After bitcoin, probably Ethereum is the other most popular cryptocurrency in the world due to its versatile usability. While everyone knows by now that you can pay with bitcoin quickly and at a low fee, do you know what can you do with Ethereum? Surely you can also pay with it, but there are a lot of other cool things you can do with Ethereum.
Ethereum in a nutshell
The Ethereum project has launched in 2014 by Vitalik Buterin, a young, enthusiastic Canadian developer. It is a decentralized network that enables running applications without any third party. In July 2015 ether, the platform’s own native token has been introduced. Ether is the tool that helps you get around the platform and used by applications inside the Ethereum network. Nevertheless, it is the second-largest cryptocurrency by market capitalization with its 20bln worth of total value.
Ether has two main purposes in the Ethereum ecosystem:
- it is used as a digital currency, a method of payment like any other cryptocurrency
- it is used inside the Ethereum network to run applications.
Comparing to bitcoin, for example, you can already see from the above, that Ethereum is not just a peer-to-peer payment system, but much more.
According to Ethereum, ether can be used to “codify, decentralize, secure and trade just about anything.”
The biggest innovation of Ethereum is the Ethereum Virtual Machine (EVM), which is a so-called Turing complete software, which means basically, any real-world computer can run it. After all, with the help of the Ethereum Virtual Machine, you can run any program regardless of the programing language it has been written in.
Since EVM exists, there is no need to build a completely new blockchain for every new application, but you can develop and run completely different application on the same Ethereum network. This greatly reduces the time and effort needed for a new project so the project owners can concentrate on the actual application of the idea.
The traditional way of using Ethereum
Before going into the interesting way you can utilize Ethereum, it is important to highlight, ether can be used just like any other cryptocurrency: you can trade and hodl it.
Trading with ether, so basically buying and selling ether can be done on cryptocurrency exchanges. You can convert ether into other altcoins and bitcoins or you can also buy and sell ether against fiat currencies. Nowadays you can buy and sell cryptocurrencies in all major fiat currencies like USD or EUR, but on a couple of crypto exchanges local currencies, like the Hungarian forint (HUF) are also available and you can quickly and easily convert your funds into ether.
The other term, ‘hodl’ is coming from a misspelling of “hold” couple of years ago on a Bitcoin Talk that. It refers to the buy-and-hold strategy in the context of bitcoin and other cryptocurrencies. If you are interested in other crypto memes like this, read this article on the topic.
Participating in ICOs using Ethereum
Another popular way of using Ethereum is to participate in ICOs. Initial Coin Offerings or ICOs are a common way to crowdfund projects with cryptocurrencies. With the help of the ERC-20 Ethereum standard, new coins on the Ethereum networks can be issued in a standardized, transparent way which helps developers to design new coins in a fraction of time compared to developing completely new blockchains.
ICO projects have their own website where you can find all the important details about the business idea and the business plan itself in the whitepaper. The ICOs are often advertised in the Bitcoin Talk forum as well.
On the website or in the announcement thread you can usually find an ETH address which is the address of the crowdsale contracts. This is the address where the investors send their funds which are collected to finance the project detailed in the whitepaper.
In order to participate in the ICO, you need to send the specified amount (in between the minimum and the maximum detailed in the project) from your MetaMask or MyEtherwallet to the given address. Always check in the whitepaper: what is the amount you need to pay and which wallet do they require you to use.
ICOs are working based on smart contracts. Smart contracts automate the whole financing process, the funds can be stored in multisignature wallets, in another address until the required goal is reached. Once the ICO is successfully completed, the ethers gathered are distributed to several different wallets to keep them safe from outside attacks.
Finally, all of the participating investors receive tokens in exchange for the value they provided in ether.
The whole process is done automatically. So after you have sent payment, Ethereum network takes care all of the background processes without any human (manual intervention). This increases the transparency of the financial side of any project, as investors can be sure they will receive the tokens no matter what happens. (That is a different story, what happens if the token receive does not worth anything, read more about scams like this here.)
The reason for using smart contracts is that the money which is gathered during the ICO must be kept safe until the funding goal is reached. And if the goal is not reached the funds need to be returned to the investors. Smart contracts on the Ethereum network can do this completely decentralized and automatized which ensure transparency.
Trending DApps on Ethereum
Decentralized application or DApp is another word for smart contracts. These programs are running on a distributed platform, in our case, on the Ethereum network. The backend code of the DApps is running on the decentralized network, compared to normal applications that are running on a centralized server or a computer.
You can download these DApss from the Apple or Google Play store or directly from the projects’ own websites.
One of the biggest projects on Ethereum is the partnership between Microsoft and ConsenSys, which offers “Ethereum Blockchain as a Service” (EBaaS) on Microsoft Azure. In this case, large enterprises can have a cloud-based blockchain development environment in a matter of seconds after signing up.
But Ethereum is not just for large corporations. There are hundreds of DApps available by now, here are a couple of examples from the most popular ones.
IDEX and ForkDelta are decentralized exchanges, while LocalEthereum is a P2P ether exchange. OpenSea is a peer to peer trading market for crypto-collectibles and rare digital items. CryptoKitties lets you breed and trade unique digital kittens – yeah cute little cats. Axie Infinity is a game about collecting and raising fantasy creatures called Axie. MLB Champions is a Major League Baseball blockchain-based sports game where you can collect players and play fantasy baseball.
Here you can find 100 popular dApps you can use right now with Ethereum.
So are you excited to get some ether? You can buy some here within seconds.