Ethereum is the second most popular cryptocurrency after Bitcoin. It is a decentralized platform that runs smart contracts, applications, and ICOs. Ethereum can be used for its cryptocurrency (ETH), but the blockchain also has multiple use cases, such as issuing tokens and running ICOs.
What is Ethereum?
Ethereum is a blockchain-based distributed computing platform. It operates as a decentralized virtual machine, with Ether (ETH) as its cryptocurrency token. The network uses ETH to incentivize users to run applications on the network, pay for transaction fees and services, and secure the network through mining.
The Ethereum blockchain consists of blocks of data containing transactions between users and smart contracts encoded; cryptocurrencies like Ether use this to record information about financial transfers and other user interactions. This allows us to track all kinds of things on this public ledger; basically, anything that can be stored digitally can be recorded on the Ethereum blockchain!
For example: if you send someone money using PayPal or Venmo, both companies will update their internal ledgers with your transaction history, so they know how much money you have in your account at any given time; however, since these are private companies that do not always share information there’s no way for someone outside those companies (like yourself) to see what transactions occurred. With blockchain networks, all transactions between all parties on the network are automatically recorded, stored, and secured. These records are virtually impossible to tamper with, minimizing the risks involved in transactions.
Ethereum is the second most valuable cryptocurrency—with a market cap of $206.43 billion, this cryptocurrency has been dubbed ‘digital oil. The Ethereum blockchain and its token, ETH, are used for four different things:
- Transaction fees: You pay ETH to move your tokens around the blockchain.
- Smart contract executions: You can use ETH to execute smart contracts on the Ethereum blockchain or other blockchains that support similar functionality.
- Non-fungible token (NFT) purchases: NFTs are unique digital assets that can have a variety of uses, but they’re most often traded on secondary markets like FTX. The ETH price at any moment can impact the value of NFTs, and Ether is required as payment for these transactions.
- Operating systems: To run DApps and develop smart contracts, developers need ETH to pay transaction fees associated with using these technologies
A DAO is a decentralized organization that operates through smart contracts. A DAO can operate as a venture capital fund, a gift economy, and an online casino or games platform.
Any one individual or entity does not control decentralized organizations – instead, these entities are governed by everyone within them who holds tokens (cryptocurrency) in that particular organization’s ecosystem. These tokens determine how much influence you have over decisions made in your specific organization’s ecosystem.
The NFT Marketplace
NFT stands for non-fungible token. This means that they are unique and can be traded between users. Non-fungible tokens are often used in gaming, but they are also used in other industries as well.
The Ethereum blockchain houses 80% of the NFTs on the marketplace because it was created to support these types of transactions and transactions with smart contracts at their core. The first NFTs were created on the Ethereum blockchain, and today, over 80 thousand unique NFT collections exist on this platform!
The Growth of Ether
Ether has been rising for many reasons. First, it has the largest developer community in all cryptocurrencies. People are working on it worldwide in an open-source environment (meaning that ANYONE can contribute). Second, Ethereum’s blockchain differs from Bitcoin’s because it can be programmed to complete more complex transactions than Bitcoin’s simple transactions. Third, Ethereum allows users to access smart contracts and DApps (Decentralized Apps) via its native currency, Ether.
You can learn about Ethereum by joining an online crypto community like FTX. Start your crypto investment journey today and become a stakeholder in the Ethereum blockchain.