What makes Ethereum the most popular multi-purpose blockchain?
As the foundational smart contract platform and the largest decentralized application landscape, Ethereum is, in numerous ways, reaping the benefits of the hard work of the committed developer team behind it – except for making the ETH coin price, at least for the moment. According to online crypto exchanges, it’s momentarily grappling with resistance and pushing to break the $3K level before investors can jump up at the news that their supported asset has breached predicted records. A triumphant jump above the $3K mark would indicate an upward trend and consequently, sell-offs and new waves of purchasers. However, long-term investors aren’t eager to see these scenarios come to fruition.
Meanwhile, short-term investors still have plenty of time to buy Ethereum while it’s still decently priced to boost the profits they may gain later, after having enough patience for the asset to take off.
Despite the current challenges Ethereum faces, such as the postponement of the decision that should arrive from the SEC, Ethereum remains a central hub for devs and a pillar of the decentralized app system, among many other functionalities that ensure its longevity. You probably can’t help but ask what makes Ethereum the touted multi-general blockchain that everyone leans on and looks to ignite ideas and prompt innovation.
Diving into the blockchain concept
Not long ago, the better part of investors was accommodated by the business platform economy, where a handful of the elite tech giants would lean on the self-created network effects in order to gain access to user content, goods, and data. They’d establish terms that over favor their businesses at the cost of users’ benefits. However, the protocol economy is seeping in and empowering users to take advantage of a secure decentralized ledger where the power doesn’t reside in key individuals’ hands. Simply put, a blockchain like Ethereum is a safe and decentralized digital ledger that needs no intermediaries like banks, brokers, exchanges, government agents, and so on, birthing a new business model.
Blockchain brings the concept of digital property rights to fruition, enabling digital ownership and scarcity to be demonstrated through code and software instead of human beings and organizations.
What differentiates Ethereum from Bitcoin?
The conquest in the crypto world is often born between the largest digital currency by market cap, Bitcoin, and the second one after it, Ethereum. Similarly, the blockchain contest sees the two poster crypto boys rival each other. To clear up the waters, it’s important to understand that each provides a range of functionalities that make them suitable depending on the operation a user may need.
For instance, not all blockchains work similarly. Bitcoin’s blockchain is an app-specific network that mainly registers wallet addresses and Bitcoin amounts. It is permissionless, transparent, and safe, setting high standards for other blockchains in this area.
Conversely, Ethereum boasts the title of “general purpose distributed ledger.” It gave way to smart contracts, alias self-executing contracts that activate when a previously established set of rules is met, and which gained tremendous traction in the business world and beyond. Moreover, the programming language is easier to learn than others, and a big ace is up one’s sleeve when slayed. Its innovatory achievements transformed blockchain into worldwide virtual computers from simple ledgers.
What about Ethereum’s security?
Evidently, network security is a priority when deciding whether a system is a go-to. The solid security layer and larger security laid the groundwork for innovative, digitally built economies to emerge atop Ethereum’s infrastructure.
The tokens generated by Ethereum or the blockchains inspired by it aren’t mere currencies. They prompt integrity and coordination within decentralized systems and are crucial incentive apparatuses. The blockchain’s inherent token, known as Ether and represented by “ETH,” isn’t just a transactional utility but provides economic and participatory advantages according to the ecosystem’s development.
The economy promoted by Ethereum has pushed it to a peak where over 120MN people possess tokens, seeing rates continuously rise over the last four years. Over 7MN of registered accounts are actively involved, increasing the adoption rates by over 40%. The user base is even more significant if we add the number of Layer-2s utilizers into the equation. The whole amount of capital registered in smart contracts is also climbing.
What is Ethereum used for?
Decentralized applications (dApps)
Ethereum’s programmable attribute helped create dApps, also known as a group of software programs running on a P2P computer network or blockchain, instead of a mere computer. Simply, it has prompted the development of interoperable smart contracts that offer services lacking go-between involvement.
Decentralized finance (DeFi) is among the most used dApp types, helping build numerous fintech services without banks, exchanges, and other intermediaries having to step in. Well-known decentralized exchanges include SushiSwap and Uniswap, where users can effortlessly perform a range of activities.
These provide a wider variety of services compared to centralized exchanges (CEXs), as they offer limited currency pairs. However, disadvantages exist, especially since the technology is in its infancy. DEXs don’t audit or check the tokens supported by platforms for trade, leaving this responsibility in the hands of the trader.
Ethereum ERC-20 Protocol
Other than smart contracts, Ethereum boasts the ERC-20 Protocol, the world’s most used technical standard for smart contracts. This protocol governs the token development so that they abide by tech rules and oversee transaction approval and token supply, among others. This standard is the basis of almost everything in the crypto realm, including utility tokens like BAT and MATIC or stablecoins like USDC and USDT. Numerous famous crypto projects today commence as ERC-20 tokens before relocating to proprietary networks. For instance, Binance Coin (BNB) was initially built on Ethereum and later transferred to the exchange platform’s network. On the other hand, EOS originally launched Ethereum-based tokens before establishing on its mainnet.
At the time of writing, the number of circulating ERC-20 tokens surpasses 500K, and more are bound to launch.
Ethereum NFT Marketplace
Another widespread Ethereum app is its non-fungible token marketplace, OpenSea, which boasts a user base of over 1MN. The platform enables users to purchase, trade, sell, and exchange collectibles and is cross-blockchain compatible with blockchains like Arbitrum, Polygon, and Solana.
OpenSea has secured its title as the first and most extended comprehensive web3 marketplace for crypto collectibles and non-fungible tokens, and the chances of being dethroned in the near future are almost inexistent.
Ethereum’s multi-purpose nature continuously brings more users to the table, so it’s the first and foremost blockchain to learn if you want to dip your toes into this sector.
