If you have ever wanted to know what Ethereum is and what it is actually used for, but without all the technical jargon and programming involved- then this article is for you.
Ethereum was created in 2013 and then launched in 2015 by a 19-year-old Russian genius named Vitalik Buterin. Ethereum has been dubbed the second generation of cryptocurrency and the blockchain technology is more than just decentralised peer to peer digital cash, which is the sole function of its predecessor- Bitcoin. As such, Ethereum’s purpose is designed not only to decentralise traditional banks but in addition decentralise the entire internet!
In essence, Ethereum is a decentralised platform that runs smart contracts. (A “smart contract” is a phrase used to describe computer code that can facilitate the exchange of money, content, property, shares, or anything of value.) When running on the blockchain, a smart contract becomes like a self-operating computer program that automatically executes when specific conditions are met. Because smart contracts run on the blockchain, they run exactly as programmed without any possibility of censorship, downtime, fraud or third party interference.
The outcome of this is that it enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have yet to be invented, all without a middleman or any counter-party risk.
Additionally, Ethereum also provides developers with the tools to build decentralised applications (known as Dapps). In the traditional world of mobile apps, Apple lays the platform mobile app startups use to build apps which are programmed to be accessed through the Apple App Store. However, with the creation of Dapps, Ethereum is one of the platforms upon which blockchain startups are built. This is an ever growing landscape and already there are over 1400 Dapps built on Ethereum. Ether (Ethereum’s cryptocurrency) is used by application developers of Dapps to pay for transaction fees and services on the Ethereum network, all of which then creates demand for the cryptocurrency itself.
Furthermore, Ethereum has simplified the ICO process which has resulted in it now being the number one choice for companies wanting to perform an ICO and raise start-up capital in the blockchain space. (An ICO is essentially a program that facilitates companies collecting cryptocurrency from contributors and, after reaching a target amount, will then distribute these newly created tokens to the ICO’s contributors.) Carrying out an ICO on Ethereum means that contributors send Ether to the company doing the ICO, which results in a demand for the cryptocurrency. This ICO process on ethereum has allowed startups to raise billions of dollars worth of ether, in turn driving up the price for the cryptocurrency.
Enough about how Ethereum works, how has it performed as an asset?
For the first two years its price remained below $10. Then, in 2017, it grew exponentially. In one year the value of one Ether went from around $7 to be worth around $1,400 at its peak in January 2018. With the recent market correction, Ethereum prices took a hit falling as low as $370, however it has subsequently gone on a bull run back up to $674 which is where it sits today- May 2nd 2018.