Ethereum is about to explode! Get ready… or get left behind in the dust!
Ethereum is one of the most exciting and promising cryptocurrencies out there, but many people aren’t sure what it’s all about or why they should pay attention to it. If you’re interested in cryptocurrency, but haven’t yet looked into Ethereum, this guide will give you everything you need to know about what it really means, how you can use it, and why this technology isn’t going away anytime soon. Read on to learn more!
What is Ethereum?
Ethereum, (ether), is a blockchain-based platform for applications that run exactly as programmed without any chance of fraud, censorship or third-party interference. In short, Ethereum is an open software platform based on blockchain technology that enables developers to build and deploy decentralized applications. These apps run on a custom-built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property. This enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have not been invented yet, all without a middleman or counterparty risk. The project was bootstrapped via an ether presale in August 2014 by fans all around the world.
It is developed by the Ethereum Foundation, a Swiss non-profit, with contributions from great minds across the globe. Ether is a necessary element — a fuel — for operating the distributed application platform Ethereum. It is a form of payment made by clients to servers that host services inside Ethereum such as smart contracts. Ether is also used to pay transaction fees and computational services on their network. You might be thinking: why would anyone want it? That’s where I come in…
What kind of apps can you build with Ethereum?
Ethereum enables a wide range of new apps that simply wouldn’t be possible with bitcoin. For example, Ethereum-based tokens can serve as programmable shares, digital assets whose value can be automatically adjusted by distributed consensus-based on pre-defined rules. We’re still in the early days of cryptocurrency and blockchain technology. What kind of apps will we see in 5 years? 10 years? Ethereum 2.0? The future has yet to be written but it’s looking very bright for Ethereum and its blockchain platform… which means now might be a good time to get involved.
How does it compare to Bitcoin and Blockchain?
First off, Bitcoin’s dominance isn’t likely to hold if Ethereum keeps up its current momentum. Second, some believe Ethereum will be better positioned for real-world use because of a few key advantages it has over its rival. First, Ethereum can handle more transactions per second than Bitcoin. The current rate is 15 transactions per second (TPS), but Vitalik Buterin, Ethereum’s founder and leader, recently claimed that an upgrade called sharding would allow it to process 1 million TPS in three years—compared with just seven transactions per second on bitcoin today.
Second, Ethereum’s platform is open-source, meaning developers can build applications on top of it without paying a fee. This could lead to widespread adoption in businesses looking for enterprise blockchain solutions. Third, unlike bitcoin mining, which only rewards miners who solve complex mathematical problems with new bitcoins, ether mining rewards people who contribute computing power to run applications and processes using Ether tokens. This could make Ether tokens more attractive as an investment tool since they have intrinsic value due to their utility within Ethereum’s network as well as their potential future value as money when Ethereum 2.0 launches in 2021 or 2022. Fourth, Ether tokens are used primarily within applications built on top of Ethereum rather than being used as currency like bitcoins are today.
Why does Ether have value?
There are many reasons for Ether’s price increase, but one of them certainly has been Ethereum 2.0. The hard fork set for Ethereum has been called a revolution by Vitalik Buterin himself, as it will make ETH far more scalable and efficient. This hard fork may propel ETH well past its 2018 high of $1,400. But what do we know about it? This October 16th Hard Fork looks like it will bring in a slew of changes and improvements that are bound to make investors happy.
Chief among these changes is going to be an increase in block size from 1 MB to 32 MB, which will increase network capacity while also allowing for quicker transaction speeds throughout Ethereum. In addition, users can expect a reduction in gas fees after October 16th. This means that users will be able to execute transactions faster and cheaper than before. In fact, according to developers involved with Ethereum 2.0 (Serenity), some transactions could even be free! Developers have suggested that once ETH hits 100% adoption on Serenity, some transactions could be free or at least near-free. And finally, there’s Casper FFG—the Friendly Finality Gadget—which is another big part of Ethereum 2.0.
The tokens and how they are distributed
The price of ether tokens has historically been very volatile. They’ve gained and lost as much as 6% in a single day. Its rise is tied to multiple factors. One major reason is that Ethereum’s blockchain, which records transactions and other data, continues to be popular with developers looking for ways to use blockchain technology for their own projects. There are also signs that large companies are preparing for Ethereum’s ascendance: Microsoft recently created an Ethereum-based virtual machine on its Azure cloud service, while firms like Toyota have used Ethereum’s blockchain platform for pilot projects such as tracking digital assets across different parts of a supply chain.
And JPMorgan Chase & Co. (JPM) CEO Jamie Dimon said he regrets calling bitcoin a fraud last year, even though he remains sceptical of cryptocurrencies overall. Meanwhile, some investors who missed out on bitcoin’s early days have poured money into the ether instead—hoping it can become another lucrative investment vehicle. People who didn’t buy [bitcoin] at $1 are buying Ethereum at $300, says Ari Paul, co-founder of BlockTower Capital LLC., which runs cryptocurrency funds. He adds that he expects interest in Ethereum to continue growing because it offers something bitcoin doesn’t: smart contracts or scripts that automatically execute when certain conditions are met.
Smart contracts and legal implications
Ethereum isn’t a game-changer just because it’s going to make life easier for those looking to launch ICOs. Ethereum allows developers to build smart contracts, which serve as digital agreements that can automatically execute when certain conditions are met.
This has huge implications for anything from real estate (the blockchain can verify property ownership) and insurance (payouts get sent immediately after an event occurs) to securities trading (trades get automatically executed). And, since these agreements operate on an open blockchain, anyone who cares about transparency in these spaces should be taking notice of Ethereum. It could be a big deal. The Ethereum price will explode soon.
The future of ETH/USD and other metrics
Ethereum’s rise in popularity has been meteoric; it’s currently at #4, after bitcoin, Ethereum’s price will explode, and ripple. That rise is despite slower transaction times than its competitors (it takes about 30 seconds for a transaction on Ethereum) and not being as user-friendly (transactions are made with ether, which isn’t as easy to obtain as bitcoin). However, other metrics point to Ethereum as having plenty of room for growth: according to CoinDesk, it has around 14% of bitcoin’s market cap ($42bn vs $226bn) while it processes significantly more transactions per day. Even Ethereum co-founder Joe Lubin stated earlier in January that he sees a near-term explosion of Ethereum usage coming.
The recent Byzantium hard fork was meant to address some of these issues by reducing block rewards from 5 ETH down to 3 ETH and reducing block time from 15s down to 12s, making for faster transaction times. The changes were met with mixed reactions from users but overall seem positive so far—the price went up immediately following them. So where does all of that leave us? Well, Ethereum may be poised for an explosion… but if you’re thinking about investing in it now you’d better do your homework first.