There’s More to Ethereum than Meets the Eye

Crypto Investing Sep 15, 2021

Following the footsteps of tech moguls like Bill Gates and Mark Zuckerberg, 20-year old Vitalik Buterin dropped out of college. In 2014, after winning the 100,000$ Thiel Fellowship, he launched a platform for blockchain development, now known as Ethereum (ETH). Ether, the currency on the Ethereum blockchain, is currently the second-largest cryptocurrency taking up more than 19% of the cryptocurrency space.

Recently, Ethereum shot up more than 80% from its bearish run, majorly stimulated by the large number of De-Fi projects going on around it. With unlimited growth potential, it often rubs horns with Bitcoin as a major contender to rein over the cryptocurrency space. So what makes Ethereum such a vital part of the cryptocurrency world? Let’s break it down.

Ethereum at a Glance

Ethereum is officially defined as a decentralized, computing platform with a smart contract functionality; it also has own programming language called Solidity. This open-source blockchain network can be used to run a variety of decentralized applications. Because it is open-source, developers around the world have come to view Ethereum as a transparent, global protocol that underpins a large number of applications across many industries.

While most usually think of the cryptocurrency “Ether” when Ethereum is mentioned, it is fascinating to note that Ether is just the tip of the iceberg.

Enter The Ethereal World

In late August, clip art of a rock was sold for 1.3m USD or 400 ETHs.

This is an example of an NFT that works on the Ethereum Blockchain. Taking use of the “smart contract’ function, the Ethereum blockchain allows artists, musicians, meme-makers, and every individual to trade their content in a transparent, easy manner.

On the more serious side, Ethereum is also the rock behind the new flurry of Decentralized Finance applications like Uniswap and that acts as a financial exchange, where one can even trade with assets pegged to the US dollars that called stable coins.

According to the Ethereum Organization” With DeFi, the markets are always open and there are no centralized authorities who can block payments or deny you access to anything.”

Now, De-Fi is used around the world for everything from credit facilities, lending platforms, or just an alternative to traditional finance for frustrated users

Excluding NFT’s (value hard to compare), the Ethereum ecosystem, defined by “the total market cap of the biggest ERC-20 tokens issued on top of the Ethereum blockchain”; is more than 250B USD!!

How Can I Make Money off Ethereum?

Ethereum has a myriad of uses, but other than Ether will any of them help make returns? The answer is yes, anyone can make money off Ethereum if they take hold of the right opportunities.

De-Fi is a major part of the Ethereum ecosystem that is growing new components every day. Companies and institutions use the blockchain to leverage their operations and make them more efficient. For regular users, you can earn a passive income through something called yield farming, staking, or lending. With a little patience, this can give you a steady source of income without having to actively trade on the crypto market!

NFT’s are also another option that has been in the hot seat recently. Trading with profitable NFT’s can surely generate big returns, though risky. If you were the subject of a meme in your past life, that serves as a direct highway to the golden pot at the end of the rainbow!

Ethereum Will Take Over Bitcoin

Most cryptocurrencies use the Turing completed programming language to write over the coin and facilitate transactions. As Bitcoin was the first cryptocurrency to experiment with this technology it uses a limited version of Turing completed and thus posses limited functions.

This is where Ethereum takes the lead.

When Vitalik developed Ethereum, he aimed to make Ethereum technically adept in ways that Bitcoin failed.

Ethereum is fully Turing-completed as compared to Bitcoin which gives it the ability to function with a huge database that is secure, efficient; holding unlimited potential. This allows for smart contracts which act as highly programmable digital money that is similar to a contract between a buyer and a seller- directly written into code. They are stored in the blockchain and run when the pre-defined conditions are met.

Smart contracts are what makes Ethereum so exciting for investors and stakeholders as the potential for this is beyond the horizon. Contracts that would require a third party can now be automated using smart contracts. Decentralizing a centralized system can potentially reduce costs, increase accuracy and speed of execution, and the most important thing – trust.
The Environmental Outtakes

In May, Musk sent Bitcoin on a long Bearish run, after he announced that Tesla would not be accepting Bitcoin anymore due to its heavy energy consumptions. Ever since then Bitcoin and other cryptocurrencies have faced intense scrutiny by various institutions and investors, with the consensus that crypto like Ethereum is a more viable option.

To combat the environmental problem, Ethereum and many other coins have started their process to move from a point of work to a point of stake model. In the words of Vuterin, “ Proof-of-stake is a solution to the [environmental issues] of Bitcoin—which needs far fewer resources to maintain”.

The point of work model that Bitcoin and Ethereum currently use, requires a lot of computational power to employ their consensus mechanism. Miners mine currency by solving complex problems on the network (hash computations). This is why mining is usually done in areas where energy is cheap and regulations are lax. Moving to sustainable sources of energy does not solve the whole problem but it’s one of the only things that can be done in the case of cryptocurrency like Bitcoin with somewhat outdated technology. In other words, solving problems on the network creates a whole different problem

Ethereums POS model does not achieve consensus using this method. Instead, it secures the blockchain by creating and proposing blocks when needed, in a method known as attesting.

According to the Ethereum Foundation – a successful switch to the POS could reduce Ethereum’s energy use by up to 99.95%. It has taken longer than usual to implement POS due to the extreme complexity of building such a model.

What Ethereum’s Future Look Like

Both Ethereum and Bitcoin are predicted to have a long, innovative future. Some investors believe that Ether will outdo Bitcoin in the long run, and vice versa. However, moving away from just the numbers, it is only fair to say that Ethereum on its own can grow and develop, faster than any cryptocurrency such as Bitcoin.

Ethereum has been described as a financial market that can perform a variety of different functions like buying, lending, and staking, while Bitcoin is more of a currency. Many consider Bitcoin to be a less risky investment as compared to Ether. Regardless, it should also be taken into consideration that Ether grew nearly 1000% percent in the last 12 months as compared to Bitcoin which grew around 300%. A few experts also predict that by the end of 2022, Ether could be the most transacted crypto on the marketplace due to its ever-expanding utilities.

For both them, and any decentralized cryptocurrency, the biggest risk remains to be regulations.  However, more governments and institutions are making efforts to accommodate crypto rather than then hamper their growth. Investors have too much of a vested interest to possibly let regulatory risk move their stand by a great deal.

Ethereum has a road ahead filled with boundless possibilities. and we will have to wait and watch to see where it goes next. Until then grab a chance to be a part of the Ethereum community by investing, when you can still do so!


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