Cryptocurrencies have been around for a while, but there is no doubt that the year 2017 was the year they become more popular.
Even though cryptocurrencies are getting attention from all sectors of the global economy, from governments and financial institutions, most of the attention has been focused on Bitcoin.
Bitcoin has been getting most of the attention, and deservedly so. The flagship cryptocurrency has been setting the trend for the other cryptos to follow. However, other cryptocurrencies have amazing projects and deserve to command as much attention as Bitcoin. One of them is Ethereum.
Despite being the second largest crypto measured by market value, the real value of Ethereum has been overlooked by most people; some still don’t know how to buy it. The abilities of Ethereum when looked at critically far outweighs that of Bitcoin, and thus, the need to know what Ethereum is and what the project adds to the crypto world and the global economy.
A glance at the official page of the Ethereum foundation, Ethereum was defined as a decentralized platform that enables applications to run smoothly the way they are designed with no chance for things such as fraud, censorship, or third-party interference. For most, there is nothing special about those words while others don’t know what the definition means.
Well, Ethereum makes it possible for users to develop and launch smart contracts on Ethereum’s blockchain. It also allows the development of Distributed Autonomous Applications (DApps), with the developer not having to deal with censorship and no third party interference.
Solidity, which is Ethereum’s original programming language, enables users for writing smart contracts and DApps on Ethereum. After that is done, its crypto, the Ether (ETH) is used in executing those apps and smart contracts.
By this, Ethereum isn’t just another blockchain. It is a decentralized programmable blockchain-based software platform. Let us look at the two things that make Ethereum so special.
Solidity: Ethereum’s software layer
The blockchain is something that almost all cryptocurrencies have, but Ethereum’s solidity is one of the things that make it unique. While Bitcoin was designed as a digital currency to be used for the transaction of value between users, Ethereum was created with the aim to expand the use of the blockchain and develop a broader and more purposeful blockchain.
Ethereum’s solidity was designed to enable the transaction of value in several forms and shapes, be it currency, a house, the rights to an object or information, identity and so many assets. Using the software layer, programmers can build programs dubbed smart contracts that have the ability to implement basic transaction agreements.
Ethereum also makes it possible for users to create new cryptocurrencies, in this case, tokens, which can be exchanged by all Ethereum users. This ability broaden the range of application of digital currencies.
The open source nature of Ethereum means that anyone can contribute by writing new codes and sharing them online. Users can also develop new features on the platform or even strengthen its performance. Thus, the Ethereum network is a self-sustaining and self-evolving one.
DApps: Ethereum’s application layer
This is the second unique feature of Ethereum. The combination of Ethereum’s blockchain and solidity layers enables the blockchain to work as a global decentralized network where third-party applications can be launched and executed.
For each application built on the Ethereum network, the application is tracked to know the current state and information such as the balance of the users, the smart contract codes and where they are stored.
The token emission feature of Ethereum is being used by virtually all startups to raise funds for new projects via Initial Coin Offerings (ICOs). Despite that, the applications of Ethereum go beyond the financial sector. Over a thousand applications have been built on the Ethereum network, with at least half of them already live.
The open source and transparent nature of Ethereum have drawn developers all over the globe together to build a strong and large community which is always working to increase the network’s functionalities and applications.
The creation of decentralized applications has several benefits such as increased transparency, resilience, and an excellent platform for launching new projects and so much more.
How it differs from Bitcoin
Since Bitcoin is the yardstick that all cryptos are measure with, let us see how Ethereum differs from Bitcoin.
- The first major difference is that Bitcoin is a cryptocurrency. While Ethereum is also a cryptocurrency, it can be regarded as more than that since it is also a platform where several things take place.
- Some consider Ethereum much easier to use since it creates blocks and records transactions faster than Bitcoin, thus increasing its efficiency.
- The feature which allows apps to run on the Ethereum network is something that bitcoin lacks. Founder of Ethereum Vitalik Buterin, once stated that “The idea is that there exists this magic computer in the cloud and anyone can send programs to it, anyone can run programs on it, and those programs can talk to each other.”
- Ethereum runs programs on its platforms and eliminates certain things such as malicious attempts by hackers to disrupt those programs, possibilities of downtime and others.
- Ethereum also allows smart contracts to be written and executed on its network. Thus, the written codes will be automatically verified and enforced once they are on the Ethereum network. This feature has led to the creation of DApps and establishment of decentralized companies on the network.
- For future transactions to occur, the bitcoin network will have to sum up a user’s piece of change, which can be either spent or unspent. Ethereum however, makes use of accounts instead.
Ethereum has one of the most functional blockchain networks in the crypto space. The smart contracts and DApps features make it a very interesting and useful cryptocurrency. While Bitcoin was designed to be a digital currency that will make transactions much easier for people, Ethereum has a broader application in the crypto space.
Bitcoin shouldn’t be the only cryptocurrency that you should pay attention to; there are other cryptos with amazing projects and Ethereum perhaps tops the list.