For some it is known as the second Bitcoin, for others, it’s much more than that. Ethereum is currently the second most popular cryptocurrency in the world. Let's find out what exactly Ethereum is and what opportunities it offers.
Ethereum is mostly known as a cryptocurrency. It is worth emphasizing, however, that this is only part of the truth because Ethereum is also an extensive development platform using blockchain technology. It is mainly used to create decentralized applications and smart contracts. Decentralized applications are essentially programs that are able to run in the cloud without a single dedicated computer executing code and smart contracts are digitally signed agreements (you can read more about them here). Having the capability to run decentralized applications and execute smart contracts was the main objective of Ethereum’s founders.
Ethereum's history dates back to 2013, with a young, 20-year-old programmer named Vitalik Buterin, who was fascinated with the idea behind Bitcoin. Knowing the possibilities and limitations of the first cryptocurrency, he prepared the concept of an alternative solution equipped with a system that was designed to enable building decentralized applications and executing smart contracts. The implementation of Buterin's idea was very difficult, so he collaborated with Joseph Lubin, who was the COO of Ethereum Switzerland GmbH - the company tasked with designing the network. The idea also gathered a lot of community support and successfully managed to raise enough capital to bring it to life. The community remains the backbone of the project to this day through its decentralized method of funding improvements and paying salaries of skilled and committed developers thus launching Ethereum in July 2015.
After Ethereum’s launch, its market value was just over USD $2.60 and remained low for months. During the bullish run of 2017, Ethereum began to record larger price gains as its public exposure increased and gathered interest from hobbyists and corporations who realized how the technology can positively impact their business’. Around this time, it reached a market value of over USD $1300. Today, in 2020, we would have to pay around $ 227 for 1 ETH.
Ethereum has been designed to solve some of the major issues its older brother Bitcoin had. Transaction speed is considered a very important part of any cryptocurrency and Ethereum was designed to send funds faster than Bitcoin while charging the users lower transaction fees. It does it by extracting blocks much faster than Bitcoin. Thanks to this, transactions made using Ethereum flow more efficiently, and the entire payment system is much more efficient. Ethereum has a variable block size, which is determined by clients (miners) connected to the network. In this situation, some people naturally turn to a faster solution offered by the competition (in this case - Ethereum).
The growth of Ethereum’s popularity is also fueled by technological development, large corporations and financial institutions for newer, safer and cheaper fintech solutions. These companies see value in decentralized applications and smart contracts as they have the potential to save them billions of dollars. A full switch to a digital contract could mean that one day these companies would no longer need to employ hundreds of lawyers, legal assistants, and account managers to keep track of transactions or agreements they sign. These agreements could be enforced by decentralized code in a way that is more reliable and less prone to error. Ultimately though, this would mean they would save a lot of money and be able to take on more business without being limited by their legal workforce. This enterprise interest can be seen through the establishment of the Enterprise Ethereum Alliance who’s aim is to “define enterprise-grade software capable of handling the most complex, highly demanding applications at the speed of business.” Many companies like Intel, BP, and Microsoft have joined this initiative. You can see a list of members here.
Ethereum’s future looks promising and it’s use cases are set to increase in the future. Projects in various industries such as healthcare, education and even government are being currently developed on the platform and there is no sign of adoption slowing down. Talented minds are constantly crafting new ideas that have the potential to disrupt various industries and take a step to a new realm of decentralization.