does just that – allows anyone to write code. What’s more, there are no limitations on the types of programs you can run because it is capable of running anything a computer can execute.
You can earn interest on loans
Because the Ethereum network offers a place where you can earn interest, it is often used to keep crypto assets like Bitcoin safe. Unlike traditional banks, which charge fees for depositing funds, the Ethereum network doesn’t charge any fees when someone lends you money. Instead, the borrower gets paid in Ether. This is why it is sometimes called an open source bank.
Pros of Using Ethereum
There are many reasons why Ethereum (and other cryptocurrencies) are mostly preferred right now. In fact, there are several benefits to using Ethereum. We list some of them below.
1. Ethereum is transparent
Unlike other centralised systems, every single movement on the Ethereum network is visible. Users will always know where their money came from. That said, it isn’t completely transparent — you don’t have complete visibility into what happens if you send your money to somebody else.
2. Transactions are cheap
One thing that has made Ethereum popular has been its ability to process hundreds of millions of dollars worth of trades without charging any kind of fee. Because of this, people see it as having low transaction costs. They say that compared to the banks, you’ll be able to move more money around the world faster and cheaper.
3. Smart contracts can save a fortune in legal fees
While smart contracts were originally designed to help simplify contracts for businesses, they’ve emerged as something much larger: a potential replacement for lawyers altogether. Since smart contracts cut out the middleman and let business owners exchange value directly, they could effectively reduce the cost of doing business. Lawyers currently spend at least USD 400 million worth of time annually managing and enforcing contract law. By simply using a blockchain network, this cost may be reduced significantly.
4. It doesn’t matter who owns the currency
This point is probably the biggest one. If banks controlled currencies, then governments would have to deal with inflation and deflation while bankers dealt with crisis. In addition, people might not trust each other because we now live in a global economy.
5. It can create almost unstoppable apps
Thanks to smart contracts enabled by the blockchain, developers can build applications that operate independently. While these apps may or may not cause harm, they also cannot be shut down easily. Therefore, decentralization may be the best part of cryptocurrencies. Well, that and the fact that they aren’t centralized.
6. Decentralized networks are secure
Since blockchains are decentralized, hackers can’t access them. Moreover, since everything is recorded on a public database, trust is established through reputation. At the same time, blockchains are highly secure since the information stored in databases can’t be altered.
7. Blockchains make censorship very hard
The truth about how cryptocurrencies work will never change regardless of government pressure. To put it simply, all transactions on the network are recorded on a distributed ledger. As such, censors can’t erase data. That means that companies like Facebook couldn’t delete posts even if they wanted to.
8. No one can cheat
Since everyone sees the same data, it becomes difficult to fake things. Of course, this is true only if enough participants agree to the system. However, many economists believe that blockchains are already efficient enough to fight against cheating.
9. There’s no way to trick someone
With Bitcoin, there was a possibility to get more coins just by sending more electricity. However, thanks to miners securing the network, this approach became pointless when mining difficulty spiked. Thanks to cryptography, there’s no way to trick users into accepting bad transactions automatically.
10. You can own multiple types of crypto assets
Cryptocurrencies are very different from traditional investments. One downside is that most investors need to invest in Bitcoin or Ether (the two largest digital currencies). The good news is that it is possible to buy altcoins too. For example, Litecoin holders can now trade their holdings for Bitcoin or Ether. This allows investors to reap profits everywhere.
11. You’ll always know what you’re spending
Although cryptocurrencies are often associated with shady practices, blockchains allow us to keep track of every transaction. Thanks to transparency, we can always see where our money goes. This lets us decide whether or not to accept certain offers; for instance, if a company wants to pay us in cryptocurrency but we don’t accept it yet.
12. Everyone has equal power
One big problem with centralised systems is that few entities hold all the power. When the internet was first developed, ISPs had tons of control over what content consumers saw. Similarly, search monopolists determine which websites appear on Google searches. With blockchains, however, anyone can participate and contribute to developing new features.
13. Cryptocurrency isn’t controlled by any country
Many people were worried about how cryptocurrencies would affect the economy. Since governments could tightly regulate how money transfers happen, some feared that it might become harder to transfer money around the world. In addition, it wasn’t safe because banks and other financial institutions can freeze our accounts at any time.
However, that doesn’t seem to be a concern for cryptocurrencies anymore. Because there’s no single entity controlling the currency, regulators and bankers don’t have as much influence over its growth.
14. Not subject to inflation
Inflation occurs when prices rise due to supply shortages. Most countries struggle with maintaining stable economies without rising prices. Although this is beneficial for businesses, it hurts regular citizens who want to save money.
The good news is that cryptocurrencies are immune to inflation. Unlike fiat currencies, whose value increases each year, the price of cryptocurrencies remains the same. As long as demand stays high, they will continue receiving new adoption.
15. No need for trusted intermediaries
When transacting online, we usually rely on third-party sites like PayPal to make payments. These companies act as gatekeepers, allowing consumers to send funds to merchants. However, many consumers aren’t satisfied with these services. They feel uncomfortable sharing information and prefer to use platforms that work anonymously.
Conclusion
In conclusion, we must consider that cryptocurrencies are still relatively young. We’ve only seen the tip of the iceberg here: blockchain technology has far more potential applications than just decentralising currency transactions.
