The world of finance changed forever when cryptocurrencies arrived on the scene. Powered by blockchain technology, these digital assets have transformed the way we think about transactions and payment processing.
Few cryptocurrencies generate as much excitement and interest as Ethereum. The asset is tipped to be the future of the sector. Why is this? Understanding the potential of Ethereum goes beyond studying the ETH price. Let’s find out more.
An Overview of Ethereum
To understand why so many people have pinned their hopes on Ethereum, let’s take a look at the history of the asset to understand where it came from.
Ethereum was designed by a team of developers, with the asset’s white paper published by Vitalik Buterin in 2013. It wasn’t until 2015 that the Ethereum blockchain went live, and it quickly garnered attention as an exciting new cryptocurrency in what was then an emerging sector.
Launched as an alternative to Bitcoin, which had dominated the crypto charts since hitting the market in 2009, Ethereum offered a number of technological benefits that set it apart from its great rival.
Ethereum quickly rose up through the charts and established itself as the second most popular and most valuable coin after Bitcoin. At the time of writing this article, Ethereum has a market cap of $304.36 billion and is trading at a value of $2,531.56, with growth of 63.75% over the past 12 months.
The crypto industry is forward-thinking and always looking for new ways to improve services. Below, we’ve listed some of Ethereum’s technical advantages that have made it one of the sector’s most popular assets.
Faster Payments
Bitcoin, and many other cryptocurrencies, serve purely as an alternative means of making payments. This is what crypto was initially designed to do, but developers soon realised the potential in blockchain technology and began harnessing it in different ways.
Ethereum is the perfect example of this. It is much more than just a payment system, although it can be used to make payments more efficiently than Bitcoin and other cryptocurrencies, a result of the technology that powers the asset.
The way it does this is through its consensus mechanism, the means through which transactions on the Ethereum blockchain are verified. Ethereum uses a system called proof of stake (PoS).
With this mechanism, fewer users are required to validate transactions, and the process is less energy-intensive. This means payments process much faster than other cryptocurrencies, making it more valuable as a payment system.
Environmental Considerations
The climate crisis is one of the most pressing issues facing the world today. You might assume that digital currencies like crypto have little impact on the environment, but that is incorrect.
Validating new blocks on blockchain networks requires huge amounts of energy. Powerful computers are used to process these verifications, which means that the crypto industry is a surprisingly significant contributor to carbon emissions.
Bitcoin in particular has been criticised for its environmental impact. According to research, Bitcoin’s carbon emissions, as a result of the power used for mining, are comparable to those of entire countries.
Ethereum, on the other hand, is far more environmentally friendly. The PoW consensus mechanism is less energy-intensive, reducing the asset’s impact on the climate.
As we head towards a greener future, environmentally friendly technologies like Ethereum will be extremely important. This is a key reason why Ethereum is considered to be the future of cryptocurrency.
Decentralised Apps and Smart Contracts
As we mentioned above, Ethereum can be used for more than payment processing and currency transactions.
The Ethereum blockchain is advanced and highly versatile; it can be used to develop and host decentralised apps (dApps) which are becoming increasingly popular across a range of industries, including healthcare, gaming, education and supply chain management.
These dApps are highly secure, and protected by the technology of the blockchain networks they are built on, offering improved levels of safety and privacy for users.
Another key attribute of the Ethereum blockchain is its scalability. As user traffic increases, the network can easily adapt to cope with spikes. This makes it the perfect platform for businesses and organisations looking to integrate blockchain technology with plans for future growth.
As well as dApps, the Ethereum blockchain can be used to implement smart contracts. These self-executing contracts are extremely valuable for businesses; they can streamline deals and ensure all parties are protected.
Smart contracts are written in code and guarantee the agreement is met. The best way to think about them is to compare them to a vending machine. Once you put the money in, the vending machine is bound to dispense whatever product you have purchased.
Conclusion
Cryptocurrency and blockchain are among the most exciting topics in the tech world today. They have been hailed as the next big thing in finance, and new developments have seen them revolutionise a number of other sectors. While Bitcoin is still the king of the crypto world, many feel it will soon fall by the wayside, with Ethereum poised to take its place. Ethereum has a number of advantages over rival coins, including superior technology and environmentally friendly systems, making it the perfect asset to take crypto into the future.
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