Ethereum came in 2013 as a platform that allows users to write and execute code. The key features of Ethereum are that it will enable you to run “Dapps” or Decentralized Applications. These apps run on a decentralized network of computers around the world. No single entity controls the data or reward pool, making Ethereum a unique development space.
Vitalik Buterin developed the Ethereum platform. He has won many awards based on his research and work in the crypto community. People also call this platform as one of the most successful blockchain-based applications until now.
Ethereum is an open-source blockchain-based distributed computing platform featuring smart contract functionality. Ethereum supports peer-to-peer transactions.
How do they work?
You do not need a central administrator to get information about a contract. Ethereum’s platform allows users to issue and use their cryptocurrencies. It is also known as Ether and its ethers. Some examples include voting blockchain apps, stock market tracking apps and other financial applications.
It provides a decentralized platform. It helps develop and execute smart contracts and applications. They run exactly as programmed without interference from a third party. So, the platform allows users to deploy code as “smart contracts” on blockchain networks. It creates an agreement that computers can execute on the web. And there is end-to-end encryption and utmost transparency.
These applications run exactly as programmed. They run without any possibility of downtime, censorship, fraud or third-party interference. Such apps run on a custom-built blockchain. So, they have a powerful shared global infrastructure that can move value around and represent property ownership.
Such apps back a modified version of the Nakamoto consensus. It is carried out via transaction timestamps with an ICO multi-sign wallet and Proof state transition. They verify the sequence of events in each account and contract. This way, Ethereum allows developers to build and run applications on blockchain technology.
Uses of Ethereum
Some of its key use cases are:
Decentralized finance
Decentralized applications, known as “Defi”, are the most promising real-world use case for Ethereum. It includes smart contract-powered lending, stablecoin minting, and decentralized exchanges.
One notable development in this category is Maker DAO. It has developed a stablecoin (DAI) backed by Ether. It always has a stable exchange value of $1 via advanced Ethereum smart contracts.
Digital identification
We use passports made out of paper that we carry everywhere as and when needed. It’s a hassle and a safety concern. One of the primary reasons we have not yet transitioned to a digital system is that it is difficult for governments to identify people. Verifying the authenticity of an online document is difficult. Hence, we still follow a paper passport.
Until now, Ethereum offers open and transparent data verification, which might pave the way for developing a digital identification system. Companies like Civic saw this potential early. So, they got their hands on working to put it into action and make it a reality.
Tokenizing real-world assets
Many believe that the security token market will become a multi-trillion-dollar market. Ethereum is one of the platforms that helps this revolution.
Security tokens are a blockchain-based representation of real-world assets like equities, securities, precious metals, real estate, etc. In fact, issuers can transfer and transact with them quicker through this platform. They are making it easier than a paper contract.
Blockchain startup Polymath raised $59 million through an initial coin offering. It is developing one of the first compliant technologies to tokenize substantial wealth. On the Ethereum blockchain, it can further tokenize assets and properties. As a result, it is one of the projects pushing asset tokenization as a practical Ethereum use case.
Health-related apps
Ethereum will completely transform the healthcare system. All hospitals globally may hold, access, and communicate patient records through it.
It is a crucial component in designing effective and novel vaccinations. In future, it can be helpful during viral epidemics and prevent them in the first place. You can visit a doctor in Thailand for a check-up while on vacation and a hospital in New York when you travel home. Both will have the same information on you. But it isn’t all. Remember the wearables frenzy from a few years ago? So, whether you like it or not, those devices are here to stay.
Imagine if the data obtained by your smartwatch every day is shared with every hospital around the globe. This way, you can quickly identify patterns in medical illnesses such as heart attacks or strokes. You can have the necessary information before they occur. Ethereum will make this achievable and might even one day save your life.
Infrastructure for security
Because there is no central server for a hacker to target, it is far more challenging to break into a website and steal your personal information. Doesn’t it sound helpful?
Payments
International business is dependent on transactions, and Ethereum will transform them. Smart contracts may indeed be established on Ethereum. It enables you to exchange anything of value completely risk-free.
Instead of a conventional paper agreement, the transaction is recorded in computer code. So, instead of getting a photo from a platform like Shutterstock, imagine purchasing it from the photographer and establishing a contract with them to get the shot. It is enabled via the “If This Then That” (IFTTT) logic entrenched in Ethereum’s infrastructure. For instance, the photo will be downloaded if the buyer deposits funds in an escrow account.
Third-party confidentiality
Do you know which search engine most of the world’s internet users use regularly? It’s the one with a capital “G.” Surprise! The organization collects and sells your personal information to advertisers and marketers and makes millions and millions of dollars yearly.
The blockchain technology used by Ethereum would make data harvesting impossible. It does not make it impossible (nothing is impossible). But it does log every time the search engine analyses your data and makes those logs public. So, if they don’t want their brand image to suffer, large corporations will have to be far more careful with what they do with our data.
Politics
As you are reading this article, it suggests that you are a well-educated individual who’s likely brighter than the common Joe. As a result, you might vote for the political party you believe should govern your nation every few years (depending on where you live).
Although people tell us that we live in a democracy, this would not be the first time that poll results have been manipulated. It is impossible with the Ethereum implementation since no one has total control over the network. Every change is registered and available. As a result, Ethereum provides a more transparent and equitable democracy.
Data storage
Companies like Dropbox and Microsoft store enormous amounts of data on server farms. A server farm is an institution which provides hundreds of servers for data storage. The issue with server farms is that they concentrate a significant part of the company’s storage capacity in a single place. As a result, if the firm faces damages by a natural disaster or a terrorist strike, it may incur significant damages. A decentralized storage facility is a solution.
In that instance, data is not kept in a few server farms in the United States but in hundreds (or even thousands!) of data centres worldwide. Until recently, this has not been achievable due to the significant technological difficulty of constructing a network for rapid data flow. Yet, Ethereum’s blockchain technology will likely solve this problem because it will enable encryption and data transfer between millions of computers.
(ICOs) Initial Coin Offerings
Early-stage start-ups create “tokens” and sell them in exchange for Ether during initial coin offerings (ICOs), sometimes referred to as token sales. These tokens will help in the programme that the start-up is developing. People buy them to use in the application or for other motives.
Bancor, one of the largest Ethereum ICOs, has raised $153 million in less than three hours by selling its BNT token to the public.
Conclusion
Ethereum focuses on future efficiency and innovation. Unless and until the governments discover a method to control cryptocurrencies, they will be the way of the future. Nothing has demonstrated more than the Covid epidemic of how fiat currency is losing favour. Most stores now need card payment.
So, it appears that digital currency will soon be available on the high streets and shopping centres. With the completion of ETH 2 in 2022, Ethereum will be ready for ultra-fast transactions using the proof-of-stake (PoS) protocol. Lower costs and more effective operations also contribute to the Ethereum network’s sustained security.
You can also learn about different cryptocurrencies and their use cases.
