Less than three years ago, a new currency emerged, earning a distinctive place within the crypto world. Ethereum rushed to the market with cryptocurrencies like a hurricane, and after two years left behind all the other cryptocurrencies except Bitcoin. In the following lines, we discuss what Ethereum is, what is revolutionary, and why it is very likely to keep its price in the coming years.
What is Ethereum different about?
While the market was dominated by Bitcoin and its copies, which wanted to improve its main features of transferring and holding value, Ethereum came up with something completely unique and new. This new invention was smart contracts.
Dr. Gavin Wood, a leading developer of Ethereum, said in one of his lectures that when they built the basic version of Ethereum, the question suddenly arose as to what they actually built and what they could do. However, Wood further explained that Ethereum is actually a decentralized computer (on the Ethereum blockchain), which is neither very good nor too fast. On the other hand, this computer has a global character, can not be hacked, can not be shut down, can not be censored, and will be wherever the internet is. Thanks to these features, Ethereum can create smart contracts that have forever changed the world of cryptocurrencies (and will soon change the world of the Internet as well as the real world).
Ethereum Smart Contracts
Under the term Smart Contract, you can imagine a classic contract between two or more parties. It’s a specific computer code that’s built on the Ethereum blockchain. For an idea, it is possible to imagine such a smart contract on the example of a beverage dispenser. Such a slot machine has a simple code that is automatically executed after a sufficient number of coins has been deposited, and the rest returns after the recalculation. No contract, no operator, only automatic code execution. Very similar to Ethereum, with the exception that smart contracts are not tied to one slot, but thanks to the global nature, it is possible to do it everywhere. Of course, unlike the beverage dispenser, smart contracts on Ethereum are much more editable, and the open-source approach allows you to program your own smart contract as needed.
Example from practice
You can probably imagine what any such technology can mean for the real world. From the following example, we are still sharing a significantly higher rate of cryptocurrency adoption. Imagine you want to sell a car. You no longer have to draw up complicated contracts, but you can use the created smart contract set the price of the car and when to address smart contract by another user loads the required number of Ethereum, and the contract automatically and Ethereum blockchain a record that already owned the car new landlord, and Ethereum is the required amount.
Smart contracts are modular, so it’s possible to set up a wealth of conditions. Smart contracts can be attended by more people, they can be time-consuming, so if your car does not sell in the month, the smart contract can end itself. All this will happen without any additional interference and everything will be visible on the blockchain.
We already know that Ethereum is a decentralized computer and has its own blockchain, which is the basis for understanding the following lines. The Ethereum blockchain has the ability to create ERC 20 tokens that behave very similarly to Ether (the currency of Ethereum blockchain). ERC20 tokens can be created thanks to the existence of smart contracts. Such a contract takes care of creating the tokens, their transactions, and tracking their numbers.
The Ethereum Blockchain can create a custom contract, which then provides token functionality, but the community has proposed a standard that was later used to be the ERC20 tokens. The reason was that new tokens are very easy to implement because they are very similar (for example, in a title or a shortcut), and this standard has managed to prevent unnecessary errors in smart contracts that are dangerous to token users.
With the creation of ERCs 20 tokens, something that we now know as ICO mania is emerging. The simple creation of new tokens has essentially created a new way of crowd-funding, and it is called ICO. The name is derived from the IPO (Initial public offer). ICO then means an initial coin. Newly emerging and existing companies began to create their own tokens and offer them to the public for Ether, which made it incredibly easier to earn money for project development, and users who buy a newly created token in ICO give the opportunity for somewhat fabulous profits. For example, we can look at the OmiseGO, which is an ERC20 token and has gained 4829% of its ICO to date. ERC20 tokens include, for example, TRON or EOS (both of these cryptocurrencies now move from ERC 20 tokens to their own blockchain), which currently has a total market value of approximately $ 13 billion. The number of traded ERCs of 20 tokens has exceeded 500, with a total of over 80,000.
Ethereum also allows the creation of decentralized applications. Many of you know CryptoKitties, an application that has overwhelmed the entire Ethereum network with its popularity. The principle is simple. For Ether, you are buying crypto kitties that are written on a blockchain and are so inconceivably yours. Then you can cross or sell them. The most expensive crypto kitty was sold at an incredible $ 114,000. Decentralized applications are not just virtual games and collectors’ items, but also decentralized exchanges such as IDEX and Bancor.
The price of the Ethereum
Ethereum, unlike most cryptocurrencies, has a clear fundamental value that is based on a few basic points in the unstable environment of ever-evolving and dying cryptomas. Ethereum was the first in its field of expertise, and like Bitcoin has benefited from it and will continue to benefit from it for some time.
The development of Ethereum involves a very high number of developers, led by a personality such as Vitalik Buterin. One of the most important things, however, is that every time an ERC 20 token is transferred, it is necessary to pay a fee in Ether, and thanks to the ever-increasing number of tokens, Ethereum may not soon lose value because it is simply needed. The same is true for the number of decentralized applications that use Ether as payment and at a faster pace. So anyone who wants to buy a crypto kittie pays her at ETH. Anyone who wants to change Bancore tokens will also pay a fee in ETH. And it certainly does not seem that Ethereum would lose its breath. On the contrary.
Thanks to all these facts, Ethereum has a true value that at least lasts for the medium term. And as Steve Wozniak said, Ethereum has a chance to become a new Apple.