As the second biggest cryptocurrency after Bitcoin, Ethereum is known as “the mother of decentralized applications.” However, such a title is not derived from the coin itself, but from the respective blockchain technology behind it.
Upon emergence in 2015, the Ethereum blockchain created a revolution in the blockchain space by introducing the first viable platform for Smart contracts.
Thanks to this platform, developers have since then created countless decentralized applications known as “dApps”, serving a variety of use-cases ranging from entertainment to financial solutions.
Although it is quite clear to most crypto enthusiasts why Ethereum’s title holds weight, if you’ve just landed in the crypto-space; this article will help you better understand its significance.
Let’s explain the top three use-cases of Ethereum:
Decentralized Finance (DeFi)
The permissionless, censorship-resistant and trustless nature of the Ethereum Blockchain gave birth to a new breed of financial solutions, gathered under the umbrella term ‘Decentralized Finance’.
Decentralized finance, more commonly known as “DeFi”, is a revolutionary new financial system that is powered with blockchain technology. Built on top of Ethereum, DeFi is transforming the way we think about money and finance.
With the help of blockchain technology, users can now access a wide range of financial services that are fast, secure and borderless, regardless of their geographic location or economic status. DeFi encompasses a range of features such as lending, borrowing, trading, insurance and many other forms of financial services.
The special part is that all these services can be accessed without the permission of any middle-man or a central authority like a bank or a government, all thanks to decentralized applications built on the Ethereum Blockchain,
This new system is transforming the way we do business and is giving users more control over their finances.
DeFi is creating opportunities for businesses to create new products and services. Through the power of smart contracts; businesses are able to automate their processes and provide more secure and efficient services. This is a huge step forward for the world of finance, and it’s already having a major impact on the global economy.
NFTs
NFTs, or non-fungible tokens, are one of the most exciting new developments in the world of digital assets. NFTs are digital tokens stored on a blockchain, like Ethereum, used to represent ownership of digital or physical assets. These assets can range from artwork, videos, game items and collectibles to real world assets such as real-estate or event tickets.
What makes them so exciting is that they are completely unique and can’t be replicated. This means that each NFT is one-of-a-kind and can be bought, sold, and traded like any real-world asset, thus opening up a whole world of possibilities for artists, creators, and collectors.
Artists can now create digital pieces of art and put them up for sale as NFTs, allowing them to easily monetize their creative works. Musicians can also create digital music and sell it as an NFT, providing new and exciting ways to make money. With NFTs in gaming you can now own an item that nobody else has, and since it’s on the blockchain, you have proof of ownership that can never be taken away.
Another thought-provoking use case of NFTs is the on-chain ownership of real world assets, such as land or houses. Furthermore, combined with Decentralized Finance, NFTs have enabled an empowering form of investing through shared or fractional investments into real estate.
Imagine owning a 1/500 part of an expensive mansion, only to reap the profits of reselling it later on? Through the power of NFTs on the blockchain, this is made possible.
Although still in their early stages, Non-fungible tokens are already starting to revolutionize the way we think about digital assets, and are rapidly growing in adoption through utilization in several industries.
According to current trends; it is highly expected that the adoption of NFTs will continue to grow in the upcoming years, with an expansion of their use-cases.
Other Cryptocurrencies
Ethereum ($ETH), the native coin to the same-named blockchain, is not the only cryptocurrency on its network. Instead, Ethereum Blockchain is serving as a digital home to thousands of other cryptos, referred to as ‘tokens’.
As previously mentioned, Ethereum’s popularity can be largely attributed to the fact that it brought the first viable smart contract platform into the world of blockchain. Soon after its emergence, the platform attracted numerous developers which had realized the benefits of creating their own crypto tokens on Ethereum.
Being the most popular smart contract platform, Ethereum is hosting all kinds of decentralized applications along with their native cryptos, ranging from DeFi and utility tokens to popular meme projects.
Some of the best examples of other cryptocurrencies built on Ethereum are Tether and USDC, the two largest stablecoins in the crypto market. These two alone are serving as crucial aspects of today’s crypto space, responsible for a significant amount of overall crypto trading volume; which speaks volumes about the relevance of Ethereum.
Although its popularity is well justified by the technology behind it, Ethereum still has several obstacles to overcome if it wants to keep its place as the go-to platform for developers building on the blockchain.
Issues such as high fees and congestion are one of the biggest questions for users nowadays, however, these problems are being actively addressed with new updates aimed at upgrading the network’s infrastructure.
The Wrap-up
Having such a variety of use cases, it’s no wonder that Ethereum is referred to as the ‘Mother of Decentralized applications’. With its smart contract platform, it is an incredibly large part of the crypto space, serving as one of the pillars backing this whole industry and numerous projects building on top of it.
Ethereum doesn’t just have one simple function, it has many and that will continue to grow as time goes on. It is highly expected that we shall see more and more use cases for Ethereum in the future, and its value growing along, especially if its present issues are successfully solved.
