Ethereum is more than a currency
Disclaimer: The following content is for educational purposes only and is not financial advice. I am not a financial advisor.
As humans have evolved, as civilizations have developed, as communities have grown, innovation has followed every step of the way. First, it was the invention of the wheel, then the compass, the telephone, lightbulb, penicillin, computer, smartphone, modern-day car, electric car, and now, it’s Ethereum’s turn to make an impact, change the world, and drive innovation to a level never seen before.
Last month, I published an article explaining some of the misconceptions and jargon in the Bitcoin world. I recently realized that the Ethereum community is filled with similar jargon, complex terminology, and far too many misconceptions. With this in mind, I went ahead and wrote this article to better inform you, the reader, about how Ethereum works, common misconceptions, and the impact the Ethereum Blockchain will have on our lives.
What Is Ethereum? Why Was It Created?
Ethereum’s creator, Vitalik Buterin, had a vision for something more than just a currency. He had a vision to fundamentally change the way we live and operate in our day-to-day lives. Vitalik’s plan for the future still lingers to this day, in fact, it has become more prominent in today’s society than ever before.
Ethereum was not created to challenge existing currencies, but to provide a decentralized framework for applications and smart contracts to operate on distributed ledger technology.
A decentralized application (dApp) is backend code similar to that of a normal application, except, it is decentralized. This means that there is no central server or authority implementing and facilitating the application.
In the latter half of this article, you will find some examples of existing decentralized applications.
Ether was designed to be the payment method for decentralized applications on the Ethereum Blockchain.
Over the past few years, Ethereum’s price has been beating record highs like an upward-moving roller coaster with occasional downturns. Currently, Ethereum is ranked as the world’s second-largest cryptocurrency.
A smart contract is a coded agreement that automatically executes without the need for any kind of central authority or middle man. Decentralized applications are embedded in the logic of a smart contract. Consider a smart contract as the company and a dApp as the product, however, a dApp runs on a decentralized framework, unlike a product or service.
In What Are Smart Contracts? A Breakdown for Beginners, an article published by CoreLedger, some real-world applications for smart contracts are stated:
“A smart contract could be programmed to release funds for someone’s birthday each year. It could also be programmed to release payment once someone confirms receipt of delivered goods.”
With this in mind, we can really appreciate the power of smart contracts and the Ethereum Blockchain.
If this still isn’t enough to impress you, here’s another way an entire industry could be disrupted by dApps:
- Ride-sharing platforms will no longer be needed once there is a dApp that connects drivers and riders, tracks if the ride was successful, and automatically transfers some Ethereum from one party to the other.
Why Are Decentralized Apps Helpful?
According to State of the Dapps, an index of decentralized applications, there are currently over 3,000 decentralized apps running on the Ethereum Blockchain.
Here are some of the benefits provided by dApps:
- Fewer data breaches
- No single point of failure
- Easily scalable
Current Applications Using the Ethereum Blockchain
A great example of how the Ethereum Blockchain is being used in the status quo would be Non-fungible tokens or NFTs. An NFT is a digital asset that is unique and secured on the Ethereum Blockchain. Twitter’s CEO, Jack Dorsey, sold his first-ever tweet as an NFT for $2.9 million on a platform called “Valuables”.
For more on NFTs, check out What are NFTs? by Decentraland.
Another platform I recently discovered is Ethlance. Ethlance allows you to hire someone or work for someone and get paid in Ether.
But why? What incentivizes someone to use this platform over other more centralized platforms?
Straight from the Ethlance homepage, some of the benefits are apparent:
- Ethlance takes no cut or percentage from any freelancer on the platform. “The amount of Ether the employer pays is the amount the freelancer gets.”
- Ethlance has no central authority. It’s completely open to the public.
Now that you understand what Ethereum is and how it works, try to spread your knowledge. Teach someone what you know. Show them. Explain the cryptocurrency hype. Be sure to highlight the difference between Bitcoin and Ethereum. There’s a big difference.
Ethereum is more than a currency.
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Ethereum for Beginners was originally published in DataDrivenInvestor on Medium, where people are continuing the conversation by highlighting and responding to this story.