This article covers the following:
- What is Ethereum?
- What can you do with Ethereum?
- What is Decentralised Finance (DeFi) and how is it linked to Ethereum?
- What is Ether?
- What’s in store for Ethereum?
Ethereum is an open-source blockchain platform that enables the use of smart contracts. It prides itself as the world's programmable blockchain, meant to provide us with a "global computer" where anyone can develop and deploy decentralized applications (DApps).
Like Bitcoin, Ethereum is decentralized – this means that it is not controlled but a single entity – relies on peer-to-peer (P2P) systems for validation of transactions. Being an open source platform, users have free access to its source code which allows them to utilize the smart contract functions to develop the DApps.
Ethereum was first proposed by Vitalik Buterin in 2013 when he was just 18 years old, and Gavin Wood, a British computer programmer, proved the possibility of creating this system later on. Ethereum came online on 30 July 2015.
Ethereum has a public blockchain that runs on thousands of computers (or nodes). These are capable of validating and processing much more than just payments and monetary transactions, which is why Ethereum has been a top choice for developers to create DApps across a broad range of services and industries like finance, real estate and insurance.
With just a little bit of creativity, you can create DApps which will be able do things that regular apps can’t such as:
- Creation of new kinds of money and digital assets
- Provision of decentralized financial (DeFi) services
- Creation of decentralized organizations, property, or virtual worlds that are governed collectively
- Ensure that apps are uncensorable and unstoppable
It is no wonder that there are hundreds of dApps built on Ethereum that can be used today.
Ethereum was first supported on Coinhako in 2017, and our users can buy ETH with fiat currencies available in their account or with other cryptocurrencies that are supported in their country of residence.
DeFi is a subset of the Ethereum ecosystem, but is now branching out through the larger crypto space. The term refers to applications that provide financial services through decentralized systems, and creation of smart contracts on the Ethereum network has allowed these developments to come in fruition – which is why the Ethereum is often credited as the platform that has given rise to the hype of DeFi throughout the world.
DID YOU KNOW: Projects like COMPOUND (COMP) and CHAINLINK(LINK) are based on the Ethereum blockchain.
To make transactions easier on its network, it uses a virtual token called Ether. Ether is currently the second most popular cryptocurrency with a market capitalization of $46.5 billion at the time of this writing.
In addition to being a tradeable cryptocurrency, the use of blockchain technology enables the use of Smart Contracts – a set of computer codes that facilitates the exchange of money, property or anything of value without Third-Party interference.
These smart contracts can be operated by sending Ether to them. This is why Ether has an intrinsic value as it can be traded for fiat money and also be accepted as a form of payment.
As of this writing, there is a circulating supply of more than 112 million tokens with no maximum supply.
Ethereum will also see a transition from a Proof of Work consensus system to a Proof of Stake one with Ethereum 2.0 – also known as Eth2 or “Serenity” – estimated to go live in 2020. Ethereum 2.0 will be released in multiple phases, and is widely supported by the community as an improvement to the functionality and performance of Ethereum as a whole.
Please note that it is commonplace to label or simply identify Ether Tokens as Ethereum. There is no right or wrong here, however, kindly note that when you purchase any coins you are purchasing the Ether Tokens.
You can view Ethereum's Whitepaper to learn more about the digital currency
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All opinions expressed here by Coinhako.com are intended for educational purposes, taken from the research and experiences of the writers of the platform, and should not be taken as investment or financial advice.