Read this blog to get a better understanding of Ethereum in simple to understand terms.
If you’re reading this article, you may have heard of Ethereum several times over the past few years. That’s because ETH has become the second-largest cryptocurrency in the world, second only to Bitcoin.
Many consider Ethereum to be a revolutionary innovation, not just a cryptocurrency or decentralized protocol. Whether or not this is true can only be understood by digging deeper into the Ethereum blockchain.
Ethereum is a decentralized protocol built on the blockchain. What this means is that Ethereum can be used to make other projects on top of it, which makes it a “layer 1 solution”.
In fact, Ethereum is the building block of many Web3 projects like Chainlink, Decentraland, Uniswap, Polygon, and others. There’s more - Ethereum’s native currency, ETH or ether, can be used to trade or transact.
These reasons, among other things, have meant that Ethereum’s price has also skyrocketed ever since it debuted in 2015. Above all, ETH negates the need for a traditional intermediary like a bank.
So far, we’ve discussed the basic use cases of Ethereum as a platform and a currency. It’s safe to say that it was just a condensed version of the true real-world ways in which Ethereum is used.
The Ethereum blockchain allows users to create decentralized apps or dApps on top of it. Think of it as a base for innovation on Web3.
A smart contract is a programmable agreement that runs when certain pre-set conditions are met. They’re stored on the blockchain and are automated.
Smart contracts have become synonymous with Ethereum and are known to be fundamental building blocks of the ETH blockchain.
ETH, which derives its value from speculation, can be bought and sold on a cryptocurrency exchange. The price of Ethereum crossed $4600 towards the end of 2021 but is currently trading at $1,173.71.
Many popular brands like Shopify, Lowe’s, and others accept cryptocurrencies like ETH as payment. ETH can also be sent and received like cash using a crypto wallet.
Believe it or not, Ethereum is at the core of many popular NFT collections like Axie Infinity, Bored Ape, CryptoPunks, and more. Curious to know why Bored Ape NFTs are so expensive?
The Ethereum protocol creates new ETH whenever a new block is created on the blockchain platform. While users can’t mint ETH, they can create new blocks using a process known as crypto mining.
Unlike Bitcoin, there’s no limit on the total number of ETH that can be minted over time. However, there is a limit on the annual issuance of ETH. There are 118.96 million ETH on the ledger as of writing this blog.
Ethereum is a diverse protocol that’s the bedrock of hundreds of crypto and NFT projects. In fact, it wouldn’t be an understatement to say that it has become one of the most important pillars of Web3.
This has been reflected in Ethereum's price which has surged from $7.82 in 2017 to $1,173.71 in 2022. That said, cryptocurrencies across the globe are in a period of scrutiny, decay, and volatility.
Thus, whether or not Ethereum is a good investment depends on how you view the pros & cons of the cryptocurrency. It’s best to do your own research thoroughly before making any decision.
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