We discuss cryptocurrencies regularly on this site, with Bitcoin being the most well-known. While Bitcoin’s price continues to rise, it’s easy to forget that there are other digital currencies. Coins that are still incredibly cheap and may be able to match Bitcoin’s meteoric rise. Will you be able to reach them on time?
We’ll be passing along promising altcoins in this series to see which ones are worth your time and money. Are you new to crypto coins and don’t know what they are? Then start with this article. Ethereum, commonly known as Ether, is the focus this time.
1. Ethereum Is Like Bitcoin, But Not Quite
Blockchain technology underpins Ethereum. On a decentralized system known as the ledger, transactions are therefore executed and independently validated. It is the same technology that underpins Bitcoin.
On the other hand, Bitcoin blockchain was created with a specific purpose: to execute Bitcoin transactions. Ethereum was designed to be a scalable infrastructure. As a result, digital currency has a greater degree of flexibility than its competitors. Consequently, businesses may more easily create their own apps using it.
2. Smart Contracts are Ethereum’s Strength
Ethereum is a cryptocurrency that is designed to create so-called smart contracts. These are transactions in the case of Bitcoin, but Ethereum’s flexible technology allows it to be used more widely. A smart contract is a contract that can be completed without the need for human intervention.
These smart contracts use the blockchain to carry out a specific action based on a set of parameters. Consider a farmer’s insurance policy that automatically transfers funds when a data stream indicates a lousy harvest.
3. In The Broadest Sense, The Foundation Of Decentralized Apps And Solutions
Decentralized apps are possible thanks to smart contracts. Or, to put it another way, dapps. WhatsApp is a centralized service. Your app communicates with WhatsApp’s servers when you send a message. Those servers are housed in a data center somewhere.
Decentralized apps don’t require a central server; instead, they rely on smart contracts hosted on the Ethereum blockchain. Blockchain accomplishes the same thing, but with money, by obviating the need for banks. Ethereum accomplishes this in general, opening up a plethora of new options. Decentralized chat services, decentralized cloud storage services, and other decentralized solutions are already in development.
4. Organizational Flexibility in the Future
Eventually, you’ll be able to think more generally. Decentralized autonomous organizations, often known as DOAs, have a unique potential, according to researchers. This decentralization is an entirely new foundation for organizations as we know them.
Smart contracts can now serve as the foundation of enterprises, replacing traditional structures such as shareholder relationships. Instead of being bureaucratically inefficient, it is flexible, instantaneous, and direct. For the time being, this is just theory, but the practice is rapidly approaching.
5. Taking it a Step Further
Okay, this is becoming increasingly difficult to comprehend. As a result, developers can create their programs and organizations based on Ethereum, the underlying technology. Obvious. However, those organizations and applications can utilize their tokens and/or coins. Assume I create an Ethereum-based app for Lego lovers. Then I’d be able to use my own money within it. I’m thinking about calling it “cubes.” Therefore, Ethereum is a fantastic example of a currency that is money and the foundation of a currency.
Ethereum’s, and thus Ether’s, has huge potential
6. Ethereum Issues Its Own Ether Tokens
Ethereum, like the Lego app’s currency Blocks, has its own tokens/coins: Ether. So, while Ether can be compared to Bitcoin, Ethereum is the basic foundation. Ether is the primary layer via which transactions on the Ethereum network can be carried out. Take, for example, the fees associated with using the Ethereum network. As the owner of an application or organization, you pay these in Ethers.
7. Ether, like Bitcoin, is subject to much speculation.
Ethereum’s and so Ether’s potential is enormous. The technology lays the groundwork for a decentralized future in which several major players have already expressed interest. As a result, determining the coin’s worth is extremely difficult.
Ether, as a result, is highly volatile. The price of Ether has varied from $10 to $400 in the last year. You can either benefit from it or become a victim of it. As a result, invest only with money you can afford to lose. If it increases, it may grow ten times faster than the dollar, for example. However, if it collapses, it collapses many times faster.
8. And It Suffers From The Same Flaw: Scalability
Although many parties have already signed on, Ethereum, like Bitcoin, has a scalability issue. Each transaction and smart contract must be processed independently, making the network decentralized. This is a significant benefit, but it also has a drawback. It is inefficient in comparison to a centralized server. With Bitcoin, you can already observe this: transactions can take hours to complete.
If you wish to replace existing currencies that handle transactions in seconds, that’s a high bar to clear. And let that be precisely what a large number of coins desire. Although Ethereum claims a more flexible and widespread deployment, this remains a central stumbling point that will affect every application and implementation. Ripple, which you can learn more about here, is one coin that avoids this difficulty.
Are you looking for the best cryptocurrency to invest in? Read 5 Tips to Consider Before Buying Cryptocurrencies.