Ethereum simply explained.
Ethereum is currently one of the leading cryptocurrencies. If you're wondering what the difference is between Bitcoin and Ethereum, you've come to the right place. In addition to the rising Ethereum price, ETH also has the potential to revolutionize the financial sector and the way we use data and applications on the internet. Here's everything you need to know before you buy Ethereum.
Ethereum is a platform for decentralized applications (dApps) based on blockchain technology. It was developed in 2015 by Vitalik Buterin. In contrast to Bitcoin, which is mainly used as a digital means of payment, Ethereum is a platform for the development of decentralized applications. It allows developers to create and run their own applications without having to rely on a central authority.
Ethereum is based on an innovative blockchain technology, similar to Bitcoin, but offers key advantages and differences that make it the preferred choice for smart contracts and decentralized applications (dApps). Ethereum enables developers to create decentralized applications (dApps) and self-executing contracts - so-called smart contracts. This allows complex business processes and contracts to be mapped securely and transparently on the blockchain. The Ethereum ecosystem has its own coin called Ether (ETH), which serves as a means of payment for the decentralized dApps and smart contracts on the platform. ETH is traded globally on various cryptocurrency exchanges. Since ETH solves problems in the real world and can be used there, the value of Ethereum is not based purely on speculation. However, the value of ETH is still measured in traditional currencies. The Ethereum exchange rate in Swiss francs (CHF) reflects the current value of the cryptocurrency on the Swiss market. Although Ethereum prices worldwide can also be tracked in euros and dollars, ETH is still predominantly valued in US dollars (USD).
Smart contracts are contracts that are executed automatically as soon as the terms of the contract are fulfilled. They have the potential to revolutionize the way we conclude contracts and carry out transactions .
For example, an artist wants to sell his artwork using the blockchain and wants to ensure that he receives a fair payment. He can create an Ethereum smart contract that defines the selling price of the artwork and specifies how payment should be made. The smart contract can also be programmed to automatically return a certain percentage of the sales proceeds to the artist if the artwork is sold again later. This represents a revolution in the art market, as artists previously only made a profit on the first sale of an artwork. Artworks often increase in value over time and artists were left empty-handed on subsequent sales. With a smart contract, however, they can earn money on every resale, provided this has been agreed in the contract. For example, the descendants of deceased artists, such as Salvador Dalí or Vincent Van Gogh, could also profit from the resale of the artwork, provided they have access to the private key.
Ethereum is named after the term "ether", which in Greek philosophy refers to an invisible substance that permeates space. The founder of Ethereum, Vitalik Buterin, chose this name to symbolize the fact that Ethereum, as a platform for decentralized applications, forms a bridge between the traditional and the new decentralized world.
✅Decentralized financial transactions: Ethereum enables a variety of decentralized financial applications such as loans, insurance, decentralized exchanges and investment funds. An excellent example of such a decentralized finance application on Ethereum is Uniswap, a platform for trading cryptocurrencies. Uniswap allows users to trade tokens directly from their Ethereum wallet, making it much easier to use and access.
✅Identity management: Thanks to Ethereum, users can verify and own their identity on the blockchain, eliminating the dependency on centralized identity management systems. An outstanding example of identity management on Ethereum is uPort, a Self-Sovereign Identity (SSI) platform. This allows users to manage their identity securely and decentralized on the Ethereum blockchain, setting new standards for security and privacy.
✅Ownership in gaming: Ethereum enables the development of decentralized games that give users full control over their in-game assets and ownership. A notable example of a decentralized game on Ethereum is Axie Infinity. Here, users can breed digital monsters and compete in exciting battles. The special thing about this is that players own their digital monsters and can even trade them on the Ethereum marketplace, which opens up a whole new dimension of gaming and ownership.
✅Transparency in logistics: To reduce fraud and improve transparency in supply chains, Ethereum offers the possibility of enabling a transparent record of all transactions. An outstanding example of this is the company Ambrosus, which has developed a blockchain solution for monitoring food supply chains. By using the Ethereum blockchain, all transactions are recorded to ensure complete traceability from origin to end consumer.
✅Decentralized autonomous organizations (DAOs): The use of Ethereum also extends to the creation of DAOs (decentralized autonomous organizations), which act like businesses and make decisions based on member voting. An exemplary project for this is Aragon, a platform that allows its users to create DAOs. Members can vote and make decisions regarding the direction and management of their decentralized company.
Ethereum is much more than just another cryptocurrency. There are numerous other crypto projects based on the Ethereum platform. Many of these projects benefit from the advantages of smart contracts to develop decentralized applications that give users maximum control and transparency. As a result, Ethereum acts as a fundamental pillar in the broad universe of cryptocurrencies.
Sources and further reading
- Ethereum: ethereum.org
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