Ethereum is a blockchain technology behind the cryptocurrency ether (ETH) and thousands of applications. Ethereum allows you to send and receive digital money without the help of traditional banks or payment providers. But Ethereum not only powers a payment system but also a marketplace of censorship-resistant financial services, games, and apps.
Banking for everyone
A large number of people in the world lack access to financial services. You only need an internet connection to be able to use Ethereum’s lending, borrowing and savings products. ETH is digital and global money. Unlike traditional money, Ether makes peer-to-peer payment a reality. Anyone with an internet connection can transfer funds to anyone else securely, anytime, anywhere.
Ethereum is decentralized because no government or company has control over Ethereum. No one can prevent you from using services on Ethereum. No governments or corporations have the power to control activities on the network. One cannot alter or remove transactions once they have been added. Therefore, the transactions and network are immutable.
Compatibility for the win
Ethereum products are compatible by default. This makes it easier to build more and more products and services. In addition, Ethereum allows you to do this without trusted third parties like traditional banks, making it totally decentralized. One does not need a bank account to accept payments.
ETH is digital and global money. Unlike traditional money, Ether makes peer-to-peer payment a reality. Anyone with an internet connection can transfer funds to anyone else securely, anytime, anywhere. In addition, Ether allows you to do this without trusted third parties like traditional banks, making it totally decentralized. One does not need a bank account to accept payments. Moreover, Ether is divisible up to 18 decimal places; you don’t have to buy 1 whole ETH. This differentiates Ether from traditional fiat currency issued by central banks.
Decentralized finance (DeFi) is an open and global financial system, an alternative to the traditional financial system. DeFi products and services give millions of people access to financial services for the first time as the people may not have access to traditional banking services. No centralized authorities are needed; therefore, no one can block payments or deny you access. Decentralization lowers transaction costs because there are no longer intermediary institutions. Decentralization also means that no one, including governments and centralized institutions, can close down markets if they want to. DeFi enables a trustless system as users no longer need to trust a third party to conduct transactions. You hold your money and are in total control of your money, without worrying about third parties mismanaging your money. Services now take seconds or are even automatic and safer instead of being slow previously due to internal human processes. For now products and services are determined by code, not by humans. Customers are served anytime, anywhere, not limited to trading or business hours of a specific time zone. One needs not sacrifice their personal data and privacy in order to be able to use financial services because transactions are now pseudonymous. DeFi is also transparent: anyone has access to a product’s data, whereas financial institutions are closed books. Those are the primary value propositions that DeFi brings compared to traditional finance.
So far tens of billions of dollars worth of crypto have flowed through DeFi applications. The crypto economy with decentralized financial services such as lending and borrowing, long / short, earning interest, and more is growing rapidly.
Non-fungible tokens (NFTs)
Non-fungible is used to describe things that are not interchangeable for other items because they have unique properties, such as a piece of furniture, a song file, or a computer. Fungible items, by contrast, are defined by their value rather than their unique properties. For instance, ETH or dollars are fungible because 1 ETH / $1 USD can be exchanged for another 1 ETH / $1 USD. NFTs are tokens that represent ownership of unique items such as art, collectibles, and even real estate. NFTs cannot be copied.
NFTs are transforming the digital art and collectible world. Digital artists have a new significant source of customers: the crypto audience.
Decentralized autonomous organizations (DAOs)
DAOs are collectively owned and managed by its members. Everyone in the organization has a voice in decision making. This creates more opportunities for global collaboration and coordination. Compared to traditional organizations which are usually hierarchical, DAO are flat and fully democratized. Activities at DAOs are transparent and public, while they are private at traditional organizations. At DAOs, every member has a say in how a decision is made through voting, whereas decisions can be made by a small group of people at traditional organizations. Outcomes of voting are automatic, instead of being handled manually.
DAO examples include ventures, freelancer networks, or charities. A network of contractors may share expenses for office spaces or software subscriptions. A venture fund may pool investment capital from a large number of people. Repaid money could later be redistributed amongst DAO-members.
Ethereum Foundation has 16 current employee profiles, including founder & inventor Vitalik Buterin. Vitaly Dmitriyevich “Vitalik” Buterin is a Russian-Canadian programmer and writer. Buterin joined the crypto movement very early and co-founded Bitcoin Magazine in 2011. In 2014, Buterin launched Ethereum with Gavin Wood.
Ethereum remains the number one smart contract blockchain system. Ethereum powers self-executing digital agreements (smart contracts), decentralized applications, and ERC-20 tokens on the Ethereum blockchain. As a result, Ethereum brought 2017’s Initial Coin Offering (ICO) craze and the current decentralized finance (DeFi) and Non-Fungible Token (NFT) booms. Ethereum’s main drawback is its limited scalability, which results in congestion and increased gas fees. For that reason, a number of blockchain platforms have gained increased popularity recently. They are highly scalable, effectively preventing network congestion in the future. Competitors comprise Cardano, Binance Smart Chain, Ripple, and Polkadot among others.
Will Ethereum Lose its Dominance Over DeFi and Smart Contracts? While Ethereum’s limited scalability leads to a congested network during busy times, the blockchain networks of most Ethereum competitors except for Binance Smart Chain and a few other projects are still work in progress. Therefore, it remains to be seen whether they might replace Ethereum as the dominant smart contract and decentralized application platform.
- Ethereum is a decentralised platform that runs smart contracts.
- The native currency of the Ethereum Blockchain, ETH, is divisible up to 18 decimal places
- Etheriuk makes peer-to-peer payment a reality and is censorship resistant.
- Ethereum products are compatible by default.
- The Ethereum Network allows for DeFi, NFTs and DAOs
- The Ethereum platform was created by Vitalik Buterin and Gavin Wood