Guide

What is Ethereum? [Updated 2020]

Ethereum is one of the most valuable cryptocurrencies

Ethereum (ETH) has been growing as one of the most popular blockchain platforms and cryptocurrencies in the world. Indeed, after several years of offering services, it became the second-largest digital asset after Bitcoin (BTC), which is something that must be taken into consideration at the time of evaluating this cryptocurrency. 

In this guide, we will be sharing with you the basic concepts about Ethereum, its main features and how it has the potential to change the entire virtual currency market. 

Read More: Full Guide About What Is Ripple

What is Ethereum?

According to Ethereum.org, Etehreum is going to be the foundation of a new era of internet where companies and users start handling payments on top of it. Moreover, they explain that users can also own their data and applications built using Ethereum would not spy or steal users’ information.

The network was launched back in 2015 with the goal of achieving the aforementioned objectives. Since that moment, Ethereum was only able to grow and reach the second position in the market in terms of market valuation. 

Ethereum works with the ETH virtual currency that can be used as a means of payment, as a store of value or just to speculate with its price. The virtual currency has also been used in many decentralized applications (dApps) and DeFi solutions as collateral. 

In the coming sections, we will be sharing some of the main features of Ethereum and how it is possible to be embraced by companies and firms. 

Decentralized Applications

One of the ways in which Ethereum can be used is by decentralized applications. These dApps can be used as games, wallets, exchanges and many other use cases. These dApps are going to be revolutionary in the future as they will not have to depend on a centralized authority but they will work using Smart Contracts and in a decentralized manner. 

Ethereum is also a synonym of decentralization. The network allows companies, firms and developers to run their own apps that would provide security, efficiency and good quality services to users. 

Some dApps include CryptoKitties, Kyber Netowrk, IDex, Uniswap and many others. 

Smart Contracts

Smart contracts are computer programs that are deployed by firms and developers on top of the Ethereum network and that would execute automatically once specific conditions are met. These conditions are specified in a contract that is written by the developers in charge of deploying them. 

They are considered to be smart because they can execute immediately after some conditions are met. In some cases, smart contracts require oracles that would provide them with clear information from the outside world, meaning that they need data from outside the network. 

The main objective behind smart contracts is to reduce the intermediation from third parties, which can result in more efficient systems for both users and developers. This can also reduce fraud losses and avoid malicious or accidental exceptions. 

Decentralized Finance

In recent years, after the expansion of Ethereum, several companies started releasing to the market the so-called decentralized finance applications. The decentralized finance world makes reference to dApps that offer users around the world the possibility to have access to financial solutions without depending on traditional centralized authorities but instead, they can do so with a public blockchain network such as Ethereum.

These decentralized finance solutions have been growing due to a large demand from the market. Some of the applications that can be built include decentralized exchanges, lending services and more. As Ethereum grows, DeFi options seem to be expanding as well and reaching a larger number of users. 

Some of the benefits of these decentralized financial solutions are related to the way in which they are controlled, how users can simply start enjoying the benefits of using financial services and clear rules due to the fact they are based on smart contracts. 

At the moment, users can use ETH and other digital assets in the market to operate with a wide range of DeFi solutions. Some of the most popular DeFi platforms that are currently available in the market include the following: 

  • MakerDAO
  • Compound
  • Synthetix
  • Aave
  • WBTC
  • dYdX
  • Uniswap
  • Set Protocol
  • Bancor

Although Bitcoin can offer similar solutions, the Ethereum network has been specifically built to handle these decentralized finance applications. 

Conclusion

Ethereum is one of the largest and most innovative blockchain networks in the market. The number of solutions and products developed on top of Ethereum has been growing over time and the network could continue expanding even more in the coming years. 

The virtual currency market has seen the creation of hundreds of blockchain networks but Etheruem was able to remain a leader in the space and establish itself as the second-largest virtual currency in terms of valuation in the market. 

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